European Production Tax Barometer 2024

Third edition

Defining precise specifications

The experts drew on European Regulation no. 549/2013 of May 21, 2013 defining production taxes, as well as on French legal standards, notably stemming from jurisprudences handed down by France's high courts.

Once the scope of the legal definition of production tax was established, the teams at Mazars Société d'Avocats in France drew up a set of specifications listing the information required to identify and analyze production taxes for each of the twelve countries studied. The specifications include a list of all existing taxes, and indicate which taxes meet the definition of production taxes (e.g., taxes on ownership or use of land, buildings and structures for production purposes (company property tax, property tax…), taxes on movable assets used for production purposes (company car tax…), taxes on labor (payroll tax…), based on four main criteria.

These taxes must be :

• mandatory
• payable by companies
• levied by public administrations or institutions of the European Union
• collected based on production capacity

The specifications also address points of contention and provide a well-founded rationale for the classification of certain taxes. For instance, it justifies the exclusion of the tax on commercial wasteland (due for the ownership of unused real estate, thus not related to productive activities), and the inclusion of the Contribution Sociale de Solidarité des Sociétés or C3S (predominantly based on revenues, but whose specificities nonetheless permit it to be included in the category of production taxes.

You can find the detailed specifications here (in french)

Mazars’ teams in France and Europe compare our specifications and Eurostat data

Mazars Société d'Avocats in France - the country coordinating the project - sent the specifications and Eurostat data on production taxes to the Mazars experts based in the eleven other countries involved in the study. While the Eurostat data provides a useful starting point, they incorporate contributions and taxes that, in some respects, diverge from the more nuanced approach to production taxation adopted by Mazars.

Based on the specifications, Mazars experts were tasked with classifying Eurostat's information, analyzing it, and, if necessary, revising the existing classification according to the established criteria.

By way of example, Eurostat data for France includes all property taxes as production taxes, without effectively distinguishing the portion owed by companies and that owed by households. The unprecedented analysis introduced by this new barometer, drawing on pre-existing legal sources, required particularly meticulous analysis by the Mazars Group's tax specialists.

The teams then compiled a comprehensive list of all taxes by country, meticulously assessing each line to determine whether or not it qualified as a production tax. They justified their decisions while considering the intricacies of each country's tax regulations.

Indicator development

Mazars Société d'Avocats subsequently transmitted the data to the Institut Montaigne. With assistance from HEC Junior Conseil, the Institut Montaigne used the data to develop the indicator necessary for comparing the total annual amount of production taxes between France and the other eleven European countries. This standardized indicator is presented as a percentage of GDP in 2022. Eurostat data, average exchange rates for December 2022.

Specific features of the third edition of the barometer

This third edition of the Production Tax Barometer builds upon the groundwork laid in the previous two years.

Austria makes its appearance in this third edition. Its inclusion is justified by its robust, agile industrial fabric, specialized in cutting-edge, high value-added sectors. Relative to its population, Austria's GDP is the 5th highest in the European Union, and the 3rd highest among the countries in this barometer (behind Denmark and the Netherlands). Its vivacious economic model makes it all the more relevant to study its production tax system.

Moreover, the growth figures, which are significant in light of the economic difficulties faced in 2022 (13% for Poland, for example), are based on nominal values in current local currency. Their magnitudes are significant as a result of the inflationary pressures that emerged at the beginning of the year, following the outbreak of war in Ukraine. To mitigate the impacts of increasing prices, one approach is to deflate all tax revenues. However, this method was not employed here as it could have resulted in distortions and sectoral biases.