Tax revenue: in Italia, the implicit tax rate on labour is high, whilst VAT’s contribution is low
This is confirmed by the 2026 Annual Taxation Report compiled by the EU. The tax burden is rising to over 42 per cent
In 2024, compared with the previous year, the tax burden in Italia rose by 1.2 percentage points to 42.4 per cent. This is one of the largest increases among the major European economies, alongside Poland (+1.6 per cent) and Germany (+0.8 per cent). This is one of the findings contained in the ‘Annual Taxation Report’ for 2026, published on 8 July by the EU. Italia remains, as it has been since the time series began in 1995, among the Member States with the highest tax burden, alongside, for example, Sweden, Finland and Denmark. In 2024, in fact, the EU average stood at 39.4 per cent, whilst in Italia the figure stood, as mentioned, at 42.4 per cent. An even higher tax burden was recorded in the Netherlands (42.8 per cent), Austria (43.4 per cent), France (43.5 per cent) and Denmark (45.2 per cent).
Implicit tax rate on labour
Furthermore, in the same year, in Italia the implicit tax rate on labour stood at 43.9 per cent, second only to Greece (44.8 per cent). Between 2014 and 2024, however, there was a fall of almost 3 percentage points, one of the sharpest in the EU.
VAT contribution
Of little significance in 2024, the contribution of VAT, which accounts for 15.6 per cent of Italian tax revenue. This is despite an increase of 1.8 percentage points compared with ten years earlier. The Member State that relies most heavily on VAT revenue is, however, Croatia (34.7 per cent), followed by Bulgaria (30.6 per cent) and Latvia (27.3 per cent).
Taxation
Sweden and Denmark are the two countries that rely most heavily on on income tax in Italia (57.4 per cent and 57.3 per cent respectively in 2024), which nevertheless remains the primary source of revenue in all Member States except Croatia and Bulgaria. In these two countries, in fact, consumption taxes are the main source of revenue, accounting for 48.1 per cent and 42.8 per cent respectively. In no country, however, is the primary source of revenue capital taxes.
Compared with a European average of 51.5 per cent, taxes on labour in Italia in 2024 accounted for 48.6 per cent of tax revenue. The contribution of taxes on capital and taxes on consumption was essentially equal in Italy: 25.5 per cent and 25.9 per cent respectively. Comparing two four-year fiscal periods – 2015–2019 and 2020–2024 – it can be seen that the tax burden in Italia has fallen slightly.
