Cyprus tax-to-GDP ratio edges higher but remains below EU average

Cyprus’ tax-to-GDP ratio rose to 36.3 per cent in 2025 from 36 per cent a year earlier, according to Eurostat, as tax and social contribution revenues increased across most European Union member states. The figures show that Cyprus remained below the EU average, where the overall tax-to-GDP ratio climbed to 40.7 per cent in 2025 from 40.2 per cent in 2024. Across the euro area, the ratio increased more sharply, reaching 41.3 per cent, compared with 40.7 per cent in the previous year. The tax-to-GDP ratio measures the combined revenue governments collect from taxes and net social contributions as a share of gross domestic product (GDP), providing an indication of the relative size of tax revenues in an economy. In absolute terms, EU revenue from taxes and social contributions increased by €401 billion in 2025 to reach €7.68 trillion, compared with the previous year, Eurostat reported. Despite the overall increase, significant differences remained between member states, reflecting variations in national tax systems, social contribution arrangements and the size of government revenue relative to economic output. France recorded the highest tax-to-GDP ratio in the EU at 46 per cent, followed by Belgium at 44.7 per cent, Denmark at 44.3 per cent and Austria at 43.9 per cent. At the other end of the scale, Ireland registered the lowest ratio at 22.7 per cent, followed by Romania at 29.3 per cent, Malta at 30.3 per cent and Bulgaria at 30.6 per cent. Cyprus’ ratio of 36.3 per cent placed it below the EU and euro area averages, although its increase from 2024 indicated that tax and social contribution revenues had risen relative to the size of the economy. Tax ratios rise across most EU countries Eurostat said the tax-to-GDP ratio increased in 19 EU member states in 2025 compared with the previous year. Germany recorded the largest increase, with its ratio rising from 40.3 per cent in 2024 to 41.4 per cent in 2025. Malta followed, with an increase from 29.3 per cent to 30.3 per cent, while Spain’s ratio climbed from 37.2 per cent to 38.1 per cent. In contrast, the ratio declined in eight member states, with the largest decreases recorded in Sweden and Latvia. Sweden’s tax-to-GDP ratio fell from 41.8 per cent in 2024 to 41.2 per cent in 2025, while Latvia’s declined from 34.9 per cent to 34.2 per cent. The figures underline the differing trends in government revenue across the bloc, with the overall EU and euro area ratios increasing despite reductions in several individual countries. For Cyprus, the rise from 36 per cent to 36.3 per cent represented a comparatively modest increase, leaving the country’s ratio below the European averages in 2025.