Research article

Corporate tax costs in Europe

The variety of corporate, personal and social security costs in Europe will have a greater impact on organisations in different cities than real estate costs

The tax regime in Warsaw makes it attractive to occupiers

▲ The tax regime in Warsaw makes it attractive to occupiers

For organisations looking to locate in Europe or relocate personnel within Europe, factors other than real estate costs will be important. Uppermost in many managers minds will be taxation regimes as these will have a far greater impact on the bottom line than property.

International taxation is an extremely complex subject, the surface of which we can’t begin to scratch here, so we have looked very simply and simplistically at a few metrics which begin to illustrate how location decisions may be affected by these considerations.

We have looked at corporation tax rates in each of the 12 cities alongside employers social security contributions in order to give some idea of what a typical organisation might face from a business point of view. We have also looked at the top rates of personal income tax and employee social security to get an idea of how encouraged, or otherwise, a CEO might be to make a location decision both on their own behalf and with a view to how easy it might be to attract and retain staff in different tax regimes.

The table below highlights those jurisdictions where tax regimes look more expensive than the 12-city average (purple) and those which look cheaper (green). On this measure, Paris, Brussels and Milan may look less attractive to occupiers, while Warsaw, London and Dublin look attractive. In other cities, there may be a trade-off between corporate tax levels and personal tax levels but there is not a great variation from the European average.

Our local operatives report that, at the extremes, high taxation can act as a significant disincentive to companies and other occupiers and is actively considered by international companies seeking to expand or relocate. It is little surprise then that Milan’s Municipality is said to be considering the introduction of special tax zones in the city to make it more competitive.

Figure 21

FIGURE 21Headline tax rates

Source: KPMG, Savills World Research

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