Corporation Tax Rates in Europe: Country-by-Country Comparison 2025

If you are running a business that operates across European borders — or considering where to incorporate — understanding corporation tax rates is fundamental to your financial planning. Tax rates vary dramatically across Europe, and the headline rate rarely tells the full story.

This guide provides a comprehensive, country-by-country comparison of corporation tax rates in Europe for 2025, including effective rates, surcharges, and the impact of the new EU minimum tax directive.

2025 Corporation Tax Rates at a Glance

Country	Headline Rate	Effective Rate (approx.)	Notes
United Kingdom	25%	25%	19% small profits rate for profits under £50,000
Ireland	12.5%	15% (large groups)	15% applies to companies in scope of Pillar Two
Germany	15% (KSt)	~30%	Trade tax (Gewerbesteuer) adds ~14-17% depending on municipality
France	25%	25%	Reduced 15% rate on first €42,500 for qualifying SMEs
Italy	24% (IRES)	~27.9%	Regional tax (IRAP) adds 3.9%
Spain	25%	25%	Reduced 23% rate for SMEs with turnover under €1 million
Sweden	20.6%	20.6%	One of the lowest flat rates in Europe
Greece	22%	22%	Reduced from 24% in recent years

Country-by-Country Breakdown

United Kingdom (25%)

The UK corporation tax rate is 25% for companies with profits over £250,000. Companies with profits under £50,000 pay the small profits rate of 19%. Companies with profits between £50,000 and £250,000 benefit from marginal relief, creating an effective rate of approximately 26.5% in that band.

The UK also offers generous capital allowances, including full expensing (100% first-year deduction on qualifying plant and machinery) and the Annual Investment Allowance of £1 million.

Key consideration: The UK's R&D tax relief schemes provide significant additional savings for innovative companies, though reforms in recent years have reduced the headline benefit for larger companies.

Ireland (12.5% / 15%)

Ireland's 12.5% headline rate has made it one of Europe's most attractive jurisdictions for multinational businesses. However, from 2024, Ireland implemented the OECD Pillar Two rules, meaning large multinational groups (consolidated revenue over €750 million) now face a minimum effective rate of 15%.

For domestic SMEs and companies below the Pillar Two threshold, the 12.5% rate remains in effect. Ireland also applies a 25% rate to non-trading (passive) income such as investment returns and rental income.

Key consideration: Ireland's knowledge development box offers an effective 6.25% rate on qualifying intellectual property income.

Germany (~30% combined)

Germany's corporation tax system is more complex than most. The federal corporation tax rate (Körperschaftsteuer) is 15%, plus a 5.5% solidarity surcharge on that amount (effectively adding ~0.825%). On top of this, businesses pay trade tax (Gewerbesteuer), which varies by municipality, typically ranging from 14% to 17%.

This brings the combined effective rate to approximately 30% in most German cities, making Germany one of the highest-taxed jurisdictions in Europe.

Component	Rate
Körperschaftsteuer (federal)	15%
Solidarity surcharge	0.825%
Gewerbesteuer (trade tax, varies)	~14–17%
Total combined	~30%

Key consideration: Small businesses and partnerships may benefit from partial trade tax credit on personal income tax.

France (25%)

France's standard rate settled at 25% following a multi-year reduction from 33.3%. Small and medium-sized enterprises with turnover under €10 million benefit from a reduced rate of 15% on the first €42,500 of taxable profit.

France also levies various additional contributions on large companies, though the CVAE (a local business contribution) was phased out by the end of 2023.

Key consideration: France offers robust R&D tax credits (Crédit d'Impôt Recherche) that can significantly reduce the effective rate for innovative companies.

Italy (24% IRES + 3.9% IRAP)

Italy applies a national corporate income tax (IRES) of 24% plus a regional production tax (IRAP) of 3.9%, giving a combined effective rate of approximately 27.9%.

IRAP is calculated on a broader base than IRES and cannot be fully deducted against IRES, which means the real-world cost of Italian taxation is often higher than the headline rates suggest.

Key consideration: Italy offers incentives including the Patent Box regime and R&D tax credits, along with favourable treatment for newly established companies.

Spain (25%)

Spain's standard corporation tax rate is 25%. Newly created companies benefit from a reduced 15% rate for their first two profitable years. From 2023, companies with net turnover under €1 million pay a reduced rate of 23%.

Spain also applies a minimum effective rate of 15% for companies with turnover over €20 million (similar to the Pillar Two concept but domestic).

Key consideration: Spain's Canary Islands Special Zone (ZEC) offers rates as low as 4% for qualifying companies investing in the region.

Sweden (20.6%)

Sweden offers one of the lowest flat corporation tax rates in Europe at 20.6%. There are no additional local or municipal taxes on corporate profits, making the headline rate the effective rate.

Sweden's system is straightforward — profit is taxed at a single flat rate with no surcharges, making tax calculations and compliance simpler than in countries like Germany or Italy.

Key consideration: Sweden allows a tax-deductible profit allocation to a "periodisation reserve" (periodiseringsfond), deferring up to 25% of pre-tax profit for up to six years.

Greece (22%)

Greece's corporation tax rate is 22%, reduced from 24% in recent years as part of the country's economic reforms. Dividend distribution is subject to a 5% withholding tax.

Key consideration: Greece offers significant incentives for investments in certain regions and sectors, and new tax residents can benefit from a 50% income tax exemption for seven years.

The EU Minimum Tax Directive (Pillar Two)

The most significant change to European corporate taxation in decades is the EU Minimum Tax Directive, which implements the OECD's Pillar Two framework. Key facts:

• Minimum effective rate of 15% on multinational groups with consolidated revenue over €750 million
• Member states must have implemented the directive from 2024
• A top-up tax applies when the effective rate in any jurisdiction falls below 15%
• This primarily affects large groups using Ireland, Hungary, or other low-rate jurisdictions

For SMEs below the €750 million threshold, Pillar Two does not apply, and each country's domestic rate remains in full effect.

How to Choose the Right Jurisdiction

When comparing corporation tax rates, consider these factors beyond the headline rate:

• Effective rate — including all local taxes and surcharges
• Available incentives — R&D credits, patent boxes, investment allowances
• Withholding taxes — on dividends, interest, and royalties repatriated to your home country
• Double taxation treaties — which reduce or eliminate withholding taxes
• Compliance burden — some jurisdictions require significantly more administrative work
• Social security costs — employer contributions vary widely and affect total cost of employment

How TaxDocs Helps with Multi-Country Tax Compliance

Managing corporation tax obligations across multiple European jurisdictions is complex. TaxDocs generates jurisdiction-specific tax documents for all the countries covered in this guide. Upload your financial data, select the relevant country, and TaxDocs produces professionally formatted, locally compliant tax documents — saving you from navigating each country's unique requirements manually.

Whether you operate in one country or eight, TaxDocs ensures your tax documentation is accurate, complete, and ready for filing.

This article is for informational purposes only and does not constitute tax advice.