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Tax Reforms in Europe 2024-2025: Country-by-Country Overview
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Each year, many European countries adjust their tax systems to adapt to global economic changes and support business growth. In 2024, several nations have already implemented significant tax reforms that will impact both individuals and businesses. These changes touch on various areas of taxation, including the 2025 corporate tax rates and new initiatives.
In this article, we provide an in-depth look at the reforms already in place and those expected in 2025 across key European countries like Italy, France, Spain, Cyprus, Malta, and Portugal.
Tax Changes Across European Countries 2024-2025
Italy
Increased Lump-Sum Tax for New Residents
In 2024, Italy introduced significant changes to its tax regime for wealthy new residents. On October 7, 2024, the Italian Parliament passed Decree-Law No. 113, bringing adjustments to the “Lump Sum Tax Regime,” which offers notable tax benefits for affluent individuals.
Under this program, the fixed tax on foreign-sourced income has been raised from €100,000 to €200,000.
The “Flat Tax for New Residents” program allows high-net-worth individuals moving to Italy to pay a fixed tax rate instead of progressive taxation on their global income, applicable to new tax residents.
For those already enrolled in the program, the conditions remain unchanged, with a fixed €100,000 annual payment.
This benefit is available for up to 15 years and applies to those who have not been tax residents of Italy for at least 9 out of the last 10 years, making Italy an attractive destination for wealthy investors looking to streamline their tax planning and minimize tax obligations on global income.
France
Tax Hikes for Large Corporations and Digital Services
France is considering raising the corporate tax rate for large businesses. The government plans to introduce an additional tax for companies with annual revenues exceeding €1 billion. While the current corporate tax rate is 25%, these businesses may face an extra 8.5% tax, bringing the total to 33.5%. This proposal could generate an additional €8 billion for France’s budget.
However, France has also introduced incentives for innovative companies. Businesses engaged in artificial intelligence, biotechnology, and renewable energy can benefit from expanded profit tax breaks. The corporate tax rate for such enterprises is reduced to 15% for the first €500,000 of income, offering a significant boost to startups and research hubs.
Additionally, the Finance Committee of the French National Assembly is reviewing an amendment to the 2025 budget, which includes raising the Digital Services Tax (DST) from 3% to 5%. This tax targets companies providing digital services in France as part of a broader global effort to regulate digital taxation. These changes could impact international tech companies operating through online platforms or offering digital services.
Spain
Incentives for Small Businesses and Increased Income Tax
Spain has also implemented key changes to its tax policy. For small and medium-sized enterprises with net revenues under €1 million, the corporate tax rate has been reduced from 25% to 23%. For startups, which play a crucial role in the economy, the rate has been further lowered to 15%.
Moreover, the Spanish government announced tax incentives for investors in green technologies. Companies investing in eco-friendly projects can access new benefits, such as a reduced corporate tax rate of 18% for projects focused on renewable energy and energy efficiency. These measures aim to support the country’s 2030 emissions reduction goals and foster a stable, eco-conscious business environment.
Spain also made adjustments affecting individuals: those earning over €200,000 annually will see an increase in income tax rates. This change impacts both local residents and foreign investors with high incomes.
These reforms are designed to redistribute the tax burden and boost the national budget. For investors, these changes highlight the importance of reviewing their tax strategies to assess the impact of higher rates on their net returns.
Cyprus
Modernization of the Tax System
Cyprus remains a leader in tax attractiveness among European countries.
From 2024, contributions to the Social Insurance Fund have increased for both employers and employees. They are now required to contribute an additional 0.5% of insured earnings, raising the total contribution from 8.3% to 8.8%. For self-employed individuals, the rate has also increased—from 15.6% to 16.6%. These adjustments aim to strengthen the social security system for all participants.
Additionally, the Cypriot government is advancing its digitalization of tax administration. In 2024, the “Taxes for All” online portal was launched, with plans for full digitalization by 2025. This initiative simplifies tax reporting and interaction with tax authorities, making Cyprus’s tax system even more efficient and business-friendly.
These efforts help Cyprus maintain its competitive edge and continue attracting international companies and startups with low tax rates and a stable regulatory environment. Feod Group offers comprehensive support in tax planning and business registration in Cyprus.
Lowering Corporate Taxes and Incentives for Small Businesses
Portugal continues to actively reform its tax system, focusing on reducing corporate taxes to improve the business environment. The standard corporate tax rate is currently 21%, but the government plans a gradual reduction by 2% per year, aiming for a 15% rate by 2027. This move is intended to attract foreign investments and support local enterprises.
In addition, small and medium-sized enterprises will benefit from extra tax breaks: the tax rate will drop to 12.5% for the first €50,000 of taxable income. These changes aim to bolster local entrepreneurship, create jobs, and strengthen small businesses, driving the country’s overall economic growth. Such measures also appeal to international investors seeking favorable business conditions in Portugal.
Portugal is also set to extend and enhance its renowned Non-Habitual Residence (NHR) program, which offers significant tax benefits to new residents for the first 10 years. In 2025, this program may expand to include new professional categories, especially in digital technologies and green economy sectors.
In 2025, Malta’s government plans to introduce additional tax incentives for businesses in innovative sectors like fintech and IT, as well as for startups working with new technologies.
Changes are also expected in the VAT system, aimed at simplifying VAT refund procedures for foreign companies and entrepreneurs operating in Malta. This would make the country even more attractive for international businesses, especially those in e-commerce and digital services.
Tax changes across Europe in 2024 are reshaping the landscape, affecting large corporations, small businesses, and individuals alike.
For small businesses and individuals, these reforms present both challenges and opportunities. On one hand, tighter control over tax residency and income taxation necessitates more strategic tax planning. On the other hand, expanded tax incentives for green technologies and innovative startups offer new avenues for growth and investment.
For detailed information and guidance on tax planning across Europe, contact Feod Group.
In 2013, she graduated in law from the National University «Odessa Law Academy» with honors and received a Master of Law degree. Anastasia Taran has experience in international and contract law, as well as corporate and tax law in Europe. Within the framework of Feod Group, she specializes i...
In 2013, she graduated in law from the National University «Odessa Law Academy» with honors and received a Master of Law degree. Anastasia Taran has experience in international and contract law, as well as corporate and tax law in Europe. Within the framework of Feod Group, she specializes in immigration and corporate law of European countries, particularly:
Italy
France
Spain
Cyprus
Portugal
Malta
