Global Corporate Tax Comparison & Guide

Choosing the right location for your startup is a critical decision, and corporate income tax rates play a significant role in that choice. Different countries offer varying tax rates and structures, some more favorable to new businesses than others. This guide provides an overview of corporate tax rates in 24 countries, offering insights for entrepreneurs seeking to optimize their tax burden and foster growth.

Understanding Corporate Income Tax

Corporate income tax is a direct tax levied on a company’s profits. These profits typically include business income, passive income, and capital gains. The rate at which these profits are taxed can significantly influence a company’s profitability, investment decisions, and overall financial health.

Corporate tax rates alone can be misleading because they only tell half the story – for example, while Ireland’s 12.5% corporate tax rate seems highly attractive, its high personal dividend tax rate of 51% results in one of the highest integrated tax rates (57.1%) in the OECD. The integrated tax rate, which combines both corporate tax and personal dividend/capital gains tax, provides a more accurate picture of the total tax burden that business owners and investors actually face when profits are distributed, making it a more reliable metric for comparing different jurisdictions’ true tax competitiveness. Read our global comparison of Integrated Tax Rates on Corporate Income for a more detailed picture.

A Global Overview of Corporate Tax Rates

Here’s a breakdown of corporate tax rates in 24 countries, based on the Tax Foundation’s International Tax Competitiveness Index (ITCI), the OECD‘s Corporate Tax Statistics and others.

CountryCorporate Tax RateNotable Features and Considerations for Startups
Australia25%Above-average rate, but allows for franking of dividends to provide tax credits to shareholders.
Austria23%Slightly above the OECD average, but offers relatively good cost recovery for machinery and industrial buildings.
Belgium25%Relatively high rate, but benefits from a broad tax treaty network and a territorial tax system. However, a new annual tax on securities accounts has been introduced.
Canada15%Offers attractive rates and the SR&ED program, providing tax credits for R&D expenditures.
Czech Republic19%Below-average rate and few complex incentives, making it attractive for startups.
Denmark22%Territorial tax system; exemptions for foreign dividend and capital gains income.
Estonia20% (on distributed profits)Offers the most competitive tax system in the OECD. Tax applies only to distributed profits, allowing for tax-free reinvestment.
Finland20%Relatively low rate and less complex tax system, but has an estate tax and financial transaction tax.
France25.8%Recently reduced from a higher rate, but still above the OECD average. Offers a Patent Box with a reduced 10% rate on certain IP income.
Germany29.9%The sixth-highest corporate income tax rate in the OECD, including a 5.5% surtax. Features a broad tax treaty network with 96 countries.
Greece22%Below the OECD average.
Hungary9% (plus local business tax)Lowest headline corporate tax rate in the OECD, but a local business tax adds to the overall burden.
Iceland20%Below the OECD average, less complex personal income taxes, territorial tax system, but limited loss carry forward.
Ireland12.5%Attractive low rate, but high personal income and dividend taxes.
Italy27.8%Higher than the OECD average. Offers an ACE (Allowance for Corporate Equity) and Last-In-First-Out treatment of inventory costs.
Japan23.2%Relatively high rate, but offers a generous tonnage tax regime for shipping companies, and a tax-favorable scheme for startup stock options.
Lithuania15%Relatively low rate and flatter-than-average taxes on labor, making it competitive.
Luxembourg24.9%Relatively low rate, but high top marginal income tax rate and solidarity tax.
Netherlands19% (up to €200,000 profit), 25.8% (above €200,000)Offers a two-tiered system with a lower rate for smaller profits.
New Zealand28%Above-average corporate tax rate, but allows for imputation credits on dividends, which can benefit shareholders.
Norway22%Close to the OECD average, but features a territorial tax system and no withholding taxes on interest and royalties.
Poland19%Below-average rate and ACE (Allowance for Corporate Equity) to limit debt bias, but loss offset limitations can be a drawback.
Portugal31.5%Highest rate among these countries. Features an ACE (Allowance for Corporate Equity) to offset debt bias.
Singapore17%Competitive rate, extensive tax incentives, and a favorable business environment.
Slovakia21%Above-average rate, but good tax treatment for capital investment.
Slovenia19%Below-average rate and a reduced capital gains tax rate based on asset holding time.
South Korea25%High capital gains tax for individuals, worldwide corporate tax system.
Spain25%Relatively high rate, but has a territorial tax system that exempts most foreign dividends and capital gains income.
Sweden20.6%Offers a territorial tax system and R&D tax relief, but high personal dividend and capital gains tax rates.
SwitzerlandVaries by Canton, averaging 8.5%-15%Attractive average rate, but varies by canton. Features a complex system with varying levels of corporate tax base competitiveness.
Taiwan20%
UAE9% (Mainland), 0% (Qualifying Free Zones)Attractive headline rate with 0% in qualifying free zones.
UK19% (for small and medium-sized companies), 25% (main rate)Increased the main rate to 25% in 2023, but maintains a reduced rate of 19% for small and medium-sized companies.
US21%Maintains a 21% federal rate, but states impose their own corporate taxes, resulting in varying combined rates.

Additional Considerations for Startups

  • Tax Incentives: Many countries offer various tax incentives to attract businesses, especially startups. These can include R&D tax credits, patent boxes, tax holidays, and reduced rates for specific industries. Be sure to research the incentives available in each country you’re considering.
  • Tax Complexity: While a low tax rate is attractive, a complex tax code can create administrative burdens and compliance costs. The ITCI considers tax complexity as a factor in its overall ranking.
  • Double Taxation: Many countries have a system of “double taxation” on corporate profits, where profits are taxed at the corporate level and again at the individual level when distributed as dividends. Some countries mitigate this with credits or exemptions.
  • Tax Treaties: Tax treaties between countries can reduce or eliminate double taxation and provide certainty for international businesses. This website offers an interactive and really helpful overview of all tax treaties.
  • Economic Substance Requirements: Some countries are implementing stricter economic substance requirements to prevent companies from artificially shifting profits to low-tax jurisdictions.

Need advice on where to start up or expand to?

Understanding corporate tax rates is essential for startups looking to expand globally. By carefully evaluating the tax landscape in different countries and considering other relevant factors, entrepreneurs can make informed decisions to optimize their tax burden and position their businesses for success.

This article is part of a the NordicHQ Business Attraction Index. Check out our comparison of the best countries to do business or contact us below with your questions.

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