Page 4 - CEE Tax Guide 2025

Tax review 2025

An overview of taxation system within CEE

Introduction and the corresponding total labor costs for the
employer. The tax wedge shows the percentage
This brochure aims to provide current information
on taxation in the 22 European states concerned, of labor costs that, in any form, go to the state
supplemented by 3 Central Asian countries, effective budget. In 2025, this indicator varies between
as of January 2025. Thanks to the cooperation of the 13 and 49% (in the case of the average wage in the
Forvis Mazars offices, this is now our thirteenth edition. private sector, without any family allowances),
with an average of 38%. Compared to the OECD
We firmly believe that this publication will help average of 35%, the tax wedge of the region can
investors understand the complexities of the be considered to be high, especially in the case
various CEE tax regimes by highlighting the latest Member States of the EU, where the average is 43%.
developments and trends characteristic of the Of course, due to progressive tax rates, the value may
respective tax regimes. be somewhat lower in the case of lower income rates
and higher in the case of higher rates.
Employment Taxes
All of the above should obviously be evaluated
The tax rates on income and employment show in light of the wage level in the given country, which
significant differences in the countries in question. is the factor where the countries of the region display
Half of the countries apply a flat-rate personal the most significant spread. The average of the
income tax (such as Bulgaria, Hungary, Romania, and minimum wage in the CEE countries amounts to EUR
Ukraine; ranging between 8 and 22%), while others 846 with a 9% increase compared to last year. The
prefer progressive tax rates (e.g. Austria, Germany gross minimum wage is no more than EUR 400
and Slovenia, as Croatia and Slovakia) where the in Ukraine, Moldova, Kosovo and Albania. It is in the
upper tax rates are often as high as 50%. There were range of EUR 400 to EUR 1,000 in the majority
changes in the standard PIT rates in 2025 in Estonia, of the region (Albania, Bulgaria, former Yugoslav
as it has increased from 20% to 22%; the progressive countries, Baltic States and Visegrad countries),
PIT rates have been amended in some countries, too while being slightly more in Lithuania, Poland and
(e.g. Kosovo, Croatia, Latvia). Slovenia. On the other end of the spectrum, we can
find Germany and Austria where the minimum wage
On average, the costs of social taxes and exceeds EUR 2,000.
contributions borne by employers in the region is The gross average wage level shows similar
17% of gross salaries, though significant differences differences. On average, workers in the private sector
(of over 30 percentage points) are apparent in the CEE region earn around EUR 1,700 which
between the lowest employer burdens (Lithuania, shows a 8% increase compared to last year. Still,
Kosovo, and Romania: no more than 5%) and the average wage is less than EUR 1,000 in Ukraine,
the highest employer contributions (e.g. Estonia Moldova, Kosovo and Albania, while it is in the range
and Slovakia: 33 and around 36%, respectively) of EUR 1,000 to EUR 2,000 in the majority of the
in this case. However, this only indicates that region (Bulgaria, former Yugoslav countries, Baltic
some jurisdictions prefer to levy payroll taxes on States, Visegrad countries, except for Lithuania and
employees rather than on employers, which makes Slovenia where it is slightly higher). The average
systems hard to compare based on tax rates alone.
wage exceeds EUR 4,000 in the top two countries,
A much more suitable method to compare systems Germany and Austria.
is to examine the tax wedge indicator. This is For the first time this year, we have also been
the ratio between the total amount of taxes and examining the average wages in the private sector
contributions paid in connection with employment adjusted by the Purchase Power Parity (PPP) index .
1

1 The source of the PPP index is the World Bank website, with the latest available data from 2023: https://data.worldbank.org/indicator/
PA.NUS.PRVT.PP?year=2023. To calculate the average wage adjusted by the PPP index, the net average wage in the private sector for
each country was divided by its respective PPP index. The resulting figures were then converted to euros for consistency with other data
in this guide, using the EUR/USD exchange rate as of January 2, 2025 (1.12 EUR/USD).

Central and Eastern European tax guide 2025 Forvis Mazars 4