Page 5 - CEE Tax Guide 2025

The PPP index is an economic indicator which rates show significant differences. In 2025, general
links the exchange rates to the price of a basket tax rates averaged around 20% in the region. The
of products in each country. It is measured in terms normal VAT rate of 25% and 27%, effective in Croatia
of national currency per US dollar. Our analysis and Hungary, respectively, still count as especially
of PPP-adjusted average wages reveals some notable high. Slovakia has moved from the midfield to the
insights. If we rank the countries by the purchasing fourth place in the list of countries with the highest
power of their net wages, we get very different VAT rates, as the Slovak normal VAT rate of 20% has
results compared to nominal salaries; for example, been increased to 23% from 2025. It is also worth
while the average gross Ukrainian wage – in terms noting that standard VAT rate in Estonia will increase
of nominal value – is little more than third of its Greek from 22% to 24% from July 1, 2025.
counterpart, in terms of the purchasing power of their Examining the reduced tax rates provides an even
net value, there is little difference. Similarly, although more diverse image (starting from 2025 a reduced
the Slovenian average gross wage is way above VAT rate of 15% has been introduced in Montenegro).
the Polish average (by 700 EUR), their purchasing Many countries have introduced two reduced rates,
power seems to be almost the same. We believe that which is the maximum permitted by Directive
this is in part due to tax reasons, but different price 2006/112/EC (VAT Directive).
levels in the countries concerned also play into it.
Overall, what we can conclude is that if we consider VAT group taxation applies in Hungary, Austria,
the purchasing power of net salaries, the difference Germany, the Czech Republic, Estonia, Latvia, North
between countries is much less significant than the Macedonia, Poland, Romania, Slovenia and Slovakia.
level of gross wages alone would suggest. More jurisdictions in the region are implementing
new systems to improve compliance and reduce
Regarding tax allowances for families, we could
conclude that, in three-quarters of the countries, fraud, such as electronic invoicing, online VAT
for employees raising three children, there registration and filing, and real-time reporting.
is no considerable increase in the net salary (and In 2024, Hungary and Romania introduced the e-VAT
decrease of tax wedge). On the other hand, some system with the aim of making VAT administration
form of family tax allowance is available in Hungary, easier. Under the new regime, the Tax Authority
Latvia, Bulgaria and Slovakia, which results provides taxpayers with draft VAT statements based
in considerable benefits for employees; in those on online invoice reporting data.
countries, parents with three children may be able
to reduce the tax wedge by 14-18% points. A couple of countries (for example: Poland and
Romania) have implemented the Standard Audit
Also, a novelty this year is the inclusion of data on the File for Tax (SAF-T), which is a standardized XML file
availability of joint taxation. Our calculation models format for exchanging accounting data between
a family with 2 children where one of the partners businesses and tax authorities.
earns double the average wage in the private sector
while the other earns a minimum wage. Our analysis Corporate income tax
shows that joint taxation is not available or does not Various countries emphasize different factors when
make a significant difference in most countries. Still, taxing corporate profit. Countries in the region
in a handful of countries joint taxation may result typically keep the headline CIT rates around 15-
in considerable increase in net wage level (Bulgaria 24%. The reality is, however, often more complex,
and Uzbekistan).
as a number of countries, like Poland and Slovakia,
Value-added tax also have beneficial tax rates for smaller taxpayers.
Although Hungary has the lowest general rate of 9%,
Due to EU regulations, the rules of value-added tax it should also be noted that in certain sectors the
are harmonized for the most part, and many non- overall profit tax rate may be as high as 50%. There
EU Member States are also trying to align themselves are three countries where the CIT higher rate has
to the Community system. However, applicable tax gone up compared to last year: in Lithuania (from

Central and Eastern European tax guide 2025 Forvis Mazars 5