Received:
2025-10-18 | Accepted:
2025-12-30 | Published:
2026-03-30
Title
Corporate tax rates in the European Union: convergence peculiarities
Abstract
This paper analyses the convergence dynamics of statutory and effective corporate income tax rates within the European Union (EU) from 2004 to 2023, with the goal of determining whether member states are moving toward a single common tax level or forming several stable convergence clubs. The study employs the Phillips–Sul club convergence methodology, which captures heterogeneous transitional paths and facilitates the identification of country groups that share similar long-term tax trajectories. Using a balanced panel of 27 EU member states and data from the European Commission and the Centre for European Economic Research (ZEW), we test for both overall convergence and club patterns. The global log-t test rejects the hypothesis of overall convergence for both statutory and effective tax rates. The strongly negative test statistics (t = −8.33 for statutory rates and t = −8.29 for effective tax rates) confirm the existence of multiple long-term regimes rather than a unified convergence pattern. Statutory tax rates separate into three distinct clubs, reflecting different strategic approaches to statutory taxation across member states. Effective tax rates form two more cohesive clusters, with the group of low-ETR economies demonstrating the strongest internal convergence and the most consistent long-run dynamics. Robustness checks across alternative specifications support these findings. Overall, the results indicate that the EU does not follow a uniform path toward complete tax harmonisation. Instead, European corporate taxation is evolving toward the coexistence of several stable fiscal regimes, suggesting that spontaneous convergence remains limited despite ongoing economic integration.
Keywords
statutory tax rates, effective tax rates, convergence, tax harmonisation, Phillips-Sul club convergence
JEL classifications
H25
, H71
, F38
, O52
URI
http://jssidoi.org/jesi/article/1402
DOI
Pages
216-234
Funding
This paper is a part of research project of the Ministry of Education, Family and Sports of the Slovak Republic VEGA project No. 1/0042/25 Analysis of the Impact of Economic Determinants in the Context of Effective Corporate Taxation.
This is an open access issue and all published articles are licensed under a
Creative Commons Attribution 4.0 International License
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