The Interplay of European Countries’ Tax Systems: A Spatial Autocorrelation and Cluster Analysis
The Interplay of European Countries’ Tax Systems: A Spatial Autocorrelation and Cluster Analysis

Summary/Abstract: The main aim of this article is to analyse the differences of tax systems across European countries based on 2015 data. The analysis was conducted by means of the application of five diagnostic variables describing tax systems’ corporate, individual and indirect tax rates, and employee social security and employer social security rates. The research was conducted using the hierarchical clustering method to identify a homogenous group of countries, and Exploratory Spatial Data Analysis (ESDA) in order to identify existing spatial interaction. Applying cluster analysis has enabled us to identify seven homogenous clusters with significantly different tax rates, and by applying ESDA, we have identified hot spot and cold spot clusters for diagnostic variables in corporate and individual income tax rates.

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