EU: tax comparison

How to compare the tax burden on “working individuals” in different countries? The answer to this question is very simple. There is a relatively affordable and fairly effective technique.

The amount is calculated and included: contributions to the Social Insurance Fund, income tax and VAT. Then this amount is divided by the average gross salary.

The result obtained is correlated with a calendar year duration of 365 days and a “date” appears, conditionally called “Tax Freedom Day” (TFD). In other words, assuming that the calendar year “starts” on January 1, this date corresponds to the period that the employee must work in order to accumulate funds for paying taxes during the year.

Values ​​of average gross salaries are provided by state statistical authorities, taxes are calculated on the basis of current legislation.

Following the results of 2015, the following results were obtained (data are not provided for all countries within the European Union):

• the “leader” among the EU countries is Cyprus - TFD - March 31;
• in the spring the Maltese “cope” with the tax burden (April 19), the Irish (April 28), and residents of the UK (May 9);
• for summer June (as expected) accounts for most of the “liberation days”: Luxembourg (June 2), Denmark and Spain (June 7), Slovenia (June 8), Portugal (June 12), the Netherlands (June 18), Czech Republic ( June 19), Sweden (June 21), Finland (June 22);
• for the month of holidays - July - the TFD fell for residents of Italy (July 2), Germany (July 10), Hungary (June 17), Austria (June 25), France (June 29);
• Belgium closes the list (August 6).

Actually, if do not go into the discussion of the calculation methodology, then the data presented allows you to draw very “transparent” conclusions, useful for comparing business immigration models (excluding investment programs):

• from the point of view of the tax burden, Cyprus, Malta and the UK are very attractive, although these countries are incorrect to compare with each other due to the peculiarities of tax laws;
• the indicated leaders of the list are island states, which reduces their value for most potential immigrants;
• the most popular immigration areas — Italy, Germany, Austria, and France — are characterized by a significantly higher (compared to “competitors”) tax burden, although in practice this circumstance is either not taken into account at all or taken into account, but in the last place;
• Luxembourg is the “leader" among the continental states, which once again confirms its attractiveness for business immigration schemes, but requires very careful consideration and concretization;
• it is obvious that the results are estimates and are not intended to compare specific business models, but the calculation methodology can be extended to them, after replacing the statistics on wages with specific ones needed for calculations.

A detailed calculation of taxation can be performed by specialists of our center.