What are the countries with the lowest and highest tax burden?
CapRelo, a global relocation management company, published a list of countries that impose the lowest and the highest tax burden on labour. The study covers 40 countries. To compile the list, CapRelo used information about the average gross and net salaries in the selected countries. The difference between those salaries is regarded as a tax burden. This means that the tax burden for the purpose of the study includes not only taxes but also social security contributions and other similar expenses. Below, we will briefly discuss the findings of the study.
Countries with the lowest tax burden
Saudi Arabia and India lead the list of countries with the lowest tax burden. Both countries have 0% tax burden. However, the average salaries in those two countries differ significantly (EUR 18,523 in Saudi Arabia and EUR 1424 in India). The next in the list are Switzerland, Indonesia, Brazil, Japan, Romania, Bulgaria, South Korea and China.
Bulgaria is a particularly attractive country for employers as, in comparison with many EU countries that apply progressive tax rates, the rates of personal and corporate taxes are flat (10%). Thus, the flat tax rate of 10% (one of the lowest in the EU) will apply to Bulgarian salaries, irrespective of their amount.
Countries with the highest tax burden
According to the study, Denmark is the country with the highest tax burden. The tax burden in the country of Hans Christian Andersen amounts to 56%. Hence, if an employer gets the average gross Danish salary of EUR 54,844, his/her net salary will be just EUR 24,072. Denmark is followed by another Scandinavian country (Sweden). Swedish employees take at home just 48% of their salaries. The remainder goes to their government. Belgium, Austria, the Netherlands, Spain, France, Germany, Portugal, and Canada are other countries that take serious portions of the salaries of their residents.