For the second year, we present this report with a high level comparison of employee taxes in various European countries. In most countries, social security taxes and income taxes are levied separately. Income tax is typically calculated through progressive income tax rates. Social security tax rates are generally fixed and in various countries only calculated up to a certain income. Income tax is typically owed by the employee only, whereas social security tax is most often a cost to both the employee and employer.
All these elements have an impact on the employee’s net income as well as the costs to the employer. For these calculations we have relied on our KPMG LINK Cost Projector technology. All calculations are prepared on the basis of default settings for a married resident employee with two dependent children, working 100% in the country of residence and subject to the country of residence’s social security system. For each country we looked at two scenarios, the first scenario is based on a gross salary of € 100,000, whereas the second scenario assumed a gross salary of € 200,000. No additional income, deductions or expat tax concessions are considered.
The difference between the highest net income (Switzerland – Zürich) and lowest net income (Greece) is € 32,410 for a gross salary of € 100,000. For a gross salary of € 200,000 the gap is also largest between Switzerland (Zürich) and Greece, a difference of € 58,117.
Employer’s costs in these calculations are the sum of gross salary and employer’s social security contributions. Several countries have a cap on the income subject to social security. Most notably, Denmark has a low cap on social security contributions, making Denmark stand out in the comparison of social security. France has high social security rates and no cap. This explains why, for the employer, in both scenarios, Denmark has the lowest cost and France the highest cost. The difference is quite significant, € 45,792 in the first scenario and € 90,998 in the second scenario.
While these calculations do not consider the cost of living and potential social security benefits, these numbers offer an interesting perspective on employees’ net income and employers’ costs. On the left, all countries included in this report are listed as direct links to the respective pages. At the end there is a summary chart for each of the scenarios.
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Partner, Global Mobility and People Services
KPMG in Luxembourg