If you are planning to travel and work within the European Union, you might find this guide to taxation useful. Please note: this guide was prepared using information in the public domain, mostly from the Europa.eu website. Please contact a tax expert for advice.
Resident for Tax Purposes
Each member country within the European Union has its own national taxation system. The country where you have established your residence will apply taxation to your income, whichever country it comes from.
To be considered a tax resident you need to have lived in the same country for more than 6 months a year. If you stay for a period shorter than 6 months a year you will be taxed according to your home country system.
If you have dual residence the advice is to contact the tax authority of one or both of your countries of your nationality.
EU Countries with the Lowest Personal Income Tax
The EU countries with the lowest tax rates for income tax are:
- Bulgaria (10%),
- Czech Republic (15%),
- Hungary (15%),
- Lithuania (15%) and
- Romania (16%)
However, please remember that other taxes apply. In these countries, taxes on goods and services tend to be higher than the other EU member states.
Income Tax by EU Country
All these figures are correct in 2017 but they may be subject to change. Please refer to this link http://europa.eu/youreurope/citizens/work/taxes/income-taxes-abroad/index_en.htm for future updates.
As of 2016, the average personal income tax rate in the EU was 39%, while corporate income tax was 22.5% on average (source: Europa.eu). Tax structures tend to be quite different among member states. To note: those countries with lower income tax tend to have higher indirect tax (duties, VAT) or higher social contributions.
You will not get taxed on income lower than €11.000. Income between €11.000 and €18.000 will be taxed at 25%. There is a grading scale for higher income, with a 50% tax rate for income over €90.000 and below €1 million.
There is no tax-free personal allowance. Income up to €11.070 is taxed at 25%. Income between €11.070 and €38.830 is taxed at a rate between 30% and 45%, while all income over €38.830 is taxed at 50%.
Bulgaria has a very straightforward tax system, with a flat tax fee of 10%. A zero tax allowance can be applicable in some cases.
The tax rate starts at 12% and the top rate is 40%.
There’s a tax-free personal allowance for income up to €19.500, then a 20% rate for incomes between €19.501 and €28.000. The highest tax rate is 35% for incomes over €60.001.
The Czech Republic applies an annual flat rate of 15%.
Denmark applies a complex system of municipal and national taxes. Municipal tax rates vary according to the area and are on average approximately 24.9%. Income tax varies between 8% and 15% depending on level of income.
There is a flat rate of 20% on income.
Finland levies both national and municipal taxes. The tax rate starts at 6.25% for incomes between €16.900 and €25.300, with the highest rate of tax at 31.5% for incomes over €73.100. Municipal taxes range from 17% to 22.5%.
There’s a tax-free personal allowance for incomes below €9.710, after which you pay 14% up to €26.818 and up to 45% tax for incomes over €152.260.
There’s a tax-free personal allowance for incomes below €8.820, then the tax rate starts at 14% to a maximum of 45% for incomes over €256.304. Other taxes apply, for example an 8% church tax.
Tax rate starts at 22% for incomes up to €20.000 for a maximum of 45% over €40.000.
There’s a flat 15% tax rate on all income.
Ireland has two tax brackets: 20% (up to €33.800) and 40%.
Italy has a grading tax scale starting at 23% for incomes up to €15.000 for a maximum of 43% for incomes over €75.001. Regional and municipal taxes apply (approximately 3%).
There is a flat tax rate of 23%.
There’s a flat tax rate of 15%.
There’s a personal tax-free allowance for incomes below €11.265, then the tax rate starts at 8% with a gradual scale going up to 42% for incomes above €200.004.
The personal tax-free allowance in Malta is €9.100 after which the tax rate is 15%, with a gradual scale going up to 35% for incomes above €60.000.
Tax rate starts at 8.9% for incomes up to €19.982 to a maximum of 52% for incomes over €67.072.
There are two rates of tax at 18% and 32% depending on income.
There is an incremental tax starting at 14.5% for incomes below €7.091 to 48% for incomes over €80.640.
Romania has a flat tax rate of 16%.
There are two tax brackets at 19% for up to €35.022 and 25% for incomes above it.
Tax rate starts at 16% for incomes up to €8.021 going up to 50% for incomes over €70.907.
Tax rate starts at 19% for incomes up to €12.450 going up to 45% for incomes over €60.000.
There are two tax rates at 20% and 25% depending on income.