What are the lowest Tax Countries in Europe in 2021?

Updated on July 29, 2021

This article will speak about what are the lowest tax countries in Europe.

Whilst it isn’t tax advice and these tax rates can change, it gives a basic guide about some of the lower tax options in Europe.

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Nothing written on this article should be considered as formal tax, legal or financial advice and the facts might change in the future.

Some of the things written may therefore be out of date.

In this article, we won’t cover tax deductions and tax reliefs

The very lowest taxes in Europe 

Monaco has 0% income tax, although it does levy some other forms of tax.

Monaco has 0% tax on income

Besides Monaco, Bulgaria has the European Union’s lowest tax rate at 10%, which is levied as a flat tax.

Andorra, which like Monaco is a non-EU country, doesn’t tax the first 24,000 Euros and levies a tax rate of 10% above 40,000 Euros. 

Georgia doesn’t tax overseas income, so you can pay 0% tax if you buy a second residency in the country, and don’t have any locally sourced income.

The only other European countries that have golden visas which can compete with that are Cyprus, Portugal, some British overseas territory like Gibraltar, Malta and Montenegro.

Your exact tax rate, however, will depend on whether your income is locally sourced or international.

Most countries, like the UK and most European countries, do charge the same rate of tax regardless of where it has originated. 

Some of the countries mentioned above don’t charge tax on most forms of overseas income, at least for a certain number of years.

Some countries, like Portugal, aren’t low tax on locally-sourced income but they do have golden visa programs which can allow you to pay close to zero in taxes.

 So one of the most effective ways of lowering your taxes is to move to a territorial tax system which doesn’t charge tax on overseas income.

Some other mentions 

Unrated: Belgium, 13%-62.6%

Each country has some stereotypes that depict how good or bad it is. One thing that most people don’t know about Belgium, that Belgians do, is that Belgium is the country with the heaviest tax pressure in the world. 

It doesn’t matter how much money you are making, if you belong to the lowest class or the highest class, in Belgium you will be paying between 13% to 62.6%, and the gap between 13% and 62.6% is quite narrow. 

How much would you pay in Belgium on a €2,000.00 salary? 26,2%

On a €2,000.00 salary, you are expected to pay €525.00 of which: €206.00 in income tax, €58.00 of municipality tax and €261.00 in Social Security. 

If you are self-employed in Belgium with this salary you will be expecting to pay 41%. Salary after taxes: €1,108.00

How much would you pay in Belgium on a €10,000.00 salary? 53,4%

On a €10,000.00 salary, you are expected to pay €5,366.00 of which: €3,485.00 in income tax, €544.00 of municipality tax and €1,307.00 in Social Security.

If you are self-employed in Belgium with this salary you will be expecting to pay 62.7%. Salary after taxes: €3,730.00.

Spain, 0-48.00%

Spain recently has been attracting lots and lots of business owners, especially from Italy and Portugal given how close their culture and languages are. One thing worth noticing is that if Belgium is the worst country in the world, Portugal is the second with a maximum fiscal pressure of 61.5%.

By living in Spain, you won’t have to pay any taxes up to €1,000.00 a month. From €1,000.00 above, you will start paying 12% and it will increase progressively. But actually only the biggest companies in the country pay 45.00-48.00% 

How much would you pay in Spain on a €2,000.00 salary? 20,2%

On a €2,000.00 salary, you are expected to pay €404.00 of which: €277,00 of IRPF (income tax) and €127,00 in social security.

If you are self-employed in Spain with this salary you will be expecting to pay 38,6%. Salary after taxes: €1,228.00

How much would you pay in Spain on a €10,000 salary? 37,8%

On a €10,000 salary, you are expected to pay €3,782 of which: €3,544 in IRPF (income tax) and €238,00 in social security.

If you are self-employed in Spain with this salary you will be expecting to pay 44,6%. Salary after taxes: €5,540.00

Similarly to Belgium, Spain is a good country if you are an unskilled worker. If you live in Northern Spain or want to move there, €1,000.00 is quite an average salary, in the South, it could be lower. Pay attention that If you live in Northern Regions you will pay 2-3% less than in Southern Regions.

Austria, 0-51,1%

Austria is one of the most difficult countries in which you can obtain citizenship. You can claim it only after 30 years of residence. If you are a European citizen this won’t be the case. But most foreigners who live in Austria generally come from Slavic countries, countries who once belonged to the Austro-Hungarian Empire or Yugoslavia.

In Austria, you won’t pay anything if you earn less than €500.00 a month. You will be paying 15% on a €600.00 to €1,000.00 salary and from €1,001.00 above you will be paying progressively more. One big advantage to consider is that the Austrian income tax brackets are like a ladder you pay slightly more for each euro you make, there’s no sudden gap like in the German model (0-14-46%).

How much would you pay in Austria on a €2,000.00 salary? 21,1%

On a €2,000.00 salary, you are expected to pay €421.00 of which: €105.00 in income tax and €316,00 in social security.

If you are self-employed in Austria with this salary you will be expecting to pay 35,00%. Salary after taxes: €1,300.00

How much would you pay in Austria on a €10,000.00 salary? 39,3%

On a €10,000.00 salary, you are expected to pay €3,930.00 of which: €2,835.00 in income tax and €1,095,00.00 in social security.

If you are self-employed in Austria with this salary you will be expecting to pay 45,4%. Salary after taxes: €5.460.00

Meanwhile Spain is more generous with those earning less than €1,000.00, Austria could be a better choice if you make between €2,500.00 to €3,500.00 a month.

Greece 29,8-45%

Greece, the land of Ancient Western civilization, welcomes many immigrants coming from the Middle East, Turkey, Albania and Slavic countries. Greece in recent years has increased its taxes in order to be able to repay its debt.

Greece, differently from most European countries, binds a flat tax to a progressive income tax.

Up to €1,710.00 everyone pays 29,8%. If you earn over €1,710.00 you will be expected to pay progressively more money to the State. 

How much would you pay in Greece on a €2,000.00 salary? 30,5%

On a €2,000.00 salary, you are expected to pay €611,00 of which: €426,00 in income tax, €133,00 for your pension and €51,00 for your health insurance.

If you are self-employed in Greece with this salary you will be expecting to pay 44,50%. Salary after taxes: €1,110.00.

How much would you pay in Greece on a €10,000 salary? 42,8%

On a €10,000.00 salary, you are expected to pay €4,281.00 of which: €3,741 in income tax, €391,00 for your pension and €149,00 for your health insurance.

If you are self-employed in Greece with this salary you will be expecting to pay 54,30%. Salary after taxes: €4,570.00.

As you can see, whatever social class you belong to, it will be difficult to spare any money on your tax bill in Greece, except if you come from Belgium.

Norway 0-46,6%

Among all the Scandinavia countries, Norway is the cheapest when it comes to your tax bill. Norway is not part of the EU but belongs to the EEA. Every year thousands of skilled workers from Scandinavia and all around Europe choose this country because of its high standard of living. 

Norway is one of the least corrupt countries and it seems that every Norwegian Kr you spend in taxes will be managed greatly. From automatization to futuristic designs, getting an unskilled job in Norway such as a cashier is becoming increasingly difficult because of the tax burden. And the tax burden is leading to more cost-effective ‘’mechanical’’ strategies. 

How much would you pay in Norway on a €2,000.00 salary? 13.9%

On a €2,000.00 salary (21,000 Kr), you are expected to pay €278.00 of which: €103.00 in income tax, €164.00 in social security and €11.50 as a State tax.

If you are self-employed in Norway with this salary you will be expecting to pay 24,50%. Salary after taxes: €1,510.00. 

How much would you pay in Norway on a €10,000.00 salary? 35.7%

On a €10,000.00 salary (105.000 Kr), you are expected to pay €3,565.00 of which: €1,921.00 in income tax, €820.00 in social security and €824.00 as a State tax.

If you are self-employed in Norway with this salary you will be expecting to pay 43,60%. Salary after taxes: €5,640.00. 

Norway could be a good choice if you earn between €2,000 to €6,000 especially if you are a Digital Nomad or freelancer. But beware of the high cost of living. Your income may be insufficient, especially in the biggest cities like Oslo. You won’t pay any tax on your first €380 (4000 NOK).

The UK 0-57%

The UK is surprisingly a high-tax country because national insurance is just another form of tax.

So about 50,000 Pounds, the effective rate is 52% (40% tax and 12% national insurance) and 57% above 150,000 Pounds.

The UK tax system, similarly to the German model and quite distant from the Italian and French ones, focuses mainly on developing a richer middle class and lowering the poverty rate. 

Moreover, if you are an entrepreneur or self-employed, employment taxes are generally quite low compared to other countries fostering startups and business activities.

You won’t pay any taxes up to £700.00 and taxes from £700.00 to £1,000.00 are barely existing.

The UK is actually a high tax society

How much would you pay in the UK on a €2,000.00 salary? 15,5%

On a €2,000.00 salary (1,783.00 GBP), you are expected to pay £276.00, £148.00 in income tax and £127.00 in National Insurance.

If you are self-employed in the UK with this salary you will be expecting to pay 25,7%. Salary after taxes: €1,486.00. 

How much would you pay in the UK on a €10,000.00 salary? 34,0%

On a €10,000.00 salary (8,915.00 GBP), you are expected to pay £3,033.00, £2,524.00 in income tax and £509.00 in National Insurance.

If you are self-employed in the UK with this salary you will be expecting to pay 42,0%. Salary after taxes: €5,800.00.

Romania the 40-41.8% flat tax

Since Romanian joined the EU the GDP of this country has been growing at a steady pace. It doesn’t matter if you earn €500 or €50.000 in a month, In Romania, you will always pay a flat tax. 

Generally the income of an employee is taxed on the basis of a 10% flat tax and then added health insurance, social security and state taxes in a single giant tax.

Differently to most countries in Europe, the employment taxes are barely existent. Therefore if you were to open a company in Romania the labour force would be extremely cheap. That is why so many Western companies are opening factories in this country. Capitalism at its finest.

How much would you pay in Romania on a €2,000.00 salary? 41,5%

On a €2,000.00 salary (9,677.00 RON), you are expected to pay €830.00 in taxes (employee taxes)

If you are self-employed in Romania with this salary you will be expecting to pay 42,8%. Salary after taxes: €1,144.00. 

How much would you pay in Romania on a €10,000.00 salary? 41,5%

On a €10,000.00 salary (48,385 RON), you are expected to pay €4.150.00 in taxes (employee taxes)

If you are self-employed in Romania with this salary you will be expecting to pay 42,8%. Salary after taxes: €5,850.00.

Switzerland 6,2%-27,5% (in Zug), 6.2%-45,8% (in Bern)

Switzerland is one of the most unique places on Earth regarding fiscal policies. It has been famous throughout modern history to be, along with Luxembourg, a hotspot where some of the richest people hide their money. 

Switzerland is divided into cantons and each canton has a different tax system. Though you will have to pay a 6.2% of minimum tax wherever you live, the maximum tax you pay will depend on your city of residence.

Moreover, the Swiss tax system is progressive but the tax brackets are so distant one from another that the percentage barely moves of 0.01% every hundreds of CHF the richer you are. 

On 1.000.000 CHF (€920.000) you would end up paying 27.4% in Zug (cheapest canton) or 45.8% in Bern (most expensive canton). If you want to end up paying your taxes in Switzerland, choose wisely where you want to live.

Beware that similarly to Norway, the cost of living in Switzerland is several times higher than in most countries in Europe and Switzerland accepts mostly skilled workers.

How much would you pay in the Zug Canton in Switzerland on a €2,000.00 salary? 8,1%

On a €2,000.00 salary (2,173 CHF), you are expected to pay €161.00

  • 3.79 CHF in federal tax
  • 19.84 CHF in cantonal tax
  • 14.01 CHF in local tax
  • 2.17 CHF church tax (optional)
  • 111.34 CHF in NBU contributions
  • 23.90 CHF AHV, IV, EO contributions  

If you are self-employed in the Zug Canton in Switzerland with this salary you will be expecting to pay 13,4%. Salary after taxes: €1,732.00. 

How much would you pay in the Zug Canton in Switzerland on a €10,000.00 salary? 18,4%

On a €10,000 salary (10,865 CHF), you are expected to pay €1,840.00

  • 349 CHF in federal tax
  • 536 CHF in cantonal tax
  • 379 CHF in local tax
  • 59 CHF church tax (optional)
  • 557 CHF in NBU contributions
  • 120 CHF AHV, IV, EO contributions  

If you are self-employed in the Zug Canton in Switzerland with this salary you will be expecting to pay 23,2%. Salary after taxes: €7,680.00. 

For further analysis, here’s how much you would pay in Zug for:

€15.000 monthly salary -> 21,3%

€20.000 monthly salary -> 23,6%

€25.000 monthly salary -> 24,8%

€40.000 monthly salary -> 26,5%

€50.000 monthly salary -> 27,1%

€65.000 monthly salary -> 27.4% (maximum)

Switzerland can be a low-tax country

Poland 13,7%-38,4% (more likely 35.2%)

Poland, like Romania, is developing at a rapid pace. Poland is sometimes referred to as the ‘’Germany of Eastern Europe’’. It has one of the most productive and hard-working people on the continent. Numerous are the factories that German investors built in Poland, especially in vehicle manufacturing.

Cost of living considered, €2,000.00 is a lot of money in Poland and you can expect to be heavily taxed. But if you are a businessman, it is cheap if you consider the labour costs, employment and relative taxes. 

How much would you pay in Poland on a €2,000.00 salary? 34,2%

On a €2,000.00 salary (8,872 PLN), you are expected to pay €684.00 in taxes, €315.00 in income tax, €225,00 in pension insurance and €49.00 in health care insurance.

If you are self-employed in Poland with this salary you will be expecting to pay 45,4%. Salary after taxes: €1,092.00. 

How much would you pay in Poland on a €10,000.00 salary? 35,2%

On a €10,000.00 salary (44,361 PLN), you are expected to pay €3,522.00 in taxes, €2,975.00 in income tax, €302,00 in pension insurance and €245.00 in health care insurance.

If you are self-employed in Poland with this salary you will be expecting to pay 40.3%. Salary after taxes: €5,970.00. 

Germany 0-46%

The German tax system is one of the friendliest to entrepreneurs in all Europe. If you’re trying to start a business and you make less than €9.200 in the process you won’t pay anything. If you make less than €55.000,00 in a year you will pay just 14%. Over €55.000,00 you will pay 42-46%. 

The biggest advantage is if you’re married. In fact, your income will be joint together and at the end of the fiscal year, you will pay taxes according to this tax bracket: 0% up to €18.400, 14% if you make less than €110.000 in a year and 42-46% over €110.000. 

The amount you pay to the State depends a lot also on your personal status, each individual is categorized into 1 out of 6 different types of tax-class (Steuerclass).

High-income earners also pay the Solidaritätszuschlag (a tax that promotes the unification of Germany, like the development of ex-soviet territories).

How much would you pay in Germany on a €2,000.00 salary? 10.5%

On a €2,000.00 salary, you are expected to pay €210.00 in income tax.

If you are self-employed in Germany with this salary you will be expecting to pay 25,1%. Salary after taxes: €1,498.00. 

How much would you pay in Germany on a €10,000.00 salary? 35,2%

On a €2,000.00 salary, you are expected to pay €3,516.00, €3,071.00 in income tax, €170.00 in Solidaritätszuschlag and €276.00 in other taxes.

If you are self-employed in Germany with this salary you will be expecting to pay 41,6%. Salary after taxes: €5,840.00. 

Hungary, the 33,5% flat tax country

The countries we’re now analysing all adopt flat taxes. It is quite common among East European countries to have it, especially to attract big investors. Some may say that it is in correlation with corrupt politicians who support, in exchange for money, the rich oligarchs.

Hungary applies a 33,5% flat tax whatever your income is and 41,8% if you are self-employed.

How much would you pay in Hungary on a €10,000.00 salary? 33,5%

On a €10,000.00 salary, you are expected to pay €3.350.00 income tax + social security

If you are self-employed in Hungary with this salary you will be expecting to pay 41,8%. Salary after taxes: €5.820,00. 

Czech Republic, 15-22%

Among Eastern European countries, the Czech Republic is the one that attracts the most investors from all over Europe. It is surprising to see the uptick in demand of Czech translators, interpreters and mediators for business purposes. What drives them? Business freedom.

In the Czech Republic, there are two flat taxes, a 15% flat tax for the people who earn less than €75.00 a month and a 22% flat tax from €75.00 above.

How much would you pay in the Czech Republic on a €10,000.00 salary? 22%

On a €10,000.00 salary, you are expected to pay €2.200,00 income tax + social security

If you are self-employed in the Czech Republic with this salary you will be expecting to pay 44,8%. Salary after taxes: €5.520,00. 

Ukraine, 19,5% flat tax

Ukraine is undoubtedly the cheapest country in Europe if we do not consider Russia. It has been attracting thousands of entrepreneurs and businessmen who funded important tech companies. Unfortunately, given the current situation with Russia and the persistent corruption in the country, the economy is not expanding.

The economy barely registers any income by Western standards and GDP-wise appears to be as developed as Nigeria. That is actually far from being true and the real reason could be that everyone is currently using off-the-books cash.

How much would you pay in Ukraine on a €10,000.00 salary? 19.5%

On a €10,000.00 salary, you are expected to pay €1.950,00 income tax + social security

If you are self-employed in Ukraine with this salary you will be expecting to pay 34,0%. Salary after taxes: €6.600,00. 

Russia, 13% flat tax

There could be multiple political reasons why taxes are so low in Russia. Probably it has to do with Putin trying to convince the oligarchs to cooperate with him in the development of the Russian Economy.

In the following years after the collapse of the Soviet Union, less than a few hundred people owned most of the Russian Economy. Still today, the Top 20 wealthiest Russian billionaires have a combined GDP similar to that of Portugal (10 million people) or 5 times the Democratic Republic of Congo (420 million people).

As strange as this seems, the 13% flat tax didn’t work either as it is estimated that more than 4 Trillion USD could be hidden elsewhere in tax havens.

How much would you pay in Russia on a €10,000.00 salary? 13%

On a €10,000.00 salary, you are expected to pay €1.300,00 income tax + social security

If you are self-employed in Russia with this salary you will be expecting to pay 37,0%. Salary after taxes: €6.300,00. 

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