5 Countries with the Highest Income Tax Rates-Read before you Migrate

Highest personal income tax around the world


If you can’t stop complaining about how much deductions you get for every paycheck, you might want to start counting your blessings. There are many countries around the world that have outrageous taxes so before you decide to migrate, make sure you get your facts straight. Unlike VAT, estate tax or donor's tax, income tax is paid depending on your income alone, in the Philippines that is. In other countries, income tax has a whole new story depending on income level, marital status and even the number of dependents. Two people with the same income but different status pay different taxes. Do you want to know top countries with the highest income tax rate around the world?



Here are the top countries with the highest average personal income taxes for a single person with no dependents around the world. Let’s start our top 1 country with the highest income tax rate around the world.

Austria.

Austria

The progressive tax rate in Austria caps at 55% and includes income from fringe benefits and employment. White-collar employees also contribute 18.07% of their income to social security while blue-collar employees contribute 18.2%. Austria also offers automatic tax credits depending on the number of individuals in the household and additional credits for children and travel to work. Some expenses related to work and child care are also deductible.




Austria imposes taxes on different sources of income like wages, pensions, dividends, and interest. A resident person is subject to personal income tax including their other incomes outside Austria. These incomes include profession, employment, investments, and income from trade or business.

Denmark.

Denmark
An average Denmark citizen pays 45%. This is divided into labor market contribution tax (8%), municipal tax (27.8%), healthcare tax (5%) and capital gains tax (27 or 42%). There is also a withholding tax of 27% on dividends and 25% on royalties. Income from sources like interest, real estate rental, annuities, fees, pensions, business income, fringe benefits, bonuses, and employment income are all taxable. Tax deductions are only available for limited contributions to approved Danish pensions, charitable donations, and double households.

Any individual fully tax resident in Denmark will be subject to tax according to the ordinary tax scheme by up to 52.06% in 2020. However, any individual with not subject to a full tax is subject also up to 52.06% on income from sources within the country.

Belgium.

Belgium
Like many countries in Europe, Belgium has what is called ‘progressive tax’ which means those who earn more pay more tax than those who earn less. Whether your income is from property, investments or other sources- all of it is taxable! The capital gains tax rate depends on the type of capital. On top of that, employees also pay social security tax that amounts to 13.7% of their income. The only deductions allowed being for business expenses, social contributions and only 80% of alimony payment.


Germany.

Germany
This is another country that imposes the progressive tax. Sources of taxable income include business ownership, savings investments, rental property, capital gains, and forestry. There is also a 25% withholding tax on interest and dividends and a 15% withholding tax on royalties. Church members who pay church tax are also tax-deductible. If your income is up to 8,652 Euros, it is not taxable and considered an allowance. Those who want to pursue a future profession can also claim u to 6,000 Euros deduction per year.


Hungary.

HungaryHungary implements a fixed tax rate, not a progressive one and that rate is 16%. Although this may sound like a low-income tax rate, the catch is it applies to all sources of income. Even passive income from sources like property rentals and interest is also taxable at the 16% rate. The only tax deductions Hungary offers is for business travel expense, professional training, and child-rearing. Each spouse is considered a separate taxpayer.

As for married couples with kids, the top countries are Denmark, Turkey, Finland, Netherlands and Norway that have a tax range of 23 to 25.3%. So where should you go if you want the lowest tax rates possible? Well, the United States is the 21st highest tax rate for married couples at 13.7%. The countries with the lowest average income tax rates for married couples with two children are Ireland (-0.3%), the Czech Republic (1.7%) and Switzerland (4.2%).



Final Thoughts

Under the new Train Law, individuals with an income below 250,000 pesos a year are exempted from paying income tax. On average, individuals pay a rate of 20% to 32% depending on the income bracket. If you think of it, this is far from the rates other countries are paying. Also, keep in mind that each country offers different levels of benefits to its citizens which has a great impact on the tax imposed. So just because a country seems to have an extremely high or low tax rate doesn’t mean you won’t be able to survive living there. Overall, taxation is not a reasonable benchmark for determining how you would fare in that country.

“If you know other country with the highest income tax rate not on the list above, let us know by the comments below”

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