Gross to net salary of a local executive and total cost to employer comparison for selected countries

Transcription

1 Gross to net salary of a local executive and total cost to employer comparison for selected countries Married, two dependant children All the numbers are in EURO Country Gross Salary Employee Income Net To Net % To Marginal Employer Total Gross Cost Top Marginal Total Net Cost Social Tax Employee Employee Income Tax Rate Social To Employer Corporate To Employer Security (B) After Social (on next Euro Security (Salary + SS) Income Tax (After Corp. Tax (A) And Income of Income) (A) Bracket Benefit if Profitable) Tax (C) Percentage Column : EUROPE Austria (1) 200,000 9,075 73, , % 50% 29, ,953 25% 172,465 Belgium (2) 200,000 26,009 81,943 92, % 53.50% 65, , % 175,173 Cyprus 200,000 2,610 52, , % 30% 2, ,610 10% 182,349 Czech Republic 200,000 25,000 51, , % 32% 70, ,000 24% 205,200 Denmark (3) 200,000 16,000 91,562 92, % 59% ,672 28% 144,484 Estonia 200,000 6,000 46, , % 23% 67, ,000 22% 208,260 Finland (4) 200,000 13,038 87,500 99, % 50% 47, ,200 26% 182,928 France (5) 200,000 37,635 34, , % 51.00% 87, , % 188,536 Georgia (6) 200, , , % 12.00% 40, ,000 20% 192,000 Germany (7) 200,000 11,475 64, , % 45.0% 11, ,475 26% 155,646 Germany and Berlin (7) 200,000 11,475 64, , % 45.0% 11, ,475 40% 126,039 Greece (8) 200,000 10,514 68, , % 40% 18, ,438 29% 155,091 Hungary (9) 200,000 12,108 74, , % 38% 64, ,000 16% 221,760 Ireland (10) 200,000 5,701 70, , % 42% 21, , % 193,813 Italy (11) 200,000 21,439 72, , % 45% 69, ,194 37% 168,919 Latvia (12) 200,000 2,573 49, , % 25% 6, ,887 15% 175,854 Lithuania 200,000 6,000 65, , % 33% 62, ,000 18% 214,840 Luxembourg 200,000 11,461 55, , % 38.95% 10, , % 147,956 Malta 200, , , % 35% ,295 35% 130,192 Netherlands (13) 200,000 6,532 86, , % 52% 3, , % 147,469 Norway 200,000 15,600 73, , % 43.5% 38, ,913 28% 172,017 Poland (14) 200,000 24,251 55, , % 50% 15, ,944 19% 174,915 Portugal (15) 200,000 22,000 59, , % 42% 47, , % 179,438 Romania (16) 200,000 15,120 29, , % 16% 21, ,778 16% 186,294 Russia 200, , ,000 87% 13% 3, ,059 24% 154,325 Slovakia (17) 200,000 1,736 36, , % 19% 6, ,190 19% 167,014 Slovenia (18) 200,000 44,200 68,897 86, % 50% 61, ,800 25% 196,350 Spain (19) 200,000 2,144 76, , % 45% 10, ,331 35% 136,715 Sweden (20) 200,000 2, ,345 94, % 57.0% 64, ,920 28% 190,742 Switzerland (Geneva) (21) 200,000 23,077 49, , % 44.3% 29, ,729 32% 156,216 Switzerland (Zurich) (22) 200,000 26,789 40, , % 37.45% 26, ,789 33% 151,949 Turkey (23) 200,000 3,374 64, , % 36.8% 43, ,000 30% 170,100 Ukraine (24) 200, , , % 13% 2, ,598 25% 151,949 United Kingdom (25) 200,000 5,857 68, , % 40% 24, ,716 30% 157,301

2 Gross to net salary of a local executive and total cost to employer comparison for selected countries Married, two dependant children All the numbers are in EURO Country Gross Salary Employee Income Net To Net % To Marginal Employer Total Gross Cost Top Marginal Total Net Cost Social Tax Employee Employee Income Tax Rate Social To Employer Corporate To Employer Security (B) After Social (on next Euro Security (Salary + SS) Income Tax (After Corp. Tax (A) And Income of Income) (A) Bracket Benefit if Profitable) Tax (C) Percentage Column : AMERICA Argentina 200,000 2,344 65, , % 35% 17, ,103 35% 141,117 Brazil (26) 200,000 1,049 52, , % 27.5% 74, ,600 34% 181,236 Canada (Ontario) (27) 200,000 1,608 81, , % 46.41% 1, , % 128,907 Mexico (28) 200, , , % 28% 4, ,983 28% 147,588 USA 200,000 7,030 47, , % 25% 7, ,030 35% 134,570 USA and Reform 200,000 7,030 25, , % 25% 7, ,030 25% 155,273 USA and Illinois 200,000 7,030 52, , % 30% 7, ,030 38% 128,359 USA and New York 200,000 7,030 68, , % 39% 7, ,030 46% 111,796 USA and Texas 200,000 7,030 47, , % 25% 7, ,030 38% 128,359 ASIA/MIDDLE EAST/AFRICA Australia (29) 200,000 3,000 85, , % 47.0% 6, ,922 30% 144,845 China (30) 200,000 1,096 72, , % 45% 2, ,648 33% 135,774 Hong Kong 200, , , % 16% 0 200, % 165,000 India (31) 200, , , % 34% 0 200, % 116,000 Indonesia (32) 200,000 4,000 65, , % 35% 8, ,480 30% 145,936 Israel (33) 200,000 7,144 85, , % 49% 4, ,327 29% 145,072 Japan (34) 200,000 8,644 56, , % 50% 9, , % 121,420 Malaysia (35) 200,000 22,000 51, , % 28% 24, ,000 28% 161,280 Singapore (36) 200,000 5,597 29, , % 20% 3, ,638 20% 162,910 South Africa (37) 200, , , % 40% ,137 29% 142,097 South Korea 200,000 6,417 59, , % 39.0% 8, , % 146,306 Taiwan 200,000 2,239 59, , % 40% 2, ,346 25% 151,760 Thailand (38) 200, , , % 37% ,178 30% 140,125 UAE (39) 200,000 10, , % 0% 25, ,000 0% 225,000 (A) Before application to expatriates of Totalization Agreements and EU Directives on social security. (B) Before application of special expatriate tax rulings, e.g. HQ ruling in France, treaty provisionsand special statutory rules. (C) This marginal income tax rate is applied to the next amount of additional income received. (1) Austria - In column 8, Employer Social Security includes Social Security, employer part and other payroll taxes to be paid by the employer. The tax calculations are based on the assumption that the annual salary is paid out in 14 installments (as usual in Austria) in order to achieve the most favorable tax rate.

3 (2) Belgium - An average of 7% communal tax has been applied for the calculations. For the employer social security in column 8, an estimate of 35% has been applied. The calculations were based on the assumption of a non working spouse and the children being older than 3. In column 4, the special social security contributions have been included in the calculation. In column 10, the calculation includes an estimates of 3% crisis tax (3) Denmark - Proposal is likely to reduce the corporate tax rate at 28% if the proposal is passed through the parliament. (4) Finland - In column 3, pension insurance payment of 4,6% is applied. A higher rate of 5,8% is applied to employees over years old. In column 4, the National Income Tax and Municipal Tax are included. Church Tax is excluded. Municipal Tax ranges from 16% to 21%.. In this calculation, the percentage of Helsinki (17,5%) is applied (5) France - In column 3 and 7, the flat tax CSG / CRDS of 8% of which 5,1% is deductible is included. Above 100,000 the 11% rate applicable to passive income is used, DLF has opined this is an income tax. In column 3 and 8, 2006 French standard social security contributions rates and brackets and 2006 supplementary social contributions rates. Assuming the employee is not a legal director or member of the board In column 4, 2006 French income tax rates and schedules. Assuming no other personal income is taken into account. Column 10 does not consider local taxes such as professional tax (6) Georgia - Income tax rate is flat and comprises 12%. Corporate income tax is payable at the rate 20% of taxable income by entreprises carying out economic activities in Georgia. Georgian tax legislation does not provide special payroll taxation regime for single persons and married with two children ones. (7) Germany - In column 3 - Social Security calculations including additional employee rate for nursing care is employee is etween 23 and 65 of age with no children (where applicable) In column 4 - The individual Income Tax includes solidarity surcharge; excludin church tax. In column 7 - The marginal tax rates are with the solidarity surcharge of 5,5% of the income tax. Marginal rates shown are new rates originally for 2004 and now for New top rate for 2007 is 45%. In column 9 - The solidarity surcharge of 5,5% of the corporate tax included. In column 10 - This is the original corporate rate after the failure of the Schroder reform 19% corporate tax rate. The Corporate Income Tax excludes the local trade tax which is, for example, an additional 14% in Berlin. (8) Greece - for employees insured prior to January 1, (9) Hungary - In column 3, if the individual is a Hungarian national and is employed by a Hungarian entity, 8.5% pension contribution (capped at a salary-level of HUF 5,307,000 p.a.) and 4% health contribution are payable on the gross income. (Furthermore the Hungarian entity has to pay 1% contribution the the so called Unemployment Solidarity Fund.) In column 7, the Hungarian tax rates are progressive up to 38%. In column 8, if the individual is a Hungarian national and is employed by a Hungarian entity, the employer has to pay 29% social security contribution on the gross income and HUF 3450 per month/person Health Fund contribution. (Furthermore the company is obliged to pay 1.5% Training Fund contribution.) (10) Ireland - In column 3 and 8, Calculations in respect of the married individual assume that his/her spouse will not have any taxable income during In column 4 - The standard rate of corporation tax for a trading company is 12,5% for The top rate of corporation tax for 2005 is 25%. This rate applies to passive non-trading income. The rate of corporation tax payable by a company depends on whether the income earned by the copny is trading or non-trading. (11) Italy - In column 3, It is assumed that the local executive works in an Italian commercial company where the National agreement of "Dirigenti" (executive) of trading company is applied. In column 4, befor application of treaty provisions. For local tax purpose, it assumes that the individual lives in Milan. In column 10, is included 33% for ordinary corporate tax and 4.25% for regional corporate tax ("IRAP") (12) Latvia - Th emaximum annual income subject to social security contributions is LVL 19,900, however, this is likely to be increased to LVL 22,700. (13) Netherlands - The partner's tax credit has been taken into account even though this credit can only be claimed by the partner.

4 (14) Poland - there is no tax benefits due to the number of children. We assumed that the executive has non-earning spouse. In order to benefit from the preferential taxation in joint tax return, the executive has to be married the entire tax year and there should be joint marital property regime between them In column 3, the employee social security contributions include the healthcare contribution, which is not technically the part of social security, but it is levied on the employee's remuneration and constitutes the additional burden. The marginal tax bracket percentage is 40% for the income exceeding the amount of per annum, 50%, top rate deemed unconstitutional for 2005, but applicable for (15) Portugal - In column 8, Assuming that they are Board members. Otherwise the social tax applicable would be 10% for the employee and 21.25% for the employer and a cap is also available. Inc olumn 10, the corporate income tax includes a 10% muniocipal surcharge (25%+2.5%) (16) Romania - no personal deductions are deducted for monthly gross incomes over ROL 30,000,000 (equivalent for approx. EUR 824) The figures are rather estimatives, due to specific requirements regarding the computation of certain social security contributions (e.g. number of employees, risk of the activity etc.) (17) Slovakia - In column 3, the amount of contributions is valid until 30 june 2005, the assessment base will change on the basis of the average wage in Slovakia in In column 4, should the spousal deduction and child bonus be applicable. (18) Slovenia - In column 8, Employer Social Security includes the employer's tax on salaries paid. (if the monthly salary is in excess of SIT 750,000 employer's tax on salaries = 14,8%. Employer's social security contribution = 16,1%) (19) Spain - It is assumed that children are between 3 and 25 years old. (20) Sweden - The employee's pension fee is 7% of the salary and benefits, capped at SEK 349, % of the paid pension fee is deductible against income and 87.5% is creditable against income tax The pension fee is included in the preliminary tax withheld. Employer social security contributions are 32.46% of the salary and benefits. No cap apply. Corporate Income tax is a flat rate tax of 28%, however, due to the possibility to make tax allocations reserves the effective tax rate can be lower. In column 7, the income tax rate includes the average Municipal Tax rate for Stockholm, Sweden (31%). The rate varies depending on where the individual is resident and range between 29% and 36%, including church tax, which you pay if your are a member of the Swedish church ( %) The Swedish Income tax legislation does not vary depending on your civil status, except for Net Wealth Tax purposes where a married couple with common net wealth exceeding SEK 3 million is subject to the tax while the limit for non married individuals is SEK 1.5 millon (including dependent children). For foreigners the Net Wealth Tax is only due if they stay in Sweden for a period exceeding 3 years. (note that if the intention is to stay in Sweden for more than 3 years, Net Wealth Tax is due from year 1) (21) Switzerland (Geneva) - In column 4, the Tax rates of the Canton and City of Geneva have been used. (22) Switzerland (Zurich) - In column 10, Corporate Income Tax rate is progressive, highest rate is used. Taxes are without Church Tax. (23) Turkey - In column 4, stamp duty has been included. (24) Ukraine - All calculations reflects amounts per year In column 3 and 8, the maximum amount subject to social security contributions is capped at UAH 4,100 per employee per month. In column 8, the amounts are calculated based on the minimum total percentage of the employer social security contributions (37%) as it includes, in particular, contributions to the social security fund against accidents at work that depends on the class of professional hazard established by the fund for each employer. The maximum total percentage is equal to 50.6% and relates to e.g. mining industry. (25) United Kingdom - The calculations are based on the UK tax rates for the year ending 5 april 2005 (i.e. those at 1 March 2005) Social security rates are based on a "not contracted out" basis for State pension purposes. Contracted out rates result in slight reduction in social secutity cost up to 31,720. If an employer pension scheme is contracted out the total employee social security will reduced by 432. The total employer social security figur will be reduced by 944 to 270 dependin (26) Brazil - The deductible amount per dependent is R$ 117,00/month per individual. The Social Security Contribution ceiling for the employee is R$ 275,96/month. In column 8, for the purpose of this calculation some labor costs such as vacation, 1/3 additional salary for vacation, prior notice indemnity, etc. were not considered. This calculation included the Employer Social Security (28,8%) plus the FGTS or Government Severance Indemnity Fund for employees (8,5%). In column 10, Corporate Income Tax (25%) plus Social Contribution Tax (9%). (27) Canada (Ontario) - Calculations are based on the 2005 Federal and Provincial rates applicable in the Ontario Province. In columns 3 and 8, Employment Insurance payments are included. Column 4 does not include the Ontario Health Care Premium.

5 (28) Mexico - Some States impose a 1% or 2% payroll tax which should be paid by the employer to the local authorities. In Mexico City, companies pay a 2% payroll tax. (29) Australia - The amount in column 3 is based on the assumption that the taxpayer is not liable to an additional medicare levy surcharge of 1,5% on taxable income on the basis that the single taxpayer (or the married taxpayer and family) is covered by private patient hospital insurance cover. We have claimed spouse rebate of A$1,535 on the assumption the taxpayer maintains his/her spouse, the spouse's separate net income is less than A$6,421, the spouse is a tax resident of Australia and he/she is not entitled to claim family tax benefit Part B (with children under age of 5) For social security calculation, we have assumed the compulsory superannuation contribution obligation is satisfied by the employer in order to ensure the executive is still paid the gross amount of salary. Compulsory superannuation contribution in Australia is 9% of base salary (capped at maximum earning base of A$122,240) (30) China - Local PRC national employee hypothesis (Social Security is only applicable to local PRC national employees). In column 4, income tax is calculated based on taxable income net of employee Social Security. In columns 3 and 8, the current Social Security Contributions rates applicable to the City of Shanghaï was used. (31) India - The Indian tax year runs from April 1 to March 31. The calculations have, therefore been based on income earned during the year April 1, 2003 to March 31, The tax rates for the year include a surcharge of 10% for incomes over and above Rs.8,50,000 and education Cess of 2% on total tax and surcharge. An employee is eligible for a standard deduction from salary of Rs.30,000 or 40% (whichever is less) if income from salary is less than Rs.500,000 and Rs.20,000 (whichever is less) if income from salary is more than Rs.500,000. India has no system of social taxes. Instead for employees whose base salary is less than Rs per month, there is a mandatory participation in Employee ProvidentFund (EPF). Employee & Employer 12% of base salary respectively. As in the given case, Salary is higher than Rs per month there are no applicable mandatory PF contributions In Column 10, the maximum marginal tax rate for the Indian domestic company has been mentioned, i.e., 35% + 2.5% surcharge + 2% education Cess. However, foreign companies in India are taxed at 41.82% (40%+2.5% surcharge + 2% education Cess). (32) Indonesia - In column 3, employee social security is 2% of the gross salary. This represents payment of pension funds (old-age insurance) incurred by the emplyee and is deducted from the employee's salary. In column 8, employer socal security is 4.24% of the gross salary contributed by the employer. Included in the percentage is 0.54% insurance premium, which is included as the employee's gross income in calculation. The 0.54% insurance premium is the lowest rate for companies of services industry. The rate varies according to the type of industry the employer engages in. (33) Israel - Male local executive hypothesis. Income Tax rates are lower for women. (34) Japan - As an assumption for the calculation, the taxpayer's age is less than 40 years old (35) Malaysia - It is assumed that in the case of a married couple with children, those children are under 18 years of age and the spouse has no personal income in Malaysia. (36) Singapore - Local Singaporean national employee hypothesis (Social Security - CPF - is only applicable to Singaporean and Singapore Permanent Resident employees). (37) South Africa - where expat is not required to return home at the end of the contract period, unemployment insurance fund contributions of 1% of Gross Salary up to R106032pa is withheld from employee and an equal amount is contributed by the employer. (38) Thailand - It is assumed that in the case of a married couple with children, the spouse is non-working and the two children are attending school in Thailand. (39) UAE - The social security is calculated on the Gross Salary of the employee. While calculating social security it does not matter whether or not the employee is married or single since the calculation is based as follows: 12.5% of employees gross salary is contributed by the employer, 5% of the employees gross salary is contributed by the employee and 2.5% of the employees gross salary is contributed by federal government. The social security only applies to UAE nationals and not expartriates. There is no individual or corporate income tax in the UAE