A new analysis of European income tax rates reveals stark contrasts across the continent, with Nordic nations and Belgium imposing the heaviest tax burdens on workers, while several Eastern and Southern European countries offer lower rates. The study, conducted by Euronews Business using Eurostat data, examines how much of their gross salaries European workers actually pay in taxes under various scenarios.
Taxation for Single Workers Without Children
In 2023, the average annual gross earnings for a single worker without children in the European Union (EU) stood at €41,004. Of this amount, €7,075 was deducted for income taxes, representing 17.3% of gross earnings. However, this percentage varies widely across Europe.
Denmark records the highest tax rate for this demographic, with 36% of gross earnings deducted. A Danish worker earning €65,506 paid €23,757 in income taxes. In contrast, Cyprus has the lowest tax rate at just 3.2%, where an average earner making €26,689 paid only €853 in income taxes. Other countries with high tax rates include Iceland and Belgium (above 25%), while Poland (5.7%), Romania (7%), Bulgaria (8.6%), and Czechia (9%) recorded some of the lowest rates.
Among Europe’s largest economies, Italy (22.1%) had the highest tax burden for single earners, exceeding the EU average, followed by Germany (17%), France (16.2%), and Spain (15.6%).
Switzerland: A Unique Case of Low Taxation
Switzerland, despite having the highest average annual gross earnings at €105,105, maintains a relatively low tax rate of 12.2% (€12,796 in income taxes). Tax Foundation analyst Alex Mengden attributes this to intense local tax competition among cantons and municipalities, allowing individuals and businesses to benefit from more favorable tax structures.
Tax Rates for Two-Earner Couples Without Children
For a two-earner couple without children, the average gross annual earnings in the EU were €81,732 in 2023, with €14,000 paid in income taxes. This represents 17.1% of total earnings, a figure closely mirroring that of single earners. Again, Denmark topped the list with a 35.5% tax rate, while Cyprus remained the lowest at 3.3%.
Impact of Children on Taxation: One-Earner Households
Having dependent children significantly lowers tax rates in many countries. A one-earner couple with two children in the EU had an average annual gross income of €41,043, paying just €3,311 in taxes (8.1%). In Slovakia, this demographic saw a negative tax rate of -14.1%, meaning the household received a tax refund of €2,381 along with a family allowance of €1,440. Other countries with negative tax rates included Czechia (-6.5%), Poland (-1.1%), and Germany (-0.2%).
Conversely, Denmark continued to impose the highest tax burden on this group, with a 32.3% rate. In general, Nordic countries had the highest tax rates, while Eastern and Southern European nations provided stronger tax benefits for families.
Taxation for Two-Earner Families with Children
For a two-earner couple with two children, the average EU tax rate stood at 14.6% in 2023, with €11,931 deducted from €81,732 in earnings. Slovakia had the lowest rate (1.3%), while Denmark again had the highest at 35.5%.
Where Do Workers Pay the Most?
Denmark ranks as the country with the highest tax proportion across all household types and dependency statuses. Belgium consistently ranks among the highest as well, particularly for single earners. Meanwhile, countries such as Slovakia, Poland, and Czechia offer significant tax relief for families with children.
Overall, Nordic and Western European nations maintain higher tax rates, often linked to extensive welfare programs, while Eastern and Southern European countries generally impose lower tax burdens. Central European nations tend to align with the EU average, with some offering strong tax incentives for families.
As income tax policies continue to evolve, these disparities highlight the varying approaches European nations take in balancing tax revenue with economic and social policies.
