The Tax Burden of Typical Workers in the EU28

At what point in the year does a typical taxpayer keep his earnings and stop paying the state – his ‘tax liberation day’? 

The only EU-wide study using consistent methodology calculated how long people would have to work in each of the 28 EU member countries before they stopped paying the state.

For the fifth consecutive year, this important study was published by New Direction and the Institut Economique Molinari (IEM) with data provided by accountants Ernst & Young. Using consistent methodology across all EU member countries, the study calculated the tax liberation days as follows:

Cyprus:    March 21        Estonia:    June 10        Sweden:    June 23
Ireland    April 28        Spain:    June 12        Italy:    June 30
Malta:    April 28        Croatia    June 13        Romania:    July 01
United Kingdom:    May 12        Poland:    June 14        Germany:    July 11
Bulgaria:    May 18        Czech Rep.:    June 19        Greece:    July 14
Luxembourg:    May 30        Finland:    June 20        Hungary:    July 16
Portugal:    June 06        Slovakia:    June 20        Austria:    July 25
Denmark:    June 07        Latvia:    June 20        France:    July 28
Slovenia:    June 08        Netherlands:    June 21        Belgium:    August 06

Typical workers across the European Union saw their average “real tax rate” rise again this year, from 45.06% in 2013 to 45.27% in 2014. The rise of 1.28% since 2010 is largely a consequence of VAT increases in 19 of the 28 EU member states since 2009.

For the fourth consecutive year, Belgium is the country that taxes labour at the highest rate in the European Union; an employer in Brussels spends €2.31 to put €1 into a typical worker’s pocket, making a Belgian worker’s tax liberation day August 6.

More than half (54.6%) of citizens are not in the labour force – a figure that is worsening as Europe’s population grows older: Since 2010, the proportion of Europeans outside the labour force has grown by 0.3%. Working people are carrying an ever-heavier share of the tax burden.

Flat tax policies have offered considerable tax relief to workers – notably in Hungary, where a new 16% rate has pushed that country’s tax liberation day forward by 21 days since 2011. However, total taxes remain higher in "flat tax" countries (46.34%) than in "progressive" systems (44.98%) – a gap that has widened since 2010.

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