Income tax is the percentage of income that an individual pay to the government regularly. Paying taxes is a civic responsibility of every citizen. The percentage of income remitted to the government as tax varies from country to country. Some countries require their citizens to pay very little as tax while some others charge as high as 50% of income as tax. Below are the top 10 countries with the highest income tax rates.
TOP 10 COUNTRIES WITH THE HIGHEST INCOME TAX RATES
DETAILS OF COUNTRIES WITH THE HIGHEST INCOME TAX RATES
Tax rate: 57.1%
The European nation, Sweden leads this list as the country that requires its citizen to pay the highest percentage of their income as tax. The tax rate here is over 57%. This makes conducting business in Sweden very expensive but if you deal in real estate, you might be able to get away from ridiculously high taxes. Sweden is the 7th richest country in the world in terms of GDP per capita. The standard of living and life expectancy in this country is one of the highest in the world. The country has very low-income inequality. The country has developed as a post-industrial society with an advanced welfare state and the highest income tax rate in the world. As high as 57.1% is deducted from the annual income of citizens. The system of taxation in Sweden combines income tax paid by employees with social security contributions paid by employers. Swedes may be heavily taxed but sales of residential properties are tax-free in Sweden.
Tax rate: 56.5%
Another European nation follows Sweden closely in the income tax rate. Portugal is a developed country with a high income rate. It is the 45th largest economy in the world and the tax rate is 56.5%. The Portuguese tax system is designed to bridge the gap and increase equality between high-income earners and low-income earners in the country. Income earned by employees in Portugal is subject to a progressive income tax that applies to every individual in the workforce. Also, a long list of tax allowances can be deducted such as general deduction, health expenses, life and health insurance, and education expenses. Portugal in the 15th and 16th centuries was where a major chapter in world history started with the New World discoveries of Portugal’s great fleet. Portugal played a great role in the history of the world as it was the first global empire. This European country also for some time had its capital outside of Europe. The capital of that era was in the South American city of Rio de Janeiro.
TOP 10 COUNTRIES WITH THE HIGHEST INCOME TAX RATES
Tax rate: 55.95%
The third country with the highest income tax rate in the world is Japan. Located on the Asian continent, Japan is a major industrial country in the world. A visit to Tokyo in Japan will allow the visitor to marvel at the city’s grandeur, sophisticated technology, and the staggering number of super-rich people living in the city. Despite all these, living in Japan may be ill-advised as the country’s income tax system isn’t friendly. Japan is the third-largest economy in the world behind the United States of America and China. In terms of purchasing power parity, Japan is the fourth-largest economy in the world behind the United States, China and India. All these statistics are truly remarkable for a country that is only the 10th largest in the world in terms of population. The success of Japan as a country has been attributed to the legendary work ethic of the Japanese people. The capital city of Japan houses more millionaires than any other city in the world. It is the only Asian country to feature in this list.
Tax rate: 56%
Danish people are one of the happiest set of people on this planet. The idea of living in Denmark may be quite enticing until you come across the tax rate which could be as high as 56% of personal income. This European nation has developed an economy that ranks 18th in the world in terms of GDP per capita and 6th in nominal GDP per capita. The Danish welfare state is founded on equal access to services for all citizens that are paid for by taxes. Due to its small population, the Danish government imposed a total income tax rate that is equivalent to 55.8% of per capita income to cater to the needs of its citizens. Many citizens justify this high tax rate due to the fact that it allows for increased social program accessibility for all citizens.
Tax rate: 55%
Austria is a beautiful country that offers an unforgettable experience for tourists. The tax system of Austria is however not much of a beauty to look at. Austria is one of the few German-speaking countries in the world and is also one of the most developed. The tax rate in Austria is 55%. Aside from this high-income tax rate, there is also a social security rate of 18%, bonus payments are charged at a rate of 6%, and capital gains tax is put at 25%. This small country is one of the richest countries in the world. It is 12th in terms of GDP per capita. The country has a well-developed social market economy and a high standard of living but all these come at a high cost.
Tax rate: 53.7%
Belgium is another European country on this list. Living in Belgium will allow you to live in a comfortable and organized setting. This, however, comes at a high price of more than 50% of personal income. The country is divided into two main linguistic units; the Dutch-speaking Flemish and French-speaking Walloons. The country is home to both NATO and the European Union. The country has the highest tax rate in all of Western Europe. The personal income tax rate in Belgium is 53.7%. The country is highly civilized and the transport infrastructure is integrated with the rest of Europe. The country is located at the heart of a region that is highly industrialized which makes it the world’s 15th largest trading nation.
STILL ON TOP 10 COUNTRIES WITH THE HIGHEST INCOME TAX RATES
Tax rate: 52%
The Netherlands is another great European country for a visitor but living here is just too expensive due to the high tax rate. The country’s economy is well-developed and has been playing a crucial role in the European economy for centuries. In more recent years, it was one of the founding members of what later transformed into the European Union. It is the 17th largest global economy. The location of the country gives it access to markets in the UK and Germany. The port of Rotterdam located in the Netherlands is the largest port in the whole of Europe. Personal income tax rate (income tax plus mandatory pension, social security and state-funded medical care payments, all of which are added as a percentage of income up to a maximum) is 52% for people under the age of 65 on all income over €66,000. In addition, the Dutch government also charges a capital gains tax of 25%, a land transfer tax of 6%, and an inheritance tax of up to 40%.
Tax rate: 51.6%
Finland is one of the high tax Nordic countries in the world. Days last very long in the summer but is always coming and with it, long night. It is worthy to mention that the citizens of Finland are among the most depressed people in the world despite the world-class welfare available in the country. The rates are so high despite the population of the country is just over 5.5 million. The tax rate in Finland is 51.6%. A fact equally worthy of mention is that anyone that stays longer than 6 months in Finland will become taxable from the Tax Administrator’s view.
Tax rate: 50.2%
France has the third-highest population in the whole of Europe. It is a global power and a member of the G7. France is also Europe’s second-largest economy by purchasing power parity. As of 2015, 31 of the 500 biggest companies in the world. It ranks 4th in the Fortune Global 500 ahead of both Germany and the UK. The tax rate in France is put at 50.2%. Recently, there have been further calls to increase the tax rate for those earning above 1 million euro to 75%. Monaco, a low tax country that is located on the French Riviera has no income tax and is one of the wealthiest countries in the world. This low tax rate is why more than 30% of Monaco’s citizens are French.
Tax rate: 50%
The last country on this list is Israel. Israel is one of the most developed countries in the world. The Israelis worked hard to build their country from scratch and this was done through a very high tax rate of 50%. The rate of innovation in Israel is mind-blowing for a country of its stature. The population of Israel is just over 8.5 million. The country has the second-highest number of startup companies in the world behind the United States. During the Great Recession of 2008, Israel was one of the most resilient economies. Currently, Israel has a GDP per capita that is similar to those of Southern European countries.
THE BOTTOM LINE ON TOP 10 COUNTRIES WITH THE HIGHEST INCOME TAX RATES
The countries on this list are some of the most advanced countries in the world. The price for this is being paid by citizens who pay very high-income taxes to their respective governments. While it is worth visiting these countries and having a feel of what their societies look like, you may want to think twice before relocating permanently to any of them.
That’s all on top 10 Countries with the highest income tax rates.