Whatever your political take on taxation the personal impact is clear: the level of taxation in your country of residence determines how much of the money you earn you get to take home and how much of the wealth you accrue you get to keep. It affects the neighbourhood in which you can afford to live, the luxuries you can afford to buy and your chances of getting on the property ladder.
Few - mostly the exceptionally wealthy - will move to a new country solely because it offers a lower rate of tax. But the level of taxation in your country of destination can make you think twice about the feasibility of starting a new life there. which is why we’ve put together the following comparison of tax rates in the world’s most popular expat destinations.
Income Tax by Country
This is the tax you pay on your personal income. This might consist of a payroll tax, the tax you pay on money earned through self employment, pensions or other investments (e.g. interest earned on savings, rental income or share dividends).
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The following table gives an overview of income tax rates in our most popular destination countries, after which we’ll drill into each country in more detail.
|Country||Income Tax Range||Average Annual Salary||Tax Rate on Average Salary|
|Canada||15-33% (federal) + 4 -25.75% (provincial)||CAD 62,420||20.5% (federal) + provincial (e.g. 9.15% in Ontario)|
|Switzerland||0-40% (levied at federal, cantonal and municipal levels)||CHF 86,812||e.g. 21% (Genève commune in Geneva canton)|
|United Kingdom||0-45%||GBP 27,600||20% (basic rate after personal allowance of £10,600)|
|USA||0-39.6% (federal)+ 0-13.3% (state) + 0-3.645% (local)||USD 57,139||25% (federal) + provincial (e.g. 5.9% in New York) + (e.g 3.645% in NYC)|
This table doesn’t include other payroll deductions like National Insurance (UK) or Medicare contributions (Australia).
Tax in Australia
The tax system in Australia is complicated by the federal structure. Taxes can be levied by the federal government, state government and local government. For three financial years (from 1 July 2014 until 30 June 2017), the government has introduced a Temporary Budget Repair Levy of 2% to the top marginal tax rate, increasing the top individual marginal tax rate to 47% (plus at least 2% Medicare levy)
Only the federal government levies an income tax. The personal tax allowance is AUD 18,200 after which tax rates range from 19% to 45%. Capital gains are treated as part of income for taxation purposes.
This is an income tax surcharge levied by the federal government to fund the Medicare program. It currently stands at 1.5% of taxable income.
Goods and Services Tax
Levied by the federal government at 10% on most goods and services.
All states with exception of the Northern Territories levy an annual land tax for owners of land beyond a threshold value. Stamp duties on transfers of land vary from state to state.
Tax in Canada
Taxes in Canada are levied at the federal and provincial level.
Both the federal government and provincial governments levy an income tax on the total taxable income of an individual. At the federal level there is a personal allowance of CAD 11,038 after which tax rates range from 15% to 29%. Provincial tax rates range from 4% to 25.75% where each province has its own progressive scale (except Alberta which has a flat rate). Only half of a capital gain is counted as income - the other half is exempt.
These are also levied by both the federal government (the Goods and Services Tax at 5%) and the provinces (the Provincial Sales Tax which ranges from 2% to 12%). The two taxes are often combined into a single Harmonised Sales Tax (HST) for simplicity.
These come in two forms, both levied by municipal governments: a property tax which is paid property owners and which is based on the value of the property; a property transfer tax which is paid by people buying property and which is typically levied at 0.5% and 2% of the purchase value.
Tax in France
Income Tax Rate in France
As part of France’s austerity measures, a surcharge has been imposed on high incomes for income received in 2012, 2013 and 2014. This is an additional 3% for a single person where income is between €250,000 and €500,000 per part (nothing is due from a family) and 4% for income exceeding €500,000 per part for an individual; 3% for a family. If income exceeds €1,000,000 per part, the rate is 4% regardless of family circumstances.
The taxable income to be assessed is the total income of the household. To avoid the higher rates of tax where there is a high income, but more than one household member, the family is divided into a number of parts familiales.
The total income is divided by the number of parts. The income tax scale rates are then applied to this lower figure, and having computed the income tax due, it is multiplied back up by the number of parts.
Tax in Singapore
The city-state of Singapore levies relatively few taxes and generally only levies taxes on income earned in Singapore, not foreign income.
The personal allowance is SGD 20,000 after which the tax rate ranges from 2% to 20%.
Levied at 10% the expected rental income of a property but there are reductions if you occupy the property yourself (where rates are 0% to 6%). Stamp duty for buyers of property ranges from 1% to 3% of the purchase value.
Goods and Services Tax
A value added tax levied at 7% on most goods and services.
Tax in Switzerland
Switzerland wins our award for most complicated tax system hands down. (Okay, the US is probably equally complicated, but given it’s size we’ll make an allowance). The Swiss confederation, the cantons and the municipalities are all able to levy taxes.
The amount of income tax you pay therefore depends not only on which canton you live in but also which administrative district of your town you live in. Sometimes moving just a few streets away can have a significant impact on your disposable income.
Federally applied taxes include VAT of 8% on most goods and services (though a reduced rate of 2.4% is applied to certain goods such as foodstuffs, drugs and books); a withholding tax of 35% on income from e.g. dividends, interest on loans, lottery prizes and private pension payments; and stamp duty on the proceeds of e.g. sales of stocks and bonds.
Taxes applied at the cantonal level include property taxes (both on the sale value and on any profits made), inheritance taxes, dog ownership, motor vehicle ownership and theatre tickets.
In short, if you’re moving to Switzerland, you still have a lot more tax research ahead of you...
Tax in the UAE
There is very little taxation in the United Arab Emirates. The federal government does not levy any income tax and, while the emirates themselves are entitled to levy income tax this normally only applies to foreign banks and oil companies.
These are levied in most Emirates at 5% of annual rental paid on residential property (10% for commercial property).
There is a 5% tax on hotel services and entertainment.
Tax in the UK
The tax system in the UK is relatively straightforward with most taxes levied at the state level. Tax rates are mostly progressive (i.e. there are different tax brackets depending on your income and assets).
Income tax in the UK
The Scottish rate of Income Tax is 10% but you’ll pay the same overall rate of Income Tax as people in the rest of the UK. This is whether you pay the basic, higher, or additional rates.
The table shows the total Income Tax rate you’ll pay from 6 April 2016, if you have a standard Personal Allowance (which is up to £11,000). You don’t get a Personal Allowance if you pay additional rate tax.
|UK rate for England, Wales and Northern Ireland||Income band||UK rate paid in Scotland||Scottish rate||Total rate for Scottish taxpayers|
Basic rate 20%
£11,000 - £43,000
Higher rate 40%
£43,001 - £150,000
Additional rate 45%
This is a separate payroll tax paid by both employers and employees to cover the cost of state benefits like the National Health Service and state pensions. There are different bands for different levels of earnings. Typically an employee will pay about 12% of their earnings as NI contributions.
This is paid to your local authority for the provision of locally administered services like refuse collection. It is levied at a rate which depends of the value of the property you live in (regardless of whether you rent or own the property). There are reductions for people who live alone (25%), students (exempt) and people with disabilities (varies).
The UK levies no direct property taxes but charges the buyers of property Stamp Duty (i.e. property transfer tax) at a rate determined by the purchase value of the property. This ranges from 0% to 15% (on properties worth £2 million or more).
Levied at a rate, which depends on your total taxable income, between 10% and 28%.
This is a sales tax levied at the point of sale at a standard rate of 20% or a reduced rate of 5% (for e.g. fuel). Many items are exempted e.g. basic foodstuffs, children’s clothes and prescription medicine.
Tax in the USA
In the United States taxes are levied at federal, state, and local government level.
Federal income tax currently kicks in when an individual’s income exceeds USD 3,900 and then ranges from 10% to 39.6% as income increases. There is also a standard deduction available depending on your filing status which ranges from USD 6,100 to USD 12,200. Capital gains are treated as part of your taxable income.
Most states levy an income tax. Rates in the most popular states among international movers are as follows:
|State||State income tax rates|
|New York||~4% to 8.8%|
|California||1% to 13.3%|
Some local governments also levy income taxes. New York City for example charges an income tax which ranges from around 2.9% to around 3.6% depending on your taxable income.
Some states levy the income tax on total taxable income while others use the amount of income after federal tax has been deducted.
Social Security and Medicare Taxes
These are levied on employees at the federal level. Social security taxes are 6.2% of wages (up to a maximum amount) and Medicare taxes are 1.45% of total wages.
Property and Sales Taxes
These are levied at the state and local level.
All figures quoted believed to be accurate at the time of writing. MoveHub does not provide tax advice.
References: 1. OECD Statistics 2012, http://stats.oecd.org/Index.aspx