Highest Tax Rates by Country

As the saying goes, there are only two certain things in life: death and taxes. Regardless of location, everyone has to pay tax at some point. However, income taxation rates and their thresholds vary considerably throughout the world.

High Earners - highest taxation rates worldwide

We have listed the top five countries worldwide which have the highest levels of income tax alongside their respective earnings thresholds. It’s not all about tax though, as some of these countries, such as Sweden and Norway, offer the highest levels of disposable income; demonstrating that generous salaries often far outweigh hefty tax deductions.

1.       Aruba – 59.98%

Worldwide, Aruba still ranks as the country with the highest level of income tax and is one of the most prosperous Caribbean territories. Currently standing at 58.98% on earnings over AWG 309,131 ($172,719), this drops slightly to 55.85% for married couples. Though it has the highest tax rate worldwide, residents of this Caribbean island can take some comfort in the fact that they receive an annual tax free allowance of AWG 20,252($11,313)

2.       Sweden – 56.6%

Somewhat unsurprisingly, Sweden has the second highest level of income tax worldwide which has remained unchanged since 2012. The top margin of payable income tax begins at SEK574,300 ($84,681).

3.       Denmark – 55.56%

In Denmark, when personal income and specific investments reach DKK 457,608 ($83,664) taxation rates peak at 56.6% for their top earners. However, as with Sweden, Denmark is a high income country, with the richest 1% contributing to 5% of the country’s economy.

4.       Netherlands and Spain – 52%

Both the Netherland and Spain have set their highest income rates at 52%.

In the Netherlands, Dutch residents (not foreign workers) are subject to pay the maximum 52% tax rate when personal income exceeds € 56,531 ($77,044), and includes social security contributions.

In Spain, the 52% income tax rate applies to residents who earn in excess of €300,000 ($408,844). The current rate is the highest it has been in eight years, though there have been recent reforms which hope to significantly lower this rate by next year.

5.       Finland – 51.13%

The maximum rate of 51.13% was raised from the previous rate of 49% in 2013. Finland’s residents are taxed in the highest margin when their income reaches over €100,000 ($136,327). Plus, if the resident is a member of the church, an extra 2.2% is added.

PWC’s G20 findings

A recent report by PWC illustrates the ‘take home’ salaries of high earners after income tax and social security deductions in G20 countries. Their findings are based on an individual who earns $400,000, has a $1.2 million mortgage and is married with two children – one of whom is under six. 

Country ‘Take home’ income %
1 Italy 50.49% (takes home $202,360)
2 India 54.90%
3 United Kingdom 57.90%
4 France 58.10%
5 Canada 58.13%
6 Japan 58.68%
7 Australia 59.30%
8 United States (NY state tax) 60.45%
9 Germany 60.61%
10 South Africa 61.78%
11 China 62.05%
12 Argentina 64.02%
13 Turkey 64.64%
14 South Korea 65.75%
15 Indonesia 69.78%
16 Mexico 70.60%
17 Brazil 73.32%
18 Russia 87%
19 Saudi Arabia 96.86% (takes home £387,400)

When making these comparisons it’s important to consider where the top-levels of tax come into play, as these vary considerably between each country. For example, in the UK, the top 45% threshold kicks in when a resident earns around $250,000. However in Italy, their 43% tax bracket applies to incomes over $125,000 – a huge variance in ‘take home’ pay.

Average earnings

It can be difficult to compare the rates worldwide of an ordinary, average salary earner, as so many other factors come into play e.g. additional taxes such as social security or tax relief benefits including child tax credits. However, the Organisation for Economic Cooperation and Development (OECD) has analysed average salaries worldwide, based on individuals who are single with no children and earn what is considered to be an ‘average’ salary for their respective country. 

Country Income tax rate
1 Belgium 42.80%
2 Germany 39.90%
3 Denmark 38.90%
4 Hungary 35%
5 Austria 34%
6 Greece 25.4%
7 UK 24.90%
8 USA 22.70%
9 New Zealand 16.40%
10 Israel 15.50%
11 Korea 13%
12 Mexico 9.5%
13 Chile 7%
The OECD average taxation rate for this demographic was found to be at 25.10%.

For the average married family with two children, OECD noted these tax rates for the following countries:

Country Income tax rate
1 Denmark 34.8%
2 Austria 31.9%
3 Belgium 31.8%
4 Finland 29.4%
5 Netherlands 28.7%
6 Greece 26.7%
7 UK 24.90%
8 Germany 21.3%
9 USA 10.4%
10 Korea 10.2%
11 Slovak Republic 10%
12 Mexico 9.5%
13 Chile 7%
14 Czech Republic 5.6%

The OECD found that the average taxation rate for this social group was 19.6%, and across the board the tax rate dropped by around 5.5% - with Greece being the only country which required extra tax to be paid for families with children. 

Of course, that’s not to say that lower tax rates are wholly beneficial to those that they affect. Higher tax rates tend to be in accordance with the services provided by each respective government. For many of the high-hitting tax income countries, these states tend to provide generous benefits, including those relating to education, healthcare and unemployment.

N.B. All stats and rates are correct as of 14 July 2014. 

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