tax surveys a european comparison - american … · a european comparison 2014. 2 a european...

Tax Surveys

A European Comparison

2014

2

A European Comparison of the following taxes for 2014 was undertaken

Agenda

1. The Countries Involved

2. Salary Taxes, Social Security & Expat Tax

3. Self Employed Tax

4. Corporate Tax

5. Parent Company Tax

6. Gift & Inheritance Tax

7. Value Added Tax

8. Q&A

2

AGN Offices in the following Countries Completed the Survey:

22 of 28 European Union Countries: Austria, Belgium,

Cyprus, Croatia, Czeck Republic, Denmark, Estonia,

Finland, France, Germany Greece, Ireland, Italy,

Luxembourg, Netherlands, Poland, Portugal, Romania,

Slovakia, Spain, Sweden, United Kingdom. (Missing

Bulgaria, Hungary, Latvia, Lithuania, Malta, Slovenia)

6 Non-European Union Countries: Isle of Man (except

for VAT), Liechtenstein, Russia, Switzerland, Turkey,

Ukraine.

SALARY TAX and SOCIAL SECURITY 2014

Salary Tax and Social Security 2014

Net Salary Income Tax Employees Social Security Employers Social Security

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2013 2014 Change

1 Russia 1 Russia

2 Liechtenstein 2 Liechtenstein

3 Isle of Man 3 Isle of Man

4 Estonia 4 Estonia

5 Romania 5 Romania

6 France 6 Switzerland 20+

7 Cyprus 7 France 1-

8 Slovakia 8 Cyprus 1-

9 Serbia 9 Czech Republic 2+

10 Luxembourg 10 Slovakia 2-

11 Czech Republic 11 Luxembourg 1-

Salary and Social Security Tax


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Net Salary: Russia leaves 88% net in the pocket of the individual,

Liechtenstein 86% and Luxembourg 70% and Belgium the least 49%.

Employers Cost: In Belgium the cost of employing someone is 280% of

net salary, In Sweden 250%, in Austria and France 200% and in

Luxembourg 161%


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Company Cars are taxed in all countries including Luxembourg, except

Greece, Poland, Turkey and Russia, and the amount is generally based

on vehicle catalogue price. Some use actual invoiced price, some, Isle of

Man, use engine size and some use CO2 emissions. The Netherlands

charges less tax on environmentally friendly cars.

Company Pension Schemes: premiums paid by employers are taxed as

a benefit in only in Cyprus, Liechtenstein, and Luxembourg charges a

20% withholding tax.

Other Insurance Premiums paid by employers for life, sickness,

invalidity and surviving spouse benefits are not taxed as a benefit in about

50% of the countries and 100% in Luxembourg

Lap-Top Computers and Internet costs are generally not treated as a

benefit in kind.

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Expatriate Schemes: Belgium, France, Romania, Poland, Spain and

United Kingdom do not tax employer funded home visit travel nor do

they tax the payment of relocation costs. Only Cyprus (20%) the

Netherlands and Luxembourg (30%) exempt from tax a percentage of

the expatriate’s income.

Buying Property: Only Croatia, Poland and Liechtenstein do not allow

expatriates to buy houses there.


SELF- EMPLOYED TAXATION 2014

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Self Employed Taxation 2014

Net Income Income Tax Employee Social Security. Employer Social Security

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2013 2014 Range

1 Russia 1 Russia

2 Czech Republic 2 Isle of Man 1+

3 Isle of Man 3 Czech Republic 1-

4 Romania 4 Liechtenstein 1+

5 Liechtenstein 5 Cyprus 3+

6 Poland 6 Switzerland 18+

7 Estonia 7 United Kingdom 3+

8 Cyprus 8 France 3+

9 Turkey 9 Luxembourg 3+

10 United Kingdom 10 Estonia 3-

11 France 11 Slovakia 4+

12 Luxembourg 12 Turkey 3-

Self Employed Tax Comparision

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Net Income: The least net income is left by: Belgium 36% , Germany

38% and Portugal 45%.

The best net income is left by: Russia 92%, Isle of Man 81% and Czech

Republic 82%. In Luxembourg a self employed person is left with 62%

of his gross income

Social Security Contributions: are a deductible expense except the

Czech Republic, Ireland, Isle of Man and the UK

VAT Registration: is required with a registration threshold for majority of

the countries except in Russia .

Depreciation: is allowed as a tax deduction except in the UK (the UK has

a capital allowances system).


Mortgage Payments: are allowed as a deduction in all except Austria,

Cyprus, Germany, Ireland, Liechtenstein, Russia, Slovakia, Sweden,

Turkey and the UK.

Travel Expenses are allowed as a deduction except in Russia.

Entertaining Expenses are not allowable in Czech Republic, Greece,

Ireland, Poland, Portugal, Russia, Slovakia, Turkey and the UK.

Flat Rate Deductions are allowable in only 9 countries surveyed Austria,

Czech Republic, Estonia, Germany, Liechtenstein, Netherlands,

Portugal, Slovakia, and Spain.


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Deductions in respect of the Taxpayer’s Children are not allowed in

Cyprus, Denmark, Greece, Isle of Man, Ireland, Netherlands,

Poland, Russia, Sweden, Turkey and the UK.

Non-Working Spouse: A deduction in respect of the taxpayer’s non

working spouse is not allowed in Cyprus, Denmark Germany, Greece,

Netherlands, Poland, Russia, Spain, Sweden, Switzerland, Turkey,

and the UK. The most generous jurisdiction is the Isle of Man where

€11,453 is allowed.


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CORPORATE TAX 2014

Corporate Tax 2014 Net Dividend Corporate Tax Withholding Tax

19

2013 2014 Change

1 Isle of Man 1 Isle of Man

2 Malta 2 Cyprus 1+

3 Cyprus 3 Hungary 1+

4 Hungary 4 Liechtenstein 1+

5 Liechtenstein 5 Slovakia 1+

6 Slovakia 6 Luxembourg 2+

7 Serbia 7 United Kingdom 5+

8 Luxembourg 8 Croatia 1+

Corporate Tax Comparision

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Corporate Tax: Nominal corporate tax rates

These range from:

0% IM (except for rental profits from Manx property, and local banking

services)

10% to 12.5% Hungary, Cyprus, Ireland and Liechtenstein

16% Romania

19% Poland and Czech Republic

21% Luxembourg (x unemployment surcharge + municipal tax so 29.22% in reality)

26% Greece and Spain

33-35% Belgium, France, Malta, Germany, Italy, Norway, Sweden Turkey

and the UK

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Corporate Tax 2014

Nominal Tax Rates vs Effective Tax Rates: The truth however lies in

comparing the effective corporate tax burden, thus considering taxable

adjustments of the accounting profit and withholding taxes on business

expenses such as intercompany interest and royalties.

Effective corporate tax rates range from approximately 13% in Cyprus

and Luxembourg, to 47% in France. However, most countries surveyed

have an effective corporate tax rate between 23% and 38%.

Poland shows the largest divergence between the nominal at 19% and

effective 40% rates.

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Corporate tax 2014Net dividends received by shareholdersThe range of accounting profit distributed to shareholders is:

• Individual shareholder resident in same country:From 84% Liechtenstein to 35% France. Luxembourg 74%

• Individual shareholder resident in treaty country:From 87% Cyprus to 42% France. Luxembourg 79%

• Individual shareholder resident in non-treaty country:From 87% Cyprus to 13% France. Luxembourg 74%

• EU resident company as shareholder:From 87% Cyprus, Luxemburg to 53% France. Luxembourg 88%

• Treaty country (non EU) resident company as shareholder:From 87% Cyprus, Luxemburg to 45% France. Luxembourg 88%

• Non-treaty country resident company as shareholder:From 87% Cyprus to 42% France. Luxembourg 74%

Corporate Tax 2014

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Tax adjustments to the accounting profit: Most countries adjust

accounting profit (usually increases) to arrive at taxable profit.

Complimentary pension provisions: The Czech Republic, France,

Ireland, Poland, Romania, Spain, Turkey and the UK do not allow

deduction of company pension provisions. Luxembourg does but there is

a 20% withholding at source.

Non-executive directors’ fees: Austria and Germany allow a 50%

deduction. Ireland, Poland, Spain, allow a deduction, but charge a

withholding tax. Czech Republic, Greece, Luxembourg and Russia

disallow them completely and charge a withholding tax (Luxembourg

20%).

Depreciation: is not deductible in Czech Republic, Hungary, Ireland,

Isle of Man, Russia and the UK. UK allows capital allowances.

Corporate Tax 2014: Adjust Commercial Result

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Company cars: Austria, Croatia, France, Ireland, Liechtenstein,

Poland, and Portugal set a maximum purchase price. Annual

depreciation rates range from 12,5% Austria to 50% Turkey.

Luxembourg No limit depreciation 4 years

Intercompany interest deduction: Most countries apply the arm’s

length principle for interest intergroup loans and about 50% apply thin

capitalization rules. Belgium, Croatia, the Czech Republic, Greece,

Romania, Russia, and the UK apply withholding taxes between 5% and

25% on intercompany interest payments. Luxembourg sets acceptable

margins

Royalties: Denmark, Hungary, Isle of Man, Liechtenstein,

Luxembourg, the Netherlands, Switzerland and Sweden do not

apply withholding taxes to royalties paid to EU companies. The others do

at rates between 10% Poland, France and Cyprus and 25% Belgium.

PARENT COMPANIES 2014

PARENT COMPANIES 2014

Net Cash Received Corporate Tax Withholding Tax on Dividend Withholding Tax on Interest

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2013 2014 Range

1 Switzerland 1 Isle of Man 24+

2 Liechtenstein 2 Switzerland 1-

3 Cyprus 3 Liechtenstein 1-

4 Malta 4 Cyprus 1-

5 Sweden 5 Sweden

6 Denmark 6 Denmark

7 Norway 7 United Kingdom 1+

8 United Kingdom 8 Luxembourg 1+

9 Luxembourg 9 Netherlands 1-

Parent Companies Tax Comparision

Parent Companies 2014

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Net cash receivable by paid to a non-EU tax haven parent

company: The Isle of Man distributes 100% of the profit made by the

parent company, Switzerland 99%, Liechtenstein 96% and Cyprus

95% and Luxembourg 84%. Bottom of the list comes Portugal 52%,

the Czech Republic 62% and Greece 64%.

Dividend income: 100% exemption by most countries including

Luxembourg except 95% in Belgium, France, Germany and Italy. 0%

in Russia and Turkey.

Dividend withholding tax credits: If dividends are taxed then a tax

credit for the withholding tax on dividend income from a USA participation

is granted in Italy, Poland and Russia and from a Swiss, French and

German participation in Italy and Russia.


Capital gain on sale of subsidiaries: 100% in most countries including

Luxembourg. 95% is exempt in Germany and Italy 88% is exempt in

France. Fully taxed in Greece, Poland, Slovakia, Turkey and Ukraine

Investment costs write down of subsidiaries: 100% allowed in

Austria, Isle of Man, Luxembourg, Slovakia and Switzerland.

Interest deduction to finance purchase of subsidiary: 100%

deductible in most countries including Luxembourg except Cyprus, the

Czech Republic, Italy and Turkey.

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Interest withholding tax paid to a non-EU tax haven parent

company: No withholding tax in Austria, Cyprus, Denmark, France,

Germany, Ireland, Isle of Man, Liechtenstein, Luxembourg, the

Netherlands, Poland, Portugal, Sweden and Switzerland The rate in

the rest varies between 15% and 25%, Belgium being on the higher end.

Dividend withholding tax on dividends paid to a non-EU tax haven

parent company: No withholding tax in Cyprus, Denmark, Isle of

Man, Liechtenstein, Slovakia, Sweden, Switzerland, and the UK . In

other countries the rate varies from 10% to 35%. Luxembourg is 15%

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GIFT & INHERITANCE TAX 2014


Proportion of estate retained Effective Tax payable

14

2013 2014 Change

1 Austria 1 Austria

2 Croatia 2 Croatia

3 Cyprus 3 Cyprus

4 Czech Republic 4 Czech Republic

5 Estonia 5 Estonia

6 Italy 6 Isle of Man 22+

7 Liechtenstein 7 Italy 1-

8 Luxembourg 8 Liechtenstein 1-

9 Poland 9 Luxembourg 1-

Gift & Inheritance Tax Comparision

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Tax Rate: In almost all the jurisdictions surveyed the tax rate is based upon the total

value of the assets and the relationship of the heirs to the deceased. It can also vary

according to the type of the asset. Only Denmark has a fixed tax rate.

Beneficiaries: In France and Luxembourg, there are ‘forced heirship’ rules which

dictate the portion of the estate that the children must receive. In other countries that

is freely determinable.

Exemption for assets transferred to the spouse is not granted in Belgium,

Germany, Greece, Italy, the Netherlands, Spain, and Turkey. In Luxembourg only

to a spouse with surviving children

Exemption for assets transferred to children is granted in Croatia, Czech

Republic, Luxembourg, Poland, Portugal, and Switzerland


15

Valuation of Assets: Family Home: Usually at current market value

except France and Spain (5% of MV, but limited to €125.060 per

individual).

Share Portfolio: must separate quoted shares and unquoted shares or

family businesses.

Ireland (10%), Spain (5%) and the United Kingdom (0%) apply

reduced rates to unquoted family business shares.

All countries surveyed include quoted shares at 100% of the market

value.

Cash: included at 100% of its value.


V.A.T 2014

V.A.T Rates 2014

7

2013 2014 Change

1 Luxembourg 1 Switzerland 24+

2 Turkey 2 Liechtenstein 23+

3 Serbia 3 Luxembourg 2-

4 Russia 4 Turkey 2-

5 Malta 5 Russia 1-

6 Cyprus 6 Germany 1+

7 Germany 7 Cyprus 1-

8 France 8 United Kingdom 1+

9 United Kingdom 9 Ukraine 20+

European VAT 2014 Comparision

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V.A.T Rates

V.A.T Rates: vary from 8% in Liechtenstein and Switzerland, 15% in

Luxembourg and up to 25% in Croatia, Denmark and Sweden. The

most common rate is 20% in Austria, Estonia, France, Isle of Man,

Ukraine and United Kingdom.

V.A.T Registration: There is no turnover limit to exceed in Italy,

Netherlands Portugal Spain, Sweden and Turkey. The highest

threshold is Russia with €170k and Isle of Man and UK at €95k,

France, Liechtenstein and Switzerland at €82k, Ireland €72k, and

Romania at €65k. Luxembourg is €25k. Only Spain does not allow

voluntary registration

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V.A.T Rates

Distance Selling Threshholds: There are no turnover thresholds in

Russia and Turkey and the others vary from €25k in Ukraine and

€100k in France, Germany, Isle of Man, Italy, Luxembourg,

Netherlands and UK. The rest have a threshold of between €32k and

€37k except Liechtenstein and Switzerland that are at €82k

V.A.T. Invoice: Only in Ireland Liechtenstein and Switzerland do you

not need to mention on the invoice why you have not charged VAT.

Reclaim of V.A.T. in another country: Only not possible in Ukraine

and Russia. You need a VAT representative in Liechtenstein,

Switzerland, Portugal, Romania, Spain Turkey,and Ukraine and

you do not need to submit original invoices in Czeck Republic,

Finland, Isle of Man and Sweden. You do not need to prove your VAT

registration in your own country to Czech Republic and Croatia

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Thank you for listening

If you want to go into more detail on the surveys and download them

please go to www.agn-europe.org and on the right click on tax surveys.

There you find the ressults of these surveys since 2004.

Or call us to discuss

All the firms that have provided tax information are listed in the following

link:

http://www.agn-europe.org/ TAX SURVEYS / AGN EUROPE TAX

EXPERTISE

or click on the following link: http://www.agn-

europe.org/tax/tax_expertise.html

Q&A

http://www.agn-europe.org/

http://www.agn-europe.org/

http://www.agn-europe.org/tax/tax_expertise.html

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