Company formation and accounting in Latvia
Last updated: 2016-01-25
This page contains social tax rates in European Union countries and the aim of the article is to compare the rates.
Need to note, that these are not exact rates. Because the exact rates depends on status of an employee, amount of salary, industry and other conditions. These are the highest possible rates.


The social tax is so called direct tax.
In general, aim of the social tax is to ensure a socially insured person rights to receive certain services. The rights may be following:
  • rights to receive old age pension;
  • disability pension;
  • survivor's pension;
  • sickness benefits;
  • maternity benefits;
  • payments in case of unemployment;
  • funeral allowance.

So, the social tax usually includes payments for various purposes. For example, for pensions, maternity, sickness, disability, invalidity and unemployment insurance.
Payers of the tax are: employees, employers, self employed and persons that voluntarily pays the tax.
Basis (object) for the tax for employees and employers is salary. For self employed basis for the tax is certain amount of income (determined according to legislation).
Usually employers withhold part of the tax from salaries (employee's part of the tax) and employers also additionally pay employer's part of the tax. Employers usually pay the tax each month. The social tax usually decreases the taxable amount for the personal income tax. Employers charge personal income tax after deduction of employee's part of the social tax.

In general the higher amount of paid social tax, the greater is a benefit for socially insured person (for example, higher amount of paid social tax means higher amount of old age pension.

A name for the social tax is different in various countries. For example, in the United Kingdom the name is "National Insurance", in Ireland "Pay Related Social Insurance (PRSI)", in some countries the social tax is named as social contributions.

The average tax rate in European Union is 34%.
In Denmark the social tax rate is low, mainly because of high personal income tax (PIT).
In the Netherlands the social tax is part of income tax.

The list of the social tax rates.

Country
Tax rate (%)
Denmark
14
Ireland
14,75
Malta
20
Luxembourg
25,94
Finland
28
Netherlands
28,81
Croatia
30,7
Lithuania
30,98
Bulgaria
31,4
Sweden
31,42
Austria
32
Estonia
33
Poland
33
Cyprus
34
Latvia
34,09
Portugal
34,75
Spain
37,25
Slovenia
38,2
Germany
39
Romania
39,95
United Kingdom
40
Greece
40,06
Czech Republic
45
Hungary
45,5
Belgium
48,07
Slovakia
48,6
France
50
Italy
50



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