How Much Tax You Really Pay As An Expat


Everyone suspects one of the main reasons for becoming an expat is paying less tax, but do you really pay less tax if you leave Britain for overseas?

Both Tory leadership hopefuls Boris Johnson and Jeremy Hunt have pledged tax cuts for middle earners and by the time you read this one will be the new Prime Minister and ready to implement their promises.

We’ll have to wait and see how they propose to cut taxes. Logically, the government will have to replace the missing billions they propose to axe by borrowing more or reducing spending.

But in anticipation of paying less tax at home, here’s a look at what you can expect to pay abroad.

Don’t forget tax is not only what’s deducted from your pay packet, but indirect taxes like VAT as well.

Top earners fare worse

In fact, the government takes around 28% of what someone on an annual salary of £28,000 earns, says the Institute for Fiscal Studies, a think tank which has crunched the numbers.

Around £6,000 disappears as income tax and national insurance, but with another hidden slice of £3,000 paid by an employer as national insurance as well.

Other European nations swipe much more – with Belgium taking the most at 49%. Germany, Italy and France all take around 47%, while Spain deducts a more reasonable 40%.

Top earners fare even worse.

Someone on £300,000 plus hands around 51% of their salary to the government. In Belgium, it’s a massive 67%, 59% in France and 54% in Denmark. In Spain, around 44% is deducted.

Zero tax in the Gulf

When VAT is factored in, the UK grabs around a third of a middle earner’s income. Top of the list are Denmark, France, Belgium, Sweden and Finland with around 44% – 45%, Spain’s about the same as the UK, while the USA (26%) and Ireland (23%) turn in lower figures.

The other big tax is corporation tax on company profits. Together the big four bring in nearly three-quarters of government income and fund spending on health, education, infrastructure and defence, to name but a few public services.

But none of these countries can compete with the Gulf States who famously have no income tax but where some have recently started to charge VAT at 5% on some purchases and the rest of the six nation bloc will soon follow.

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