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Belgian Labour Taxes Highest In Europe

by Ulrika Lomas, Tax-News.com, Brussels

20 August 2012


For the second consecutive year, Belgium ranks as the country in the European Union (EU) with the highest tax burden on both workers and employers, according to a recent study conducted by the economic institute Molinari (IEM).

Based in Paris, the IEM independent think tank maintains that Belgium has the highest rate of labour taxes in the EU this year, pointing out that an employer in Brussels spends EUR2.45 (USD3) for every EUR1 in “a typical worker’s pocket”, when social security contributions and value-added taxes (VAT) are combined, corresponding to an actual tax rate of 59.2%. The European average stands at 44.89%.

IEM argues that this makes Belgium less attractive as regards foreign investments.

Back in 2010, Hungary ranked first in this category. Belgium has retained its leading position since last year, however, when Hungary implemented a flat rate of income tax of 16% on January 1, 2011, significantly lowering labour taxes in the country.

The institute also points out that tax freedom day, the calendar day on which an employee finally finishes paying taxes to the state theoretically and is able to keep earnings, is much later in Belgium (August 5) than in either France (July 26) or Germany (July 16). In contrast, tax freedom day in Malta is April 11, IEM notes.

TAGS: tax | value added tax (VAT) | Belgium | Hungary | Malta | social security | France | Germany

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