Top Individual Income Tax Rates in Europe

May 7, 2020

Most countries’ individual income taxes have a progressive structure, meaning that the tax rate paid by individuals increases as they earn higher wages. The highest tax rate individuals pay differs significantly across European OECD countries—as shown in today’s map.

The top individual income tax rate applies to the share of income that falls into the highest tax bracket. For instance, if a country has five tax brackets, and the top income tax rate of 50 percent has a threshold of €1 million, each additional euro of income over €1 million would be taxed at 50 percent.

The map reflects the marginal tax rate a single person without dependents faces at the earnings level at which the top statutory personal income tax rate first applies—in our example at the €1 million threshold. The marginal tax rate also includes employee-side social security contributions—in the U.S. commonly referred to as payroll taxes—and takes into account tax deductions and credits. In other words, it shows what share of that first euro over the top threshold earned in wages is paid in taxes.

Top Individual Income Tax Rates in Europe, top marginal tax rates for employees (including employee social security contributions) in European OECD Countries

Slovenia (61.1 percent), Belgium (60.2 percent), and Sweden (60.2 percent) had the highest top marginal income tax rates among European OECD countries in 2019. The Czech Republic (31.1 percent), Estonia (32.4 percent), and Hungary (33.5 percent) had the lowest rates.

The income level at which the statutory personal income tax rates apply—and at which the marginal rate shown in the map is measured—also varies significantly across the countries covered. Expressed as a multiple of a country’s average wage, the threshold ranges from 0 in Hungary to 22.7 in Austria. Hungary applies its flat 15 percent statutory personal income tax on all income earned. In contrast, Austria’s top statutory rate of 55 percent only applies to income above €1 million.

Top Income Tax Rates and Thresholds in European OECD Countries, 2019
Country Top Marginal Income Tax Rate (Including Employee Social Security Contributions) Top Statutory Personal Income Tax Rate Threshold of the Top Statutory Personal Income Tax Rate
As a Multiple of the Average Wage In National Currency* In Euros* In USD (PPP)*
Austria (AT) 55.0% 55.0% 22.7 EUR 1,096,663 € 1,096,663 $1,431,738
Belgium (BE) 60.2% 52.9% 1.1 EUR 52,100 € 52,100 $67,804
Czech Republic (CZ) 31.1% 15.0% 0.3 CZK 123,768 € 4,821 $9,850
Denmark (DK) 55.6% 55.9% 1.3 DKK 558,044 € 74,744 $82,716
Estonia (EE) 32.4% 20.0% 0.8 EUR 14,400 € 14,400 $26,172
Finland (FI) 58.5% 51.1% 1.9 EUR 85,191 € 85,191 $99,012
France (FR) 55.6% 55.4% 16.1 EUR 587,145 € 587,145 $778,601
Germany (DE) 47.5% 47.5% 5.3 EUR 277,063 € 277,063 $373,533
Greece (GR) 55.0% 55.0% 11.0 EUR 234,326 € 234,326 $417,388
Hungary (HU) 33.5% 15.0% 0.0 HUF 0 € 0 $0
Iceland (IS) 44.4% 46.2% 1.2 ISK 11,588,590 € 84,416 $82,389
Ireland (IE) 52.0% 48.0% 1.4 EUR 70,044 € 70,044 $89,597
Italy (IT) 52.8% 47.2% 2.6 EUR 83,263 € 83,263 $123,420
Latvia (LV) 40.2% 31.4% 4.8 EUR 62,801 € 62,801 $126,554
Lithuania (LT) 34.0% 27.0% 9.5 EUR 136,344 € 136,344 $300,694
Luxembourg (LU) 47.2% 45.8% 3.5 EUR 214,756 € 214,756 $251,267
Netherlands (NL) 54.4% 51.8% 1.4 EUR 71,886 € 71,886 $91,237
Norway (NO) 46.4% 38.2% 1.6 NOK 964,800 € 97,938 $100,552
Poland (PL) 39.9% 32.0% 1.7 PLN 101,147 € 23,536 $57,010
Portugal (PT) 58.2% 53.0% 15.0 EUR 280,899 € 280,899 $488,964
Slovakia (SK) 35.1% 25.0% 3.2 EUR 41,867 € 41,867 $82,234
Slovenia (SI) 61.1% 50.0% 4.6 EUR 95,264 € 95,264 $165,883
Spain (ES) 43.5% 43.5% 2.4 EUR 65,102 € 65,102 $102,819
Sweden (SE) 60.2% 57.2% 1.5 SEK 702,925 € 66,382 $78,821
Switzerland (CH) 41.7% 41.7% 3.3 CHF 301,123 € 270,697 $260,607
Turkey (TR) 45.5% 35.8% 3.0 TRY 174,119 € 27,387 $95,045
United Kingdom (GB) 47.0% 45.0% 3.7 GBP 150,000 € 170,888 $217,673

Source: OECD, “Tax Database: Table I.7. Top statutory personal income tax rate and top marginal tax rates for employees,” April 2020, https://stats.oecd.org/index.aspx?DataSetCode=TABLE_I7.

Note: *These thresholds have been calculated by multiplying the threshold expressed as a multiple of the average wage with the average wage expressed in the national currency and in US$ Purchasing Power Parity (PPP). Thus, they are approximations of the statutory thresholds. For non-Euro countries, the threshold was converted into euros using the average 2019 exchange rates provided by the European Central Bank (ECB).

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A tax bracket is the range of incomes taxed at given rates, which typically differ depending on filing status. In a progressive individual or corporate income tax system, rates rise as income increases. There are seven federal individual income tax brackets; the federal corporate income tax system is flat.

A tax deduction is a provision that reduces taxable income. A standard deduction is a single deduction at a fixed amount. Itemized deductions are popular among higher-income taxpayers who often have significant deductible expenses, such as state/local taxes paid, mortgage interest, and charitable contributions.

A payroll tax is a tax paid on the wages and salaries of employees to finance social insurance programs like Social Security, Medicare, and unemployment insurance. Payroll taxes are social insurance taxes that comprise 23.05 percent of combined federal, state, and local government revenue, the second largest source of that combined tax revenue.

An individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income. Individual income taxes are the largest source of tax revenue in the U.S.

The marginal tax rate is the amount of additional tax paid for every additional dollar earned as income. The average tax rate is the total tax paid divided by total income earned. A 10 percent marginal tax rate means that 10 cents of every next dollar earned would be taken as tax.