How taxes & social security impact your net salary and the differences between countries

Income tax, social security, gross, brutto, net, netto, brexit (🤨).

Did you know that someone making 100k€ a year receives around 73k€ after deductions in Luxembourg, but only 56k€ in the Netherlands?

Quick math

When evaluating a job offer salaries play a major role. Do they cover your expenses and more?

To know that, you'll need to understand how much you'll actually receive in cash – the net amount.

Gross Salary – Taxes – Social Security = Net Salary

Easy right?

The taxes and Social Security Contributions are deducted as percentage depending on your personal situation. Are you married? Do you have children? How high is your salary?

These factors vary again depending on the country you work and live in.

Differences between countries

Have a look at this graph:

income-tax-ssc-developer-software-engineer(data from oecd.org)

It shows the percentage of the gross salary that was deducted as income tax & social security in 2017. This for single people that earn 67, 100 or 167% of the average salary in each country.

So basically, if you lived in Luxembourg and earned an average salary, you received around 10% more cash than a colleague in Germany with an average salary.

Let's have a look at these more recent statistics from our colleagues at KPMG.

graph-net-salaries-developers-software-engineer

This graph represents the percentage of gross salary going straight into the pocket (=net salary) of a married person with 2 dependent children with a 100k€ gross salary.

So again, if you live in Luxembourg, have a wife and two children, and make 100k a year, you'll net 73.14k€ (cash in the pocket). In the same situation, you'll only earn 65.76k€ in Germany or 55.75k€ in Belgium.

Here's how the deductions are distributed in the different countries:
table-net-kpmg-2

As you see, the combination of taxes and social security is what reduces the net salary. In France, the income tax is extremely low, only 8% (!) but the social security contributions reduce the net salary to 72%. Contrary to this, the UK only ask 6% of social securiy contributions, but 27% of income tax. Luxembourg has more balanced rates with 12% and 14%.

On this note, it is important to note that social security works different in every country. Here's a pretty complete guide if you want to dig deeper.

Single? No Child? High Salary?

As mentioned above, your personal situation matters first and foremost. Relationship status, children, salary and many other factors influence how you are taxed.

To illustrate the differences, let's have a look at Luxembourg.
table-net-family-situation-luxembourg

For once, being single is more expensive than being in a relationship. 😉
In other words the impact of salary and family situation is huge.

Ms 167% 👩🏼‍⚖️ earns little more than twice as much as Mr 67% 👨‍🎨, but is deducted ±4 times more in the end (8,000€ vs. 36,000€).

Family 167% 👪 earns the exact amount as Miss 167% 👩🏼‍⚖️, but are only deducted two thirds.

Conclusion: Do your research

Now, the general tendencies are obvious and commonly known. But when it gets more complex, there are more things to consider than only the variables "salary" and "married". Are you getting company car? Do you have income other than your salary?

While there are many nice tools (here's a list with some) that help you understand where your money goes, don't forget our Talent Coaches at nexten.io will happily consult you on the matter and help you negotiate the best deals with employers.

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