Income tax
Estonia is far from being a top expat destination, but it can surprise you when it comes to taxes. It's definitely a country to consider if you're looking for a job abroad. Estonia has the best tax system in the world with a 20% uniform income tax rate. This proportional system allows you to keep the largest proportion of your salary for yourself. You don't have anything else to do since income tax is deducted at source. Employers also contribute up to 33% to a social tax for each employee. The amount is calculated according to the gross salary, which is not affected. On the other hand, Estonian employees are eligible for deductions for various expenses, including interest on bank loans, children's schooling, pension contributions, training, as well as gifts and donations.
In Slovakia, income tax ranges from 19% to 25% depending on the income threshold. However, employees can request reductions for their pension contributions and health insurance. Expats who are tax residents in Slovakia are also eligible for an allowance for their dependent spouse. The Czech Republic applies income tax at a rate of 15%. Employers contribute 33.8% based on their employees' gross income, taking into account social contributions and health insurance.
Corporate tax
You can still move to Estonia if you're looking to start a business abroad. Thanks to its low corporate tax rate, it tops the Global Fiscal Competitiveness Index. In fact, entrepreneurs and larger companies pay a 20% corporate tax. Also, profits, especially when they are reinvested, are tax-exempt. It's worth noting that corporate tax in Estonia only applies when profits are redistributed among the shareholders. When the company makes profits, there is 0% tax. Besides, corporate tax can entirely be paid online.
It's quite similar in Latvia where tax only applies when profits are distributed among shareholders. This means that companies don't pay tax if they choose to keep profits or reinvest them into operations or to buy vehicles. Also, shareholders no longer have to pay the 10% tax on dividends, including those from foreign sources. In Lithuania, only companies generating profits above 2 million euros per tax year are required to pay a standard 15% corporate tax and an additional 5% tax.
Meanwhile, France is working on reducing its corporate tax rate to 32.02% until 2022. While the rates are still high compared to other countries, it is also planning to reduce taxes on dividends and royalties for individuals coming from non-treaty countries. In Belgium, corporate tax dropped from 29.58% to 25% over the past few years.
New Zealand recently introduced a special provision for businesses that incurred losses during the COVID-19 crisis. According to this provision, tax payments are postponed for a year. Norway did the same, except that the payment is postponed for two years.
Property tax
Estonia also stands out for low property tax. In general, real estate owners are required to pay an annual tax ranging from 0.1% to 2.5%, depending on the property's market value of the property, but the rates vary from one city to another. For property sales, the rate is capped at 20% of the total value, even when the property is rented out.
In New Zealand, there is no tax on the purchase of property and capital gains. Also, stamp duty and mortgage stamp duty are non-existent. Property tax is only applied when the buyer is a real estate broker who intends to resell the property or if the property has been redeveloped. In general, the property tax is deducted by local authorities based on the estimated value of the property, but the owners can still claim reductions.
In Australia, property owners can claim reduced stamp duty on the purchase of off-plan properties in certain states and territories. Buyers pay only a fraction of the stamp duty, depending on the stage of construction, at the time of signing the contract. When the property generates income, property tax applies, but owners are eligible for tax reductions or deferral. However, they will need to justify the expenses incurred following receipt of the income.
Consumption tax
Switzerland has the lowest value-added tax. In 2021, it will be applied at a rate of 7.70%. There is also a reduced rate of 3.7% on hotels and 2.5% on water, foods and drinks, medicine, books, as well as sports and cultural events. Financial services, education, healthcare and insurance are tax-exempt.
In South Korea, the value-added tax is applied at a flat rate of 10%. As in Switzerland, financial services and insurance are VAT-exempt.
