How many days do people have to work every year to pay their taxes?
Taxes across the world
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A country's Tax Freedom Day is the point in the year when a nation has theoretically earned enough money to have paid off its taxes, meaning that all of the money earned after that date is yours to do with as you please. But which countries shake off the taxman the quickest? We compare how long it takes 29 countries to pay off their taxes based on figures from professional services network Deloitte, unless otherwise stated.
All calcuations are based on the average taxpayer for each country, meaning that the exact Tax Freedom Day for each person will vary.
USA: 105 days
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In our round-up Tax Freedom Day comes around the quickest in America, where it falls on 16 April, according to tax policy non-profit the Tax Foundation. That isn't to say that it comes cheaply however, as people living in the US spent more on their taxes in 2018 than they did on food, clothing, and housing combined, according to the Bureau of Labor Statistics Consumer Expenditure Survey. The exact date does vary state to state, with Alaska and Oklahoma enjoying earlier Tax Freedom Days on 25 March and 30 March respectively. New Yorkers have to work for the longest before their money is theirs, with Tax Freedom Day happening on 3 May. Tax is a hot topic in the US at the moment as working class Americans are set to pay more than the country's top 1% due to new tax rules introduced by President Trump.
Australia: 107 days
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Research by the Centre for Independent Studies (CIS) marks 17 April as the day that Australians are officially tax free. This year people living in Australia had to work an extra day to pay off their taxes compared to 2018, and this is the latest that Tax Freedom Day has fallen since the Global Financial Crisis saw the date pushed back to 23 April in 2008. The average tax bill for each Australian is more than A$22,000 ($14,960/£11,638), with the national tax burden set to creep up in the coming years, according to the CIS.
Romania: 114 days
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Romanians pay off their taxes quicker than any other European Union country, with Tax Freedom Day happening on 24 April. In order to be part of the 2007 EU enlargement along with Bulgaria, Romania had to completely reorganise its political and economic systems. The country's average personal income tax rate reached a record low of 10% in 2018, where it has stayed for 2019 according to Trading Economics. But the number of days it takes for Romanians to pay that tax has drpoped dramatically, as it was 124 days in 2018.
Bulgaria: 121 days
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Bulgarians are among the Europeans who pay off their taxes the fastest, with their earnings only going to the taxman up until 6 May. Like Romania, Bulgaria faced huge changes when it joined the EU, and the country now has plans in place to switch its currency from Bulgarian lev to the euro as early as January 2022, according to Reuters. Tax Freedom Day comes earlier for Bulgaria than last year, with Bulgarians being tax-free five days sooner than in 2018.
Switzerland: 127 days (2018)
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Formerly regarded as a tax haven, Switzerland had been a hidey-hole for wealthy people wanting to stash their cash without paying extortionate tax rates for years. The EU named and shamed the country on its 'gray list' of tax havens in 2017, prompting reforms to make Switzerland's tax system compliant with EU standards and to prevent tax evasion. Switzerland met the EU conditions by ending some of its preferential schemes and it was officially removed from the list this year. It is worth noting that these results are from Deloitte's 2018 data, as the company was unable to provide data for 2019.
New Zealand: 129 days
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This year New Zealanders paid one day's less tax compared to 2018, according to New Zealand accountancy firm Bakertilly Staples Rodway, although that is still five days more than in 2017. It is calculated that 27 of the 129 days go towards healthcare, while everybody works for 22 days to fund education and another 22 days for social services & welfare (superannuation). There haven't been any abnormal increases in tax for people in New Zealand in recent years; Tax Freedom Day falling later is as a result of GDP not growing at the same rate as tax payments.
Lithuania: 129 days
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Also falling on 9 May, Lithuania's Tax Freedom Day came four days earlier than in 2018. However, the Lithuanian Free Market Institute placed the day quite a bit later than Deloitte in 2018, with the organisation suggesting that it was 23 May, rather than 13 May. Either way, Lithuanians start working for themselves, rather than the taxman, considerably earlier than most Europeans. Lithuania has recently employed a progressive tax system, meaning that the amount of tax paid by residents is now calculated based on their earnings, rather than everybody having the same flat rate.
Latvia: 144 days
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In 2019 it took citizens in Latvia 144 days to pay off their taxes, which shows no change since 2018. As of January 2019, a progressive tax rate was implemented for annual income (at rates of 20%, 23%, and 31.4%), capital gains, income from property, and income from non-residents. Recently Latvia adopted Estonia's system for corporate taxation, and the Tax Foundation has praised its "relatively efficient system" for taxing labour.
Estonia: 145 days
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In 2019 Estonians reached their Tax Freedom Day eight days earlier than they had in 2018, with it only taking 145 days before the average person's taxes had been paid off. Estonia has a flat tax rate of 20%, meaning that everybody pays the same regardless of income. The country's tax rates have dropped fairly steadily over the last decade, according to the Republic of Estonia Tax and Customs Board. Each year the Organisation for Economic Co-operation and Development (OECD) ranks the tax systems of its member states, and 2019 saw Estonia keep its number one spot as the "most competitive tax system" out of the 36 countries.
United Kingdom: 148 days
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People living in the UK worked for 148 days in 2019 just to pay the tax bill, according to the Adam Smith Institute (ASI). This year's Tax Freedom Day came at the latest point in the year since 1995, which is when this kind of data was first made available by ASI, although earlier data shows correlations of tax burdens falling under Conservative governments, and rising under Labour governments. Social protection, health, and education are the three largest sectors that are funded by those paying taxes in the UK. British citizens paid off those taxes three days sooner in 2019 than they did in 2018.
Malta: 150 days
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The European Union country with the smallest population, Malta, is becoming a popular choice for multinational companies looking to relocate their business interests according to KPMG. Tax rates are relatively low, with residents paying up to 35% of their annual income in tax if they earn more than €60,001 (£51,333/ $66,022). All of Malta's taxes were paid off by 30 May in 2019, which is a day later than in 2018. Having both Maltese and English as official languages also makes the island an appealing option for investors who are looking to move abroad.
Poland: 151 days
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In Poland, tax payers worked for an additional two days to pay off their taxes compared to 2018. But as of 1 August 2019 this no longer includes people younger than 26, as the Polish government implemented a new policy to discourage young people from emigrating for better pay. The new system will mean that those aged 26 and under who earn less than 85,528 Polish złoty (£17,099/$21,979) a year are entirely exempt from tax. This figure is well above the national average salary of 58,000 Polish złoty (£11,588/$14,889) according to the Tax Foundation, and the Polish government hopes that it will help to fill the labour market's skills deficit.
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Spain: 152 days
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A rejection of budget proposals at the beginning of 2019 meant that Spain's tax rates haven't changed in the last year, and neither has the time it takes for people to pay their taxes. The rejections not only impacted tax rates, but also prompted two general elections, with the Spanish Socialist Workers' Party (known as PSOE) coming out on top on both occasions. The results are likely to have a considerable impact on Spain's tax system, with the Socialists having pledged to increase the country's tax progressivity as a means of increasing wealth distribution, according to Forbes.
Ireland: 154 days
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Ireland has seen their Tax Freedom Day pushed back further than most countries listed, as in 2019 it took an extra 10 days for the Irish to pay off the taxman compared to the year before. Irish taxpayers had to wait until the 3 June to be free of tax. However, the Organisation for Economic Co-operation and Development (OECD) praises Ireland's tax system which it has called the second most progressive for income tax (out of 36 members), and the most progressive in the EU. The system follows the simple rule of the more you earn, the more tax you pay. So for workers on low salaries the personal tax rate is actually the second-lowest compared to the UK, the US, Germany, France, Sweden, Singapore and Switzerland, according to research by the Irish Tax Institute (ITI), but as salaries go up the scale so does the tax rate and Ireland's rankings in the International Tax Tables.
Norway: 164 days
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Norwegians have always put quite a hefty chunk of their wages into taxes, and the money has led to the Scandinavian nation becoming a world-envied example in terms of its healthcare and education systems. US president Donald Trump even named the country as having the type of people that he would welcome as immigrants in America. While this year sees residents taking five days longer pay off their taxes, the personal income tax rate is currently at its lowest point in decades at 38.52%, which is almost 10% less than between 2000 and 2005 according to Trading Economics.
Canada: 164 days
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In 2019, the average Canadian family had paid off their taxes by 14 June – a total of C$52,675 ($39,764/£30,975) – which is 44.7% of the average earnings, according to the Fraser Institute. Tax Freedom Day does vary from province to province, with Alberta getting there first on 27 May, and Newfoundland and Labrador celebrating it just over a month later on 2 July. Carbon tax was a big point of contention in the election this year, with Liberals insisting it was needed for Canada to comply with the Paris Agreement, and the Conservatives wanting to scrap it all together. Having been re-elected, it will be interesting to see how the Liberals will use tax as a means of reducing Canada's environmental impact.
Portugal: 166 days
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The Portuguese paid off their taxes two days earlier in 2019 than they did in 2018, with the country celebrating Tax Freedom Day on 15 June. This only applies to mainland Portugal however, as people living on Madeira and the Azores are taxed differently. Those who earn more than €80,640 ($88,759/£69,120) per year will pay 48% tax in both Portugal and Madeira for example, whereas someone living in the Azores will pay much less with a tax rate of 38% according to PwC.
The Netherlands: 168 days
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Tax Freedom Day came four days earlier in 2019 than in 2018 for the Netherlands, and this comes ahead of big changes due to be made to the tax system in 2020. The main drive behind these changes is to keep businesses in the country, as well as to combat tax abuse and ensure that the country's systems align with those set out by the EU, according to law firm Baker McKenzie. This comes after members of the European parliament voted for the Netherlands to be included on the EU tax havens black list.
Germany: 173 days / 198 days
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Depending on the data that you look at, Germany's Tax Freedom Day falls either on 22 June as recorded by Deloitte, or 15 July according to the Bund der Steuerzahler Deutschland e.V. (BdSt). But both sites do agree that German tax payers are better off than last year, with Deloitte's Tax Freedom Day falling a day earlier, and the BdSt reporting that the tax burden on individuals has reduced by 0.2%, which are good signs for those contributing to the eurozone's largest economy.
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Czech Republic: 174 days
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Boasting the EU's lowest unemployment rate at only 1.9%, a huge majority of people in the Czech Republic are liable to pay taxes, and they did so by 23 June 2019. The Czech Republic is one of several European countries, including Italy and Austria, that plans to implement a digital services tax in 2020, with France having already applied the tax retroactively from January 2019, according to the Tax Foundation. Certain digital services i.e. services provided by big internet companies such as search engines have become increasingly problematic for existing tax systems, which is why many countries are looking to come up with new systems to combat the issue.
Hungary: 182 days
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In Hungary 1 July continued to mark Tax Freedom Day this year, whilst February saw the prime minister, Viktor Orbán, announce changes to the tax system in an attempt to boost the country's population. Women with four or more children would be exempt from paying income tax for the rest of their lives in Orbán's new plans, and he's looking to introduce further measures that would support larger families, such as having the government contribute to larger family cars and increasing funding for daycare.
Greece: 183 days
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Greece's financial reputation has taken quite the battering as it was hit harder than most during the Global Financial Crisis of 2008. Its Tax Freedom Day coming four days earlier than last year could, however, be a by-product of a slow but steady recovery. The government has revealed plans designed to boost the economy, including enticing wealthy foreigners with an attractive flat tax rate of €100,000 ($110k/£86k) on income generated outside of the country. It would be expected that any investor would then pump €500,000 ($551k/£429k) into the national economy over the first three years of their residency in Greece, according to Bloomberg.
Italy: 185 days
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Also hitting Tax Freedom Day four days earlier than in 2018 is Italy, which is one of several European countries looking to implement a web tax as part of their 2020 budget. The move comes as the country is struggling to avoid a steep increase in sales tax and instead wants to crack down on web giants. Sites such as Google and Facebook have profits that massively outweigh the contributions they are making to the countries where they are based. By applying these new taxes, Italy hopes to generate an extra €600 million ($667m/£510m), according to Reuters.
Austria: 188 days
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Austrians started working for themselves 10 days earlier this year, which means that Austria, along with Ireland and Romania, has seen the biggest shift in the date of Tax Freedom Day since 2018. The country at the heart of Europe may see Tax Freedom Day continue to edge earlier over the next couple of years as the government has set out plans to reduce its progressive income tax rates. Progressive tax was implemented in Austria back in 1988, and now consists of seven brackets whereby individuals pay between 0% (on earnings up to €11,000 ($12.2k/£9.3k) and 55% tax on all of their income.
Finland: 190 days
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Tax Freedom Day fell on 9 July for people in Finland this year, which is five days earlier than in 2018. As many as 79% of Finnish residents are happy to pay their taxes, according to a 2017 survey by the country's Tax Administration, and their contentment is reflected in the World Happiness Report, which Finland has topped for the last two years. The factors taken into account as to what makes a country happy are GDP, life expectancy, generosity, social support, freedom, and corruption levels.
Sweden: 192 days
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Sweden celebrated Tax Freedom Day on 7 July this year, which was two days later than in 2018. While Sweden isn't considered to be one of the typical tax havens of Europe, the removal of inheritance and gift taxes can make it an appealing location for investors looking to relocate. In fact the Nordic country has become something of a haven to neighbouring countries thanks to its lack of a sugar tax: in 2018 the BBC reported that more and more Norwegians are heading to Sweden to satisfy their sweet tooth, and confectionery shops are popping up all along the border as a result.
Denmark: 201 days
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Tax Freedom Day came to the people of Denmark on 17 July in 2019, which is one day earlier than in 2018. A Eurostat report revealed that Danes' taxes and social contributions add up to 45.9% of GDP and current tax rates are high compared to most other countries; citizens paid 55.8% of their income in taxes in 2018. But this is a big decrease since Denmark's 62.3% tax rate from 10 years ago during the Global Financial Crisis however, and high taxes don't seem to have had a negative effect on the country, with Denmark consistently ranking in the top three countries in the World Happiness Report since 2013.
Belgium: 206 days
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The taxation rate in Belgium is considered to be one of the highest in the world, with those on an income of €40,480 ($45k/£34k) or more paying 50% of that money to the government in taxes according to KPMG. This is more than double the amount paid by those living in the UK or US who are on a similar salary, where citizens earning that much are only required to give up 20% and 22% of their earnings respectively. Huge tax rates account for Belgium's ranking on this list as it was the second-to-last country to reach Tax Freedom Day in 2019.
France: 209 days
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It takes French citizens longer than any other nation to pay their annual taxes, with Tax Freedom Day falling on 28 July in 2019. In 2017, France overtook Denmark as the most highly taxed country, with the overall government tax revenue reaching 34.2% of GDP, its highest average tax since records began in 1965 according to Reuters. In response to the gilets jaunes (yellow vests) protesters, a series of tax cuts have been announced by French president Emmanuel Macron, but these have yet to have an effect on the country's Tax Freedom Day, leaving France waiting the longest to pay off its debts to the taxman.
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