Popular expat country France has second highest taxes in the world

by Ray Clancy on December 12, 2014

If you decided to become an expat to have a better lifestyle but want to pay less tax then you may want to check what you might expect to pay, as the top economies are also the top for tax.

France, one of the most popular countries in the world for expats, has the second highest level of tax, surpassed only by Denmark, according to new figures published by the Organisation for Economic Cooperation and Development (OECD).

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France’s high tax rates are surpassed only by Denmark

Some 45% of GDP in France is raised through taxes. Overall taxation among the world’s top economies rose to the highest level in six years in 2013, though the United States has much lower tax levels at 25.4%

Tax receipts collected by OECD countries went from an average of 33.7% of the GDP in 2012 to 34.1% in 2013.

In some countries tax levels have fallen. For example, Belgium, which is in third place, has seen its notoriously high tax to GDP ratio fell from 45.5% to 44.6% but France’s has increased from 42.9% to 45% in just two years, while in Denmark it is up from 48.1% to 48.6%.

France also has the second highest property taxes in the developed world, accounting for 3.8% of their GDP. It is the fourth year in a row that the tax burden in France has grown from €20.1 billion in 2011, to €23.5 billion in 2012 and € 26.3 billion in 2013.

Socialist President Francois Hollande was elected in 2012 partly on a promise to tax the country’s rich at a rate of 75%, but the average person in France has found the tax burden too high and there has been a huge rise in the number of people asking to defer part of their tax bills.

In fourth place is Finland at 44%, then Italy at 42.6%, Luxembourg at 39.2%, Germany at 36.7%, Holland at 36.3%, Greece at 33.5%, Portugal at 33.4%, the UK at 32.9%, Spain at 32.6%, Japan at 29.5% and Ireland at 28.3%.

The largest increases in 2013 occurred in Portugal, Turkey, Slovak Republic, Denmark and Finland. The largest falls were in Norway, Chile and New Zealand.

The lowest tax-to-GDP ratios among OECD countries are in Mexico with 19.7%, Chile at 20.2%, followed by Korea at 24.3% and the United States at 25.4%.

The tax burden remains more than 3% below pre-recession levels in Iceland, Israel and Spain. The biggest fall has been in Israel from 34.7% in 2007 to 30.5% of GDP in 2013.

The tax burden in Turkey increased from 24.1% to 29.3% between 2007 and 2013. Three other countries, Finland, France and Greece, showed increases of more than 2.5% over the same period.

The OECD report also shows that in 2013, the tax burden rose in 21 of the 30 countries for which data is available, and fell in the remaining nine. The number of countries with increasing and decreasing ratios was the same as that seen in 2012, indicating a continuing trend toward higher revenues.

It says that a number of factors are behind the rise in tax ratios between 2012 and 2013 with about half due to personal and corporate income taxes, which are typically designed so that revenues rise faster than GDP during periods of economic recovery. Discretionary tax changes have also played a role, as many countries raised tax rates and/or broadened tax bases.

The new data also show rising revenues in central, state and regional governments between 2011 and 2013, following declines over most of the 2008/2010 period. The average tax ratio for local governments increased slightly but steadily since 2007.

Revenues from personal and corporate income taxes are now recovering, after the sharp falls of 2008 and 2009. However, the 33.6% share of these taxes in total revenues seen in 2012, the last year for which full data is available, remains below the 36% share in 2007. The share of social security contributions has increased by 1.6% to an average 26.2% of total revenue.

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