Expats looking for a more liberal tax regime might want to avoid France and Belgium which a study have found are the most taxed countries in Europe.

The annual study by think tank the Molinari Institute, which works out a tax freedom day for each country which is the date when the tax man is effectively paid off, puts France top and last year’s title holder Belgium in second place.

Tax Squeeze
The study calculates how much tax, social charges and VAT a person must pay to the state compared to what they earn on average. It then works out the equivalent of how many days a year it will take them to pay it.

Workers in France have to wait until 29 July while in Belgium it was 27 July and based on figures from EY (formerly Ernst and Young), French workers hand over some 57.5% of their salaries to the state in various kinds of taxes compared to 56.9% in Belgium.

Overall typical workers across the European Union saw their average real tax rate dip slightly this year from 45.2% to 45%. Since 2010 this figure has risen by 1%, due mostly to VAT increases in 20 of the 28 states of the European Union.

The earliest tax freedom day is in Cyprus where it is 29 March, followed by Malta on 18 April, Ireland 30 April, the UK 09 May, Bulgaria 18 May, Denmark 01 June, Luxembourg 04 June, Estonia and Spain 08 June, Slovenia 09 June, Lithuania and Croatia 13 June, Poland 14 June, Portugal 15 June, Slovakia and the Netherlands 20 June, Finland and Sweden 22 June, Romania 23 June, Italy 02 July, Greece 07 July, Germany 11 July, Hungary 17 July, and Austria 19 July.

The study explains that although the French earn higher wages on average than their German counterparts, those across the Rhine actually have 17% less spending power and France’s rise to the top of the table has more to do with the impact of Belgian tax cuts.

‘The fiscal and social pressure on the average French employee remains at record levels. This pressure, which cannot be explained by more attractive benefits, penalises most of the world,’ said Cécile Philippe, president of the Molinari Economic Institute and co-author of the study.

The study also looked at whether the French were getting value for their money in terms of the social and welfare services all their taxes were being spent on and found that France’s public services are not the best performing.

‘It seems that the high level of collective spending in France is not matched by better well-being that would justify the higher taxation,’ the report said.

‘Belgian and French workers spend more than half of the amounts distributed by their employers and taxes. It is worthwhile to ask why they do not get back the best schools, the best health care or the most generous pensions,’ said James Rogers, associate researcher at the Institut Economique Molinari.