Tax Liberation Days Calculated for all EU Countries

May 7, 2014 Taxation in EU

BRUSSELS – Average employees in the EU may work for up to half a year just to pay off their annual tax obligations this year, and this time frame is only set to rise as populations continue to age.

On May 6th the independent international think-tank the New Direction Foundation released a report listing the dates of the tax liberation days of each EU country for 2014, and showing that an average worker in the EU faces a “real tax rate” of 45.06 percent, approximately 0.21 percent more than last year, and 1.28 percent higher than in 2010, when the calculation was first completed.

According to the report published by the Foundation, Cyprus has the earliest tax liberation day in 2014, falling on March 21st, while the second and first place are held jointly by Ireland and Malta, more than a month later on April 28th.

Conversely, the latest tax liberation days during 2014 in the EU will be on July 28th and August 6th, in France and Belgium respectively.

The authors of the report noted that their report is the first of its kind to be completed using internationally comparable methodology across all the countries of the EU, while all previous studies have only focused on national tax policies.

The report also showed that a significant proportion of taxes effecting employees in the EU are “invisible” as the burden is carried by employers or in the form of VAT, and it was specifically mentioned that lowered headline tax rates may not necessarily translate to lowered overall tax obligations, as governments will usually balance out the drop with a hike to other taxes.

As part of the research it was also found that approximately 54.6 percent of the entire population of the EU are currently not in the labor force, leaving the remainder to pay for the rising burdens of healthcare, superannuation and welfare, and the current situation will only worsen as populations age.

Photo by: Emilian Robert Vicol