Taxes in other countries, how do they work? What are the countries with no income tax? What are the tax-free countries? To quote Benjamin Franklin, nothing’s sure but death and taxes. So, whatever country you go to, you’re bound to pay taxes, one way or another. If you migrate or even travel abroad, you might be surprised at the different tax system that country might have. To help you out, here’s a list of things you might not know about taxes in other countries.
11 Facts About Taxes In Other Countries
1. Compared to Taxes in Other Countries, Americans Pay Less
First, if you want to pack-up and fly abroad because you’re sick of taxes, think again. Americans generally suffer lighter tax burdens than their developed neighbors. Tax burdens cover income, property, and other taxes you’re required to pay. Taxes eat up around 25% of national income, and this is lower than the 35% that other developed countries have to pay. Meanwhile, the highest personal income tax rate is 39.6%
2. There Are Still Several Countries Paying Lower Taxes
Americans pay less taxes than other countries, but there are still countries with less taxes than the US. Among these countries is our neighbor, Canada, where the highest income tax rate is 33%. New Zealand, Poland, the Czech Republic, and Singapore count among the developed countries whose citizens pay lower taxes. Particularly, Singapore’s highest possible income tax rate is 22%, a far cry from America’s 39.6%. Finally, Hungary’s highest income tax rate only reaches 15%, with 9% for corporate taxes.
3. Europe Has The Highest Tax Burdens
Even if Poland, the Czech Republic, and Hungary have lower taxes, the rest of Europe does not. Denmark the highest tax burden, which can eat up almost half of their personal income. France, Belgium, Finland, and Italy all follow in tax burdens by country, which range from 40% to 50%.
4. France Tried to Pass a Very Unpopular Super-Tax
Another thing about France, they tried to hike up their already-high taxes even more. Francois Hollande, the former president, attempted to put a 75% tax on income earned above a million euros. Of course, that led to a lot of anger, since it would make France have the highest income tax rate in the world. Some of France’s richest even threatened to give up their French citizenship. So, the bill ended up getting junked.
5. American Expats Still Have to File Taxes
If you’re an American living abroad and you think you can escape filing taxes, think again. The US and Eritrea are the only two nations on earth that require its people to file their taxes, wherever they live. So even if you live abroad, you still have to mail your tax report to the IRS.
6. Income Earned in Other Countries Can Be Exempted from Taxes!
You may have to file a tax return, but it doesn’t mean you have to pay taxes. The IRS gives a tax exemption for income earned abroad, as much as a $100,000. So, you can still file without paying any taxes, and you avoid any penalties for late reports. Also, the IRS isn’t very strict with late-filers, and readily forgive those who’ve missed years of reporting if they come clean.
7. Ireland’s Tax System is Kind to Artists
In Ireland, artists have it easier. That’s because they can claim an exemption on their earnings from creative works. To encourage the production of art, the Irish government will forgive up to 50,000 euros worth of artists’ income.
8. There Are Countries With No Income Tax or Corporate Tax
Want a tax haven? Well, you’ll probably have to go to an island-nation or the Middle-East. Since that’s where most countries with no income tax or corporate tax are located. Countries with no corporate tax include Vanuatu, the Bahamas, and the Cayman Islands. Meanwhile, countries with no income tax include the United Arab Emirates, Saudi Arabia, and Bahrain.
9. The Tax Agency Approves Your Baby’s Name in Sweden
Here’s one of the weirder things about taxes in other countries. In Sweden, the tax agency has to approve your child’s name before they turn five. They can refuse to approve the name for a number of reasons, like religious offensiveness. If you don’t follow this tax rule, you might end up paying a hefty fine.
10. The US Loses Billions of Corporate Taxes Every Year
Yes, you heard that right. Among developed countries, the US suffers worse from tax evasion. Experts estimate a loss of nearly $200 billion every year. On the other hand, the South African nation of Guyana, followed by Chad in Africa, are the worst-affected by tax evasion. Since it affects nearly 7% of their GDP.
11. There is No Value-Added Tax in Macau
Lastly, do you know that in Macau, there’s no value-added tax? Macau charges taxes for imports of alcohol and tobacco, but generally doesn’t implement VAT. Other countries that have a low VAT include Singapore, Malaysia, Thailand, and the UAE. On the other hand, many European countries charge high VAT amounts. France, Italy, Belgium, Denmark, and the Netherlands all impose VAT of 20% or higher.
Still curious about taxes in other countries? Then watch the video below!
Taxes in other countries can be either really similar to or really different from our own. Even if you’re not planning to travel, you should have at least some understanding of how international taxes work. So if you ever go abroad, you can be more prepared. Also, prioritize taxes at home, and don’t forget to file your tax returns!
Do you have any questions about taxes in other countries? Then comment them below!