How does Tax work in Europe?

[freestate]

Hello everyone. If it seems like I'm starting a lot of threads lately, perhaps I am. I just have had a lot of questions arise in me lately! Hah. And I always appreciate this community's thoughts.

I'm considering living abroad in Europe next year, probably spending a month or two in each country and I was wondering how taxes work there. For ancestry reasons, I'll probably have a French Citizenship when I arrive in Europe and I'm wondering how it works if I decide to take residence and live in Europe.

How does income tax tend to work in Europe? Or am I being too broad... Is France's tax code as complex as the US's?

I'm considering moving to Europe also because I see their fiscal policy as more sustainable. Things are pretty crazy here in the US if you haven't noticed.


Here's hoping there are some Europeans on here, or at least some people who have lived in Europe for a while.

Thanks!

[blackfm]

Tax code very simple and straight forward in Europe.
You only pay income taxes when you live in One EU country longer than 6 months.
So if I were you and had a large income rolling in, I would move about the continent every 4 months or so like the Billionaires here do.

[freestate]

Well I'm certainly not a billionaire! Haha.

It's nice to hear the code is simpler there. I thought I heard it was.

But if I decided to stay in a country for longer than 6 months, how bad is the tax? Do you have any real-world experience in this? How is the Nederlands compare to France?

[JimOfferman]

Originally Posted by freestate

It's nice to hear the code is simpler there. I thought I heard it was.

I think you may have heard wrong. I don't think that our tax code is of a different complexity, it's just different. While there are many similarities due to overarching EU laws, each country here has its own set of rules... so what I know about Dutch regulations may not apply at all in France. My advice would be to decide where you want to go first and then ask about the tax situation there

I'm not aware of anything like blackfm's supposed tax exemption during your first half year here. I'm willing to be wrong, but I'm inclined to write that off as wishful thinking.

Dutch tax law does state that you do not have to pay taxes on income that was taxed and earned abroad (even if those taxes are zero). If, for example, the company you work for would send you to our beautiful little country for a year, then you would probably still be on their payroll and would pay income taxes according to American rule.

(You'd better ask for a big raise, though, because our 19% VAT tends to make consumption a little more expensive and lets not even mention the abysmal exchange rate of your dollar at the moment...)

Originally Posted by freestate

how bad is the tax?

In the Netherlands, the lowest rate for income is 33%. People who work minimum wage full time pay this rate, most people pay more. It's an outrageous amount by American standards, but then again we do have very un-American standards pertaining social security as well.

[Brutha]

There's no way paying Taxes works in Europe.
Europe isn't a country.
Different European countries have a totally different tax system.

[blackfm]

Looks like there are different tax rules for billionaires and ordinary EU citizens
My apologies for my earlier post

[Brutha]

Looks like there are different tax rules for billionaires and ordinary EU citizens

There no tax rules for EU citizens because the EU is no organisation that taxes people.
Countries tax people, the EU is no country.

[Stephen]

Originally Posted by freestate

How does income tax tend to work in Europe?

Same as everywhere else.

Bend over and take it right up the %^$#@!>

[freestate]

Right, I know Europe isn't a country nor an organization that taxes people.

I was just trying to get a general gist of the differences between the American system and a typical European system.

If this isn't doable, then oh well.

[Holistic Star]

You didn't ask about the UK

but here you go:

Income Tax
You can earn up to £5,435 tax free
Anything you earn up to £36,000 you pay 20% tax
Anything over £36,001 you pay 40% tax

Also we have to pay National Insurance Contributions which is really complicated as there are loads of different categories - but you are looking at about 10% of pay here. Not sure if you would have to pay this if you weren't a UK citizen as it is all about paying into the state pension.


VAT on luxury goods (i.e. pretty much everything) is usually 17.5%

Council tax depends on the type of property you live in, but you are looking at approximately £1,200 per year per house for a catagory D house, which would be shared between all occupants. Depends on which county you live in. The more social problems in the area, the more the local council need to support it. (Single people get a discount I think of 25%)

If you wanted to watch TV while you were here you would have to pay £140 for your TV licence. (And also start calling it 'Telly' rather than TV!)

Depending on the size of the car you drive you would have to pay £120 - £185 for vehicle tax, ensure it had a valid MOT certificate and also insurance which can be expensive if you have no prior claim history.

Does that help?

Sorry I don't know anything about the French financial situation!

[freestate]

Thanks for the info on how the UK works, Holistic.

One of the reasons I ask how tax works in europe is because tax code is the United States is probably the most complicated tax code on the planet. (The complete tax code is 65,000 pages, on last count. Look it up.) Thus we have people who make interpreting a full time job, but I digress...

Can any Europeans attest to how complex or simple the tax system is there? Better yet, anyone who has lived in North America and Europe so they have a comparison?

Thanks in advance!

[Brutha]

Germany has an incredibly complex tax system. Even people who study it don't understand it fully.
It's probably more complex than your US system.

The US ways of making laws is often more pragmatic, while we Germans go after Kant want to have laws that produce the best possible solution for every individual case. We have a lot more bureaucracy.

But as I said ago, that Europe is no country and every European country has it's own tax system.
You Americans have historically more or less copied the British way of organizing society through laws.

[Lalena]

I came here looking for a summary on how the american tax system works. I was reading about it and found that it was nog completely unlike Dutch Tax laws. Income tax anyway (property tax i different).

The Dutch also have a progressive rate only much higher. Lowest percentage is about 33%, second is about 43% and the highest is 52%. A couple of years ago the highest rate was 62%.
The progressive rate is held against brackets as well.

Also deductions like payments to retirement plan, alimony and interest on mortgages are familiar. And don't quite understand the credits but i guess it's like our special situations, singles with children or elderly people or diabled people get a certain amount of money.

Payment for childcare are not calculated on the same form as the annual income tax form, but the rates are depend on you salary. The more you earn, the less contribution you get from the irs.

19% vat on luxury items, 6% on neccesities. Al lot of taxes on fuel (at the moment about 1,33 euro's per liter total of which about 65% is taxes) Taxes on sigarettes and alcoholic drinks. Taxes on money you inherit. Prperty tax is a set amount of money per every 3000 euro's that you property is worth. The value is calculated by the irs every year. A few years ago the property-tax-value would be significantly lower that the real market value, mostly because of rapidly increasing house prices and the fact that the house was valued every 4 years. So the irs changed that to every year.

The property tax is pay to the city by the way and not the government.

What else....hmmm.. oh right, taxes on cars and motorcycles. Depending on what sort of fuel you use. Benzine or diesel or lpg. Most people drive benzine and an medium sized car would cost about 45 euro's per month besides the taxes on fuel.
7% taxes on insurance premiums.....


hmmmm can't think of anything else right now.

Bye
Lalena

[ssandra]

Just something to remember as well is that in the netherlands you have to pay for heathcare insurance which can be around 100 euros a month.

In Belgium you pay a bit more income taxes, but the health insurance is around 65 euros a YEAR.

If you are allowed to live in France, than after 6 months you are allowed to live in any other EU country as well because by than you will be a EU citizen (which does not say anything legally, just a term to say that you have the same rights as any other citizen from a EU country).

It is not easy to emigrate to country in Europe. Have at least enough money to be 3 or 4 months without work because it could take that long to get all the paperwork in order.

Don´t worry about if it is doable or not to live here... 16 million people can do it, so can you.

I would decide on where to live not based on money or income taxes, but on culture, where would you feel more at home?

French working culture (as far as I can see) is pretty macho, and can be summed up in "it is not my job, so why should I care?" Belgium is sort of the same there...

In the Netherlands the culture is very open but also very direct. This can be an advantage or disadvantage, depending on your preference.

Both countries are pretty racist as well lately. This is not something to bother you if you are white but if you look like maroccan or that area.. it might be something you are not used to.

[aelle]

Originally Posted by ssandra

If you are allowed to live in France, than after 6 months you are allowed to live in any other EU country as well because by than you will be a EU citizen (which does not say anything legally, just a term to say that you have the same rights as any other citizen from a EU country).

I'm not sure what you mean by this. If freestate is allowed to enter France (or any other schengen area country) on a visa, then he can immediately go to any other Schengen area (not the whole EU) country without an extra visa, as long as he stays there a short enough time not to need immigration paperwork - just like he would be allowed to if he got individual tourist visas for each of the countries.

If he obtains the French nationality (or any other UE nationality) he can immediately travel freely, and reside under certain conditions (employment, proof of ressources, proof of insurance for instance) in any other UE country.

One does not gain nationality by residing for more than 6 months. The legal minimum for requesting nationality on this ground is 5 years of permanent residence. Being naturalized French is at least as difficult as being naturalized American.

freestate , I am very doubtful your anscestry will grant you French citizenship, btw. Right of blood is only valid if one or both of your parents (biological or adoptive) are French citizens, and that you take advantage of this possibility before you turn 18.

[spirit4711]

Originally Posted by freestate

...
Can any Europeans attest to how complex or simple the tax system is there? Better yet, anyone who has lived in North America and Europe so they have a comparison?

Thanks in advance!

The Dutch system is not very complicated for most people. Over the years it was simplified a lot and this trend will continue.

Employers withhold taxes for their employees. In many cases this means less than 1000 EUR difference in tax payable or receivable. Filing your taxes is pretty straightforward if you have a job and not too much wealth (say less than 500,000 EUR). The average tax rate is about 36% I guess. The top tax bracket is 52% over income more than about 50,000 EUR.

Within a few years the Tax Dept will pre-fill your tax file with the data they get from employers. You will only need to agree or adapt, and declare other things you must pay taxes on (e.g. taxable income earned abroad).

[ssandra]

Originally Posted by aelle

I'm not sure what you mean by this. If freestate is allowed to enter France (or any other schengen area country) on a visa, then he can immediately go to any other Schengen area (not the whole EU) country without an extra visa, as long as he stays there a short enough time not to need immigration paperwork - just like he would be allowed to if he got individual tourist visas for each of the countries.

If he obtains the French nationality (or any other UE nationality) he can immediately travel freely, and reside under certain conditions (employment, proof of ressources, proof of insurance for instance) in any other UE country.

One does not gain nationality by residing for more than 6 months. The legal minimum for requesting nationality on this ground is 5 years of permanent residence. Being naturalized French is at least as difficult as being naturalized American.

freestate , I am very doubtful your anscestry will grant you French citizenship, btw. Right of blood is only valid if one or both of your parents (biological or adoptive) are French citizens, and that you take advantage of this possibility before you turn 18.

If you stay as a tourist, you are absolutely right.

Of course, as a French national you have the same rights as every other European.

But, if you are looking to move there, without getting the French nationality (just by being a French citizen), then the EU rules apply. And those say that you have to have lived a minimum of 6 months in a EU country.

I know in Spain having Spanish grandparents is enough, even after they are 18. I don´t know the rules for France.

[aelle]

Originally Posted by ssandra

If you stay as a tourist, you are absolutely right.

Of course, as a French national you have the same rights as every other European.

But, if you are looking to move there, without getting the French nationality (just by being a French citizen), then the EU rules apply. And those say that you have to have lived a minimum of 6 months in a EU country.

I know in Spain having Spanish grandparents is enough, even after they are 18. I don´t know the rules for France.

I have been looking for the legislation on that but couldn't find the answer I was looking for. From my own experience though, I know that non European nationals (my Algerian friends for example) who have been legally living in France all their lives, do not have the same rights as me when it comes to travelling inside the EU non-Schengen states.

[ssandra]

The legislation is very unclear.

The basic principle of the matter is:

If you are a Dutch nationality, the Dutch law takes presidence over the European laws. If you are a Dutch national, living in another EU country, EU law takes presidence.

EU Law states that if you are (as a non-eu national) married to an EU National, you are entitled to any of the benefits that your spouse is entitled to as well.

Many countries still try to dispute this by having secondary legislation in place, for example the tests to see if you have a "fake" marriage, just for living in an EU country. If they deem that this is true, they can say that they do not accept your marriage and you have no rights...

Probably I got a little confiused and mixed that with other visitors, who are not married to an EU-national.

*EU-national ofcourse doesn´t exsists, by that I mean a national of any of the EU countries.