Tax Game
In the 17th edition of our "Tax Game", we compared the personal income tax systems of various member countries using a real-life case scenario from 2024. The aim was to highlight the differences in tax calculation methods and levels of taxation, offering a practical and engaging way to explore the specific features of each national tax system.
Tax Game
In the 17th edition of our "Tax Game", we compared the personal income tax systems of various member countries using a real-life case scenario from 2024. The aim was to highlight the differences in tax calculation methods and levels of taxation, offering a practical and engaging way to explore the specific features of each national tax system.
To illustrate the exercise, we first present the German model in detail, followed by a comparative table showcasing selected responses from our member firms.
Germany (Example)
| € | |
| Husband | |
| He is a co-owner of a small business and has from it | |
| Income from business operations | 30.000 |
| He is self-employed as an architect and earns | |
| Income from self-employment | 110.000 |
| Wife | |
| She works as an accountant and has | |
| Income from employment | 40.000 |
| Her father had left her a rented house, from which she has | |
| Rental Income | 15.000 |
| In 2024, she took part in a guessing game on television, | |
| because she was so good, she won € 5.000 | |
| Other income | 5.000 |
| Capital Gains, Interest and dividend - income | |
| Husband | |
| Interest and dividends | 9.000 |
| Wife | |
| Interest and dividends | 3.000 |
| Sale of shares | 9.000 |
There is a total income amount 2024 for both of € 221.000.
They both paid for their own health insurance, whereby he for a private insurance € 7.400 p.a. and she for a statutory insurance € 3.530 p.a. for her work as an employee.
They paid €7.000 to a craftsman company for a new terrace in their home.
Comparative Overview – Selected Countries
|
Taxable income |
Tax |
In % from taxable income |
In % from total income |
|||
|
Austria |
201.438 |
65.901 |
32,7% |
29,8% |
||
|
China |
189.560 |
39.555 |
20,9% |
17,9% |
||
|
Cyprus |
190.142 |
43.539 |
22,9% |
19,7% |
||
|
France |
193.000 |
43.835 |
22,7% |
19,8% |
||
|
Germany |
205.340 |
58.152 |
28,3% |
26,3% |
||
|
Japan |
200.140 |
44.891 |
22,4% |
20,3% |
||
|
Lebanon |
207.000 |
28.280 |
13,7% |
12,8% |
||
|
Malta |
192.000 |
49.800 |
25,9% |
22,5% |
||
|
Netherlands |
175.470 |
66.287 |
37,8% |
30,0% |
||
|
Panama |
182.125 |
42.065 |
23,1% |
19,0% |
||
|
Poland |
37.616 |
17,0% |
||||
|
Portugal |
213.500 |
72.587 |
34,0% |
32,8% |
||
|
United-Kingdom |
203.930 |
63.643 |
31,2% |
28,8% |
||
The different taxable income amount comes from tax exemptions or tax advantages, which are granted in several countries such as standard allowances on different types of income, discounts or flat rate deductions.
In many countries, in addition to the normal tax rate, separate lower tax rates are applied to various types of income (e.g. rental income).
Capital income is taxed at a special, usually lower, tax rate in all countries.
In summary, it can be said that statements about high or low tax rates alone do not provide any indication of the actual tax burden in a country. For example, countries with a high tax rate may well have comparatively low tax burdens if the sum of the types of income is reduced by exemptions from taxation to such an extent that taxable income is low.
It should also be noted that in some countries the social security components are only determined with the tax assessment. In some countries, high social security contributions are assessed in addition to taxes. In the example above, Poland has a comparatively low tax burden, but an extraordinarily high social security contribution is also assessed with the tax assessment.
It might be interesting to include the burden of social security contributions in a next step.
Hans Ronneberger
Rentrop & Partner - Germany
