Where in Europe You Keep the Most of Your Salary: Tax Wedge by Country (2025)

What the Tax Wedge Measures

The tax wedge is the gap between what your employer pays to employ you and what you actually take home. It includes personal income tax, your social contributions as an employee, the employer's social contributions, and any cash benefits the state pays back.

According to data compiled by the Tax Foundation, single workers earning an average wage paid 38.9 percent of their total labour compensation in taxes on average across the European Union and the United Kingdom in 2025.

Because economists generally agree that both sides of payroll taxes ultimately fall on workers, the employer's share of contributions counts as part of this figure - not only the amounts you see on your payslip. These figures apply to a single worker with no children earning a nation's average wage.

Countries with the Highest Tax Burden

Belgium tops the 2025 ranking with a tax wedge of 50.81 percent. Germany follows at 46.55 percent, and Slovenia at 46.17 percent.

Austria (44.63 percent), the Slovak Republic (44.64 percent), and France (44.60 percent) round out the top 6. Each sits well above the EU and UK average of 38.9 percent.

Countries with the Lowest Tax Burden

Cyprus has the lowest tax wedge in the 2025 data at 26.41 percent. Malta (29.18 percent) and the United Kingdom (29.20 percent) follow, with Ireland at 29.51 percent.

Croatia (31.52 percent) and Greece (31.82 percent) also come in below the EU and UK average of 38.9 percent - making them notably more favourable than the top-ranked countries for workers keeping their take-home pay.

How the Numbers Have Changed

Between 2024 and 2025, the average tax wedge across the EU and UK fell by 0.06 percentage points. The direction varied sharply by country: 16 increased their tax burden on labour, while 9 reduced it.

The United Kingdom recorded the largest increase, up by 1.9 percentage points, after raising the employer national insurance contribution rate and reducing the secondary threshold. Estonia's burden rose by 1.6 percentage points following an increase in the flat personal income tax rate from 20 to 22 percent.

On the other side, Greece cut its wedge by 3.8 percentage points, largely through a rent subsidy for low- and middle-income households. Latvia reduced by 1.7 percentage points by simplifying its income tax schedule and moving to a fixed tax-free allowance. Malta cut by 1.8 percentage points by raising lower income tax thresholds.

Over a longer period, Hungary had a tax wedge of 54.7 percent in 2000. By 2024 that had fallen to 41.2 percent, partly through the introduction of a flat income tax and reductions to payroll taxes. Lithuania and Sweden each reduced their tax burden on labour by between 6.4 and 8.7 percentage points over the same period. This shows the ranking is not fixed: policy decisions can shift a country's position considerably over time.

What to Keep in Mind When Comparing Job Offers

When weighing a role in one European country against another, the tax wedge gives a useful reference for how much of total labour costs typically reaches a worker as take-home pay. A job in Cyprus, Ireland, or Croatia will generally yield a higher share than a comparable role in Belgium, Germany, or Slovenia - based on this data for a single worker with no children at average wage.

The 2025 Tax Foundation data covers 28 European countries, with individual breakdowns for income tax, employee social contributions, employer social contributions, and cash benefits.

Source: Tax Foundation, "Tax Burden on Labor in Europe," 2025 data.