Income Taxes Abroad: Calculating Net Salaries
A lot of programmers want to participate in large foreign projects and earn competitive salaries. But how much is left from their remuneration after deducting all obligatory taxes? Let’s review 5 countries.
Many developers don’t mind moving abroad for a better life and higher salaries. We’ll focus on 5 countries we work with the most: Germany, Cyprus, Latvia, the Czech Republic and the USA.
In our experience, the United States and Germany attract developers with their strong IT-sector and always need good specialists. Cyprus is a luring place thanks to its warm climate, opportunities of an EU member, more affordable living expenses and simpler relocation paperwork than in many other European states. Latvia and the Czech Republic don’t have enough local programmers, which is good news for foreign developers: it’s way cheaper to live there than in most other places in Europe.
Let’s have a closer look at taxes, obligatory contributions, and allowances in each of these countries.
In our experience, the United States and Germany attract developers with their strong IT-sector and always need good specialists. Cyprus is a luring place thanks to its warm climate, opportunities of an EU member, more affordable living expenses and simpler relocation paperwork than in many other European states. Latvia and the Czech Republic don’t have enough local programmers, which is good news for foreign developers: it’s way cheaper to live there than in most other places in Europe.
Let’s have a closer look at taxes, obligatory contributions, and allowances in each of these countries.
Germany
Germany has a progressive taxation system: the more you get, the more you have to give (from 14% to 45%). Unmarried employees will pay using the following scheme:
Germany has a progressive taxation system: the more you get, the more you have to give (from 14% to 45%). Unmarried employees will pay using the following scheme:
You don’t have to pay anything for the income lower than €9 984 a year. 14-42% is a progressive rate: 14% is levied for €9 985. Then it goes gradually up with the growth of your salary and reaches the maximum of 42% for €58 596 per year. The sum between €58 597 and €277 825 has fixed 42%. If you earn more, you pay 45%.
All working people are divided into tax classes. It’s a special Fiscal Service tool to determine the rate for each individual payer. The division is based on the marital status, number of kids and the income size. For example, unmarried people or spouses who live separately get the first class. Apart from this one, there are 5 more (single parents, spouses with different incomes, etc.). Click here for more information.
The goal of such a system is not to confuse everyone but to ease the tax burden: the state establishes tax-free sums for different categories and provides benefits for married couples and single parents.
Apart from the income tax, you’ll have to deduct social security contributions from your salary:
We have a current vacancy for a Senior Java Developer in Berlin with the salary up to €5400 gross. If we use a special calculator, we’ll see that the specialist will get €3200 net (taken that the person is not married and doesn’t have kids):
All working people are divided into tax classes. It’s a special Fiscal Service tool to determine the rate for each individual payer. The division is based on the marital status, number of kids and the income size. For example, unmarried people or spouses who live separately get the first class. Apart from this one, there are 5 more (single parents, spouses with different incomes, etc.). Click here for more information.
The goal of such a system is not to confuse everyone but to ease the tax burden: the state establishes tax-free sums for different categories and provides benefits for married couples and single parents.
Apart from the income tax, you’ll have to deduct social security contributions from your salary:
- 7,3% for health insurance
- 9,3% for pension insurance
- 1,2% for unemployment insurance
- 1,5% for nursing care insurance
We have a current vacancy for a Senior Java Developer in Berlin with the salary up to €5400 gross. If we use a special calculator, we’ll see that the specialist will get €3200 net (taken that the person is not married and doesn’t have kids):
Interesting Facts
Cyprus
This country has the lowest income tax when compared to Europe in general. Individuals pay using a progressive system: the payable sum depends on how much you earn.
- Those who are married and have children pay less than other categories. A registered couple can reduce the sum that needs to be paid to the state, especially if one spouse doesn’t work or earns way less. As for kids, parents get child allowances, which is €8 388 per year in 2022.
- There is a solidarity tax (5,5%) that was first introduced in 1991 (soon after the reunion of Germany) to support the Eastern part, as well as to help other European countries. Since 2021, it’s only paid by people who earn over €73 000 a year.
- The minimum wage in Germany is €9,82 per hour (about €1 150 per month for a full-time job).
- According to the annual salary report by StepStone, the average salary for a Senior Software Developer is €4 800 gross. But the remuneration depends on the programming language.
Cyprus
This country has the lowest income tax when compared to Europe in general. Individuals pay using a progressive system: the payable sum depends on how much you earn.
Apart from the income tax, you’ll also pay the following social contributions:
Let’s take a current Java Developer vacancy from our website. A company from Limassol is looking for an experienced programmer to work in their office, with the salary from €4 500 gross per month. We add this sum into a special calculator and see how much the state will take in a month (€1 102) and year (€13 224).
- 2,65% to the national healthcare system (NHIS in the table below)
- 8,3% for social security
Let’s take a current Java Developer vacancy from our website. A company from Limassol is looking for an experienced programmer to work in their office, with the salary from €4 500 gross per month. We add this sum into a special calculator and see how much the state will take in a month (€1 102) and year (€13 224).
A tip: tap on the Tax Breakdown in the calculator to see how exactly your income is levied on the progressive scheme.
Interesting Facts
Latvia
The progressive income tax scale in this country is as follows:
Interesting Facts
- The state provides allowances for those who become its tax residents for the first time. For example, you can reduce the income tax due up to 20% of your salary (but no more than €8 550 per year).
- Cyprus is one of the few countries that doesn’t have an official minimum wage standard (except for some professions: cleaning specialists, nuns at kindergartens, guards and so on get no less than €870 per month). The government was planning to implement a minimum national salary threshold, but the coronavirus made them postpone the changes.
- According to the Average Salary Survey, a Software Engineer gets €3 432 gross in 2022. But in our experience, Senior programmers’ salaries are reaching €4 500 gross.
Latvia
The progressive income tax scale in this country is as follows:
Social contributions take 10,5% from your salary, while the employer pays 23,59%.
There are a lot of allowances and bonuses in Latvia. For example, €250 is not eligible for tax deduction if you have an unemployable family member with a dependency status (kids, physically challenged relatives, etc.). Taxpayers who have a document proving their physical disability also get additional deductions.
We have a vacancy for a Senior Java Developer in Riga. The salary is up to €5760 gross, with the company guaranteeing €4 000 net. We’ve calculated all taxes and contributions one has to pay for the specialist without children:
There are a lot of allowances and bonuses in Latvia. For example, €250 is not eligible for tax deduction if you have an unemployable family member with a dependency status (kids, physically challenged relatives, etc.). Taxpayers who have a document proving their physical disability also get additional deductions.
We have a vacancy for a Senior Java Developer in Riga. The salary is up to €5760 gross, with the company guaranteeing €4 000 net. We’ve calculated all taxes and contributions one has to pay for the specialist without children:
Interesting Facts
The Czech Republic
Unlike other countries, there is a simpler taxation system for physical persons. In 2022, the income lower than 155 644 CZK per month (€6 311) is levied 15%, while the sum over it – 23%.
Additional 6,5% is deducted as a social security contribution, while 4,5% – for health insurance (11% total). Employers pay 33,8%.
A tax credit is available for parents (about €50 per month for the first kid, €70 for the second and €90 for the third), people with physical disability (according to official documents), as well as for working students.
Let’s take our vacancy Java/Groovy Developer with the remuneration €3 100 gross and calculate the net income for a specialist without kids:
- Latvia also has a solidarity tax that is paid for sums exceeding €78 100 per year (10,5% for employees and 23,59% for employers).
- The minimum wage in 2022 remains at the same level – €500 per month.
- The average salary for a Software Developer in 2022 is €3 315.
The Czech Republic
Unlike other countries, there is a simpler taxation system for physical persons. In 2022, the income lower than 155 644 CZK per month (€6 311) is levied 15%, while the sum over it – 23%.
Additional 6,5% is deducted as a social security contribution, while 4,5% – for health insurance (11% total). Employers pay 33,8%.
A tax credit is available for parents (about €50 per month for the first kid, €70 for the second and €90 for the third), people with physical disability (according to official documents), as well as for working students.
Let’s take our vacancy Java/Groovy Developer with the remuneration €3 100 gross and calculate the net income for a specialist without kids:
The programmer will get €25 114 per year or €2 092 per month.
Interesting Facts
The USA
All taxpayers are divided into special classes (similar to the system in Germany): a category for singles, married filing jointly or separately, as well as for heads of households (not married but having dependents). The website of the Internal Revenue Service has detailed information for all classes. The following table is relevant for single employees:
Interesting Facts
- On the 1st of January, 2022, the minimum wage in the Czech Republic was increased to 16 200 CZK per month (€656).
- The average monthly salary for a Software Developer is 69 250 CZK gross (€2 701) as of the 1st March, 2022.
The USA
All taxpayers are divided into special classes (similar to the system in Germany): a category for singles, married filing jointly or separately, as well as for heads of households (not married but having dependents). The website of the Internal Revenue Service has detailed information for all classes. The following table is relevant for single employees:
Contributions are divided between the employee and the company: each pays 6,2% for social security and 1,45% for health insurance (Medicare).
Payments to the government can be reduced if you choose the right taxpayer status. In addition, the USA offers lots of benefits. Here are only some of them:
It’s hard to find a national minimum wage for a Software Developer in the USA. The differences between IT salaries in Silicon Valley and other regions are huge. If we compare big projects, the gap can reach 20-25%, while with small ones – 40%. According to the Bureau of Labor Statistics, the average salary for a programmer is $9 522 per month, while PayScale shows $6 100.
Let’s analyze the data from PayScale and calculate the taxes that will be paid to the government:
Payments to the government can be reduced if you choose the right taxpayer status. In addition, the USA offers lots of benefits. Here are only some of them:
- Child tax credit (up to $3 600 a year)
- American opportunity tax credit (available in case of expenses for higher education for taxpayers, their kids or spouses, up to $2 500 per year)
- Deduction for state and local taxes (up to $10 000 per year)
It’s hard to find a national minimum wage for a Software Developer in the USA. The differences between IT salaries in Silicon Valley and other regions are huge. If we compare big projects, the gap can reach 20-25%, while with small ones – 40%. According to the Bureau of Labor Statistics, the average salary for a programmer is $9 522 per month, while PayScale shows $6 100.
Let’s analyze the data from PayScale and calculate the taxes that will be paid to the government:
It’s $4 876 per month net (in our case, the programmer doesn’t have kids and is not married).
The high tax burden encourages local companies to look for employees in other countries to create distributed teams. For example, specialists from Eastern Europe and Asia can apply for the position of Distributed Database Software Engineer. Even considering the USA taxes, the employer offers the monthly remuneration from $6000 gross, which is higher than the average salary for such specialists in the local market.
Interesting Facts
Salary Calculators of Other Countries
If you’re eager to know about taxes and compulsory deductions in other places, you can use online calculators: there are options for anywhere. We’ve compiled a list and tried to make it as complete as possible:
We hope this article will help you quickly navigate through taxes and contributions in other countries. Explore our active vacancies and have no trouble calculating your net income. If you want to relocate, contact us: we’ll find a suitable position and navigate you through all stages until you complete a probation period on your new job.
The high tax burden encourages local companies to look for employees in other countries to create distributed teams. For example, specialists from Eastern Europe and Asia can apply for the position of Distributed Database Software Engineer. Even considering the USA taxes, the employer offers the monthly remuneration from $6000 gross, which is higher than the average salary for such specialists in the local market.
Interesting Facts
- The USA is a federal state. It means that taxes are levied not only at a federal level but also at regional and local ones. They set their own personal income rates.
- At the federal level, the minimum wage is $1 256 per month, but states can make it higher. For example, an employee in California gets at least $15 per hour (about $2400 per month for a full-time job).
Salary Calculators of Other Countries
If you’re eager to know about taxes and compulsory deductions in other places, you can use online calculators: there are options for anywhere. We’ve compiled a list and tried to make it as complete as possible:
- The United Kingdom
- Belgium
- Bulgaria
- Hungary
- Vietnam
- Greece
- Denmark
- India
- Indonesia
- Iran
- Ireland
- Spain
- Italy
- China
- Luxembourg
- Malta
- The Netherlands
- Pakistan
- Poland
- Portugal
- Romania
- Saudi Arabia
- Singapore
- Slovakia
- Slovenia
- Turkey
- Finland
- France
- Croatia
- Switzerland
- Sweden
- Estonia
- South Korea
- Japan
We hope this article will help you quickly navigate through taxes and contributions in other countries. Explore our active vacancies and have no trouble calculating your net income. If you want to relocate, contact us: we’ll find a suitable position and navigate you through all stages until you complete a probation period on your new job.
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