How much of your gross salary do you take home? This is a very complex matter, depending on different variables such as whether you are a couple or not and if you have children. Of course, it also depends on how much you earn, as tax rates are progressive in many countries.
Still, we can get an overall idea of take-home pay ratios for different scenarios based on Eurostat's annual earnings figures.
Let us begin with how net earnings are calculated. Net earnings are derived from gross earnings by deducting the employee's social security contributions and income taxes, and adding family allowances in the case of households with children.
Eurostat's 2023 dataset includes all EU member states, three EFTA countries, and one EU candidate country. As we focus on the ratios, we do not delve into the specific amounts in detail; however, they are fully available for all four scenarios in the charts below.
The first scenario examines a single person without children earning 100% of the average salary. Among the 31 European countries included, the ratio of annual net average earnings to gross average earnings varied significantly, ranging from 60.1% in Belgium to 85.9% in Cyprus, with the EU average standing at 68.8%.
In addition to Cyprus, employees in Switzerland (81.4%), Estonia (81.1%), and Czechia (80%) also take home at least four-fifths of their gross salaries.
Alex Mengden, Global Policy Analyst at the Tax Foundation, told Euronews Business that the main factor keeping the net-to-gross earnings ratio high in Switzerland is the intense local tax competition between cantons and municipalities.
Alongside Belgium, Lithuania, Germany, Romania, and Denmark, the take-home ratio fell below 65%.
Among the EU's top four economies, Spain stands out as the most favourable for singles without children, with individuals retaining 77.9% of their gross salaries. This compares to 72.5% in France and 72.3% in Italy.
Annual net salaries within the EU showed significant variation, ranging from €9,355 in Bulgaria to €49,035 in Luxembourg, with the bloc's average reaching €28,217.
Annual gross earnings in the EU averaged €41,004, resulting in a difference of €12,787 between gross and net income.
When EFTA and EU candidate countries are included, Switzerland emerges as a clear outlier with annual net earnings of €85,582, while Turkey ranks at the bottom with €8,968, falling below Bulgaria.
The ratio of annual net average earnings to gross average earnings for a two-earner couple without children is very similar to that of a single person without children, with only minor variations.
To illustrate, a two-earner couple without children took home €56,359 out of a gross income of €81,732 in the EU, resulting in a net-to-gross ratio of 69%..
The take-home pay ratios for couples with children increase significantly compared to households without children, regardless of whether the household consists of a single person or a couple.
It ranged from 70.4% in Romania to 109.3% in Slovakia, with an EU average of 82.7%. The three Nordic countries - Norway, Denmark, and Finland - were among the bottom five, each reporting a ratio below 76%.
In the EU, a one-earner couple with two children took home a net income of €33,940 from a gross salary of €41,043. A single person without children had a net income of €28,217.
The €5,723 difference in net earnings primarily stems from two factors: the couple received €1,846 in family allowances and, more significantly, paid €3,764 less in income taxes.
However, this family support was not available in all countries on the list. Turkey, for example, did not provide any family allowances or tax relief, resulting in a nearly identical take-home pay ratio across all scenarios.
The difference in take-home pay ratios between a single person without children and a one-earner couple with two children was also less than 5 percentage points (pp) in Greece, Norway, Cyprus, and Finland.
In Slovakia (109.3%) and Czechia (102.3%), annual net earnings exceeded gross earnings for a one-earner couple with two children. For example, in Slovakia, gross earnings amounted to €16,835, while net earnings were €18,399, resulting in a €1,564 surplus. This difference is primarily due to the implementation of a "negative income tax", which offers additional financial support and emphasises family-friendly policies.
In this scenario, besides Slovakia (+33.6 pp) and Czechia (+22.3 pp), Luxembourg (+22.7 pp), Poland (+21.5 pp), and Belgium (+19.6 pp) also reported significant rises in the take-home ratio compared to a single person without children.
To provide a concrete example, in Belgium, a single person without children would retain only 60.1% of their gross earnings as take-home pay. In contrast, this ratio increased significantly to 79.7% for a one-earner couple with two children.
More precisely, the take-home figures were €35,604 and €47,238, respectively, resulting in €11,634 more net earnings for the couple with children.
The take-home pay for a two-earner couple with two children ranged from 65.7% of gross earnings in Belgium to 89.5% in Slovakia. The EU average was 73.8%, meaning a couple would receive €60,332 out of a total gross earning of €81,732.
Compared to two-earner couples without children, couples in this category generally had higher take-home ratios, with the exception of Iceland and Turkey, where there was no difference. The difference was less than two percentage points (pp) in Greece, Cyprus, Spain and Norway.
Meanwhile, couples with two children in Slovakia, Poland, and Austria enjoyed a take-home ratio increase of more than seven pp compared to those without children.
Families with children generally benefit from higher net-to-gross earnings ratios compared to individuals without children, especially one-earner households, with many countries crossing 80%. This suggests that countries tend to provide more favourable tax treatment or benefits for families with children and a single income.
For two-earner couples with two children, the take-home ratios are generally slightly lower than for one-earner couples with children but still higher compared to single individuals.
Single individuals often have the lowest ratios, reflecting less favourable tax or benefit policies for individuals without dependents.
Biggest differences occur between single individuals and one-earner families with children.
"These results mirror our Tax Burden on Labour in Europe, with the important difference that the Tax Burden on Labour data takes total labour costs and therefore also employer-side social contributions into account", Alex Mengden said.
2025-01-22T06:27:57Z