Why you should be grateful to live in Cyprus

ANYONE who thinks they pay too much tax in Cyprus should be grateful they don't live in Slovenia, France, Belgium or China, according to the latest edition of the Forbes Tax Misery Index.Both employees and employers in Cyprus are left with more in their pockets every year than their counterparts in 50 other countries.

Only the Maltese, Georgians, and residents of Hong Kong, Qatar and the United Arab Emirates fare better.Forbes says tax misery levels in Cyprus stand at only 73.3 per cent, which actually qualifies the island for what Forbes called its Tax Happiness Index.France’s tax misery level is nearly 167 per cent, Belgium’s 156 per cent and China’s 152 per cent, which means people who earn 50,000 euros a year there can end up paying more than 20,000 euros in tax and social insurance deductions. “We've ranked countries based on how large of a cut they take.

We call it the Forbes Misery Index (or, for those countries with low taxes, the Forbes Happiness Index),” said Forbes on its website. “A look at this index shows an executive's gross salary may be reduced by almost 60 per cent if he has his office in Denmark or Sweden. Almost as much is lost in Belgium, and 40 per cent of your pay cheque may be lost in France or New York City to income and social taxes.”By contrast in Qatar, executives “get to keep every euro or dollar their company pays them”.

Using 50,000 euros, as a sample annual salary in all 57 countries, Forbes makes its calculations based on the sum of corporate income, personal income and wealth taxes plus employer social security, employee social security and VAT/sales taxes at the highest marginal rate in each locale.A married person with two dependents earning 50,000 euros in Cyprus can expect to take home 39,597, which amounts to 79.2 per cent of total pay.

In Cyprus, the take home pay for single people earning 50,000 euros is the same.And the island’s low ten per cent corporate tax rate means that employers actually end up paying out less than the gross salary they actually give you. A 50,000 euro a year employee actually costs his employer 47,349 euros after corporate tax.In fact, Cyprus has the lowest corporate tax rate outside of the UAE’s five per cent. The highest was in India, with 42 per cent and Japan at 41 per cent.In Malta, despite its slightly higher 15 per cent corporate tax rate, employees’ take-home pay is one of the highest.

Workers take home 47,415 euros or 94.8 per cent of their 50,000 euro salary. Only in Qatar do employees take home the full 50,000.Sadly for Slovenians, they are left with the smallest net pay cheque, 27,627 euros out of 50,000, and Belgium, Denmark, Sweden, Finland, Italy and the Netherlands are not far behind.

Forbes said that for employees at the 200,000 euro salary level, the Misery Index shows that the best locations for a married executive to maximize after-tax salary in Europe are Georgia, Russia, Ukraine and counties in Central Europe. “Way down the list are Switzerland and Luxembourg. The countries with the lowest total salary cost to the employer are Denmark, Ukraine, Cyprus, Russia and the Netherlands,” Forbes said.

For those earning 1,000,000 euros a year, things are bleak in Slovenia where you end up with less than 400,000 of your hard-earned money after the state has taken its share. The Cyprus government will, however, let you keep around 650,000.