Where in the world can you pay the least tax?

UK

Relatively low headline rates of income tax but large social security levies on top

Income	Tax rate
£0-£10,000	0pc
£10,000-£41,865	20pc
£41,865-£150,000	40pc
£150,000+	45pc

National Insurance contributions

Paid on earnings of more than £153 a week. Employees pay 12pc on earnings below £41,865 and an extra 2pc above that. The self-employed generally pay £2.75 a week plus 9pc on annual profits between £7,956 and £41,865. A further 2pc is paid on profits above that level. Over-65s pay nothing.

VAT 20pc

Property tax

Banded council tax levied by local authority, averaging £1,470 for a flat or £1,800 for a three-bedroom house (less in Scotland).

Buying property

Banded stamp duty rates, ranging from 1pc to 7pc, payable on full purchase price under “cliff-edge” system.

Savings

Currently 10pc on total savings income up to £2,880. This will change in April 2015, from when no tax will be payable below £5,000. Otherwise interest is taxed at your marginal rate. Dividend income is taxed at 10pc for basic-rate taxpayers, at 32.5pc from there to £150,000 and at 37.5pc above that.

Spain

Numerous income tax bands, tax breaks for children and elderly relatives

Income	Tax rate
€0-€17,707	23.9pc
€17,707-€33,007	29.3pc
€33,007-€53,407	39.4pc
€53,407-€120,000	46.5pc
€120,000-€175,000	48.5pc
€175,000-€300,000	50.5pc
€300,000+	51.5pc

Rates shown include national tax and the average local tax rate. €4,080 can be deducted as an allowance

Social security (equivalent to NI) 6.4pc of salary , up to a maximum of about €41,000. Self-employed pay about €250 a month. Married couples can use each other’s allowances, deducting up to €3,400. There are income deductions for children. Elderly parents living in the family home also help cut tax bills.

VAT 21pc

Property tax

Charged by local councils at 0.4pc-1.3pc. Councils may also charge taxes on construction, motor vehicles and land.

Buying property

Transfer fees of 6pc-7pc, stamp duty of 0.5pc-1.1pc on second-hand properties.

Savings

21pc for interest up to €6,000, 25pc on €6,000-€24,000, then 27pc.

Italy

Complex income tax system but plentiful allowances

Income	Tax rate
€0-€15,000	23pc
€15,000-€28,000	27pc
€28,000-€55,000	38pc
€55,000-€75,000	41pc
€75,000+	43pc

A 3pc “solidarity tax” on income of more than €300,000 applies until 2016

Tax allowances

For children, medical and funeral expenses, school and university fees, some insurance premiums. Sliding scale for those earning up to €55,000. A regional tax of 1.2pc-2.3pc is also levied, plus a municipal tax of 0.1pc‑0.8pc.

Social security

9.2pc of salary, deducted at source. Self-employed pay 18pc-28pc, up to an income of about €99,000.

VAT 22pc

Property tax

Municipal “service tax” of 0.3pc-0.8pc a year.

Buying property

3pc tax on urban property, 4pc if buying from a company or agency . Second homes attract tax at 10pc. Rural properties attract higher tax rates: 11pc, or 18pc for second homes. All rates are plus VAT. Agency fees (usually divided equally between buyer and seller) of 3pc-8pc, notary fees of 2.5pc-3pc.

Savings

Interest and some dividends and capital gains are subject to a flat tax rate of 20pc. Others are liable to tax of 49.7pc on gains.

France

Income taxed on family basis, with surcharges for high earners

Income	Tax rate
€0-€6,011	0pc
€6,011-€11,991	5.5pc
€11,991-€26,631	14pc
€26,631-€71,397	30pc
€71,397-€151,200	41pc
€151,200+	45pc

An additional “exceptional contribution” applies: 3pc for income of more than €250,000 and 4pc for more than €500,000

Couples pay tax on a family basis

Combined income is added up and divided by the number of people in a household, including children, to arrive at an individual’s taxable income. Self-employed pay up to 48pc of net profits, less for lower earners. Tax allowances on mortgage interest, children’s education, charitable donations and maintenance payments.

Social security

Total rate of about 8pc, levied on pensions and benefits (7.1pc) and investment or rental income or capital gains (15.5pc).

VAT 20pc

Property tax

Regional tax linked to notional rent a property might achieve. For main homes the rate is 0.2pc for more than €4,500 in notional rent. For second homes it is 1.2pc for €4,500-€7,600 and 1.7pc above that.

Buying property

Tax of 5.8pc, less in some regions. Off-plan and newbuild homes attract less tax but up to 20pc VAT. Registration costs can be an extra 1pc or so. Legal, mortgage and professional fees come to a further 2pc.

Savings

Interest and dividends taxed at marginal rate, additional social charges up to 15.5pc.

Greece

Simple income tax system but watch for the 'garden tax’

Income	Tax rate
€0-€25,000	22pc
€12,000-€42,000	32pc
€42,000+	42pc

There is an additional “solidarity” tax ranging from 1pc on income of €12,000 to 4pc on income of more than €100,000. Self-employed pay 26pc on income up to €50,000 and 33pc above that, plus a single solidarity fee of about €450.

A tax credit of €2,100 applies to employees and pensioners with annual incomes up to €21,000 then falls on sliding scale.

Social security

16.5pc of salary. The self-employed are “self-insured” and pay according to income, with a monthly minimum of €250.

VAT 23pc

Property tax

From 0.1pc for property worth €300,000-€400,000 to 1pc for those worth €1m or more, plus €1 per square metre of garden.

Buying property

3pc tax. Land registry and other fees up to 5pc. New properties attract no tax but do attract 23pc VAT.

Savings

15pc tax on interest, deducted at source. Dividends taxed at marginal rate.

'Luxury living’ tax

Applies to the assumed annual income from the ownership or use of private cars, aeroplanes etc, and up to 10pc for swimming pools.

Australia

No social security costs except small health care levy

Income	Tax rate
A$0-A$18,200	Nil
A$18,200-A$37,000	19pc
A$37,000-A$80,000	32.5pc
A$80,000-A$180,000	37pc
A$180,000+	45pc

Social security

Paid for through federal taxes, except for Medicare, charged at 1.5pc of taxable income. Those earning A$160,000 (plus A$1,500 per child) pay an extra 1pc.

VAT 10pc

Property tax

Charged locally. In Sydney , for example, the charge is A$100 plus 1.6pc of the value between A$412,000 and A$2.5m.

Other taxes

States also levy fees on other transactions, including land transfers, leases and car sales. This varies between 1.4pc and 5.5pc on sums of more than A$960,000.

Savings

Interest taxed at marginal rate. Capital gains tax is payable on disposal of assets, except for personal items such as a family home.

United States

Complex web of national, state and local taxes

Income	Tax rate
$0-$9,075	10pc
$9,075-$36,900	15pc
$36,900-$89,350	25pc
$89,350-$186,350	28pc
$186,350-$405,100	33pc
$405,100-$406,750	35pc
$406,750+	39.6pc

Married couples filing together, widows and widowers and heads of household filing alone get different allowances. Taxpayers get a fixed amount for dependants such as children of just under $4,000.

State income taxes

4.6pc in Colorado, for example, or 6.5pc on income of more than $60,000 in Delaware, but none in Alaska or Florida.

Social security

6.2pc on salaries and self-employed income up to $117,000. Medicare charge is 2.9pc, plus 0.5pc on single incomes of more than $200,000 or joint incomes of more than $250,000. Many states levy sales taxes – 9.5pc in Tennessee and 6.6pc in Florida.

Property tax

Generally charged at county or municipal level. Expect to pay $8,000 a year or more in Manhattan or $250 in parts of Alabama or Louisiana. In Palm Beach, property taxes average just under $5 per $1,000 of value.

Buying property

Many states levy sales tax on property purchases. Florida charges stamp duty and sales tax of about 8pc of the property value.

Savings

Dividends and other income taxed at marginal rate. Investments held longer than a year attract capital gains tax of 15pc on disposal, or 5pc in two lowest tax brackets.

Cayman Islands

No income tax but import duties on almost everything

Taxes

No income or capital gains tax.

Social security

None – nor for any other government programmes. Medical insurance and pensions are mandatory for all employees.

VAT None.

Other taxes

Stamp duty on lease and property transfers, customs duties, business licences and fees.

Buying property

Tax at 7.5pc of price or market value, whichever is higher. Mortgages taxed at up to 1.5pc of the sum borrowed. Land leases charged at 5pc of rent for up to five years, 10pc for five to 10 years and 20pc for longer.

Import duties

Cayman does not produce its own food, apart from fish and turtles. Duties are imposed on most products, although luxury items, such as watches and jewellery, are exempt.

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