Employees in Belgium pay highest income taxes in 38 OECD countries

Employees in Belgium pay highest income taxes in 38 OECD countries
Credit: Belga

For the second year in a row, employees paid more taxes on their wages in Belgium than in any other country last year, according to the Organisation for Economic Cooperation and Development (OECD) annual report.

Due to the Covid-19 pandemic and the accompanying support measures, the tax burden on income was reduced in most countries in 2020. However, there was hardly any sign of it in 2021.

In Belgium, too, the tax burden increased again, partly due to the absence of the Federal Government's planned tax reform: of all 38 OECD countries, the difference between gross and net wages was the biggest in Belgium, the report shows.

For tax burden on income, single workers in Belgium saw 52.6% of their gross income go to social security contributions and personal income tax, on average – 0.4% more than in 2020, when Belgian single workers were also at the top of the list.

The OECD average was 34.6%.

While the wage taxes for a two-earners married couple with two children are a little lower because of child benefits and tax breaks, the taxes on their gross salaries are still the highest in Belgium.

In 2021, the tax burden for such a family was 45.2% – 1.8 percentage points more than in 2020, when the difference between gross and net was 43.4%. The OECD mainly referred to the increase in income tax for the rise.

It is also over 4 percentage points more than the next three countries: Germany, France and Italy (all 40.9%). By comparison, the Netherlands is only in 27th place, with a tax wedge of 27.4%, just below the OECD average of 28.8%.

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For families with children, the tax wedge does decrease when one of the partners does not work: for couples with one working parent and two children, Belgium did not come up first, but ranked in sixth place with 37.3%.

But tax benefits and child allowances can also be taken into account, bringing the average net tax burden for a married employee with two children in Belgium to 20.3% in 2021. This, too, is the sixth highest rate in the OECD report.

In practice, this means that a married employee with two children in Belgium had, on average, a net salary, after taxes and child benefits, of 79.7% of their gross salary. The OECD average for this was 86.9%

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