A favorable tax regime is one of the criteria that people look for when looking for a job.
The Tax Foundation analytical center evaluated the tax legislation of 36 EU countries and identified the states with the highest and lowest personal income tax.
Cyprus was on the 25th place of the rating. The island has one of the lowest rates of maximum possible tax.
According to the non-profit organization, the Republic of Cyprus does not take tax from the first nineteen and a half thousand euros earned by its tax resident. Thereafter, a rate of 20% to 35% of the amount of income for the year applies. Interestingly, the maximum rate in Cyprus is equivalent to the corresponding rate in Malta.
The top 10 countries with the highest personal income tax are Denmark (55.9%), France (55.4%), Austria (55%), Spain (54%), Belgium (53.5%), Portugal (53%), Sweden (52.3%), Finland (51.4%), Slovenia (50%) and the Netherlands (49.5%).
In contrast, the lowest rate of increased effective income tax is recorded in Romania and Bulgaria (10%), Moldova (12%), Hungary (15%), Ukraine (19.5%) and Georgia (20%).
How the rating is compiled
Tax Foundation is an American non-profit organization, which has been studying the tax policy of states since 1937. The company's experts analyze the legislation of countries and interview their residents, make reports, and tell how taxes affect the economy of states and people's lives. The Tax Competitiveness Index determines the strengths and weaknesses of the legislation of OECD countries. According to the experts, competitive tax legislation keeps the marginal tax rate low. That is, the rate of additional tax that residents pay for each additional euro of income.
If the tax rate is high, the inflow of foreign investment decreases. Neutral tax legislation seeks to collect the most revenue with the least economic distortions. For example, under such a tax policy, there are no exemptions for specific activities.