Different economic strategies, social policies, and efforts to attract foreign investment among European countries result in greatly varying employer tax rates across the region. Understanding these rates is crucial for businesses seeking to optimize their expenditure while staying compliant with local regulations. Here are the top 5 European countries with the lowest employer tax rates in 2024:
- Lithuania (1.77%). This year, Lithuania has further reduced its already minimal employer tax rate, which remains one of the lowest in Europe. The employer contribution to social security is set at 1.77%, applicable to income up to a ceiling of EUR 114,162 for 2024. In this way, the country aims to foster a business-friendly environment, especially for small and medium-sized enterprises.
- Romania (6%). Currently, Romania is in competition with other Eastern European countries to become the region’s most attractive IT outsourcing destination. Therefore, it offers a low employer tax rate to foreign investors as a part of a broader strategy of economic growth with focus on IT and related industries.
- Montenegro (6%). Montenegro offers an attractive employer tax rate as a part of their national economic program designed to stimulate foreign investment. The country has established itself as a popular destination for international businesses looking to minimize operational costs.
- Malta (10%). Malta is currently known as another attractive international business hub. The country offers favorable tax residency programs that minimize foreign-sourced income tax and attract investors.
- Ireland (11.05 to 11.15%). One of the most dynamically growing IT and tech hubs in Western Europe, Ireland offers a competitive employer tax rate to remain attractive to multinational corporations.
When calculating per capita employer costs, it is important to consider that monthly salary limits may apply to these general rates. Additionally, there are other factors such as specific industry regulations, employee benefits, and regional policies. For a detailed and case-specific breakdown, we recommend contacting local specialists such as Acvian.
