The true cost of an employee in Europe | Infographic

How much does it really cost to employ someone? For an entrepreneur this is a really tough question, as there is a lot to be considered when you calculate the budget and things will get more complicated if you want to expand your business in more countries.

It is just about the salary? Of course not – you will need to think about cost related to employee recruitment, employee benefits, payrolls, taxes, insurance, retirement benefits, performance bonuses, specific perks considering the country culture and the industry and many more.

For example, did you know that in Bosnia and Herzegovina – Republic of Srpska there are no employer’s social security contributions? Also, in Romania there is a disability tax fund, payable by companies with at least 50 employees, if at least 4% of these employees are not people with disabilities (the fee is determined by the number of employees and the minimum wage provided by the legislation in force).

The list could go on, but let us better show you how statistics look. We were also curious about the True Cost of an Employee in our region and we made a comparison between 22 countries: Bosnia and Herzegovina (Federation of Bosnia and Herzegovina: BA-BIH and Republic of Srpska: BA-SRP), Bulgaria (BG), Croatia (HR), Cyprus (CY), Czech Republic (CZ), Estonia (EE), Greece (GR), Hungary (HU), Italy (IT), Montenegro (ME), North Macedonia (MK), Norway (NO), Poland (PL), Portugal (PT), Romania (RO), Slovenia (SI), Slovakia (SK), Serbia (SR), Spain (ES), Turkey (TR), Ukraine (UA) and the United Kingdom (GB).

Of course, for simplification purposes we calculated the costs (salary and other taxes) for the standard employment conditions. We started from the scenario where a company pays EUR 1000 NET salary to an employee (no meal tickets, no children, full time, excluding all the exceptional benefits) and analyzed how the social and health contributions, as well as income tax varies in all these countries.

You may find below what these amounts are in EUR, what other taxes and deductions are applicable in each country and what are the TOTAL costs in the given scenario.

Other deductions

(for EUR 1000 NET salary)

Additional deductions apply only to certain countries:

• Cyprus: Cohesion Fund, Redundancy Fund and Industrial Training Fund – all included in the employer’s contributions . Also Holiday Fund may apply depending on the employer
• Italy: EUR 75.45 – Severance fund, accrued over the employment period and paid at the termination of it. It’s an additional company cost.
• Norway: Standard minimum deduction, Interest on loans
• Poland: EUR 55 – Income costs, EUR 57.50 – The middle class relief (From 1 July 2022, the middle-class relief will be removed with regards to reducing the PIT rate from 17% to 12%)
• Romania: Disability fund is payable by companies with at least 50 employees and which are not employing disabled people in at least 4% of the total number of employees (the fee is determined by the number of employees and the minimum wage provided by the legislation in force)
• Ukraine: – Military tax is still considered as temporal according to the laws, however there is no information currently when it will be canceled

Calculate your employees’ salaries

To help you calculate the net income of your employees, our experts have prepared payroll calculators for the Czech Republic, Hungary, Poland, Romania and Slovakia. Get a quick indicative reference of your employees’ gross and net earnings in 2022.

General notes

• all amounts have been rounded for simplification purposes
• estimations have been done in May 2022