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 and Macedonia there are no employer’s social security contributions? Same rule applies also for Croatia if the employee is younger than 30 years old.
Or that, according to Slovenian legislation, the employer is obliged to pay to the employee a costs of transport to work and meal allowance for the days of presence at work?
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 12 countries: Bosnia and Herzegovina (Federation of Bosnia and Herzegovina: BA-BIH and Republic of Srpska: BA-SRP) Croatia (HR), Czech Republic (CZ), Hungary (HU), Macedonia (MK), Montenegro (ME), Poland (PL), Romania (RO), Serbia (SR), Slovenia (SI), Slovakia (SK) and Ukraine (UA).
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 is the gap between employee and company taxes for each country (who owes more taxes) and what are the TOTAL costs in the given scenario.
» Total Company Costs For Each EUR 1000 NET Salary Paid
(Total cost in EUR and equivalent percentage on top of the EUR 1000 NET)
Hungary (total cost EUR 1820)
Slovakia* (total cost EUR 1811)
Czech Republic (total cost EUR 1791)
Federation of Bosnia and Herzegovina (total cost EUR 1776)
Croatia (total cost EUR 1751)
Romania (total cost EUR 1747)
Slovenia (total cost EUR 1740)
Montenegro (total cost EUR 1704)
Serbia (total cost EUR 1661)
Bosnia and Herzegovina/Republic of Srpska (total cost EUR 1641)
Poland (total cost EUR 1602)
Ukraine (total cost EUR 1516)
Macedonia (total cost EUR 1504)
» Social And Health Contributions, Income Tax And Other Taxes Owed By Employee
(for EUR 1000 NET salary)
Contributions employee: BA-BIH – EUR 492; BA-SRP – EUR 542; HR – EUR 299; CZ – EUR 147; HU – EUR 278; MK – EUR 406; ME – EUR 364; PL – EUR 184; RO – EUR 598; SR – EUR 280; SI – EUR 331; SK – EUR 180; UA – EUR 0;
Income tax employee: BA-BIH – EUR 93; BA-SRP – EUR 100; HR – EUR 165; CZ – EUR 269; HU – EUR 226; MK – EUR 98; ME – EUR 151; PL – EUR 111; RO – EUR 111; SR – EUR 128; SI – EUR 167; SK – EUR 160; UA – EUR 224;
Other taxes: HR – EUR 30; UA – EUR 19;
- Contributions employee
- Income tax employee
- Other taxes employee*
» Social And Health Contributions and Other Taxes Owed By Company
(for EUR 1000 NET salary)
Contributions company: BA-BIH – EUR 164; BA-SRP – EUR 0; HR – EUR 257; CZ – EUR 456; HU – EUR 316; MK – EUR 0; ME – EUR 156; PL – EUR 262; RO – EUR 38; SR – EUR 252; SI – EUR 241; SK – EUR 471; UA – EUR 273;
Other taxes company*: BA-BIH – EUR 28; ME – EUR 34;
- Contributions company
- Other taxes company*
» Employee Taxes Vs. Company Taxes
Employee Taxes (social and health contributions, income tax and other taxes owed by employee) Vs. Company Taxes (social and health contributions and other taxes owed by company)
If we consider above amounts that employee and company owe when a EUR 1000 NET is paid, and we compute in percentages how much more/less the employee owes compared to the company, we will have the following overview:
Employees owe MORE taxes than the company (%)
Employees owe LESS taxes than the company (%)
NO taxes owed by company