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 21 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), 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.
Total company costs for each EUR 1000 NET salary paid
(Total cost in EUR and equivalent percentage on top of the EUR 1000 NET)
Federation of Bosnia and Herzegovina (total cost EUR 1754)
Bosnia and Herzegovina/Republic of Srpska (total cost EUR 1514)
Bulgaria (total cost EUR 1532.51)
Croatia (total cost EUR 1667)
Cyprus (total cost EUR 1290.28)
Czech Republic (total cost EUR 1621)
Estonia* (total cost EUR 1529-1735)
Greece (total cost EUR 1559.01)
Hungary (total cost EUR 1699)
Montenegro (total cost EUR 1356)
North Macedonia (total cost EUR 1521)
Norway (total cost EUR 1700)
Poland (total cost EUR 1676)
Portugal (total cost EUR 1699)
Romania (total cost EUR 1747)
Slovenia (total cost EUR 1672)
Slovakia** (total cost EUR 1788)
Serbia (total cost EUR 1630)
Spain*** (total cost EUR 1491.67)
Turkey**** (total cost EUR 1801)
Ukraine (total cost EUR 1515.53)
United Kingdom (total cost EUR 1245.28)
Income tax and other taxes
(for EUR 1000 NET salary)
Income tax employee*: BA-BIH – EUR 78; BA-SRP – EUR 41; BG – EUR 111; CY – EUR 0; CZ – EUR 78; EE – EUR 250; HR – EUR 145; ME – EUR 66; MK – EUR 95; NO – EUR 150; PL – EUR 92; PT – EUR 222; RO – EUR 111; SI – EUR 121; SK – EUR 145; SR – EUR 124, UA – EUR 224;
Other taxes employee*: BA-BIH – EUR 28; BA-SRP – EUR 4; BG – EUR 0; CY – EUR 0; CZ – EUR 0; EE – EUR 47; HR – EUR 22; ME – EUR 18; MK – EUR 0; NO – EUR 0; PL – EUR 191; PT – EUR 0; RO – EUR 0; SI – EUR 0; SK – EUR 0; SR – EUR 0, UA – EUR 19;
Social, health insurance and pension contributions owed by company vs. employee
(for EUR 1000 NET salary)
Contributions company: BA-BIH – EUR 164; BA-SRP – EUR 0; BG – EUR 244; CY – EUR 167; CZ – EUR 409; EE– EUR 437; HR– EUR 236; ME– EUR 76; MK– EUR 426; NO– EUR 260; PL – EUR 285; PT – EUR 326; RO – EUR 38; SI – EUR 232; SK – EUR 466; SR – EUR 227, UA – EUR 273;
Contributions employee*: BA-BIH – EUR 484; BA-SRP – EUR 469; BG – EUR 178; CY – EUR 123; CZ – EUR 133; EE – EUR 25; HR – EUR 286; ME – EUR 196; MK – EUR 0; NO – EUR 150; PL – EUR 299; PT – EUR 151; RO – EUR 598; SI – EUR 318; SK – EUR 177; SR – EUR 279, UA – EUR 0;
(for EUR 1000 NET salary)
Additional deductions apply only to certain countries:
- Cyprus (CY) – Cohesion Fund, Redundancy Fund and Industrial Training Fund – all included in the employer’s contributions . Also Holiday Fund may apply depending on the employer
- Norway (NO) – Standard minimum deduction, Interest on loans
- Poland (PO) – 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 (RO) – 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 (UA) – Military tax is still considered as temporal according to the laws, however there is no information currently when it will be canceled
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