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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.
(Total cost in EUR and equivalent percentage on top of the EUR 1000 NET)
FEDERATION OF BOSNIA AND HERZEGOVINA
BOSNIA AND HERZEGOVINA/REPUBLIC OF SRPSKA
BULGARIA
CROATIA
CYPRUS
CZECH REPUBLIC
ESTONIA*
GREECE
HUNGARY
ITALY**
MONTENEGRO
NORTH MACEDONIA
NORWAY
POLAND
PORTUGAL
ROMANIA
SLOVENIA
SLOVAKIA***
SERBIA
SPAIN****
TURKEY*****
UKRAINE
UNITED KINGDOM
* Estonia: Depends on tax free amount; ** Italy: Considering the NLCA for Trade and the 7th level; *** Slovakia: Employee does apply so-called tax-free allowance – in case the employee does NOT apply so-called tax-free allowance, the total cost will be: EUR 1927; **** Spain: The legal indemnity for contract termination from the employer is 33 days of salary per year of seniority (or 2.75 days of salary per month of seniority). In case of EUR 1000 NET salary, this represents EUR 107 per month to be accrued in case of severance. If the termination is caused by the voluntary resignation of the employee, the is no severance to pay; ***** Turkey: Monthly average
(for EUR 1000 NET salary)
FEDERATION OF BOSNIA AND HERZEGOVINA
Foreign trade chamber tax – 0.2% of gross salary/minimum EUR 10; Disability tax – 0.5% of gross salary; Environmental tax – 0.5% of net salary; Injury tax – 0.5% of net salary
BOSNIA AND HERZEGOVINA/REPUBLIC OF SRPSKA
Disability tax – 0.1% of gross salary; Solidarity tax – 0.25% of net salary (deducted from net salary)
BULGARIA
CROATIA
Surtax: depends on employee residence (from 0% to 18% on tax, e.g. for Zagreb it is 18%)
CYPRUS
No tax applies for Net Income < EUR 19,500
CZECH REPUBLIC
After application of personal tax relief
ESTONIA
Unemployment insurance (1,6%) EUR 20.75; Funded pension (2%) < EUR 25.93 (depends on employee funded pension)
GREECE
Other taxes: solidarity contribution, which is paused for two years
HUNGARY
ITALY
Taxes due are fully covered by the deductions as per Italian regulations; tax brackets apply as follows: 23% up to EUR 15,000, 25% from over EUR 15,000 up to EUR 28,000, 35% from over 28,000 euro up to EUR 50,000, 43% over EUR 50,000.
As for other taxes, additional regional and municipal taxes apply, based on the place of residence of the individual. However, during the first year regional and municipal taxes are not due.
MONTENEGRO
Surtax company: 15% of tax (percentage depends on municipality); Syndicate: 0.2% of gross salary; Work fond: 0.2% of gross salary; Chamber of commerce: 0.27% of gross salary
NORTH MACEDONIA
NORWAY
POLAND
As for other taxes, the amount is including deductions: old-age pension insurance, pension insurance, sickness insurance
PORTUGAL
ROMANIA
SLOVENIA
SLOVAKIA
SERBIA
SPAIN
N/A
Other taxes are deducted by the employer.
TURKEY
*Monthly average
UKRAINE
Military tax: 1.5% from the gross salary
UNITED KINGDOM
N/A
(for EUR 1000 NET salary)
FEDERATION OF BOSNIA AND HERZEGOVINA
BOSNIA AND HERZEGOVINA/REPUBLIC OF SRPSKA
No contributions paid by the company
BULGARIA
CROATIA
CYPRUS
CZECH REPUBLIC
ESTONIA
Social tax (33%) < EUR 427.90; Unemployment Insurance (0,8%) < EUR 10.37; Funded Pension (2%) < EUR 25.93
GREECE
HUNGARY
ITALY
Company contributions: EUR 316.46 + EUR 10 for EST Fund + EUR 7.42 (INAIL monthly cost)
MONTENEGRO
NORTH MACEDONIA
No contributions paid by employees
NORWAY
POLAND
Employee contribution consists of EUR 191 (the total amount of old-age pension insurance, pension insurance, sickness insurance) + EUR 108 (the amount of health insurance (9% of the calculation basis for health insurance)
PORTUGAL
ROMANIA
The tax due by the company is the Labor Tax
SLOVENIA
SLOVAKIA
SERBIA
SPAIN
TURKEY
*Monthly average
UKRAINE
No contributions paid by employees
UNITED KINGDOM
(for EUR 1000 NET salary)
Additional deductions apply only to certain countries:
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.
About Accace
Accace is a proactive consultancy and outsourcing partner who bridges the gap between needs and solutions. Combining smart and streamlined technology with a holistic approach, we provide an all-round care to clients and consider their matters as our own. With over 800 experts and more than 2,000 customers, we have vast experience with facilitating the smooth operation and growth of small to large-scale, global businesses.
About Accace Circle
Accace operates internationally as Accace Circle, a co-created business community of like-minded BPO providers and advisors who deliver outstanding services with elevated customer experience and erase the borders of service delivery. Covering over 50 jurisdictions with nearly 2,500 professionals, we support more than 15,000 customers, mostly mid-size and international Fortune 500 companies from various sectors, and process at least 200,000 pay slips globally.
