Countries with the highest taxes can be perceived positively or negatively, but understanding tax rates is crucial for many reasons. Firstly, taxes significantly impact people’s incomes, corporate earnings, and government revenues.
However, countries with the highest tax rates usually use their unique tax system to help fund comprehensive social services like healthcare, education, and wealth transfer programs that will shape the country’s overall quality of life.
As a reputable consultancy firm that prides itself on providing residency and citizenship through investment solutions, we believe it is important to balance the challenges and benefits individuals and businesses face in these high-tax jurisdictions.
This guide will discuss 16 countries with the highest tax rates and why businesses and individuals may or may not choose to move to countries with more favorable tax systems. We also rely on our investment index to determine whether the countries are considered the most favorable, favorable, or least favorable to invest in.
The Public Perception in High-Taxed Countries
The perception of high-income taxes in high-taxed countries can vary widely among the public and the country. Many citizens from European countries view high taxes as a necessary means to fund robust public services, social welfare programs, and infrastructure development. Government transparency and the visibility of public expenditure prove these taxes contribute to a better standard of living.
The OECD survey on trust in government reveals that a minimum of 60 percent of the population in high-taxed European nations have confidence in their governments’ political decisions and allocation of public funds.
Others may hold a more critical view of high taxes, perceiving them as a burden on income and financial growth. They often argue that excessive taxation stifles entrepreneurship, reduces disposable income, and hampers business investment, potentially leading to reduced economic competitiveness and slower job creation. For those wondering how to avoid taxes legally but still want a stable economy to live in, this is also possible.
16 Countries with the Highest Tax Rates
Despite opposing views on high taxes, factors such as a stable economy and investment options can outweigh some of the downfalls of high-income tax rates. Here is a breakdown of the top 15 countries with some of the highest taxes worldwide, the highest individual income tax rates, and high taxes on corporate income. We have also highlighted their investment favorability and key tax categories of the average income tax burden by country.
16. Norway
– Highest income tax rate: 38.2%
– GDP: $500 billion (2023)
– Investment Index: Most favorable
Norway is a significant oil and gas producer, which drives its GDP and makes it one of the richest countries per capita. Therefore, it is not surprising that it is also renowned for its high standard of living. The country has a progressive tax system with a top personal income rate of 38.2%.
However, additional taxes on wealth, inheritance, and capital gains effectively raise the tax burden. Corporate tax stands at 22%. Norway’s high tax revenues support its welfare state, including universal healthcare and free education.
The country’s abundance of natural resources has contributed to its high standard of living, and its reliable economy makes it a considerable country for business and investment.
15. United Kingdom
– Highest income tax rate: 45%-
– GDP: $3.2 trillion (2023
– Investment Index: Most favorable
The UK is known for its significant historical and cultural impact, including its global influence in finance, literature, and the arts. It also has a diverse economy with strong points in technology and services.
The country’s top personal income tax rate is 45%, with additional capital gains and inheritance taxes contributing to the overall tax burden. The corporate tax rate is set at 25%. Nonetheless, the UK’s tax system supports essential services such as healthcare (NHS), education, and welfare programs.
As one of the world’s major financial hubs, home to the London Stock Exchange, numerous global banks, and insurance companies, it has become a great country for investment regardless of its high tax rates.
14. France
– Highest income tax rate: 45%
– GDP: $3.4 trillion (2023)
– Investment Index: Favorable
France has a progressive tax system, with the highest income tax rate of 45 percent for individuals. This applies to residents with annual worldwide income exceeding specific thresholds.
France imposes additional taxes such as the Solidarity Wealth Tax and the Social Security Contribution. Social security contributions are a significant part of the tax burden, making France one of the countries with the highest overall tax pressure.
The corporate income tax in France is set at 25 percent, down from previous higher rates due to recent reforms aimed at boosting investment and economic growth.
Taxpayers in France face capital gains taxes, wealth taxes, and inheritance taxes, but the tax system is balanced by strong social benefits such as healthcare, pensions, and education.
13. Iceland
– Highest income tax rate: 46.24%
– GDP: $28 billion (2023)
– Investment Index: Favorable
Iceland’s renewable energy industries and tourism help keep the country’s GDP strong. Iceland imposes a top income tax rate of 46.24%, which includes local and national taxes. Corporate tax is set at 20%, and capital gains are also taxed.
While Iceland might be considered to have high tax rates, its tax revenues support its extensive welfare programs, including healthcare and education. The country’s small population relies heavily on tax revenues to fund public services.
12. Spain
– Highest income tax rate: 47%
– GDP: $1.7 trillion (2023)
– Investment Index: Most favorable
Spain is loved for its contributions to art and architecture, and its GDP is driven by tourism, manufacturing, and agriculture. The country imposes a top marginal income tax rate of 47% on high-income earners and taxes capital gains, inheritance, and property transfers.
The corporate tax rate is 25%. However, Spain’s tax system supports public services, including healthcare and education, but it has faced criticism for its high tax burden on individuals. While the country might have high income tax rates, it offers various investment options through the Spain Golden Visa, which also comes with the privilege of accessing the EU market, another crucial factor to consider when investing in the nation.
11. Israel
– Highest income tax rate: 50%
– GDP: $520 billion (2023)
– Investment Index: Most favorable
Israel is among the rare non-European countries that make the list of countries with a high-income tax rate.
Despite a population of just 9 million, the small Middle Eastern country exhibits remarkable innovation, positioning it as the 13th nation worldwide with the largest concentration of startups.
Israel’s corporate income tax rate is 23 percent, which is relatively average. However, it’s the country with the highest tax rate in the Middle East regarding individual income tax. The top tax bracket pays 50 percent.
Personal income tax ranges from 10 to 50 percent, and additional taxes, such as capital gains, are also assessed. However, as one of the leaders in the tech industry, Israel is considered one of the most favorable countries on the Investment Index.
10. Slovenia
– Highest income tax rate: 50%
– GDP: $64 billion (2023)
– Investment Index: Favorable
Despite being one of the smallest European countries, Slovenia imposes a staggering 50 percent individual income tax on its citizens and residents.
As one of several former Communist nations to join the European Union, it levies the highest income tax rate of fellow ex-Communist states, with the highest tax bracket paying 50 percent tax on worldwide annual income.
Slovenia has a well-developed economy and is the wealthiest among the Slavic nations in terms of nominal GDP per capita. The country also has a moderate corporate income tax rate of 19 percent. The personal income tax ranges from 16 to 50 percent, and additional taxes are levied on inheritance and capital gains.
9. Sweden
– Highest income tax rate: 52.2%
– GDP: $600 billion (2023)
– Investment Index: Most favorable
Sweden is ranked 11th globally by GDP per capita and is one of the world’s wealthiest nations. Its high standard of living, life expectancy, and minimal income inequality make it an idealistic country.
Like other Scandinavian countries, Sweden’s developed post-industrial society boasts an advanced welfare state with comprehensive social security.
The extent of the country’s social security necessitates one of the highest income tax rates worldwide. Sweden employs a dual-tier tax system with multiple local and federal tax brackets. The highest earners in Sweden could be liable to pay up to 52.2 percent in combined state and federal taxes.
Residents at the lowest income level are also required to pay higher income taxes than residents of other countries. Personal income tax ranges from 28.98 to 52.2 percent, corporate income tax is 20.6 percent, and there is also a capital gains tax.
8. Portugal
– Highest income rate: 53%
– GDP: $260 billion (2023)
– Investment Index: Favorable
Portugal is loved for its beautiful landscapes, which attract many tourists. However, the country’s thriving tourism and tech industry are some of the primary drivers of its GDP. Portugal has a top marginal income tax rate of 53%, among the highest in the European Union.
The country also levies capital gains, inheritance, and real estate taxes. Its corporate tax rate is around 21%. However, Portugal’s tax system is progressive, with additional surtaxes for high-income earners.
Even though Portugal might have a high-income tax rate of 53%, its thriving real estate market is attractive for entrepreneurs. Not forgetting that the Portuguese passport, which can be gained through the Portugal Golden Visa, also provides access to the broader EU market.
7. Belgium
– Highest income tax rate: 53.7%
– GDP: $590 billion (2023)
– Investment Index: Most favorable
With an economy intricately linked to the global market and a well-established transport network seamlessly integrated with the wider European landscape, it’s no wonder Belgium ranks as the 10th largest trading nation worldwide.
While the allure of a strong economy is undeniable, it comes with the obligation of paying one of the world’s highest marginal tax rates.
Belgium’s maximum income tax rate is 53.7 percent, which applies to both residents and non-residents conducting operations within the country.
The corporate tax rate is 25 percent, and the Belgian government also imposes taxes on various forms of gains and inheritance. In addition to personal income tax ranging from 25 to 50 percent, there are additional taxes on capital gains, net wealth, gifts, and inheritance.
As the EU and NATO headquarters, Belgium is ideal for businesses wanting to engage in European or international trade. It ranks as one of the most favorable countries to invest in.
Take a look at our Caribbean Citizenship by Investment Comparison Guide
6. Austria
– Highest income tax rate: 55%
– GDP: $480 billion (2023)
– Investment Index: Most favorable
Among the few German-speaking nations worldwide, Austria stands out with its advanced development and stable economy, albeit paralleled by its high-income tax. The strong economy also makes it a great place for business in tourism and the arts.
The country’s top marginal rate for income tax is 55 percent; however, this will be reduced to 50 percent in 2025. Nonetheless, despite the decrease in income tax, the nation will continue to rank among the European countries with the highest taxation.
Austria has high income taxes but boasts one of the best health insurance and social security systems among OECD countries. Additionally, its citizenship by investment program provides a unique fast-track route to EU citizenship.
Some key tax rates in Austria include personal income tax ranging from 0 to 55 percent, corporate income tax at 23 percent, and capital gains taxation as an additional tax.
5. Denmark
– Highest income tax rate: 55.9%
– GDP: $410 billion (2023)
– Investment Index: Most favorable
Amidst discussions centering on the United States, China, and Japan as the global economic giants, Denmark’s noteworthy 9th-place ranking in GDP per capita warrants recognition, and its stable economy makes it a great place for investment.
Although it leads several prominent global indices, including the World Happiness Report and the Social Progressive Index, this achievement is accompanied by a trade-off of high-income tax rates.
Local taxation, combined with the country’s federal labor market tax (AM tax), results in the highest marginal rate on personal incomes, reaching 55.9 percent. The corporate tax rate is a flat 22 percent, which falls in the middle range. Additionally, there are specific taxes for inheritance, gifts, and capital gains.
4. Japan
– Highest income tax rate: 55.97%
– GDP: $4.2 trillion (2023
– Investment Index: Most favorable
The key to Japan’s success is frequently linked to its renowned work ethic, and its capital city is home to a higher number of millionaires than almost any other city globally.
A considerable top marginal tax rate of 55.97 percent underpins the nation’s strong work ethic, placing Japan as the third highest-taxed country in the world.
Japan has one of the highest corporate tax rates in Asia. Businesses are required to pay a 23.2 percent tax on corporate income. Additionally, Japanese citizens are subject to significant inheritance, capital gains, and gift taxes. The personal income tax ranges from 5 to 55.97 percent.
3. Finland
– Highest income tax rate: 57.30%
– GDP: $300 billion (2023)
– Investment Index: Most favorable
If you’re after the answer, which country has the highest tax rate in Europe? The buck stops with Finland.
Finland presents an intriguing case in the conversation about countries with the highest tax rates, primarily owing to the Finnish population’s willingness to embrace the country’s demanding taxation system.
When examining the issue of an overwhelming tax burden, a point of contention often arises regarding the misallocation of public funds generated from income tax. However, in Finland, this concern is notably absent.
Substantial contributions from income taxes primarily fund Finland’s social security system. The top marginal income tax rate in Finland is 57.30 percent. Despite the high income tax rates, Finland has built one of the world’s best welfare systems, providing its citizens with top-quality education and healthcare.
It’s worth noting that despite the higher tax burden, Finns often see a return on their income tax payments through the various social security benefits the government provides. In addition to personal income tax, Finland also has a corporate income tax rate of 20 percent. Furthermore, additional taxes are in place, including inheritance, gift, and capital gains.
2. Aruba
– Highest income tax rate: 59%
– GDP: $3 billion (2023)
– Investment Index: Not listed
At first glance, Aruba appears to be a scenic Caribbean island. It promises an exceptional quality of life, unparalleled safety, meticulously maintained infrastructure, and the added advantage of EU citizenship.
However, Aruban residents are subject to one of the highest income tax rates in the Caribbean and other countries worldwide.
In Aruba, the government imposes a high-income tax rate of 59 percent on individuals earning the most, which sets it apart from other Caribbean tax havens.
Additionally, the country maintains a corporate income tax rate of 22 percent. In addition to these taxes, there is also capital gains taxation. While Aruba is not in the Investment Index, several attractive Caribbean citizenship by investment programs exist.
1. Ivory Coast
– Highest income tax rate: 60%
– GDP: $70 billion (2023)
– Investment Index: Not listed
The country stands alone in the list of highest-taxed countries as it is the only nation that has reached a 60 percent income tax rate.
While many countries with high income tax rates, like Finland, Denmark, Sweden, and Japan, incentivize high-income taxpayers, this pattern doesn’t quite hold true for this small African nation.
The country stands out as the only African nation on the list of the highest-taxed countries. It imposes a personal income tax ranging from 0 to 60 percent and a corporate income tax of 25 percent. Additionally, there is a capital gains tax as part of the additional taxes.
Despite some exceptions, the highest-taxed countries generally prioritize providing their citizens with extensive social security, healthcare, education, and other welfare programs, often requiring higher income tax rates to sustain them. As one of the largest cocoa producers, Ivory Coast is a prime destination for businesses involved in agriculture and raw material exports. However, its high tax rates might require deeper consideration by foreign investors.
Highest Taxed Countries Comparison
Country | Individual Income Tax Rate | Corporate Income Tax Rate | Worldwide Income Tax | Inheritance Tax | Wealth Tax | Capital Gains Tax |
 Slovenia | 50 percent | 19 percent | Yes | Yes | No | Yes |
 Israel | 50 percent | 23 percent | Yes | - | No | Yes |
 Belgium | 53.7 percent | 25 percent | Yes | Yes | Yes | Yes |
 Aruba | 59 percent | 22 percent | Yes | No | No | Yes |
 Austria | 55 percent | 23 percent | Yes | - | No | Yes |
 Sweden | 52.2 percent | 20.6 percent | Yes | No | No | Yes |
 Denmark | 55.9 percent | 22 percent | Yes | Yes | No | Yes |
 Japan | 55.97 percent | 23.2 percent | Yes | Yes | No | Yes |
 Finland | 57.30 percent | 20 percent | Yes | Yes | No | Yes |
 Ivory Coast | 60 percent | 25 percent | Yes | No | No | Yes |
How Countries with High Taxes Are Determined
Determining countries with the highest income and corporate tax rates involves a multifaceted methodology, relying on a combination of data sources, tax rate comparisons, and economic indicators. Here’s an overview of the methods and sources used:
Tax rate comparisons
When determining the highest-taxed countries, the primary aspect is comparing top marginal tax rates across different types of taxes, such as personal and corporate tax. These rates provide a snapshot of the maximum rates individuals and businesses in the highest tax bracket are subject to.
Effective tax rates
Effective tax rates are a form of net taxes. They consider tax deductions, exemptions, and credits to calculate the actual tax burden for all taxpayers, from those with high incomes to lower earners. This involves analyzing how these factors impact the overall tax burden for each income level and business.
Tax revenue as a percentage of GDP
The total tax revenue collected by a country as a percentage of its Gross Domestic Product (GDP) is a fundamental indicator. Developed and developing countries with higher tax revenue relative to GDP often rely more heavily on taxes to maintain their economies and, as such, impose higher tax rates.
International comparisons
Comparing tax rates, revenue, and tax structures across countries helps contextualize a nation’s position within the global tax landscape. Organizations like the Organization for Economic Cooperation and Development (OECD) and the World Bank provide international tax data for accurately comparing corporate income, capital gains, inheritance, and other taxes.
Government and tax authorities report
In a commitment to transparency and trust-building, national tax authorities and government agencies release official tax data, reports, and statistics that offer insights into tax rates, revenue, and policy changes.
Economic reports and databases
Economic research organizations and databases such as the NBER and IMF analyze tax-related data to provide insights into a country’s tax system and revenue sources. Researchers can gauge tax burdens in different countries by combining and interpreting this data.
Four Types of Taxable Income Explained
The approach to taxable income varies globally, with most countries following one of four fundamental tax systems:
- Residential tax
- Territorial tax
- Citizenship-based tax
- Zero tax
Residential taxation
Residential taxation determines an individual’s tax liability based on their physical presence or residence status in a country. If an individual spends a certain duration in a country, often around 183 days, they become subject to that country’s tax regulations on their worldwide income. This system ensures that individuals contribute financially to the country’s services, infrastructure, and public programs.
Territorial taxation
Territorial taxation is a system that taxes only income and activities within a country’s borders. It typically does not tax foreign-source income, aiming to encourage international economic activities and attract foreign investment. This prevents double taxation on overseas income, but rules and regulations vary by country.
State taxes
In the United States, your tax burden will vary depending on which state you live in. The country employs a dual-tier tax system, a type of territorial taxation involving state and federal taxes. States like New York and California impose generally high state income taxes, with the highest rate reaching 15.9 percent. On the other hand, states such as Florida, Texas, and Arizona do not impose state income taxes.
Citizenship-based taxation
Citizenship-based taxation is a system in which a country taxes its citizens on their worldwide income, regardless of where they live or earn income. The US is an example of a country that uses this system, requiring its citizens to report and pay taxes on their worldwide income regardless of where they live.
This system ensures citizens contribute financially to the country’s revenue and prevent tax evasion through offshore accounts. Nevertheless, many Americans overseas find ways to avoid paying taxes legally through several employee and self-employment income tax credit programs.
Zero taxation
Zero taxation, a strategy often seen in countries referred to as tax havens or tax-free jurisdictions, involves a tax foundation where minimal to no taxes are imposed on specific types of income, transactions, or entities. Under this system, individuals and businesses can benefit from a minimal or non-existent tax burden on their earnings, investments, and financial activities.
Tax havens attract businesses and individuals seeking to optimize their financial affairs and reduce taxable income. Typically, these zero-tax countries present advantageous aspects like safeguarding financial privacy, minimal regulatory prerequisites, and a conducive business atmosphere.
How Can Global Citizen Solutions Help You?
Global Citizen Solutions is a boutique migration consultancy firm with years of experience delivering bespoke residence and citizenship by investment solutions for international families. With offices worldwide and an experienced, hands-on team, we have helped hundreds of clients worldwide acquire citizenship, residence visas, or homes while diversifying their portfolios with robust investments.
We guide you from start to finish, taking you beyond your citizenship or residency by investment application.
Frequently Asked Questions about High Tax Countries
Which country has the highest taxes in the world?
The country with the highest taxes in the world is the Ivory Coast, which imposes a 60 percent income tax.
Are taxes higher in US or Europe?
Tax rates can vary significantly between countries in Europe and the United States. The overall tax burden depends on your tax residency. In general, many European countries have higher overall tax rates than the United States. Tax havens like Monaco, and the lowest income tax countries in Europe, like Andorra and Bulgaria, charge lower income tax rates than the US.
Are taxes higher in Canada or USA?
In Canada, tax rates are generally higher than in the United States due to factors like social welfare programs and universal healthcare. Canada has a progressive income tax system and a Value Added Tax (VAT) called the Goods and Services Tax (GST). In the US, federal income tax rates can be lower than in some Canadian provinces, but the US tax system is complex, with various deductions, credits, and exemptions. State income taxes also significantly impact the overall tax burden for US citizens.
Why do certain countries have higher tax rates than others?
Some countries have higher tax rates due to social welfare policies, public services, economic structure, and government prerogatives. They aim to provide extensive social safety nets, universal healthcare, quality education, and public infrastructure. Progressive tax systems aim to reduce income inequality. In times of global events or economic downturns, some countries may increase taxes to maintain critical services.
Do high-tax countries provide more extensive public services and welfare benefits to their citizens?
Countries with high taxes usually offer their citizens extensive public services and welfare benefits. The higher tax revenues collected from individuals and businesses allow these countries to finance and maintain comprehensive social welfare benefits, quality healthcare services, accessible and free education, public transportation, unemployment benefits, and other safety nets. These services aim to improve citizens’ overall quality of life, promote social equality, and ensure that basic needs are met for everyone.
Which country has the world's highest sales tax?
The country with the highest sales tax in the world is Bhutan, which charges a staggering 50 percent sales tax. Other jurisdictions on the list of countries with the highest sales tax in the world include Denmark, Norway, Sweden, and Finland, all impost a 25 percent sales tax.
Which country has the world's highest corporate tax rate?
Charging an unprecedented 50 percent corporate income tax, the small African nation of Comoros has the highest corporate tax globally. Other countries with the highest corporate taxes include Puerto Rico, Suriname, and Equatorial Guinea.
Are there any historical examples of countries successfully reducing high tax rates?
One notable example of a country successfully reducing high tax rates is the United Kingdom in the 1980s under the leadership of Prime Minister Margaret Thatcher. Through HM Revenue and Customs, the UK government implemented a series of tax reforms, including lowering the top marginal income tax rate from 83 percent to 60 percent and then further to 40 percent. At the same time, the tax system was simplified.
How do high-tax countries fare in terms of economic growth and competitiveness?
While many countries with the highest taxes might fund well-developed public services and social welfare schemes, they can also impact economic growth and global competitiveness by reducing disposable income for residents and discouraging business investment. Additionally, excessive taxation can lead to an exodus of capital and skilled individuals to lower-tax jurisdictions.
Which country has the highest tax rate in Europe?
As of the most recent data, Denmark holds the highest personal income tax rate in Europe. The top marginal tax rate on personal income in Denmark can reach up to 55.9%, depending on income level and local taxes.
