The country's rulers boast about what a good tax reform they have come up with. But in essence, it does not change anything. Lithuania, as before, remains the most expensive country in the European Union for ordinary mortals - it is easiest to earn a salary here only for those who earn a lot.
If you want to earn a thousand, pay half as much to the state.
A thousand euros "in hand" is not such a big salary. However, in order to get that much, the state takes another 470 euros in taxes. No other country in the European Union pays so much. After the tax reform, starting next year, the state will have to pay "significantly" less - 420 euros, and Lithuania will still remain the most expensive country in the EU.
The closest to Lithuania in this respect are only its neighbors – Latvians and Poles, in these countries you will have to pay an additional 400 and 380 euros, respectively. Other countries tax people much less. For example, in Germany the state would have to pay only 200 euros, and in Great Britain – 50 pounds. The British, looking at the lowest earners, follow a simple logic – it is better to earn little and not pay taxes at all than not to work and go around asking for benefits. Thus, no income tax is applied to those earning up to a thousand pounds per month, only the employer has to pay 87.45 pounds in social security.
If we look only at personal income tax and employee social security taxes, Lithuania is the most expensive country in the EU – here the state has to pay 32.3% in taxes. Starting next year, when the “super reform” comes into effect, we will have to pay slightly less – 31.7% in taxes. This way, we will no longer be the most expensive! We will leave Italy behind with 32% in taxes, but we will still remain second in this indicator.
The average "hand-held" salary in our country is currently about 1320 euros. In this case, Lithuania has to pay 850 euros in taxes to the state (after the tax reform, they will decrease to 780 euros). So, even after the reform, we will remain the country that requires the most taxes.
Taxes in Lithuania are only favorable for high earners
If you receive 10 euros per month in your hand – congratulations. You are not only one of about 000 people in the country who receive such a salary, but also one of the lowest tax payers (in percentage terms) in all of Europe.
In order to receive ten thousand, the state will have to pay an additional 7000 euros in taxes from next year. In this regard, our country is already becoming competitive - it has one of the lowest taxes in the entire EU. After all, most countries have progressive taxes and the more you earn, the less you get "in your hands". Such a tax is equivalent to taxes in Germany or Great Britain, but is significantly lower than the rates in Scandinavia and other countries.
In principle, from a salary of around 3000 euros, Lithuania is already becoming competitive among European Union countries, and the further it goes, the more it strives for the leaders.
Well, our tax reform will basically only affect the so-called middle class, people who earn between 2 and 3,5 thousand euros. Everyone else will practically not feel the tax change. So, eighth This is not the first time that spears have been broken for essentially no reason.
"The situation of people with the lowest incomes will not change at all due to the tax reform. They will still be taxed at the highest rates in all of Europe. We believe that due to this tax regime, Lithuania loses approximately two percent of its workers per year who emigrate to other countries," says Sigitas Živoltas, a tax advisor at the Swiss company Pillar Capital.
Where is the best place to get paid?
If we talk about Europe, then the Swiss canton of Zug, located in the central part of the country, probably has the lowest taxes for employees. Here, it doesn't matter how much you earn - you will only pay ten percent in taxes. Five percent goes to social security and another five will have to be paid as cantonal and national taxes.
Well, the real tax paradise is in the UAE – Dubai. No income tax is applied here. It is always zero. However, it should be remembered that there is no social insurance here, so you will have to cover the costs of treatment yourself, and living (renting housing) is not very cheap here, although food prices in stores are not much different from Lithuania, probably like everywhere else – you can live very luxuriously, but you can also live without spending.
"The new tax reform in Lithuania may increase tax progressivity, but the difference will be very small and will not change the overall tax environment. According to our calculations, budget revenues will increase by approximately 200 million euros, but this will not change the image of Lithuania as a country with high taxes, and the additional money will not plug the budget holes," says S. Živoltas.
According to him, people will continue to gradually leave Lithuania, and what's even worse is that such reforms, which essentially do nothing, do a disservice to the image of the state - they certainly do not help attract international business to Lithuania and do not increase competitiveness - these tax reforms are happening too often in Lithuania.
