The difference between net and gross salaries in Europe is influenced by various factors, including marital status, children, and income level. To help make sense of the differences, Euronews Business explores how much individuals take home after taxes and deductions across four key scenarios, considering both single workers and those with families.
When looking at how net earnings are calculated, it’s important to understand that net pay is derived by deducting social security contributions and income taxes from gross earnings, while family allowances can boost net pay for households with children. Eurostat’s latest dataset for 2023 includes data from all EU member states, as well as three EFTA countries and one EU candidate country.
In the first scenario, focusing on a single person without children earning 100% of the average salary, the net-to-gross salary ratios vary significantly across the 31 European countries. For example, in Belgium, the net salary accounts for just 60.1% of the gross salary, while in Cyprus, the ratio reaches 85.9%. The EU average for this scenario is 68.8%.
According to Alex Mengden, Global Policy Analyst at the Tax Foundation, “The main factor keeping the net-to-gross earnings ratio high in Switzerland is the intense local tax competition between cantons and municipalities.”
On the other hand, countries like Lithuania, Germany, Romania, and Denmark have a net-to-gross ratio of below 65%. Among the EU’s largest economies, Spain offers the most favorable conditions for singles without children, with individuals retaining 77.9% of their gross salary, followed by France at 72.5% and Italy at 72.3%.
Annual gross earnings in the EU averaged €41,004, with net income differing by €12,787. The highest net earnings were in Luxembourg at €49,035, while the lowest were in Bulgaria at €9,355. Switzerland stands out with annual net earnings of €85,582, while Turkey has the lowest net earnings in the group at €8,968.
For two-earner couples without children, the net-to-gross ratio is similar to that of a single person without children, with minor variations. The average net-to-gross ratio for these couples in the EU stands at 69%, with €56,359 taken home out of a gross income of €81,732.
However, for couples with children, the net-to-gross ratios are significantly higher across the board, with an EU average of 82.7%. For instance, in Slovakia, families with children can see a take-home pay ratio of over 109%. While countries like Norway, Denmark, and Finland report lower ratios, with the Nordic trio falling below 76%.
In the case of a one-earner couple with two children, net income is significantly higher than that of a single person without children. On average, a one-earner couple in the EU takes home €33,940 from a gross income of €41,043—€5,723 more than a single person without children. The increase comes primarily from family allowances (€1,846) and lower income taxes (€3,764).
However, this family support isn’t available everywhere. For instance, Turkey provides no family allowances or tax relief, leading to nearly identical take-home pay ratios across all scenarios.
For two-earner couples with two children, the net-to-gross ratios range from 65.7% in Belgium to 89.5% in Slovakia, with an EU average of 73.8%. This category generally enjoys higher take-home ratios than couples without children, except in Iceland and Turkey, where no significant difference is observed. In countries like Slovakia, Poland, and Austria, the difference in take-home pay is particularly noticeable, with increases of more than seven percentage points.
This analysis highlights the disparities in net-to-gross salary ratios across Europe, which depend on a variety of factors like household structure, taxation, and social benefits.
