Disclaimer: This article is for informational purposes only and is not a substitute for legal advice. Always consult official sources or a legal professional before taking action.
Navigating the landscape of tax-free thresholds across different countries can reveal a lot about each nation’s approach to income taxation. While some countries offer generous allowances that exempt a significant portion of income from taxation, others operate on progressive tax scales, with tax-free amounts varying widely or, in some cases, not existing at all.
In this article, we’ll explore the tax-free income thresholds in various European countries, from the £12,570 Personal Allowance in the UK to Poland’s structured tax-free threshold of PLN 30,000, and on to Portugal’s progressively structured income tax rates. By understanding these differences, individuals can gain insights into how each system impacts net income.
This list may also help freelancers understand how and if they need to pay tax in their home country when using Abillio; however, it is for informational purposes only. Freelancers should always consult their local tax authority or seek professional advice before taking action.
Poland
Revenue of up to PLN 120,000 – 12% tax rate;
Revenue above PLN 120,000 – 32% tax rate.
A tax-free threshold of PLN 30,000 is applicable.
UK
In the UK the standard Personal Allowance is £12,570, which is the amount of income you do not have to pay tax on.
Belgium
Anyone subject to personal income tax is entitled to a “tax-free allowance”. This means that part of the taxable income is not taxed. In Belgium the tax-free allowance is EUR 10,160 per year.
Latvia
Maximum non-taxable income is 6000 euro in Latvia.
You have to submit a declaration for this to be valid, as well as keep in mind that all your income falls under this threshold.
Estonia
The amount of basic exemption depends on a person’s income and is up to 7,848 euros per year. For more information, consult the local tax authorities.
France
Maximum non-taxable income in 2024 is up to €11,294.
Finland
In Finland, the maximum non-taxable income is €20,500
Iceland
If annual income is below ISK 2.276.569 no income or municipal income tax is to be paid.
Austria
In Austria tax-free threshold income is up to 11,693 Euros the income tax is 0%
Some countries do not offer tax-free thresholds, but offer either flat or progressive tax rates:
Portugal
In Portugal, income tax rates are progressive and vary depending on the annual taxable income.
less than €7,112- 14,5% tax rate
€7,113– €10,732- 23% tax rate
€10,733– €20,322- 28,5% tax rate
€20,323– €25,075- 35% tax rate
€25,076- €39,967- 37% tax rate
€39,968- €80,882- 45% tax rate
more than €80,883- 48% tax rate
Hungary
The lump tax is for those sole traders whose yearly revenue is less than HUF 15 million and the rate is 15%.
An option to get deductions on expenses; Business income tax (9%) is obligatory on sole traders whose yearly revenue is more than HUF 15 million. Deductions are applicable.
Romania
A flat 10% tax rate applies on your income.
Additionally, sole proprietors are required to pay health contributions once their income surpasses six times the minimum income threshold, which is RON 216,000 for 2023.
However, sole proprietors earning more than twelve times the minimum threshold, or RON 432,000 for 2023, must also pay social security contributions. The health insurance contribution is 10%, and the social security contribution is 25%, with the taxable base determined by the income level.
Spain
Spain currently doesn’t seem to have non-taxable threshold, however it does have a progressive tax scale, depending on your income:
Up to €12,450: 19%
Incomes ranging from €12,451 to €20,200: 24%
Incomes ranging from €20,201 to €35,200: 30%
Incomes ranging from €35,201 to €60,000: 37%
Incomes ranging from €60,000 to €300,000: 45%
Income tax for incomes over €300,000: 47%
Understanding tax-free thresholds across various countries is essential for freelancers and business owners aiming to maximize their earnings and navigate the complex world of international taxation. Whether you work in a country with generous allowances or one with strict progressive tax rates, it’s crucial to stay informed and compliant.
If you’re a freelancer looking to simplify the process of writing invoices for clients globally without having to establish your own company, Abillio can be a game-changer. Learn how to start using Abillio to create business-friendly invoices and manage your income seamlessly without having to open up your own company.
