Across Europe, the total cost of employing a worker can vary dramatically. In some countries, the base salary is just the tip of the iceberg, with additional expenses (such as social security contributions and mandatory employer benefits) significantly inflating the overall financial commitment. In other nations, the base salary more closely reflects the true cost of employment.
These varying financial considerations have major impacts for both the employer and the employee. For the employer, it’s vital to understand these figures in order to budget more accurately, plan strategically, and make more informed decisions about where to hire talent. For employees, these factors directly influence their take-home pay, financial well-being, and, ultimately, where they choose to live and work.
To unravel this complexity, this guide breaks down the true cost of hiring across various European countries, focusing on a €60,000 annual salary. We dissect the employer's expenses, totalling up all the costs beyond the base salary, and calculate how much employees actually take home after taxes and deductions.
We also offer a side-by-side comparison of the "cost-to-pay" ratio - how many euros employers have to pay for their employees to receive one euro in net income - across three different salary ranges.
This comprehensive analysis gives a deeper understanding of the financial dynamics at play in the European job market.
Why a €60,000 Salary?
At Boundless, we help businesses hire talent compliantly all over the world (particularly the European continent), and we've found that €60,000 falls roughly within the average salary range we see across our diverse client base.
Of course, average salary figures vary heavily across Europe, and this €60,000 benchmark is by no means intended to represent the expected salary in any of these countries. Instead, it serves as a useful reference point to illustrate the significant differences in employment costs and take-home pay across the continent.
FOR A €60,000 SALARY
Disclaimer: These figures are estimates based on typical scenarios and may not reflect individual circumstances. Actual employment costs and net salaries can vary due to personal circumstances and changes in tax laws.
The total cost to hire an employee earning a €60,000 salary in Lithuania, the country with the lowest employment costs
The total cost to hire an employee earning a €60,000 salary in Austria, the country with the highest employment costs
The UK and Ireland stand out as two of the major (native) English-speaking countries in Europe, and they both sit firmly within the top 10 countries with the lowest employment costs. Ireland stands at number six, (€66,630) while the UK (€67,099) sits at number seven.
Their favourable position on this list may demonstrate a competitive advantage to employers able to hire in these nations, combining relatively lower employment costs with a workforce fluent in the global language of business.
Eastern Europe presents a compelling opportunity for businesses seeking cost-effective talent solutions, with Bulgaria and Romania ranking among the top five most affordable locations for employers. However, while the financial benefits are undeniable, it's important to acknowledge the complexities that can arise when operating in these regions.
Navigating complex local regulations, bureaucratic processes, and potential political instability may require additional time, resources, and expertise compared to other markets. This doesn't mean that such countries should be dismissed as a viable option. Instead, it underscores the importance of strategic planning and informed decision-making.
Partnering with an Employer of Record (EOR) provides a simplified and efficient method to tap into talent across these regions without the need to establish a legal entity or deal with unfamiliar legal and regulatory landscapes.
Major Western European economies like Germany (€74,724), the Netherlands (€83,140), and France (€86,707) typically present higher employment costs for businesses compared to many Eastern European countries. This disparity reflects a combination of potential factors, including stricter labour laws and regulations, stronger unions, and more comprehensive social safety nets, often funded through employer contributions.
While these systems provide valuable benefits for workers, such as healthcare, pensions, and unemployment support, they can also increase the financial burden on employers.
FOR A €60,000 SALARY
Disclaimer: These figures are estimates based on typical scenarios and may not reflect individual circumstances. Actual employment costs and net salaries can vary due to personal circumstances and changes in tax laws.
The net pay for employees earning a €60,000 salary in Bulgaria, the country with the lowest deductions
The net pay for employees earning a €60,000 salary in Iceland, the country with the highest deductions
The variance in net salaries among European countries for a €60,000 gross income is staggering, with Bulgaria (€51,219) and Iceland (€30,252) representing the two extremes. This range of over €20,000 annually is substantial, especially when you consider the difference in cost of living between the two countries.
With that said, in Bulgaria, a €60,000 salary would be considered exceptionally high and unattainable for most of the population, while in Iceland, this is much more realistic. It’s also worth bringing factors such as quality of life into this discussion. According to Numbeo, Iceland currently ranks as the country with the 3rd best quality of life in the world (just behind the Netherlands and Luxembourg).
The Mediterranean region presents a varied picture of net salaries for a €60,000 gross income. Cyprus (€44,306) and Malta (€42,913) stand out with relatively smaller gaps between gross and net pay, suggesting a more moderate tax burden on employees.
Spain (€38,993) and Italy (€35,927) fall towards the middle of the pack, with deductions aligning more closely with broader European averages. However, Portugal (€33,800) emerges as an outlier, with a surprisingly high deduction rate, particularly considering its growing popularity as a destination for remote workers.
Despite being one of the more popular countries for relocation, navigating Spain’s intricate employment laws can be particularly challenging, especially if compliance is important to you. Discover why these legal nuances have led us to decide NOT to offer our Employer of Record (EOR) services in Spain.
The Nordic countries reveal a surprising range in net salaries for a €60,000 gross income. As mentioned, Iceland leaves its earners with the smallest slice of the pie (€30,252). Meanwhile, Norway, an oil-rich nation with a robust welfare state, allows its workers to retain significantly more (€42,068).
This stark contrast underscores that even within a culturally and geographically cohesive region, national differences in tax codes and deduction policies can drastically reshape an individual's financial reality.
So, while the Nordic model may appear unified from afar, the paycheck reveals a more nuanced story, highlighting that even small distances can translate to vastly different take-home pay.
IcelandSwedenFinlandDenmarkNorwayIt’s crucial to remember that these figures are just a snapshot. To fully understand the financial implications of living and working in these countries, it’s essential to consider the broader context. For example, while Portugal’s high deduction rate may seem daunting, the country boasts a lower cost of living than many of its European neighbours, thus potentially offsetting the impact on purchasing power.
While the majority of European nations impose significant income tax, a handful of 'tax havens' operate under different rules. Monaco stands out with no income tax for residents, while Andorra and Liechtenstein offer particularly competitive rates. This results in a substantially larger portion of a €60,000 salary remaining in the earner's pocket compared to countries with higher income tax burdens.
Note: The analysis in this guide excludes these tax havens due to their unique tax structures and the lack of comprehensive comparative data. It's important to note that residency requirements and tax laws can vary significantly in these locations.
FOR A €60,000 SALARY
This ratio reveals the total employment cost relative to the employee's net pay. Simply put, it shows how many euros an employer must pay for every euro their employee takes home.
A higher ratio means a heavier burden on the employer, indicating higher taxes, social security contributions, and other mandatory costs relative to the employee's net income.
So far, we've explored the landscape for a €60,000 salary, but the financial dynamics shift significantly as we move up the pay scale. Each country is represented by three bars, each corresponding to a different salary level.
Examining the cost-to-pay ratios across different salary levels reveals three distinct categories of countries:
The length of the bars represents the Cost-to-Pay Ratio. The chart shows how the ratio changes as we move up the pay scale.
Let’s break down a few interesting cases from each:
Romania, Hungary, and Estonia stand out for their consistent cost-to-pay ratio across all salary levels. This means that the relative cost for employers remains stable, whether they are hiring for positions in the €60,000 range, or top executive roles. This predictability can be a significant advantage for businesses seeking a stable and transparent employment cost environment in Europe.
In these countries, the cost-to pay ratio decreases as salaries increase, meaning the relative financial burden on employers is regressive for higher earners:
Bulgaria stands out as the most cost-effective for employers across all salary levels, with a remarkably low and decreasing cost-to-pay ratio. This is due to a regressive tax system and relatively low social security contributions.
Similar to Bulgaria, Turkey offers employers a decreasing cost-to-pay ratio as salaries rise, potentially making it an attractive location for businesses seeking a cost-effective talent pool.
Surprisingly, despite being one of the countries with the highest employment costs for a €60,000 salary, Austria's cost-to-pay ratio decreases fairly significantly as salaries enter the higher brackets.
This Central European nation stands out for its dramatic shift in cost-effectiveness as salaries rise. While the cost-to-pay ratio is relatively average for lower salaries, it significantly decreases for the highest earners, making the Czech Republic the second most cost-effective country in Europe for employers hiring top talent.
In these countries, the cost-to pay ratio increases as salaries rise, meaning the relative burden on employers intensifies for higher earners:
France demonstrates the highest increase in the cost-to-pay ratio, indicating a substantial rise in employer costs for higher salaries. This is due to progressive tax rates and increasing social security contributions.
Portugal, known for its growing popularity among remote workers, surprises with a sharp increase in the cost-to-pay ratio for higher salaries. Again, this can be attributed to progressive tax rates and a relatively high social security burden.
Despite boasting relatively low employment costs for smaller salaries, Slovenia's cost-to-pay ratio skyrockets for higher earners, making it the least cost-effective option for businesses with high-salary roles.
As our exploration of the European employment landscape reveals, there's more to consider than meets the eye when it comes to employment costs across the continent.
A €60,000 salary isn't a one-size-fits-all proposition. Its true cost to employers (and actual value for employees) varies considerably depending on the.
This becomes even more crucial when we consider the principle of equal pay for equal work. In an ideal world, individuals performing the same job with the same level of expertise would receive equal compensation, regardless of where they live. However, as our data shows, equal pay for equal work requires careful consideration of local specifics.
To overcome this conundrum, some companies choose to adjust salaries based on local cost of living to ensure that employees in different locations have comparable financial well-being. Others prioritise maintaining consistent global salary bands to ensure internal equity within the company. Navigating these decisions requires a nuanced understanding of each country's unique financial context, as well as a commitment to fair and equitable compensation.
This guide serves as a starting point for businesses and decision-makers grappling with these complexities. By understanding the true cost of hiring and the varying financial landscapes across Europe, organisations can make informed choices that balance cost-effectiveness with fairness, ensuring that compensation strategies attract and retain top talent while upholding principles of equity in an increasingly globalised workforce.
To get a clearer understanding of what a given salary may cost you (as an employer), you can run your own simulations using one of our country-specific calculators.
Boundless, the fully compliant Employer of Record platform, compiled and analysed the employment costs in 32 countries within Europe, including gross salary, social and health insurance contributions, income taxes, net pay and more.
To collect this data, Boundless leveraged their internal salary calculators, a resource developed and used by the Boundless Payroll team in collaboration with local payroll partners in each country. This approach enabled Boundless to capture the true costs associated with employing staff in each of the 32 countries, taking into account all applicable regional nuances, and ensure that the findings reflect the latest legal and economic conditions.
