It's crazy depending on who do you compare it to. Taxes in Spain and Europe are certainly higher than in the US, but these are different systems. I can only tell about Spain:
The autonomous (Social Security) montly tax provides you free healthcare system and a (modest) retirement pension. The higher you pay, the higher your pension. It also covers a disability pension. I pay a fixed 385 €/month which doesn't vary with my income.
Income tax is proportional and usually misunderstood. You pay 19% for your first 12 k€. Then it increases to 24% for every euro above 12 k€ but under 20 k€. Then it's 30% between 20 and 35 k€, and so on. Every euro you earn above 300 k€ is currently taxed at 47%.
In Spain the average salary is ~25 k€/year. As I see it, an average young couple can live confortably in most parts of the country with their combined 50 k€/year per household, including a decent flat via a mortgage or rental. (However, many young people struggle to make 25 k€).
So say you make 100 k€/year from your business — that would be a pretty good gross income in Spain, catapulting you to the top 1% best-paid of the population.
Say yo decide to leave 25 k€ in your company for reinvestment, and take 75 k€ home for your expenses.
In taxes:
You would pay 4,6 k€ to the Social Security, and have free health insurance and a modest pension when you retire or in case of disability.
In corporate tax you would pay 5,65 k€ more (23% of the 25 k€ you decided to reinvest).
In personal income you would be taxed 20,1 k€.
So you would pay, in total ~30 k€, leaving you ~70 k€ from your total 100 k€ gross income. Your combined average tax rate is around 30% for that high income.
Of course you would then pay VAT when spending that money: ranging from 4% for basic goods to 21% for most of regular consumer goods.
On the other hand, public education is also free in Spain. Even university tuitions. As an example, my own education, from high school to my college graduation, was completely free. I even received public grants to pay for books and other expenses.
As far as I know, it's pretty similar across Europe. As said in my prior answer, corporate tax varies greatly among countries. But that is of little impact to indie makers, solopreneurs and even small business owners.
To me, the issue is when you are starting up and you don't make much money. Then the Social Security fixed tax is particularly painful.
It's crazy depending on who do you compare it to. Taxes in Spain and Europe are certainly higher than in the US, but these are different systems. I can only tell about Spain:
The autonomous (Social Security) montly tax provides you free healthcare system and a (modest) retirement pension. The higher you pay, the higher your pension. It also covers a disability pension. I pay a fixed 385 €/month which doesn't vary with my income.
VAT is generally 21%, in the European average.
Corporate tax is generally 25%, less than the European standard. And 23% for small business.
Income tax is proportional and usually misunderstood. You pay 19% for your first 12 k€. Then it increases to 24% for every euro above 12 k€ but under 20 k€. Then it's 30% between 20 and 35 k€, and so on. Every euro you earn above 300 k€ is currently taxed at 47%.
In Spain the average salary is ~25 k€/year. As I see it, an average young couple can live confortably in most parts of the country with their combined 50 k€/year per household, including a decent flat via a mortgage or rental. (However, many young people struggle to make 25 k€).
So say you make 100 k€/year from your business — that would be a pretty good gross income in Spain, catapulting you to the top 1% best-paid of the population.
Say yo decide to leave 25 k€ in your company for reinvestment, and take 75 k€ home for your expenses.
In taxes:
You would pay 4,6 k€ to the Social Security, and have free health insurance and a modest pension when you retire or in case of disability.
In corporate tax you would pay 5,65 k€ more (23% of the 25 k€ you decided to reinvest).
In personal income you would be taxed 20,1 k€.
So you would pay, in total ~30 k€, leaving you ~70 k€ from your total 100 k€ gross income. Your combined average tax rate is around 30% for that high income.
Of course you would then pay VAT when spending that money: ranging from 4% for basic goods to 21% for most of regular consumer goods.
On the other hand, public education is also free in Spain. Even university tuitions. As an example, my own education, from high school to my college graduation, was completely free. I even received public grants to pay for books and other expenses.
As far as I know, it's pretty similar across Europe. As said in my prior answer, corporate tax varies greatly among countries. But that is of little impact to indie makers, solopreneurs and even small business owners.
To me, the issue is when you are starting up and you don't make much money. Then the Social Security fixed tax is particularly painful.
How is that in your countries?