Romania, European leader in wage taxation: over 40% goes to the state

Romania leads the European ranking for labour taxation, according to the latest Eurostat data. Nearly half of a salary ends up back in the state budget, in the form of taxes and social contributions.

Specifically, an employee on the minimum wage pays the state over 1,600 RON, whilst an employee on the average income ends up handing back over 4,000 RON. In addition to these amounts withheld from income, the state also applies a 19% VAT rate to any payment made by citizens.

41.5% of gross salary withheld by the state

According to Eurostat data, a Romanian employee loses 41.5% of their gross salary in taxes and contributions — the highest percentage in the entire European Union.

The difference compared to other member states is considerable. In Cyprus, labour taxes withhold just 15.1% of income, whilst in Greece the figure is 17%. As such, the tax burden borne by a Romanian employee is more than 2.5 times greater than that in Cyprus.