In this Tapestry global tax update we will cover:
- Global tax changes – Argentina, Finland, France, Germany, Ireland, Latvia, Netherlands, Philippines, Romania, USA
- Global filings – Australia, Hong Kong, Ireland, Japan, Luxembourg, Portugal, UK, USA
Global tax changes in 2018
For many countries, revised tax rates start on New Year’s Day. Often the rates are only announced in the last days of December and in some cases the final figures are not available until well into January, sometimes later. Our international advisors provide us with new rates to update our database as quickly as they become available. In this update we take a brief look at some of the changes:
- Argentina – employer social security rates update: currently the employer social security contribution rate depends on the gross income of the employer with rates in 2018 of either 23.5% or 26.7%. Between 2018 and 2021, the employer contribution rate is due to adjust each year until in 2022 it settles at a single combined rate of 25.5%.
- Finland – changes to social security rates: the rate for employee social security has increased from 10.83% to 11.28% and the rate for employer social security contributions has decreased from 23.2% to 22.8%.
- France – personal tax changes in 2018: the 2018 Finance Act introduced a flat tax rate of 30% to cover most types of investment income (including capital gains and dividends). Social levies have been increased by 1.7% to 17.2%. The wealth tax, which previously applied to all assets over EUR1.3 million, now only applies to real estate assets. The Tax Finance Act also introduced changes to the tax regime for qualified free share plans. We discussed this in a newsletter in November (here) and will cover in more detail in a future newsletter.
- Germany – changes to social security contributions: the social security contribution rates have decreased and the capped amounts (i.e. the amounts above which social security is not paid) have increased from EUR76,200 to EUR78,000 (pensions) and from EUR52,200 to EUR 53,100 (health) for both employees and employers.
- Ireland – new rates for USC and PRSI: the main change for individuals is for those earning between EUR19,372.01 and EUR70,044 where the USC (Universal Social Charge, an income based tax) has increased from 4.5% to 4.75%. For employers, the PRSI (social security) rate has increased from 10.75% to 10.8%.
- Latvia – introduction of progressive taxes: the flat rate tax system has been replaced with a system of progressive rates. Applicable rates are now 20%, 23 % and 31.4%. The maximum tax rate applies to income over EUR55,000 and includes the solidarity tax which is levied on income over EUR55,000. The CGT rate has increased to 20%.
- Netherlands – maximum personal tax rate reduces: the top tax rate has reduced from 52% to 51.95% for 2018.
- Philippines – increase in top rates of tax: the maximum personal tax rate has increased from 32% to 35%, applicable to income over PHP8,000,000.
- Romania – reduction in personal income tax rates and alteration in social security contribution rates: in 2018 the personal income tax rate reduced from 16% to 10% (this is a flat tax rate which applies to most income). The employer social security obligations have mostly been moved to the employee. The employer social security rate has reduced from a maximum rate of 33.45% to 10.25% and the employee social security rate has increased from 16.5% to 35%.
- USA – change to personal income tax rate: the maximum tax rate has reduced from 39.6% to 37% (for a single tax payer earning over USD500,000 per year).
The above list is not exhaustive. Many countries have made adjustments to tax bands and to social security caps. If you need specific advice for any jurisdiction, please let us know.
Various fiscal year-end filings are coming up over the next few months. In this chart we set out information about year-end filings in several popular jurisdictions.
The two main changes that we have seen in relation to tax filings over the past few years are an increase in the information requested by local tax authorities and a move to require online filing. We find that tax authorities are becoming ever more sophisticated in their approach to obtaining information about employees with a view to ensuring full compliance with local tax laws. Please let us know if you would like any more information on these filings.
If you would like to keep track of the legal and tax requirements around the world, our OnTap database covers over 100 countries and is kept up-to-date with all the latest legal and tax requirements to operate your incentive plans. We would be delighted to provide a demo and a free trial.