Net earnings and tax rates (earn_net)

Reference Metadata in Euro SDMX Metadata Structure (ESMS)

Compiling agency: Eurostat, the statistical office of the European Union


Eurostat metadata
Reference metadata
1. Contact
2. Metadata update
3. Statistical presentation
4. Unit of measure
5. Reference Period
6. Institutional Mandate
7. Confidentiality
8. Release policy
9. Frequency of dissemination
10. Accessibility and clarity
11. Quality management
12. Relevance
13. Accuracy
14. Timeliness and punctuality
15. Coherence and comparability
16. Cost and Burden
17. Data revision
18. Statistical processing
19. Comment
Related Metadata
Annexes (including footnotes)



For any question on data and metadata, please contact: EUROPEAN STATISTICAL DATA SUPPORT

Download


1. Contact Top
1.1. Contact organisation

Eurostat, the statistical office of the European Union

1.2. Contact organisation unit

F3: Labour market

1.5. Contact mail address

ESTAT BECH

5, Rue Alphonse Weicker

L-2920

LUXEMBOURG


2. Metadata update Top
2.1. Metadata last certified 14/04/2016
2.2. Metadata last posted 14/04/2016
2.3. Metadata last update 14/04/2016


3. Statistical presentation Top
3.1. Data description

Information on net earnings (net pay taken home, in absolute figures) and related tax-benefit rates (in %) complements gross‑earnings data with respect to disposable earnings. The transition from gross to net earnings requires the deduction of income taxes and employee's social security contributions from the gross amounts and the addition of family allowances, if appropriate.

The amount of these components and therefore the ratio of net to gross earnings depend on the individual situation. A number of different family situations are considered, all referring to an average worker. Differences exist with respect to marital status (single vs. married), number of workers (only in the case of couples), number of dependent children, and level of gross earnings, expressed as a percentage of the gross earnings of an average worker (AW). 

All the data are based on a widely acknowledged model developed by the OECD, where figures are obtained from national sources (for further details on data providers, see the national contact list in Annex).

The collection contains, for selected situations, data for the following variables and indicators :

a)      gross and net earnings, including the transition components "income taxes", "employee's social security contributions" and "family allowances", if appropriate;

b)      tax rate, defined as the income tax on gross wage earnings plus the employee's social security contributions less universal cash benefits, expressed as a percentage of gross wage earnings;

c)      tax wedge on labour costs, defined as income tax on gross wage earnings plus the employee's and the employer's social security contributions, expressed as a percentage of the total labour costs of the earner. The total labour costs of the earner are defined as his/her gross earnings plus the employer's social security contributions plus payroll taxes (where applicable). The tax wedge on labour costs structural indicator is available only for single persons without children earning 67% of the AW.

d)      unemployment trap, measuring the percentage of gross earnings which is taxed away through higher tax and social security contributions and the withdrawal of unemployment, and other, benefits when an unemployed person returns to employment. This structural indicator is available only for single persons without children earning 67% of the AW when in work.

e)      low wage trap, measuring the percentage of gross earnings which is taxed away through the combined effects of income taxes, social security contributions and any withdrawal of benefits when gross earnings increase from 33% to 67% of AW. This structural indicator is available for single persons without children and one-earner couples with two children.

3.2. Classification system

Data is only available at country level with no further breakdowns by region

http://ec.europa.eu/eurostat/en/web/products-manuals-and-guidelines/-/CA-22-99-442-1F

3.3. Coverage - sector

Final tax Effective Tax Rate results:

The results for Malta, Latvia, Lithuania, Slovenia, Estonia and Cyprus (2005 onwards), Bulgaria and Romania (2008 onwards) and Croatia (2013 onwards) are based on the new classification NACE rev 2.0 (B-N). The data for Cyprus is currently unavailable from 2008 onwards since responses to Tax-Benefit questionnaires have not yet been provided to Eurostat. 

Final tax burden indicators:

Data for the years 2000 to 2014 are now available and they contain the latest tax burden indicators. For some countries, the indicators may have changed mainly due to revisions in the average wage values. As specified in the files, the average wages are based on either NACE/ISIC rev.3.1 (sectors C-K) or NACE rev.2/ISIC rev.4 (sectors B-N) with exceptions for Turkey prior to 2007 (ISIC rev.3.1, sector D) and for Austria for the 2000-2003 period (another classification than ISIC or NACE was used).

3.4. Statistical concepts and definitions

Information is provided on net earnings, the (average) tax rate, the tax wedge on labour costs, the unemployment trap and the low wage trap. All variables and indicators are based on gross earnings, income tax, social security contributions, family allowances and other benefits.

Gross earnings cover remuneration in cash, paid during the reference year by the employer, before tax deductions and social security contributions payable by wage earners and retained by the employer. All bonuses, whether regularly paid or not, are included (13th or 14th month, holiday bonuses, profit-sharing, allowances for leave not taken, occasional commissions etc.). Severance payments and payments in kind are excluded. Details of this definition can be found in Commission Regulation (EC) No 1916/2000 of 8 September 2000 implementing Council Regulation (EC) No 530/1999 concerning structural statistics on earnings and labour costs as regards the definition and transmission of information on structure of earnings.

Net earnings are calculated from gross earnings by deducting the employee's social security contributions and income taxes, and adding family allowances in the case of households with children. Income tax and social security contributions parameters refer to the beginning of the fiscal year, i.e. changes occurring later during the year are ignored. Family allowances are cash transfers paid in respect of dependent children aged between 6 and 11 years (except for parts d and e below, the ages are 4 and 6). If the amounts vary within this age range, the most generous are used. The case of twins is disregarded.

The data refer to an average worker at national level for different illustrative cases, defined on the basis of marital status (single vs. married), number of workers (only in the case of couples), number of dependent children, and level of gross earnings, expressed as percentage of the average earnings of an average worker (AW).

See also the country specific overview provided in the file in the Annex.

Data are available for the following variables and indicators for selected situations:

a) gross and net earnings, including the transition components income taxes, employee's social security contributions and family allowances, where appropriate. The following situations are considered:

  • single person with no children and 50%, 67%, 80%, 100%, 125% and 167% of the AW respectively;
  • Single person with two children and 67% of the AW;
  • Married couple with two children and the following levels of the AW: husband: 100%/wife 0%, husband 100%/wife 33%, husband 100%/wife 67% and husband 100%/wife 100%
  • Married couple with no children and 100% of the AW for the husband and 33% for the wife and husband 100%/wife 100%.

b) (average) tax rate, defined as the income tax on gross wage earnings plus the employee's social security contributions less universal cash benefits, expressed as a percentage of gross wage earnings. The situations considered are the same with the ones in (a). Illustrative calculations Singles and married contain illustrative calculations (see Annex at the bottom of the page).

c) the tax wedge on labour costs, defined as income tax on gross wage earnings plus the employee's and the employer's social security contributions, expressed as a percentage of the total labour costs of the earner. The total labour costs of the earner are defined as gross earnings plus the employer's social security contributions plus payroll taxes (where applicable). The tax wedge on labour costs structural indicator is available only for single persons without children earning 67% of the AW. Illustrative calcul indic tax wedge (see Annex at the bottom of the page) contains illustrative calculations.

d) the unemployment trap measures the percentage of gross earnings which is taxed away by higher tax and social security contributions and the withdrawal of unemployment, and other, benefits when an unemployed person returns to employment. It is defined as the difference between gross earnings and the increase of the net income when moving from unemployment to employment, expressed as a percentage of the gross earnings. This structural indicator is available only for single persons without children earning 67% of the AW when in work. Illustrative calcul indic unemploy trap (see Annex at the bottom of the page) contains illustrative calculations.

e) the low wage trap measures the percentage of gross earnings which is taxed away through the combined effects of income taxes, social security contributions, and any withdrawal of benefits when gross earnings increase from 33% to 67% of AW. It is defined as the difference of the increase of gross earnings and net income both due to increased work effort, expressed as a percentage of the increase of gross earnings. This indicator is available for single persons without children and one-earner couples with two children aged 4 and 6 years. Low wage trap_briefing note (see Annex at the bottom of the page) contains illustrative calculations.

3.5. Statistical unit

The statistical unit is the family. All situations are illustrative and not necessarily representative in any country.

3.6. Statistical population

All families in the aforementioned countries.

3.7. Reference area

Data are available for the EU and Euro area aggregates, EU Member States, Turkey, Iceland, Norway, Switzerland, Japan and the USA.

3.8. Coverage - Time

Pulished data are available from 2001 onwards. For a few countries, the time series start from reference year 1995.

3.9. Base period

Not applicable.


4. Unit of measure Top

Gross and net earnings and the transition components are expressed in Euro, national currency (if different) and Purchasing Power Standards (PPS), all other indicators are in %.

To remove the effect of differences in price levels between the countries, special conversion rates called Purchasing Power Parities (PPPs) are applied. The PPPs used are on the basis of household final consumption expenditure in each country, expressed in national currencies (euro-fixed series for euro area countries) to an artificial common unit called the Purchasing Power Standard (PPS). In the case when PPPs for the most recent reference year are not yet available, the ones from the previous last available year are used. These are then updated once the PPPs of that particular year become available.


5. Reference Period Top

The reference period is the calendar year.


6. Institutional Mandate Top
6.1. Institutional Mandate - legal acts and other agreements

The data are collected on the basis of gentlemen's agreements between the countries, OECD and Eurostat

6.2. Institutional Mandate - data sharing

Not applicable.


7. Confidentiality Top
7.1. Confidentiality - policy

Regulation (EC) No 223/2009 on European statistics (recital 24 and Article 20(4)) of 11 March 2009 (OJ L 87, p. 164), stipulates the need to establish common principles and guidelines ensuring the confidentiality of data used for the production of European statistics and the access to those confidential data with due account for technical developments and the requirements of users in a democratic society.

7.2. Confidentiality - data treatment

Not applicable.


8. Release policy Top
8.1. Release calendar

No release calendar.

8.2. Release calendar access

Not applicable.

8.3. Release policy - user access

In line with the Community legal framework and the European Statistics Code of Practice Eurostat disseminates European statistics on Eurostat's website (see item 10 - 'Dissemination format') respecting professional independence and in an objective, professional and transparent manner in which all users are treated equitably. The detailed arrangements are governed by the Eurostat protocol on impartial access to Eurostat data for users.


9. Frequency of dissemination Top

Annual


10. Accessibility and clarity Top
10.1. Dissemination format - News release

None

10.2. Dissemination format - Publications

See Annex

10.3. Dissemination format - online database

Please consult free data on-line or refer to contact details.

10.4. Dissemination format - microdata access

Not applicable.

10.5. Dissemination format - other

Identification of commentary on the occasion of statistical releases:

There is no official comment accompanying data release.

Hardcopy > Other: None
Internet address: http://ec.europa.eu/eurostat
CD ROM: None
Electronic > Other: None

10.6. Documentation on methodology

The OECD annual publication "Taxing Wages" sets out the methodologies and the sources used for the net earnings, tax rates and tax wedge indicators. The methodology used for the unemployment and low wage trap indicators are available at http://www.oecd.org/els/soc/Methodology.pdf.

10.7. Quality management - documentation

Not applicable


11. Quality management Top
11.1. Quality assurance

Not available.

11.2. Quality management - assessment

Not available.


12. Relevance Top
12.1. Relevance - User Needs

Not available.

12.2. Relevance - User Satisfaction

Not available.

12.3. Completeness

Not available.


13. Accuracy Top
13.1. Accuracy - overall

Not available.

13.2. Sampling error

Not available.

13.3. Non-sampling error

Not available.


14. Timeliness and punctuality Top
14.1. Timeliness

Net Earnings data - 3 months after the end of the reference year

Low Wage and Unemployment trap data – 9 months after the end of the reference year

14.2. Punctuality

Not applicable


15. Coherence and comparability Top
15.1. Comparability - geographical

Not available.

15.2. Comparability - over time

Not available.

15.3. Coherence - cross domain

Net Earnings data except those for the non-OECD EU Member States are also available at: www.oecd.org/ctp/tax-policy/taxing-wages.htm

Unemployment Trap and Low Wage Trap data for all countries are also available at: http://www.oecd.org/social/benefits-and-wages.htm

15.4. Coherence - internal

Not available.


16. Cost and Burden Top

Not available.


17. Data revision Top
17.1. Data revision - policy

Not applicable.

17.2. Data revision - practice

The data for the latest year are sometimes subject to revisions the year after, but the extent of the revisions is usually small.


18. Statistical processing Top
18.1. Source data

The data are not collected but estimated on the basis of a widely acknowledged model developed by the OECD. OECD collects these data from national sources on a gentlemen's agreement.

18.2. Frequency of data collection

Not applicable.

18.3. Data collection

Net Earnings data available at: www.oecd.org/ctp/tax-policy/taxing-wages.htm

Unemployment Trap and Low Wage Trap data available at: http://www.oecd.org/social/benefits-and-wages.htm

18.4. Data validation

Validation is undertaken between OECD and national sources.

18.5. Data compilation

EU aggregates are weighted averages of the national data.

Each individual country weight reflects the number of employees in the labour market of that particular country.

18.6. Adjustment

Not applicable


19. Comment Top

Country specific notes

Data prior to 2005 for Estonia, Cyprus, Latvia, Lithuania and Malta, prior to 2008 for Bulgaria and Romania, and prior to 2013 for Croatia are not calculated by the OECD - causing a possible break in national vs. OECD concepts.

Housing benefits are included for data on Tax rate on low wage earners - 'Unemployment trap ' and ' Low wage trap'.For full details on Housing Benefit methodology, please see http://www.oecd.org/els/soc/Methodology.pdf

A full classification of the Average Wage figures used is available from the following link: http://dx.doi.org/10.1787/888933197483 This table is replicated in OECD (2015), Taxing Wages 2015, OECD Publishing


Related metadata Top


Annexes Top
Illustrative calculations Singles and married
Illustrative calcul indic tax wedge
Illustrative calcul indic unemploy trap
Low wage trap - briefing note
The Impact of Policy Change on Tax benefit indicators
National contact list
Taxing wages - Methodology 2014