What are the taxes and rates of tax to which an individual is subject in respect of income and capital gains and, in relation to those taxes, when does the tax year start and end, and when must tax returns be submitted and tax paid?

Private Client (3rd edition)

Colombia Small Flag Colombia

The fiscal year in Colombia is the same as the calendar year. The Colombian fiscal year starts on January 1st and ends December 31st of each year.

  • Non-residents:
  • Non-residents are subject to tax at a 35% rate on Colombian sourced income and at 10% rate on Colombian sourced capital gains if the assets have been held for 2 years or more. They are only required to report assets located in Colombia.

  • Residents:
  • Individual tax rates depends on income baskets and residence status. As of January 1st, 2019, the rates for each type of income are the following:

    Labour income, Capital Income and Non-labour income

    Pensions

    Dividends

    · 0% to 39% for residents.

    · 35% for non-residents.

    · 0% to 39% for residents.

    · 35% for non- residents.

    · 0%-15% for dividends paid out of taxed profits at the corporate level (for residents).

    · 7.5% for dividends paid out of taxed profits at the corporate level (for non-residents).

    · 33% for FY 2019, 32% for FY 2020, 31% for FY 2021, 30% as of FY 2022 plus 15% (for residents) or 7.5% (for non-residents) on the distributed net dividend (net of the 33%, 32%, 31% or 30% initial tax) if not taxed at the corporate level.

    The following exemptions, reliefs or deductions are available:

    Revenues not considered as income

    Mandatory health and pension contributions made by employees.

    Voluntary contributions to the individual savings scheme provided that:

    · The income does not annually exceed 2.500 Tax Value Units (Approximately USD 25.800); or

    · The contributions do not annually exceed 25% of the annual labour income.

    Deductions

    Payments of interests derived from loans destined to housing purchase.

    Payment of pre-paid health services and health insurance payments.

    10% of all labour payments made to individuals who are dependent from the taxpayer (i.e., children who have not reached legal age, children who have reached legal age but are being financed in a recognised educational institution and children older than 23 years old who are dependent due to physical or psychological incapability).

    Exempt income

    Voluntary contributions to pension funds and AFC accounts (savings accounts for housing purchase) provided that:

    · The Income does not annually exceed 3.800 Tax Value Units (Approximately USD 39.230); or

    · The contributions do not annually exceed 30% of the annual labour income.

    The above mentioned tax benefits may be applied as long as they do not exceed 40% of the total income received or 5.040 tax value units (Approx. USD 51.894).

  • Capital gains

For Colombian tax purposes, capital gains are those that are not obtained by a taxpayer as a result of the activities that she or he ordinarily carries out. The activities that trigger capital gains are specifically listed in the Colombian Tax Code:

  • Capital gains from the sale or indirect sale of fixed assets that have been owned by the taxpayer for a term of two or more years;
  • Profits obtained in the liquidation of legal entities, and that do not correspond to undistributed profits or reserves;
  • Gains resulting from estates, legacies and donations (gifts);
  • Prizes, awards, lotteries and gambling earnings; and
  • Life insurance indemnities, only on the amount that exceeds 12.500 Tax Value Units (Approx. USD 129.000).

Italy Small Flag Italy

For individuals the tax year coincides with the calendar year. The total taxable income is subject to progressive tax rates up to 43% (plus local surcharges). However, income and gains from financial assets are generally subject to final withholding taxes at flat rates (see 3) and are not computed in the total taxable income. The deadline for the filing of the income tax return is usually the 30th of November of the following year. Taxes are paid through two advance payments during the year (usually in June and November) and the payment of the balance, which must be usually made in June of the following year.

Cyprus Small Flag Cyprus

Income Tax
Individuals who are Cyprus tax residents are taxed in Cyprus on their worldwide income.

Income tax is payable at the following rates:

Taxable Income (EUR)

 Tax Rate
%

 0 – 19,500

 0

 19,501 – 28,000

 20

 28,001 – 36,000

 25

 36,001 – 60,000

 30

 Over 60,001 

 35

Gains from the disposal of securities or arising from an approved corporate restructuring are fully exempted from taxation.

Any dividend or interest income are fully exempted from income tax at the above rates, although they are subject to the Special Defence Contribution, which will be analysed below, unless it falls under the operating activities of the individual.

Rental income is subject to both income tax at the above rates and Special Defence Contribution.

When calculating a person’s taxable income, certain expenses incurred wholly and exclusively for the production of income are deductible, such as the expenses for letting buildings or the interest relating to the acquisition of fixed assets etc.

Cyprus source widow(er)’s pension is taxed at the flat rate of 20% on amounts over €19.500. Foreign pension income is taxed at the flat rate of 5% on amounts over €3.420. The taxpayer can however, on an annual basis elect to be taxed at the normal tax rates and bands set out above.

Persons who are not tax residents in Cyprus will only be taxed on income accruing or arising from sources within the Republic of Cyprus. 

Special Defence Contribution (SDC)
Special Defence Contribution (SDC) is imposed on dividend income, ‘passive’ interest income and rental income earned by tax residents in Cyprus and Cyprus domiciled persons, legal entities and individuals at the following rates:

Type of income

Individuals

Corporate entities

Dividend income from Cyprus tax resident companies

17%

NIL

Dividend income from non-Cyprus tax resident companies

17%

NIL

‘Passive’ interest income

30%

30%

Gross rental income (reduced by 25%)

3%

3%

Capital Gains Tax
The capital gains tax rate (imposed when the disposal is not subject to income tax) is 20%, and it is imposed on the gains from the disposal of immovable property or shares in a company owning immovable property situated in Cyprus. Individuals are allowed certain deductions when the abovementioned gains are calculated.
The tax year begins on the 1st of January and ends on the 31st of December.

The tax returns must be submitted before the 31st of July. In the previous year an extension was granted by the 30th of September for tax returns submitted electronically.

Mexico Small Flag Mexico

Individuals are obliged to pay income tax over all their income, regardless it is obtained in cash, goods, credits or services.

The income tax of individuals is calculated in a schedular way, separating the different kinds of income that an individual can receive. Each of the regulated taxable income has its own calculation and deduction system, and each individual has to calculate the income obtained by each of the regimes and has to add the result to the general total income.

The Mexican Income Tax Law establishes special regimes for the income that comes from: (i) salaries; (ii) business and professional activities; (iii) leases; (iv) sale of goods; (v) acquisition of assets; (vi) interest; (vii) prizes; and (viii) dividends and profits distributed by a legal entity.

Once the individual calculates the tax base in accordance with the particular regime of each income (with their own deductions, if applicable), all income obtained during the year shall be added, regardless of their source of origin. The resulting amount can be reduced by personal deductions (deductions that can be made by all individuals), and the total amount will be the general tax base.

The rate imposed to the income of individuals is a progressive fee, that goes from the 1.92% up to the 35% on the individual´s total income, depending on its amount.

Tax year equals the calendar year, so it starts on January 1 and ends on December 31. The annual tax return shall be presented before April 30 of the immediately following calendar year to the year in which such incomes were obtained.

Notwithstanding the foregoing, throughout the tax year individuals shall execute advance payments over the income tax. Such payments shall be credited by the tax payer from the annual income tax calculation at the end of the tax year.

Hong Kong Small Flag Hong Kong

a. There is no capital gains tax in Hong Kong.

b. Broadly speaking, an individual may be subject to profits tax, salaries tax and property tax.

c. The year of assessment commences on 1 April of each year and ends on 31 March of the following year.

d. Persons carrying on any trade, profession or business in Hong Kong are chargeable to profits tax on all profits (excluding profits arising from the sale of capital assets and dividend income) arising in or derived from Hong Kong from such trade, profession or business. Two-tiered profits tax rates apply to corporations and unincorporated businesses with effect from the year of assessment 2018/19. For corporations, the tax rates is 8.25% on the first HK$ 2,000,000 of assessable profits and 16.5% on any part of assessable profits exceeding HK$ 2,000,000. For unincorporated businesses, the tax rates is 7.5% on the first HK$ 2,000,000 of assessable profits and 15% on any part of assessable profits exceeding HK$2,000,000.

e. Salaries tax is charged on every person with income arising in or derived from Hong Kong from any office or employment of profit at the progressive rates from 2% to 17% on the net chargeable income or at the standard rate of 15% on the net income without allowances, whichever is lower.

f. Property tax is charged to the owner of any land and / or buildings situated in Hong Kong, except those (i) owned by the Government, approved charitable institutions or trust of public character or (ii) used for consular purposes. It is computed at the standard rate of 15% on the net assessable vale of such land or buildings. The net assessable value is the assessable value (after deduction of rates paid by the owner and certain other payments) less 20% statutory allowance for repairs and outgoings. The assessable value is calculated by reference to the actual consideration payable to the owner in respect of the right of use of the property such as gross rent received or receivable and payment for the right of use of premises under license.

g. Taxpayers are required to complete and send the tax return back to the Inland Revenue Department within one month from the date of issue of the return. An extension of 1 month will be given automatically if the return is filed electronically.

h. The due dates for tax payment is stipulated in the notice of assessment issued by the Inland Revenue Department. Broadly speaking,
i. for profits tax, between November of the year in which the tax return is issued and April of the following year;
ii. for salaries tax, between January and April of the year following the year in which the tax return is issued; and
iii. for property tax, in or after November of the year in which the tax return is issued.

India Small Flag India

Please note all the tax rates provided below are exclusive of surcharge and cess. The income of an individual is taxed at progressive slab rates that range from 0% to 30%, with the highest slab applying to individuals who have income in excess of INR 1,000,000. Tax slabs also differ based on the age and gender of the individual and different rates may be applicable to entities. For the purposes of charging income tax, an individual’s total income is classified into five categories of income i.e. (i) salaries, (ii) income from house property, (iii) business income, (iv) capital gains and (v) income from other sources. Individuals are subject to a surcharge ranging from 10% to 37% based on their total income tax payable. Additionally, an individual is also subject to a health an education cess of 4% over the income tax and surcharge.

Capital gains tax rates range from 0% to 40%, depending on the residency status of the seller, the nature of seller (individual or otherwise), the type of asset and the period of holding. Assets which are considered “long term capital assets” are eligible to a lower rate of capital gains tax. The eligibility period for an asset to be considered a long term capital asset varies from asset to asset. India does not levy an expatriation tax or exit tax.

An individual with taxable income is to pay tax and submit tax returns at the end of the tax year by July 31st, although the dates are occasionally extended.

Liechtenstein Small Flag Liechtenstein

Tax rates are different for singles and married couples and are increasing depending on income. Maximum rates for resident individuals are between 20% and 22.4% depending on the commune in which they live. Maximum rates for non-residents and for property capital gains are 24%.

The tax year is the calendar year. In case one is relocating to Liechtenstein, the liability starts at that date and ends at year end. Tax returns must be submitted between April and September of the following year.

Monaco Small Flag Monaco

N/A. See Question 1.

Poland Small Flag Poland

Most individuals are subject to taxation at progressive rates of 17% (up to PLN 85,528 per annum) and 32% (surplus over PLN 85,528 per annum). Social security (approx. 14% financed by the employee and 18% financed by the employer) and healthcare (9% financed by the employee) contributions are based on the remuneration. Social security contributions are deductible from the income, whilst healthcare contributions are partly deductible from the tax.

However, certain individuals may be subject to taxation at a lump-sum regime or at linear 19% tax rate (self-employment and business activity). Specific rules of social security and healthcare contributions apply to them as well.

There are rules of taxation for controlled foreign companies (CFCs).

Rental income is subject to taxation at progressive rates of 17% and 32%, linear rate 19% or lump-sum taxes of 8.5% (up to PLN 100,000 per annum) and 12.5% (surplus over PLN 100,000 per annum).

Capital gains and gains derived from the disposal of financial instruments or real estate are taxed at 19%. Disposal of real estate not earlier than 5 years from the end of its acquisition year is tax exempt.

Individuals with annual income from certain sources exceeding PLN 1,000,000 are subject to an additional 4% tax on the surplus over PLN 1,000,000 per annum.

An exit tax of 19% on unrealized gains may apply when individual transfers assets outside Poland or changes tax residency.

A tax year is equal to a calendar year. Tax returns must be submitted by the end of April of the following year. Married couples and single parents may settle with preferential joint spouses’/single parent’s regimes.

Portugal Small Flag Portugal

For tax residents, the Portuguese PIT has a ‘dual’ structure. In general, income from employment, business activities and pensions are subject to progressive tax rates up to 48% (plus and additional surcharge of 2.5% to 5%). Real estate income, financial income and capital gains are subject to a 28% flat tax rate (although the individual may opt to be subject to the general progressive tax rates). In addition, payments from entities located in blacklisted jurisdictions (listed in Ministerial Order No. 150/2004, as amended) are subject to a 35% tax rate.

Please see 9 below concerning the tax framework (including special tax rates) under the Portuguese Non-Habitual Tax Regime (“NHTR”).

Income received from employment and business activities are subject to social security contributions. Said contributions are, in general, 23,75% on the gross amounts paid for employers and 11% for the employees. For individuals performing business activities the contributions vary between 21,4% and 25,2%.

As a general rule, the Portuguese tax year matches the calendar year (from 1 January to 31 December) and the corresponding PIT return must be submitted between 1 April to 30 June of the following year.

Russia Small Flag Russia

Taxable income

Under the Tax Code residents are taxable on their worldwide income, including, inter alia, income from business activities as well as dividends, interest, royalties and worldwide capital gains. Non-residents are taxed on income derived from Russian sources only. Foreign-source income is treated in the same manner as domestic income safe for the tax rates and the rules applying to the collection of taxes.

The following categories of income are deemed to be sourced in Russia and taxable in Russia regardless of the resident / non-resident status of the income recipient (Art. 208 and Art. 209 of the Tax Code):

  • employment income (includes wages, salaries, benefits in kind) derived from the activities performed in Russia;
  • directors’ fees derived in the capacity as a member of the board of directors of a legal entity incorporated under the Russian law, regardless of the location of a particular meeting of the board of directors;
  • income from independent activities, including business income;
  • dividends and interest paid by domestic entities, individual entrepreneurs or permanent establishment of foreign legal entities;
  • royalties if the rights generating royalties are used in Russia;
  • rent payments and capital gains from the alienation of immovable property located in Russia;
  • income from the sale of real estate andother property (including capital gains from the sale of shares or securities, if the sale takes place in Russia or the shares constitute a participation in a Russian legal entity. Income from the sale of real estate is located in Russia and shares in Russian companies, held for a period longer than 5 years, is exempt from the individual income tax);
  • payments under an insurance contract;
  • private pensions funded by employers, scholarships and other similar benefits paid according to the Russian legislation, or by a Russian entity or the permanent establishment of a foreign legal entity;
  • income from transportation, provided that the transportation and services related to it are performed in Russia;
  • income from the use of pipelines, power lines, data transfer and other similar services if the corresponding facilities are located in Russia;
  • profits of controlled foreign companies; and
  • other income from transactions which take place in Russia.

Taxation of material benefit

According to Art. 210 of the Tax Code tax base is composed not only of received payments but also of received benefits in kind and of the specific deemed income category of “material benefit” ((материальнаявыгода). The following three specific types of material benefit are included into the taxable income under Art. 212 of the Tax Code:

  • the interest on loans granted to an individual by the employer or another affiliated company or entrepreneur to the extent that the rate charged is lower than one of the following thresholds:
          • two thirds of the refinancing rate of the Central Bank of Russia (the rate is currently set at 6,5% (as of Okt. 28, 2019)); or
          • in the case of foreign-currency denominated loans - 9% per year;

The tax is calculated on the excess of the amount of deemed interest (see the thresholds (i) and (ii) above) over the amount of the interest actually charged. Exceptions from this deemed interest rule are provided for operations with credit cards and loans granted for the purchase of residential premises.

  • the negative difference between the price of goods or services sold to affiliated parties (e.g. between an employer and an employee or between relatives) and the market price of those goods and services; and
  • the negative difference between the purchase price of securities or derivatives and the market price of those derivatives safe for transactions of the following type:

 

          • acquisition of securities from a CFC by the taxpayer recognized as (a) a controlling person of such CFC; or (b) a Russian related party of such controlling person, provided in either case that income of this CFC from the sale of the securities is not included in the profits (loss) of this CFC;

Taxation of employee stock option plans

Granting stock options to individual employees may constitute a taxable event if the stock options are classified as derivatives.. However, the Ministry of Finance in its letter dd. December 19, 2012 (N 03-04-05/4-1415) declared that in the particular case at hand (stock option plan issued by non-resident group company in favour of resident employees of a resident group company) the stock option plan shall not be recognized as a derivative for the purposes of Art. 212 of the Tax Code and therefore granting of a stock option under the plan would not constitute a taxable event. Therefore, generally two taxable events occur in the context of employee stock option plans. Firstly, on the exercise of an employee stock option, a taxpayer is subject to individual income tax on the negative difference between the price paid (strike price) and the market price of the stock (material benefit under Art. 212 of the Tax Code). Secondly, upon realization of the stock income tax is paid on the difference (material benefit) between the sale price and the aggregate sum of the acquisition costs (strike price).

Rates

According with the Tax Code, income is taxed at flat rates. The default rate for resident individuals is 13%, which generally applies unless the Tax Code requires otherwise (Par. 1, Art. 224 of the Tax Code).

The default rate for income of non-resident individuals derived from source in Russia is 30% (Par. 3, Art. 224 of the Tax Code) including, inter alia, interest, royalties and capital gains on sale of shares in Russian organizations. It shall be noted that in the recently announced discussions on reform of the tax policy for 2020-2022, the Ministry of Finance proposed to equalize the default rate for both resident and non-resident individuals and to set it at 13%.

Specific rates for non-resident individuals apply in the following cases (Par. 3, Art. 224 of the Tax Code):

  • receipt of dividends from domestic entities: 15%;
  • employment income originating from activities of highly skilled specialists, as defined in Federal Law 115-FZ of 25 July 2002 on the status of foreign citizens in Russia: 13%;
  • etc.

The rate of 35% applies to the following categories of income (Art. 224 par. 2 of the Tax Code):

  • interest on Russian bank deposits (i) exceeding the result of the refinancing rate established by the Central Bank of Russia (the rate is currently set at 6,5% (as of Okt. 28, 2019)) being increased by 5% on domestic currency deposits; and (ii) exceeding 9% per year on foreign currency deposits (Art. 214.2 of the Tax Code);
  • interest (coupon) on listed bonds of Russian companies denominated in roubles and issued after Jan. 1, 2017 exceeding the result of the refinancing rate established by the Central Bank of Russia (the rate is currently set at 6,5% (as of Okt. 28, 2019)) being increased by 5% (Art. 214.2 of the Tax Code);
  • material benefit (deemed income) originating from low-interest loans safe (the negative difference between the interest rate and two thirds of the refinancing rate of the Central Bank of Russia (the rate is currently set at 6,5% (as of Okt. 28, 2019) or 9% in the case of foreign-currency denominated loans) for the deemed benefit originating during the interest-free (grace) period under credit card operations; and
  • prizes and awards received in the course of an advertising event in excess of RUB 4,000.

Social Security Contributions

All resident under employment and civil law contracts (including under copyright and licensing agreements) are social security contributions payers to the State Pension Fund, the Social Security Fund and Federal Compulsory Medical Insurance Funds (Art. 419 of the Tax Code). The maximum social security contribution may not exceed 30% of an employee’s annual salary. 

Contribution (RUB)

Pension Fund (%)

Social Insurance Fund (%)

Federal Medical Insurance Fund (%)

Up to 1,150,000

22

 

5.1

Over 1,150,000

10

 

5.1

Up to 865,000

 

2,9

5.1

Over 865,000

 

-

5.1

Municipal taxes

There are no local (municipal) taxes on income.

Exit taxes

There are no exit taxes.

Timing of payment

The taxable period is the calendar year (Art. 216 of the Tax Code). Generally, the tax return is due on the 30th of April immediately following the end of the taxable period (Art. 229 of the Tax Code). In the case of a termination of the business activity or the contractual relationship generating income (e.g. rent contract), the taxpayer must file the tax return within five days of such termination. The obligation to file a tax return must be submitted to the tax authorities  within one month prior to the day of emigration of the foreign citizen qualifying as a resident for tax purposes.

Tax returns

Tax returns can be filed electronically and from 1 July 2015 through the “personal account” of the taxpayer available on the website of the Federal Tax Service. In the case of failure to submit a tax return after the filing deadline a fine of 5% of the tax due under the assessment may be imposed for each full or partial month of delay with the maximum of 30% of the tax due.

Serbia Small Flag Serbia

Personal income taxation consists of taxation at source and of a supplementary annual income tax. Most types of income are taxed at source by withholding, such as e.g. employment income, dividend, interest, rental income, income from copyright-protected works, work-for-hire contracts, directors' fees etc. Withholding obligation rests with domestic legal entities only, while in case an individual receives income from sources outside of Serbia, such income is not subject to withholding tax, and an individual is required to report such foreign income and self-asses income tax.

Basis for taxation of employment income and investment income (dividend, interest) is gross income, while basis for taxation of other types of income is gross income less standard deductions for costs (those standard deductions vary between 20% and 50% of gross income). Self-employed registered sole entrepreneurs are subject to annual self-assessment of tax on the basis of profit shown in an annual income statement, adjusted for some expense items. Capital gains are taxed by assessment of tax authority.

The rates are as follows: (i) employment income – 10%, (ii) income from sole entrepreneurship – 10%, (iii) income from copyright-protected works, including software and from IP rights – 20%, (iv) income from investment (dividend, interest, return on investment units of investment funds) – 15%, (v) capital gains due upon disposal of certain assets (real property, shares in companies, other securities except government debt securities, copyright-protected works and other IP rights, investment units of investment funds) – 15%, (vi) rental income from renting real property – 20%, (vii) other various types of income, e.g. freelance work-for-hire contracts, directors' fees, various payments and benefits to people who are not employees etc. are all subject to 20% rate.

An annual supplementary income tax is levied on the sum of annual income from the following sources: employment income, income from sole entrepreneurship, income from copyright-protected works and IP, rental income, income earned by freelance contractors, directors' fees etc. However, dividends, interest and capital gains are excluded for the purpose of the annual supplementary income tax framework. Resident individuals are subject to the annual supplementary income tax on their worldwide income, and non-residents only with respect to Serbian-source income.

For the purpose of the annual supplementary income tax, income of each type is aggregated on an annual level and decreased by the sum of withholding income tax and social security contributions paid on such income by withholding. The result is an aggregate net annual income (net of paid income tax and social security contribution where applicable), which is a starting point of establishing a tax base. An individual is subject to the annual supplementary tax only with respect to the net annual income exceeding the threshold of three times the average annual wage in Serbia according to the official statistics office. The threshold for the annual supplementary tax for 2018 was RSD 2,470,644 (roughly EUR 20,000). The first band is an aggregate net annual income exceeding the threshold of EUR 20,000 and up to the six times the average annual wage (roughly EUR 41,800) and it is subject to 10% rate. The second band is income exceeding the six times the average annual wage and it is taxed with 15%.

An individual whose aggregate net annual income exceeds the threshold of three times the average annual wage is required to file an annual supplementary income tax return by 15 May of the current year for the preceding year. The tax is paid within 15 days from the receipt of the tax authority's assessment.

Individuals who work in Serbia for local entities either on a proper employment agreement governed by the labour regulations, or under various types of agreements providing for flexible employment, self-employed sole entrepreneurs, unregistered freelance contractors, directors, board members etc. are subject to the mandatory social security contributions. They consist of the following three elements: (i) pension and disability insurance contribution at the aggregate rate of 25.5%, (ii) health insurance contribution at the aggregate rate of 10.3%, and (iii) unemployment insurance contribution at the aggregate rate of 0.75%. The social security contributions are capped at the monthly level (applicable to monthly wages and other monthly payments, except to freelance contracts) at five times the statistical average monthly wage. On the annual level the social security contributions are capped at the amount calculated by multiplying the monthly average wage by 12.

Switzerland Small Flag Switzerland

Income tax is levied at federal, cantonal and communal levels. The tax rates are progressive at federal level and in most cantons. Cantonal rates vary considerably and range from as low as 25% to as high as 47% depending on the location. Dividends from qualifying participations are taxed at reduced rates.

The Swiss tax year corresponds to the calendar year. Tax returns are submitted to the tax authorities of the canton of residence by March/April of the following year. Deadline extensions are generally granted upon request.

Cantonal and communal income taxes are paid on a provisional basis during the respective tax year. Payments on account of federal income tax are generally due in March of the year following the tax year. Final payments become due upon final assessment, usually 1-2 years after the tax year.

Capital gains on the sale of Swiss private real property are subject to separate taxation at cantonal/communal levels. The applicable tax rate depends on the canton where the property is situated and decreases with the number of years the taxpayer has held the property.

United States Small Flag United States

a. Individual Ordinary Income Tax Rates.  There are four filing statuses and seven brackets for individual federal ordinary income tax; the brackets are indexed for inflation. The following table shows the anticipated individual income tax rates and brackets for the 2020 tax year.

Tax Rate

Single

Married filing Jointly and Surviving Spouses

Married Filing Separately

Head of Household

10%

$0—$9,875

$0—$19,750

$0—$9,875

$0—$14,100

12%

$9,875—$40,125

$17,750—$80,250

$9,875—$40,125

$14,100—$53,700

22%

$40,125—$85,525

$80,250—$171,050

$40,125—$85,525

$53,700—$85,500

24%

$85,525—$163,300

$171,050—$326,600

$85,525—$163,300

$85,500—$163,300

32%

$163,300—$207,350

$326,600—$414,700

$163,300—$207,350

$163,300—$207,350

35%

$207,350—$518,400

$414,700—$622,050

$207,350—$311,025

$207,350—$518,400

37%

$518,400 +

$622,050 +

$311,025 +

$518,400 +

b. Capital Gains Rates.  For individual taxpayers (i.e., US Persons and nonresidents with US source income), the capital gains rate depends on the individual’s tax bracket, and whether the gains are classified as short-term capital gains or long-term capital gains.  Short-term capital gains are gains from the sale or disposal of assets held for one year or less.  Individuals pay short-term capital gains at the same rate as their ordinary income tax rate.  Long-term capital gains are gains from the sale or disposal of assets held for more than 1 year and they are taxed at 0%, 15% or 20% depending on an individual’s income tax bracket.  Long-term capital gains on the sale of collectibles (such as works of art or other tangible personal property) are taxed at 28%.  If long-term capital gains raise an individual’s income from one bracket to another, only the portion that is in the higher bracket – not the entire gain – is taxed at the higher rate.  It is possible to defer the realization of capital gains on the sale of investment real property by investors through the use of a like-kind exchange of similar investment real property.  As a result of the 2017 enactment of the Tax Cuts and Jobs Act (described in the answer to question 28) and the issuance of proposed Treasury regulations, deferral of such gains on the sale of capital assets other than investment real property is unavailable, except to the extent the proceeds of sale are invested in a qualified business or property located within a special “qualified opportunity zone” (i.e., generally, a listed disadvantaged area within the US) for a fixed period of time.

c. Social Security and Medicare Taxes.  For the 2020 tax year, US Persons who work as employees and nonresidents with US-source salaried income are obligated to pay a social security tax at a rate of 6.2% on compensation up to $137,700, and a Medicare tax at a rate of 1.45% on compensation up to certain thresholds ($125,000 for married taxpayers who file separately, $250,000 for married taxpayers who file jointly, and $200,000 for single and all other taxpayers) and 2.35% on compensation in excess of these thresholds.  (The ceiling for application of the social security tax is adjusted annually for inflation.)  Self-employed US Persons and nonresidents with US-source self-employment income must pay 12.4% of their annual self-employment earnings up to $137,700 toward social security taxes, as well as 2.9% of their self-employment earnings up to the above thresholds and 3.8% of their earnings in excess of these thresholds, toward Medicare taxes.

d. Length of Tax Year; Tax Return Submission; Payment of Tax.  The tax year for individuals runs from January 1 to December 31.  Individuals are required to file income tax returns reporting their income and capital gains, and pay any tax due, by April 15 of the year following the end of the taxable year to which the return relates.  Individuals who cannot file by the due date for their return may request an extension of time to file.  An extension of time to file is not an extension of time to pay, however, and individuals may be subject to a late payment penalty on any tax not paid by the original due date of their return. 

Singapore Small Flag Singapore

A resident individual taxpayer is taxed at a graduated margin tax rate depending on the quantum of chargeable income. The current highest income tax rate for individuals is 22%. The tax year is from 1 January to 31 December, and tax returns generally have to be filed between 1 March and 18 April every year for the preceding tax year, depending on whether it is filed online or by way of a paper form.

There is no capital gains tax in Singapore, but see also question 1 above.

Israel Small Flag Israel

An individual is subject to the following taxes in Israel:

(a) Income tax: Israel levies personal income tax at a progressive rate, starting at 10% for a gross annual income of approximately USD21,420, and increasing up to a maximum of 47% for a gross annual income of approximately USD144,000 and above. Furthermore, a surtax of 3% is levied when exceeding an annual income of approximately USD185,500. However, certain types of passive income are subject to reduced tax rates; for example, rental income from residential properties under a certain threshold is subject to a 10% flat tax rate, dividends are subject to a 25% tax rate (if received by a person holding less than 10% of the entity shares; otherwise a 30% tax rate applies) and interest income is subject to a 15%/25% tax rate. In addition, Israel does not levy municipal taxes on income. It should be noted that, in principle, income tax is deducted at source by the employer (in case of salary and income payments) or payor (in case of dividends and interest).

(b) Capital gains tax: Israel levies a capital gains tax at a 25% tax rate on capital gains not derived from inflationary increase in value, but when the capital gain is derived from the sale of shares by a person holding more than 10% of the entity shares, the rate increases to 30%. Capital gains should be reported to the ITA within 30 days of their occurring, and the applicable taxes should be paid thereafter.

(c) Real estate taxes: in principle, purchases of Israeli real estate are subject to a progressive purchase tax that can be as high as 10% for expensive residential properties, whereas profits from the sale of Israeli real estate are subject to tax that is normally 25% for non-Israeli tax residents; although, certain tax reductions and exemptions are available to single home-owners. In principle, all real estate transactions should be reported to the ITA no later than 30-60 days from their occurring, and the applicable taxes should be paid thereafter. It should be noted that upon the sale of Israeli real-estate, a betterment levy of up to 50% of the betterment might be due to the local municipality, if zoning changes undertaken during the seller’s holding period have “bettered” the property (i.e. increased the value of the property being sold).

(d) National insurance: Israeli residents aged over 18 are also subject to obligatory national insurance contributions and health insurance contributions from their monthly income up to a ceiling of approximately USD12,000 a month, at the following rates: (i) employees – 3.5%-12%, (ii) self-employed – 5.97%-17.83%, (iii) non-working individual with income – 9.61%-12% and (iv) early pension (women below the age of 62 and men below the age of 67) – 3.49%-11.79. Unemployed individuals with no income pay approximately USD50 a month.

(e) Exit Tax: Individual who becomes a non-Israeli tax resident is deemed to have sold all his or her worldwide assets (including, inter alia, employees’ share options and purchase arrangements) at market value the day before he or she ceased to be Israeli tax resident, and is thus liable to Israeli capital-gains. However, the exit tax is payable upon departure or upon the actual sale of the relevant assets, all at the individual choice.

(f) Reporting to the ITA: The Israeli tax year starts on 1st of January and ends on 31st of December, and filing an annual tax return and payment of taxes are due by April 30 of the consecutive year, although ample extensions of time are granted.

France Small Flag France

Income/capital gains earned by individuals are taxable, as a general rule, on a cash basis.

The French tax year begins on January 1st of each year for individual income tax purposes.

By way of exception to this general rule, the transfer of residence abroad entails the payment of an exit tax on latent capital gains incurred by financial assets owned by an individual who has been resident of France for more than six years during the last ten years.

The death of the taxpayer does not entail the payment of capital gains on assets he/she owned but gives rise to inheritance tax as explained in § 5.2.

The tax treatment is different depending on whether the individual is resident (see §2.1) or non-resident (see § 2.2.) of France and on the nature of the income/capital gains received.

2.1. Income/capital gains tax regime applying to French resident taxpayers

  • Wages and salaries are subject to a progressive tax scale with a marginal tax rate of 45 % for 2020. Social contributions are also due at the rate of 9.7 % for 2020.
  • Real estate income is also subject to the same progressive tax scale with a marginal tax rate of 45% for 2020. Social contributions are due at the rate of 17.2% for 2020.
  • Since January 1st 2018, investment income are subject to a flat tax of 30% including income tax at the rate of 12.8% and social contributions at the rate of 17.2%. Nevertheless, if more favourable the taxpayer may elect for the application of the progressive scale rates.
  • Capital gains on real estate are subject to tax at the flat rate of 19% and social contributions at the rate of 17.2%. Rebates for duration of ownership apply allowing a total exemption of income tax after 22 years of ownership and a total exemption of social contributions after 30 years of ownership. An additional tax applies on capital gains exceeding 50,000 € varying from 2% to 6%.
  • Capital gains on the sale of pass through entities’ shares owning French real estate are subject to tax under similar conditions than those applying upon the sale of French real estate properties (see just before).
  • Since January 1st 2018, capital gains on securities and shares are subject to a flat tax of 30% including income tax at the rate of 12.8% and social contributions at the rate of 17.2%. Rebates for the duration of ownership will not apply any longer. Once again, the taxpayer may elect for the application of the progressive scale rates.

A supplementary contribution also applies amounting to 3% for the fraction of income between 250,000 € and 500,000 € for a single (500,000 € and 1,000,000 € for a couple) and to 4% for the fraction exceeding 500,000 € for a single (1,000,000 € for a couple).

2.2. Income/capital gains tax regime applying to non-French resident taxpayers

  • The tax regimes applying to Wages and salaries and real estate income as described in § 2.1 on residents also apply to non-resident taxpayers. However, a minimum tax rate of 20% for the fraction of French source income under €27,794 and 30 % above applies to non-resident taxpayers.
  • Dividends distributed are subject to a 12.8% withholding tax.
  • Interests benefit from an exemption under certain conditions.
  • Royalties are subject to a 28% withholding tax.
  • Capital gains on real estate are subject to the same tax regime than those which applies to resident taxpayers. However, individuals that are affiliated to a social security scheme in the EU, the European Economic Area (EEA) or Switzerland are subject to social contributions at a rate of 7.5% on the sale of French real estate (instead of a flat rate of 17.2% for French resident individuals and individuals not affiliated to a social security scheme in the EU, the EEA or Switzerland). Rebates for duration of ownership applies allowing a total exemption of income tax after 22 years of ownership and a total exemption of social contributions after 30 years of ownership. An additional tax applies on capital gains exceeding 50,000 € varying from 2% to 6%.
  • Capital gains on securities and shares of companies owning real estate properties located in France having a market value exceeding those of other assets they own are subject to tax at the rate of 19% and social contributions at the rate of 17.2%. However, social contributions are levied at a rate of 7.5% for individuals that are affiliated to a social security scheme in the EU, the EEA or Switzerland. Rebates for duration of ownership applies allowing a total exemption of income tax after 22 years of ownership and a total exemption of social contributions after 30 years of ownership. An additional tax applies on capital gains exceeding 50,000 € varying from 2% to 6%.
  • Capital gains on securities and shares are only taxable in France if the participation of the family members (including the spouse, ascendants, descendants and their spouses) exceeds 25% of the voting rights of the sold company at any time during the five-year period preceding the sale. Since January 1st 2018, capital gains on securities and shares are subject to a flat tax of 12.8% (in that case, rebates for duration of ownership do not apply any longer). However, if more favourable the taxpayer may elect for the application of the progressive scale rates with application of rebates for duration of ownership.

The rate of withholding taxes may also amount to 75% when payments are made to individuals resident in non-cooperative states or territories.

The supplementary contribution amounting to 3% and 4% also applies to non-resident taxpayers.

The tax regime described in this paragraph may be altered when a tax treaty applies.

Germany Small Flag Germany

Income tax covers income from seven sources:

  • income from agriculture and forestry;
  • income from trade or business;
  • income from self-employment;
  • income from employment (salaries and wages);
  • income from capital and capital gains;
  • income from letting property, especially real property and groups of assets; and
  • other income (e.g., income from a pension or leases of movable assets).

The tax rate ranges from 14 to 45 percent progressively with the exception of income from capital and capital gains (see question 3). In addition to that, solidarity surcharge of 5.5 percent of the tax due is still being levied. This surcharge was intended to finance the German reunification of 1990. Recently, the government decided on the gradual abolition of the surcharge, with the aim to have it completely abolished by 2021; however, high-income earners will not benefit from this tax relief.

Unless in case of a withholding tax (see question 3), taxpayers must make advance payments on the 10th of March, June, September and December.

The tax year is the calendar year. Tax returns must be submitted by 31st of July of the following year. However, if the taxpayer is represented by a tax advisor, the deadline is prolonged until February 28th of the year after that. For the tax year of 2019, the return is therefore due on February 28th of 2021.

United Kingdom Small Flag United Kingdom

2.1 Subject to the territorial limits and the reliefs mentioned in §1 and subject to the availability of the remittance basis (§10), income tax is generally charged on the total income of an individual for each tax year (§2.13). In relation to rental and trading income, expenditure incurred exclusively for the purposes of the rental business or (as the case may be) trade is generally deducted in computing this total, but there is a restriction on the deductibility of interest paid by landlords of let residential property.

2.2 Of the individual's total income for the tax year (§2.13) ending 5 April 2020, income falling within his personal allowance (§2.3) suffers no income tax (§2.1), taxable income in the band up to £50,000 (having deducted the available personal allowance) suffers income tax at 20% (or 7.5% for dividends), taxable income in band £50,001 to £150,000 (having deducted the available personal allowance) suffers income tax at 40% (or 32.5% for dividends), and the balance suffers income tax at 45% (or 38.1% for dividends). The rates for the tax year ending 5 April 2021 have not yet been confirmed. In the application of these rates and bands to an individual's income, dividends are treated as the top slice of that income.

Different rates and bands apply to Scottish taxpayers. Scottish taxpayers include those UK-resident individuals whose main or only home is in Scotland, and those UK-resident individuals who do not have their main or only home in any part of the UK but spend more midnights in Scotland than in any other part of the UK (i.e. England, Wales or Northern Ireland). Wales has had the power since 6 April 2019 to set its own rates and bands, but has chosen not to make changes in the tax year ending 5 April 2020.

2.3 An individual's personal allowance is normally £12, 500 for the tax year (§2.13) ending 5 April 2020, but is reduced by £1 for every £2 by which his total income for that tax year exceeds £100,000. The personal allowance for the tax year ending 5 April 2021 has not yet been confirmed. No personal allowance is available to an individual who claims the remittance basis (§10) for the relevant tax year. The personal allowance is only available to certain non UK resident individuals (e.g. residents of the Channel Islands and the Isle of Man, EEA nationals, and individuals benefiting from particular kinds of double tax treaty with the UK).

2.4 In addition, an individual may receive £2,000 of dividends in each tax year (§2.13) without any charge to income tax (§2.1) (although such dividends are still classed as taxable income and therefore still use up the 'band' for which different rates of income tax are charged), and modest annual tax-free allowances are generally available for payments of interest to individuals whose total income for the relevant tax year does not bring them into the 45% income tax rate band.

2.5 Subject to territorial limits broadly similar to those described in §1 in relation to income tax (§2.1), individuals with income from an employment or self-employment must also pay national insurance contributions on that income. For the tax year (§2.13) ending 5 April 2020, an employee whose income exceeds £8,632 pays national insurance contributions at 12% on the excess up to £50,000, and at 2% on the excess over £50,000. The rates for the tax year ending 5 April 2021 have not yet been confirmed. Different rates apply to the self-employed. There is a link between eventual entitlement to state pension and the number of tax years for which national insurance contributions have been paid.

2.6 Subject to the territorial limits and reliefs mentioned in §1, capital gains tax is generally charged on the total chargeable gains (§2.7) of an individual for each tax year (§2.13), after deducting allowable losses (§2.10) and the annual exempt amount (§2.10).

2.7 Broadly, chargeable gains are capital gains on the disposal (§2.8) of most kinds of assets, with exceptions including the main or only residence of an individual (subject to a number of conditions) (§8.3), cars, chattels with a predictable life of less than 50 years, and chattels for which the consideration does not exceed £6,000 (subject to special rules for collections of chattels).

2.8 The disposal of an asset includes the sale or gift of the asset, certain other occasions on which a capital sum is derived from an asset, and events deemed to involve a disposal, such as the appropriation of an asset to trading stock.

2.9 To compute the chargeable gain (§2.7) on the disposal of an asset, the individual should normally take the consideration or deemed consideration (§5.10) for the disposal of the asset and deduct expenditure incurred on the acquisition, enhancement or disposal of the asset.

2.10 The allowable losses that may be deducted are capital losses (computed in the same way as chargeable gains §2.9) realised in the relevant tax year (§2.13) and, if unused, in previous tax years. The annual exempt amount is £12,000 for the tax year ending 5 April 2020, but is not available to an individual who claims the remittance basis (§10). The annual exempt amount for the tax year ending 5 April 2021 has not yet been confirmed.

2.11 Once the total of the individual's chargeable gains has been determined for the tax year (§2.13), and the allowable losses and the annual exempt amount (§2.10) have been deducted, the resulting figure is charged to capital gains tax at the relevant rate. The top rate of capital gains tax is 20%, except for capital gains on the disposal of residential property or carried interest, where it is 28%. Generally, these rates may be reduced to 10% and 18% respectively in the case of an individual who does not pay income tax at 40% (or 32.5% for dividends), but the amount of the chargeable gains of such an individual is brought into account in determining whether the higher capital gains tax rates apply to him.

2.12 Individuals are entitled to invest up to an annual limit (£20,000 for the tax year (§2.13) ending 5 April 2020) in an individual savings account ("ISA") consisting of cash or shares, and can achieve shelter from income tax (§2.1) on the interest and dividends, and from capital gains tax (§2.6) on the capital gains, realised in that account. In addition, individuals can achieve shelter from income tax and capital gains tax by making contributions (subject to annual and lifetime limits) to a registered pension scheme, but the funds so contributed can only be used to provide retirement benefits which (apart from a 25% tax-free lump sum) will normally fall within the scope of income tax when paid. Other reliefs from income tax and capital gains tax exist to encourage business investment by individuals.

2.13 The tax year begins each 6 April and ends on the following 5 April. In some circumstances an individual may split a tax year into a period of residence and a period of non residence, with income and capital gains arising during the period of non residence not charged to UK tax. For example, a tax year may be split if an individual with no previous connections with the UK comes to live in the UK and arrives part of the way through that tax year.

2.14 Individuals who have to submit a tax return must do so, and pay any income tax or capital gains tax that is due, by 31 January following the end of the relevant tax year (§2.13). In some circumstances, six monthly advance payments of tax (known as "payments on account") must be made, and these fall due on 31 January during the relevant tax year and 31 July following the end of the relevant tax year. Since 6 April 2019, non-residents who have disposed of UK residential property have been required to submit a tax return and pay any capital gains tax due within 30 days of the completion of the sale.

Updated: January 17, 2020