What are "other" salary charges? (Europe)


1

I just found this post on HN:

It may be pretty hard to compare US
and foreign offers. For instance, in
France, you'd be earning 36000 euros
in cash --what's landing on your
account --, however it would actually
be nearly 48000 euros with charges
(that's what you're taxed for): social
security, retirement, etc. Then the
company will actually pay some 20000
more euros in other salary charges.
That means that 36000 euros in cash in
France translate to (36000 (cash) +
32000 (charges)) * 1.30 = about US$
90000 ..
I'm curious to know what these other salary charges are if taxes, social security and pension are already included in the €12k (in this example). Any idea?

Salary

asked Jan 27 '11 at 20:02
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Znq
164 points

3 Answers


4

Details will vary country-to-country, even within EU member states.

Here's the break-down:

Gross pay That's the headline 'salary' figure. It's what you'd apparently receive in cash if the Government opted out of income-related taxes.

Statutory deductions These are specific, itemised deductions, where you are contributing to the common pot for something. This can include income taxes paid at source, healthcare, social security and pension contributions and the like. Some of these may explicitly create benefits for you that can be accessed at a later date. And some you may be able to choose options for or even opt out of.

Employer deductions You may have other compulsory or optional deductions controlled by the employer. These may overlap statutory deductions - for instance, you may be able to choose between (or blend) state, employer-specified or personal pension plans, health cover and the like.

Taxable benefits You may be entitled to non-cash benefits that the tax authorities deem to have a financial value. And these can increase the tax you pay. Again, some of this may be optional or somewhat controllable. For instance, in some countries if your employer wants to provide a cellphone you may be taxed in obscure and punitive ways, which you could avoid by using your own phone and expensing business usage. If you're entitled to use of leisure facilities, and the employer has agreed the arrangement with the tax authorities, you may not be able to avoid the additional tax even if you never use the service.

Employment taxes All of the above relates to you as an individual employee. The employer may in addition be taxed invisibly from your point of view. That doesn't directly affect your earnings or tax position, but it does increase the cost of employing you. In a startup context, you could regard that as a reduction in your earnings.

In the example you quote, that's what's going on. So for instance, in the UK, employees pay National Insurance contributions - this is deducted by the employer, visible on a payslip and forms part of the individual's lifetime contribution record (relevant to the eligibility for and calculation of the state pension). And in addition, employers pay further National Insurance contributions, which result from your employment but are not in any sense your contributions.

The point isn't that this element is 'already included' - it's just how the system is constructed overall. And - naturally! - the composition and overall effect varies significantly from country to country.

answered Jan 27 '11 at 21:06
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Jeremy Parsons
5,187 points
  • Thanks for the detailed answer. Very appreciated. – Znq 8 years ago

2

They're taxes and social security charges that are payable by the employer rather than the employee.

answered Jan 27 '11 at 20:11
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Mike Scott
691 points

1

The major expenses that are not covered by the employer in the US include health insurance and retirement (and no, a 401K plan is not the same, although it's pre-tax, it's still coming from your pocket mostly). A confusion may arise as "social security" in French literally means "health care", which is not what it is.

answered Jun 19 '11 at 06:58
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Alain Raynaud
10,927 points

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