High Tax Countries: Combined Tax Corporate and Dividend

Countries with High Taxation For Business Owners

Developed countries such as those in the OECD, invariably have the highest taxation rates. There are several taxes to consider particularly for High Net Worth Individuals (HNWIs) who will usually be caught by the highest marginal tax rates. Typical taxes include income, dividend, corporation tax, capital gains tax and inheritance tax.

With increasing mobility for international business owners many more now have a choice of where they can take their wealth. And that often means going somewhere where it is welcomed, more appreciated and importantly, taxed a lot less or not taxed at all.

Combined Corporation Tax and Dividend Tax Rates

The key tax rate often of primary importance to entrepreneurs and business owners is the rate they pay on income earned and drawn from their business. There are two taxes to consider, the tax on profit and the tax on dividends. Combining these two taxes gives an effective tax rate that the business owner is paying on their withdrawn profits.

For example take the UK. Corporation Tax is 25%. When profits are withdrawn they are taxed (at the highest marginal rate) at 39.35%. The net income on £100 after tax is £100 x 75% x 60.65% = £45.50. Total tax paid is £54.50.The combined tax rate is therefore 54.50%.

We have listed below the highest marginal tax rates paid by business owners in OECD countries.

Flag	Country	Combined Tax
	Australia	47.00%
	Austria	44.18%
	Belgium	47.50%
	Canada	55.20%
	Chile	44.45%
	Colombia	48.00%
	Costa Rica	40.50%
	Czechia	39.17%
	Denmark	54.76%
	Estonia	20.00%
	Finland	43.12%
	France	51.04%
	Germany	48.41%
	Greece	25.90%
	Hungary	22.65%
	Iceland	38.38%
	Ireland	57.13%
	Israel	48.41%
	Italy	43.76%
	Japan	44.01%
	Korea	59.12%
	Latvia	20.00%
	Lithuania	27.75%
	Luxembourg	40.70%
	Mexico	42.00%
	Netherlands	50.29%
	New Zealand	39.00%
	Norway	51.52%
	Poland	34.39%
	Portugal	50.68%
	Slovenia	41.50%
	Spain	46.00%
	Sweden	44.42%
	Switzerland	37.45%
	Türkiye	40.00%
	United Kingdom	54.50%
	United States *	46.99% *

OECD 2024,Combined (corporate and shareholder) statutory tax rates on dividend income, URL

Notes

(1)  For the USA figures above exclude local state taxes. So in high tax states such as California when Corporation Tax and Dividend tax is combined with State Tax then high earning business owners are paying a marginal tax rate of 56.0%. Even higher than that in the UK at 54.5%.

(2) The average combined tax on business owners from the above table, across the OECD is 43.0%. However this figure is reduced due to several lower tax regimes such as Hungary and the Baltic States (Lithuania, Latvia and Estonia) and the table also excludes state tax in the USA. With these adjustments the average is closer to 46%.

Escaping Countries with High Business and Dividend Tax

Tax is usually applied based on physical residency in a country. To avoid high taxation countries you have to live in a low tax country. It sounds simple but it is often a little more complicated than that particularly when several countries are involved. But in general, the country you spend most time in is the country you will be taxed in. And where double taxation treaties apply then you will not be taxed in your “home” country but in the country where you are habitually resident.

Residency and Citizenship

So how do you avoid high taxation in countries such as those in the OECD listed above? Well first you  need an alternate residency. This is possible through countries that offer golden visas or citizenship by investment whereby you can acquire residency and citizenship in a second country by making the required investment through that country’s program. Second, and as a general rule, you need to be spending more time there than anywhere else.

But tax advice is critical to avoid other complexities and hidden traps. For example, returning too early and not being out of the country long enough. This applies in the UK for example with the five year absence rule. And then, in the case of the USA there is global tax to consider. The US is one of only two countries in the world taxing you on your citizenship. To escape entirely from US taxes it is necessary to gain another citizenship then renounce US citizenship.

Disclaimer: This content is for informational purposes only and should not be considered tax, legal, or financial advice. Tax laws vary by country and are subject to change. Always consult a qualified tax professional or legal advisor for personalized guidance regarding your specific situation.