Tax by country

Most retirement calculators ask you for one number: your effective tax rate. That number does not exist before the calculation, because what you owe depends on how much you draw and how much you need to draw depends on what you owe.

So this model works it out instead. Every simulated year, in every simulated future, it builds your household’s position for that year and charges your country’s own scales, allowances and thresholds against it. Tax then shows up as its own line in your results, and as its own cost your plan has to fund.

Your country

Each page below lists every figure the model charges in that country, in plain language, with a link to the tax office page it came from and the date we last read it. It also lists everything the model does not do there, including where we know we are wrong and by how much.

Tax is a cost, not a smaller income

The model treats your whole yearly bill as an expense. It sits in the same list as your groceries, your mortgage and your care costs, and your plan has to fund it out of income and withdrawals like anything else.

That is arithmetically the same as netting it off your income, but it does two useful things. You get one honest tax figure per year that you can look at directly, and the bill runs through the same machinery as every other cost, so the year a tax charge is the thing that breaks the plan is visible rather than buried.

One rule about that bucket: tax is never cut. When money is tight the model trims discretionary spending first, then squeezes essentials down to a floor. It will not pretend you negotiated your tax bill down, because you cannot.

Your results page reports that figure added up across the whole plan, split into what you pay, what the tax system pays back to you, and how much of it your withdrawals added. How to read it.

Three kinds of account

Where your savings sit changes your bill more than any rate in any table. Most countries offer some version of three shapes, and the model splits your portfolio between them:

Parameter	Default	Meaning
Taxed on the way out	the whole withdrawal counts	Nothing happens while the money grows. When you take it out, the whole amount is treated as income for that year. Workplace and personal retirement accounts in most countries work this way.
Already taxed	nothing further	Tax was taken before the money went in, so withdrawals cost nothing and are invisible to every threshold. That invisibility is most of the value: money coming out of one of these cannot push the rest of your income up a band.
An ordinary account	as it goes, and on the profit	Taxed on what it pays out each year, or on an assumed yearly return where the country charges that instead, and then on the profit when you sell. Only here does the mix of shares, bonds and cash change what you owe.

You are asked for this split during setup, as three percentages. There is no sensible default: in the United States the same spending from the same portfolio costs anywhere from nothing to about 11.7 percentage points of your withdrawals depending only on which of the three your money is in, and in Australia the spread is larger still. Guessing on your behalf would be the single largest silent error in the model, so we ask.

When the plan takes money out, it draws from all three in proportion to the split you gave, unless you pick an order. Real retirees often empty one account before touching another, and which order you choose changes the bill, so the same screen lets you drain the ordinary account first or the pension account first. In proportion stays the default: it applies no strategy at all, and any order you pick is priced by the same rules, against what each account actually still holds that year.

In four countries, the law does not leave the timing entirely to you. From an age the statute sets, a minimum share of a retirement account must come out every year whether or not your plan wanted a withdrawal: required minimum distributions in the United States (from 73 or 75, set by your birth year), the RRIF minimum in Canada (from 72), the pension minimum in Australia (from retirement), and the approved retirement fund payout in Ireland (from 61, with a higher rate above two million on the whole fund). The plan enforces these: the required amount leaves the right account first, whatever order you chose, is taxed the way that country taxes it, and whatever you do not spend is moved into your ordinary account, where its earnings are taxed from then on. What you withdraw by choice counts toward the minimum, so a plan that already draws more is left alone. The per-country simplifications, each small and each leaning careful, are listed on the country pages.

The early side has a charge of its own in the United States: money taken out of a 401(k) or traditional IRA before age 59 and a half carries an extra 10% on top of income tax, and the plan charges it on the retirement-account share of every early withdrawal. The law also offers ways around it, like leaving your job in the year you turn 55 or a schedule of equal yearly payments, and whether one applies to you is a fact about your plans that we cannot know. So a plan retiring before 59 and a half is asked from what age its retirement money is free of the charge, prefilled with the law’s own 59 and a half; lower it to the age your route opens and the charge stops there. The breakdown reports the charge as its own line, so you can always see what it cost.

Some countries offer only one of these shapes to a retiree drawing down a pot, and for those the question is not asked at all. That is a finding rather than a gap: much of continental Europe shelters retirement saving through annuities and income streams you cannot draw down freely, so there is no second pot to split.

What we assume you are holding

Two investments tracking the same market can be taxed very differently in the same country. A fund that pays income out is charged as it goes; one that rolls income up is charged later, on the profit when you sell. Individual shares are different again, and in several countries where the fund is registered matters more than what it holds.

This is not a rounding detail. In an investment that rolls income up, nothing is taxable until you sell, so charging annual income on top would tax the same growth twice: for one Finnish worked example it turns a correct 1,800 into 2,358, a third too much. In Greece a European fund pays nothing at all while a fund from a Greek manager carries a yearly charge on its assets, and across our three Greek worked examples that gap runs from 930 to 4,650 a year on the same portfolio.

So every country starts from what its own tax literature says people there typically hold, and your plan is computed on that unless you say otherwise. 7 of the twenty ask you about it in the Detailed view, because their rules genuinely turn on the answer. The rest ask nothing, and that is a finding rather than a gap. Each country’s page says what it assumes.

Dividends get the same treatment. Where a country taxes them yearly, the model charges the dividend part of your stock return in your ordinary investment account every single year, at that country’s own dividend rate, and that income also counts wherever the law counts it: in the United States it enters the income that sets the health insurance credit, and it is charged at the lower qualified rate that broad index funds mostly earn. The assumed dividend yield is 1.6%, the yield of a broad global stock index, and you can change it, or set it to zero for funds that pay nothing out, in the Detailed view of the money step. Most planners either ignore dividend income in their tax numbers or treat all of it at one rate; this one prices it the way your country does.

What the model does not do

Each country’s page carries its own list, in full, with the size of the effect wherever it could be measured. These themes run through all of them:

• Where you live inside your country is asked in 10 countries and not in the rest. Local rates vary inside most of them, and the gap is not small: Finnish municipal rates span 4.7% to 10.9%, Swedish councils 28.93% to 35.65%, and Swiss cantons far more again. Those 10 carry 1,955 jurisdictions between them, so naming yours charges you your own area’s scale. Skip the question and you are charged a stand-in that the planner names on screen. The United States is the one where the list is still growing: a state not yet on it is charged federal tax only, whether you skip or live there, and the results say so. Three countries are still not asked at all: Scotland, France and Norway. Each of their pages says which figure stands in and which way that pushes your answer.
• No optimisation of the choices a tax return offers you. Several countries let you elect between two treatments and take whichever is cheaper. The model picks the branch that is right for a typical retiree’s income range and documents it, rather than solving for the best one.
• New Zealand’s earlier-income savings rate is still left out. The rate its funds are taxed at is set by your income from the two prior years. The engine now carries that income memory, and the United States’ Medicare premium surcharge and France’s pension levies are charged from it, but the New Zealand tier itself is not yet modelled.
• Inheritance tax is out of scope. It is a separate system with its own rates, thresholds and authority. Lump sums you enter are assumed to be what actually reaches you.
• Tax before you retire is not modelled. Your expense inputs describe your retirement, not your working-age budget, so the years before retirement use a simplified cash flow. The consequence runs against the plan being flattered: it understates how much a contribution to a retirement account is worth. Charges that fall on your holdings are the exception and are applied throughout, because a Norwegian pays them while still working.
• Couples are modelled where joint assessment exists, but only in the full model. The ranking analysis treats a couple as a single person for speed, so treat its magnitudes as approximate there.

When these numbers go out of date

Tax rules change every year, and more than half of these twenty countries had a change relevant to retirees in the last twelve months alone. Every figure carries the date it was read, on its own line, on its own country’s page.

15 of the twenty are checked against something the tax office itself publishes: its calculator, the rate data that calculator reads, or its published tables. Those checks re-run on a schedule and are compared against the answers committed here. The rest are worked through by hand from the authority’s own rules, and re-read on a cycle.

If a date on a country page is well behind the current tax year, treat that country’s tax line as indicative and the rest of the plan as unaffected: everything else in the model is independent of it.