Contractors’ Questions: What’s the most taxing foreign city for UK contractors?
Contractor’s Question: How does a destination like Mumbai quite quickly go from the most lucrative destination for UK contractors (in 2018), to be now being behind Switzerland, China and California? I assume it’s tax which has knocked India off the top spot. Or is it just paying a lot less in wages? Where else is very taxing?
Expert’s Answer: The changes in lucrative ranking from 2018 to 2019 are down to a combination of salary level, cost of living and tax charge changes, coupled with exchange rate fluctuations.
Silicon Valley (California), ranked highly last year, so it isn’t that drastic a reversal of fortune for Mumbai, given that is now the world’s fourth most lucrative city for expatriate workers.
As regards taxation, contractors should not place undue emphasis on tax rates when comparing foreign destinations. For example, despite income in Dubai being tax-free, it is not a high-paying destination. Moreover, the most taxing foreign city for expats is San Francisco yet it also the most lucrative.
Similarly, Sydney, Australia is a high-paying destination (more so than London), but it is only tenth in the lucrative stakes.
A breakdown of annual rates, in terms of both tax and pay, for all 16 countries we assessed is below, alongside their respective lucrative ranking.
|Country (City)||Tax (and Social Security) (€)||Lucrative Ranking||Salary Ranking|
|California/USA (San Francisco)||83,728||1||1|
|New York/USA (NYC)||57,823||6||3|
|Malaysia (Kuala Lumpur)||19,460||8||11|
The expert was Nikolas Papageorgiou, EU country manager at overseas contracting solutions firm Access Financial.