The 1% are the top earners in the country: households and individuals with wealth beyond that which many of us will ever see in our lifetimes. However, it’s interesting to note that the 1% in one country can look very different in another, with a different threshold to meet.
Our experts at Moneyzine.co.uk have found out exactly what it takes to be in the top 1% around Europe - and the results may raise some eyebrows!
Key Findings:
The countries with the highest inequality between the average earnings of the top 1% versus the average income are Romania, Ireland, and Denmark - all of which are in the top 5 countries for highest average earnings for the top 1% of workers.
Denmark is the only country that ranks in the top three for greatest income inequality, highest tax rate for the top 1% of earners, and highest average income across the country.
There is little correlation between the countries with the highest-earning top 1% of workers and the highest average worker income: only Switzerland and Denmark appear in the top 5 for both factors.
“Many of us may have a preconceived notion that the top 1% of earners around the world can be grouped into a single, ultra-wealthy bracket. While there’s no denying that the top 1% are wealthier than the average earner anywhere in Europe, it’s interesting to see just how much income inequality there is amongst the top 1% from country to country.”Jonathan Merry, personal finance expert at Moneyzine.co.ukJonathan Merry
Country Rank By Inequality (1% Income Vs Average Income)
We calculated the earnings inequality ratio for each country, demonstrating the gap between the earnings of average workers per country and those of the top 1% of earners. Of the five countries with the greatest inequality gap, just three are also in the top 5 for highest average earnings of the top 1%.
The other two countries - Greece and Austria - have a bigger inequality ratio because although the top 1% earn less than some European countries, the country's average income is also considerably lower in comparison.
1. Romania
When looking at the difference between the average earnings for the top 1% of each country compared to the average earnings across the country, Romania stands out as having the most inequality in incomes.
The top 1% of earners in Romania make an average of 95 times more than the average worker.
2. Ireland
Ireland has the highest average income for the top 1% of earners, and is also second for having the largest income inequality between the top 1% and the average income in the country.
The top 1% of earners in Ireland earn approximately 75 times more than the average worker.
3. Denmark
Likewise, workers in Denmark are considerably out-earned by the top 1%. The income inequality ratio here is 63 - meaning that the top 1% of earners make more than 63 times that of the average Danish worker.
4. Greece
Greece has the fourth largest income inequality ratio out of the 39 European countries we analysed, with the top 1% of earners making approximately 52 times more than the average worker, earning £9,019 per year. In comparison, the top 1% earn an average of £476,012.
Greece ranked 18th for the average income of the top 1%, and yet has the fourth largest inequality gap due to the low average wage of workers.
5. Austria
Finally, Austria has the fifth highest income inequality ratio with workers earning approximately 50 times more than the average worker. Austria ranks ninth overall for the average income of the top 1% of workers, and yet the lower-than-average annual income of workers (£12,534) widens the inequality between the top 1% and the average wage significantly.
European Countries with the Least Income Inequality Between Workers & Top 1% of Earners
Below are the countries in which the gap between the average income of workers in the country, and the average income of the top 1% of earners, is smallest.
1. Belgium
In Belgium, the top 1% of earners make 23.45 times more than the average worker, who earns an average of £18,390 per year. This may still sound like a significant income gap - but it’s the smallest of the 39 countries analysed.
2. Luxembourg
The top 1% of earners in Luxembourg earn a whopping average of £692k per year - but that’s just 23.71 times more than the average worker, who earn an average of £29k per year. That’s the highest average wage out of all European countries analysed in this data set.
3. Malta
The third smallest income inequality ratio, Malta’s top 1% of earners earn approximately 23.74 times more than the average worker. The top 1% are estimated to pull in an average of £423k per year, while the average worker brings in £17,839.
4. Belarus
Somewhat surprisingly, Belarus is the only country from the bottom 5 average earnings of the top 1% that also features in the top 5 countries with the smallest income inequality ratio.
The top 1% in Belarus earn an average of £152k, which is 24.13 times more than the average worker, who earn an average of £6,311 per year.
5. Czech Republic
The top 1% of earners in the Czech Republic earn an average of 24.36 more than the average worker. In monetary terms, that’s an average of £305k compared to the country’s average of £12k.
Top 5 Countries For Top 1% Income
Across the 39 European countries analysed for this data, the average income of the top 1% of earners differs by a staggering 1.3million USD. The five countries where the top 1% earn the most are:
1. Ireland: £1,362,397
Ireland takes the top spot in this ranking as the country with the highest average income for the top 1% of earners, with a huge £1.3million per year. With the mean income in Ireland standing at £18,161, that means the top 1% of earners make more than 75 times that of the average worker.
Ireland is only one of two European countries in which the average income of the top 1% is more than £1 million per year.
2. Denmark: £1,287,375
The top 1% in Denmark have a similarly substantial average income, standing just slightly below Ireland at£1,287,375 per year. The average income in Denmark is just slightly higher than that of Ireland, at £20,197 per year, with a 63% difference between the country's average income and the top 1% of earners.
It should be noted, however, that Denmark has amongst the highest income tax out of any other European country, with the top 1% taxed a whopping 55.9% of their income.
3. Sweden: £832,054
Sweden is home to the third wealthiest 1% of earners in the European countries analysed, with an average income amongst the top 1% of £832,054.
Like Denmark, the top 1% of earners are heavily taxed - with 52% of their earnings subject to income tax.
4. Switzerland: £832,054
Switzerland, known for being one of the wealthiest countries in Europe with high incomes and high income taxation, is fourth on our list. The top 1% of earners here earn an average of £832,054 - still £650,000 more than what the top 1% earn in North Macedonia, which is the bottom of our list.
Despite the top 1% of earners in Switzerland raking in over £800,000 on average, there is a smaller ratio of income inequality thanks to the higher mean average income in Switzerland. On average, the top 1% of earners make around 32 times more than that of the average worker.
5. Romania: £714,427
Rounding out the top five on this list is Romania, where the top 1% of earners make an average of £714,427 per year, which is subject to just 10% income tax.
Romania also has one of the lowest average incomes of all the European countries featured in this list. The average Romanian worker makes £7,535 per year, meaning there is a huge inequality between the top 1% of earners and the average worker of 94% - a bigger gap than any other country on this list.
Bottom 5 Countries For Top 1% Income
At the other end of the spectrum, the top 1% of earners in the bottom 5 European countries in this list all earn less than £200,000 per year - which is still a significant income in any country, it should be noted.
1. North Macedonia: £128,783
The top 1% of earners in North Macedonia have an average income of £128,783 - which despite being the lowest average income for the top 1% out of the 39 European countries reviewed, is still far higher than the average income for any European country.
The inequality ratio between the top 1% and the average worker in North Macedonia is still quite significant, too. The average worker earns £4,680 per year, meaning the top 1% earn approximately 27 times as much as the average worker.
2. Moldova: £135,924
Next up, the average income for the top 1% of earners in Moldova is £135,924 - more than only North Macedonia. The ratio of income inequality is far greater in Moldova than it is in North Macedonia, however, with the top 1% of earners making more than 44 times that of the average worker, who earn around £3,079 per year.
3. Albania: £142,454
The average income for the top 1% in Albania is £142,454, which is subject to a 23% income tax - higher than any other country in the bottom 5. At the other end of the scale, the average income for workers in Romania is just £3,412 - meaning the top 1% earn more than 41 times that of the average worker here.
4. Ukraine: £143,106
Just above Albania, the top 1% in Ukraine earn an average income of £143,106 per year, which is subject to an 18% income tax. Comparatively, the average worker earns £4,297 per year - meaning the top 1% earn an average of 33 times more than the country’s average wage.
5. Belarus: £152,262
The average income for the top 1% in Belarus is £152,262 - 24 times that of the average wage for Belarus workers, which is £6,311 annually.
The top 1% of earners in Belarus are subject to an 18% income tax.
Top 5 Countries For Top 1% Tax Rate (Where Are They Taxed The Most)
Another key consideration in this ranking is where the top 1% are taxed most heavily - for example, the top 1% in Romania may earn almost half (£714k) of what they earn in Denmark (£1.2million), but they are subject to just a 10% income tax. In contrast, the top 1% in Denmark are subject to a 55% income tax rate.
The most-heavily taxes 1% of earners across Europe are in:
Denmark (55%)
France (55%)
Austria (55%)
Spain (54%)
Belgium (55%)
Bottom 5 Countries For Top 1% Tax Rate (Where Are They Taxed The Least)
At the other end of the spectrum, of course, are those ‘tax havens’ in which the top 1% of earners keep a far larger percentage of what they earn than they would in other parts of Europe. The top 1% of earners in these countries very well may have a higher take-home pay than higher earners with a larger tax income obligation do.
Countries where the top 1% of earners are taxed the least are:
Romania (10%)
Bulgaria (10%)
Bosnia and Herzegovina (10%)
North Macedonia (10%)
Moldova (12%)
Where The UK Sits in This Data
The UK ranks 30th for the largest income inequality gap between the top 1% of earners and the average worker’s income, out of a total of 39 countries - which means that the gap is relatively small in comparison to many other countries in Europe.
The top 1% are estimated to earn an average of £472,973, which is 27.53 times more than the country’s average wage of £17,182.
The UK also is also in the middle for tax rates for the top 1% of earners, ranking 15th (the top 1% of earners are taxed 45% in the UK). Likewise, the amount UK top earners make is relatively average within the ranking - with the 19th highest average income overall.
Methodology
To compile this data, we used the following sources:
Top 1% Earnings Across Europe: World Inequality Database
European Tax Rates: Tax Foundation
Median Income by Country: World Population Review
Additional Tax Rate Information: Tax Summaries
We then calculated the ratio between the median earnings of the top 1% and that of the median country earnings to enable us to rank the countries listed by the gap between earnings.
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