Even if you are retired, you still face tax on savings, investments and pensions, not to mention VAT. Having paid so many taxes all your life, you will not want to pay more than necessary – that’s why tax planning plays such an important part in protecting your wealth and legacy.
Tax freedom days across the EU
Each year, the Institut Economique Molinari compares the taxes payable by the average wage earner across EU member states (now EU plus the UK), measuring how many days each year are devoted to paying taxes. While this study mainly focuses on the ‘average worker’ and payroll taxes, it illustrates the general tax burden of each country and how they compare to each other.
The study calculates a “Tax Freedom Day” for each country – the date on which an employee has earned enough to pay off all taxes for the year and can start to “use the fruit of their labour as they please”.
Institut Economique Molinari’s methodology takes the average real gross salary (gross income + employer social security contributions) as the base, and deducts all social security payments, personal income taxes and estimated VAT paid to establish the ‘real net salary’ and ‘real tax rate’.
For 2025, the average tax freedom day across the EU was June 11. Thirteen countries had an earlier day this year, but 15 are experiencing a higher tax burden. Malta now has the earliest tax freedom day with April 15, followed by Cyprus with April 24. France once again has the latest tax freedom day with July 18, followed by Belgium and Austria with July 16 and 14, respectively.
How did Portugal fare?
The study reveals that Portugal’s tax freedom day landed on June 7 this year – six days earlier than 2024 – placing it 11th in the rankings. While a noticeable improvement, the average Portuguese employee still worked for 158 days of 2025 just to pay their tax bill.
The average real gross salary in Portugal is €29,347, but after the real tax rate of 43%, workers are left with just €16,664 to spend on themselves and their families.
The UK: “Things are only getting worse”
According to the Institut Economique Molinari study, the UK’s tax freedom day landed on May 8. However, many think tanks undertake their own research using different methodologies. In the UK, the Adam Smith Institute (ASI) establishes tax freedom day by measuring the entire tax take, including indirect taxes.
The ASI’s approach places the UK’s 2025 date on June 12, six days later than in 2024 and 21 later than before the pandemic.
The Institute warns that “things are getting worse”. Based on current taxation, government spending plans and Office for Budget Responsibility projections, ASI research concludes that the UK’s tax freedom day will fall on June 24 by 2028. By 2030, it could fall over halfway through the year, with taxation surpassing 50% of Net National Income. In-year taxation hasn’t reached such heights before, “not even during wartime, the economic crisis of the 1970s and reforms of the 1980s”.
ASI research also shows that this tax burden is increasingly carried by the rich. The top 1% paid 28.2% of the UK’s total tax burden in the last tax year, with the top 10% contributing 60.2%. With wealthy taxpayers leaving the UK as a result, the Institute predicts “the UK is on course to lose the greatest proportion of millionaires in the world within this parliament”.
How much tax are you paying in 2025?
Of course, the research is just indicative of the average taxpayer in each country. Retirees don’t have to worry about social/national insurance contributions but pay tax on savings, investments and pensions, as well as indirect taxes.
Every taxpayer is different, but if you feel you are paying too much tax this year, act now to establish if you can mitigate your liabilities for 2026 and beyond.
There are often steps you can take to lighten your tax burden, especially on capital investments and pensions, and your estate for your heirs. While, of course, we all have to pay our share of taxes, cross-border taxation is highly complex – do not risk getting it wrong or paying more than you actually have to.
Take personalised, specialist advice on the compliant tax mitigation opportunities available in Portugal and the UK – you may be surprised at how you can improve your tax situation. If you are considering leaving the UK, take cross-border tax advice before putting plans into action.
Keep up to date on the financial issues that may affect you on the Blevins Franks news page at www.blevinsfranks.com.
Summarised tax information is based upon our understanding of current laws and practices which may change. Individuals should seek personalised advice.
