Income tax or personal income tax is a part of the tax system that refers to the taxation of an individual's income within a certain time frame. As personal income tax produces a large share of public funds, it is essential for the proper functioning of a state. Countries treat income tax differently, so the objective of this thesis is to compare four member states of the European Union and pinpoint the key similarities and differences between their treatment of personal income tax.
Several research methods were employed for the purpose of this thesis. First, there is the descriptive method, which was used for the theoretical definition. Then comes the comparative method, which was used to compare the states. Lastly, the statistical method was used to process data for the personal income tax scales and proportions of income in the selected states.
Comparing the data collected, I found that there are a lot of differences between the income tax systems in the four selected member states. The European Union only lays out the basic provisions. The rest of the decisions are up to each member state to make. As they are all allowed to make their own choices, it only makes sense that their income tax systems are so different from one another. Nevertheless, these differences pose a problem for those individuals who are subject to personal income tax in more than one country – for instance those who work abroad, have moved abroad or similar.
The comparison of personal income tax in the four member states, which included Slovenia, Malta, Spain and Great Britain, can be of help to any individual who is unfamiliar with the personal income tax system and all those who are part of more than one personal income tax system, especially those living in any of the above European Union member states.