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How Much Does It Cost to Hire Developers in the US, the UK, Germany, the Netherlands, and Ukraine?

Posted Mar 27, 2020 Trends

Hiring remote software developers has become a widespread practice for businesses all around the world. If you're interested in joining their ranks and are looking for your perfect hiring destination, comparing developers’ salaries isn't enough. What you really need is a comprehensive overview of all the taxes you'll have to pay in addition to your employees’ salaries. Keep reading to find out how much it really costs to hire developers in the UK, Germany, the Netherlands, and the US, and how it measures up against the cost of hiring software engineers in Ukraine.


How Much Does It Cost to Hire Developers in the US, the UK, Germany, the Netherlands, and Ukraine?

If you hire a developer in the US, the cost you'll have to pay will be $138,539 including taxes; if you hire software engineers in the UK, you'll have to pay around $74,058 with taxes included; hiring a developer in Germany will cost you $81,657 with taxes; in the Netherlands, it will cost you $88,058 all in all to hire a programmer.

If you hire a developer in Ukraine with Daxx, you'll pay $40,000–45,000 a year on average for a middle developer. This sum includes all taxes and Daxx’s fee, meaning you won't even have to spend extra time to get to know the employment tax system in Ukraine. 

 UKGermanyNetherlandsUSUkraine
Developer’s Annual Gross Salary Including All Company Taxes$74,058$81,657$88,058$138,539$45,000

Daxx is a tech partner who helps businesses from all over the world hire Ukrainian software developers through a dedicated team model. Our experts find professionals that fit your specific requirements, leaving you to choose the best-fitting candidates for your team and manage them with the tools and methods you prefer. 

In the meantime, Daxx takes care of all the administrative hassles: office, workstations, paperwork, insurance, etc.

Below, you can find gross salaries of software developers in the UK, Germany, the Netherlands, the US, and Ukraine.

how much it costs to hire developers in europe vs us

How Much Does It Cost to Hire Developers in the UK, Germany, the Netherlands, the US, and Ukraine?

Our research compares employment tax systems in the UK, Germany, the Netherlands, and the US with the expenses employers have to cover when hiring developers in Ukraine with Daxx.

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How Much Does It Cost to Hire a Developer in the US (Taxes Included)?

Hiring a software developer in the US will cost you between $82K and $180K per year including taxes and benefits. A junior developer in the US costs $82,661, a middle software engineer in the US will cost you $138,539, while a senior programmer costs $180,472

The salary of a junior software developer in the US per year is around $63,735, the annual salary of a middle developer in the US is around $106,816 a year, while senior software developers' salary in the US is $139,148 annually. 

 Junior Software Developer Mid-Career Software DeveloperSenior Software Engineer
US developer cost
Annual net salary$63,735$106,816$139,148
Supplementary pay 3.2%$2,039$3,418$4,452
Insurance 8%$5,098$8,545$11,131
Paid leave 7.1%$4,525$7,583$9,879
Retirement and savings 3.8%$2,421$4,059$5,287
legally required benefits 7.6%$4,843$8,118$10,575
Total after-tax cost$82,661$138,539$180,472
Daxx developer cost
Total annual cost$32,500$45,000$57,000

 

how much does it cost to hire developers in the us

How Much Does It Cost to Hire Developers in the US?

To find out what the after-tax cost of hiring software developers in the US is, we took into account the following taxes: supplementary pay (3.2%), insurance (8%), paid leave (7.1%), retirement and savings (3.8%), and legally required benefits (7.6%)

The Internal Revenue Service (IRS) controls the payments employers are expected to contribute. There are several different types of charges, among these are federal withholdings, unemployment taxes, and workers’ compensation. 

Tax rates vary in the US depending on the region. On average, the net salary accounts for approximately 70% of all contributions for an employee, while the remaining 30% represent taxes and benefits.  

The average rate of taxes can amount to as much as 29.7% in the US.

  

How Much Does It Cost to Hire a Developer in the UK (Taxes Included)? 

The after-tax annual costs are considerably higher than a net salary: hiring a junior software developer in the UK costs $47,475 per year; a middle programmer in the UK costs $74,058; while hiring a senior developer in the UK will cost $91,781 a year. 

An average salary of a junior software developer in the UK is $39,381 a year, a middle programmer in the UK makes $59,072, while a senior software engineer's annual income is $72,199.

              Entry-Level DeveloperMid-Career Software DeveloperSenior Software Engineer
UK developer cost
Annual net salary$39,381$59,072$72,199
Taxable sum (Excluding tax-free allowance (12,500 pounds)$23,133$42,824$55,951
Income tax 20%$4,626$8,564$11,190
National Insurance 12%$2,775$5,138$6,714
Auto enrolment pension 3%$693$1,284$1,678
Total after-tax cost$47,475$74,058$91,781
Daxx developer cost
Total annual cost$32,500$45,000$57,000

 

how does it cost to hire developers in the uk

How Much Does It Cost to Hire Developers in the UK?

Each employee in the UK has the right to a tax-free allowance — a sum of £12,500 that is excluded from their annual salaries. 

Thus, we left out the tax-free amount and counted how much an employer will have to pay in addition to the net salary of a developer in the UK.  

To count the after-tax costs of hiring developers of different seniority levels in the UK, we took into account income tax (20%), national insurance (12%), and auto enrolment pension (3%).  

A tax year in the UK starts on the 6th of April and lasts until the 5th of April of the following year. Income tax accounts for 20% of earnings starting at £11,800 and up to £46,300. As for earnings between £50,000 and £150,000, the tax makes up 40% of the income. *Scottish income tax rates differ. 

Another contribution that employers have to pay is national insurance. There are several classes that shape the specifics of national insurance payments. Software developers in the UK come under Class 1. 

Earnings of less than $8,6oo annually are not subject to national insurance. A yearly income of $8,600 to $50,000 results in a 12% national insurance tax, while those earning more than $50,000 only pay 2%

The final contribution you'll have to pay for a developer in the UK is auto enrolment pension. A minimum pension contribution is 8% of the annual salary of a worker. Employers have to pay at least 3%, while an employee's minimum contribution is 5%.

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How Much Does It Cost to Hire a Developer in Germany (Taxes Included)?

Hiring a junior developer in Germany costs $66,280 annually, employing a middle software engineer in Germany will cost you $81,657 per year, and for a senior programmer, you'll have to pay $94,607 a year. 

The average annual net salary of an entry-level developer in Germany is around $48,929, mid-career developers in Germany earn around $59,568 a year, and a senior developer in Germany earns $68,508 a year.

                             Entry-Level Software DeveloperMid-Career Software DeveloperSenior Software Engineer
Germany developer cost
Annual net salary$48,929$59,568$68,508
Taxable sum (Excluding tax-free allowance 9,408 euros)$38,699$49,256$58,196
Personal income tax 14%$5,417$6,895$8,147
Different types of Insurance 21.8%$8,452$10,761$12,715
Church tax 9%$3,482$4,433$5,237
Total after-tax cost$66,280$81,657$94,607
Daxx developer cost
Total annual cost$32,500$45,000$57,000

 

how much does it cost to hire a developer in germany

How Much Does It Cost to Hire Developers in Germany?

Germany's employment tax system is complex and depends on multiple factors including age, marital status, and geographical location. Each employee in Germany has the right to a tax-free allowance, however, the amount depends on your marital or civil relationships. 

For a single person, the sum makes up €9,408, which is $10,312. We counted the amount of taxable income to find out how much each separate tax for hiring a developer in Germany will cost you. 

The contributions we took into account are personal income tax (14%) and different types of insurance (21.8%) that include pension insurance 9,3%, unemployment insurance 1,2%, health insurance 7,3%, long-term care insurance 1,525%, accident insurance 1,25%, and nursing care insurance 1,275%

We also took into account the church tax, which is paid under state law. The tax rate is 9% of the income tax payable, with the exception of Bavaria and Baden-Württemberg, where the rate is 8%.

On the whole, there are around 30 different types of taxes in Germany, which may or may not apply to you depending on your particular situation. On average, employment taxes can vary between 14% and 42% of the taxable income.

By the way, in one of Daxx researches, we found out that the majority of German businesses choose Ukraine as their outsourcing destination, while their Dutch counterparts demonstrate a similar tendency.  

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How Much Does It Cost to Hire a Developer in the Netherlands (Taxes Included)?

Hiring a junior software developer in the Netherlands costs $55,911, hiring a middle programmer in the Netherlands costs $88,058, and to hire a senior software engineer, you'll have to spend $99,873 a year. 

The amount entry-level software developers in the Netherlands earn a year is $37,188, a middle developer in the Netherlands makes $58,570 a year, while a senior developer in the Netherlands makes around $66,428 annually. 

                       Entry-Level Software DeveloperMid-Career Software DeveloperSenior Software Engineer
Netherlands developer cost
Annual net salary$37,188$58,570$66,428
Box 1 tax - up to €68,507 are taxed at 37.35%$13,889$21,875$24,810
Pension funds 5%$1,859$2,928$3,321
Holiday allowance of 8% of annual earnings$2,975$4,685$5,314
Total after-tax cost$55,911$88,05899,873
Daxx developer cost
Total annual cost$32,500$45,000$57,000

 

how much does it cost to hire a developer in the netherlands

How Much Does It Cost to Hire Developers in the Netherlands?

There are three tax Boxes in the Netherlands, each covering separate criteria. Box 1 applies to software developers’ income. With this tax, annual salaries of up to €68,507 are taxed at a 37.35% rate, while workers with higher salaries have to contribute 49.5%.

In addition to the Box 1 tax, we also took into account pension funds (5%) and holiday allowance (8%) to determine the after-tax costs of hiring software engineers of different seniority levels in the Netherlands.

The Netherlands' government fosters recruitment from outside of the EU to fill the local tech talent gap. For this, a 30% incentive was introduced — employees from outside of the EU can have 30% of their annual salaries tax-free. 

However, this ruling applies only if the salary of an employee is at least €37,743.

And just like in Germany, having a tax partner or someone registered at your address may influence the amount of taxes you pay in the Netherlands. 

About the Research Method

Daxx has compiled its own research on employee taxation systems in several countries: the UK, Germany, the Netherlands, and the US. As a result, we found out how much employers will have to pay for hiring a developer in addition to net salaries in each country under study. We also provide information on how much it costs to build a dedicated software development team in Ukraine with Daxx. 

Having collected data on taxation systems in the countries mentioned above, we counted tax rates based on the average annual software development salaries of junior, middle, and senior developers.  

*The data presented in this research might be incomplete or require consideration of additional factors depending on the specifics of your particular business situation. 

**To compile the research, we used the data from state-run websites of each country under the study.

Conclusions 

There are several conclusions we can make based on our employment tax research: 

  • The UK and Germany both have a tax-free allowance — a specific amount of an annual income that is tax-free. For the UK, it's £12,500, while for Germany it will depend on a worker's marital status (for example, €9,408 if the person is single). 
  • There's one more similarity between the UK and Germany — its employment expenses. Both countries charge income tax. In the UK, it's 20% of the taxable sum, while in Germany, it's 14%.
  • Another interesting fact is that the Dutch government fosters the recruitment of foreign talent to fill the local talent gap. The country has introduced a 30% ruling — employees hired from outside of the EU can have 30% of their gross salaries released from income tax. However, the minimum annual salary for the ruling to be applied has to be €37,743
  • The US doesn't have a unified tax system for all states. Tax rates differ from region to region, yet the margins don't exceed 2%
  • When hiring developers in Ukraine with Daxx, you won't have to bother getting into the tax system of the country. You'll interview pre-selected candidates, hire the best-fitting professionals, and manage them with the methods you prefer. In the meantime, Daxx will take care of all the administrative support and provide you with high-quality services.
     
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Olena Herasymchuk

Digital Content Creator

Olena Herasymchuk is a tech-driven Digital Content Creator at Daxx. She is eager to discover latest trends of the IT world and share valuable insights with the readers of the Daxx blog.

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