Many people are trying to find a legal way, how to pay less taxes. We already discussed,
To begin with, we remind you, that there are two strategies to pay zero tax based on your country of residence:
1. Become a resident of one of tax-free countries that do not impose income taxes or capital gains taxes, or
2. Become a resident of a territorial tax country that only imposes income taxes and other taxes on income you earn within their borders… then make sure you don’t have local source income.
The Bahamas decided to base their economy on tourism, which is why it’s a tax-free country. The Bahamas has no income tax, choosing to earn its money from tourism. Residents of the Bahamas pay zero tax on money they earn anywhere in the world. The government application fee for temporary residence, which is renewable annually, is a mere $1,000. If you plan to settle in and stay a while, purchasing $250,000 in real estate will get you longer term or permanent residence.
You don’t need a lot of money to get residency permit on The British Virgin Islands, only some patience for time-consuming bureaucracy. While getting a work permit in the BVI can be rather bureaucratic, obtaining a residence visa as a self-sufficient person is quite easy and can be obtained in less than a month in most cases. You simply must provide bank statements showing you can afford to live there and pay a $1,000 surety bond.
Becoming a resident of Brunei is possible, but costly, to put it mildly.
The Sultan of Brunei has so much money he doesn’t really need investors to immigrate to his sultanate. However, with a large enough investment, you can obtain residence or permanent resident status in his tiny country nestled in the Borneo part of Malaysia.
The crown jewel of the Caribbean offshore world, the Cayman Islands don’t appeal to the middle class. Just as Cayman financial authorities have gone to great lengths to make incorporating into their country expensive, immigrating there requires some serious cash as well. Specifically, if you want to live on Grand Cayman, you must have an annual income of nearly $150,000 and make an investment of $500,000 into real estate or Cayman Island companies.
The principality bordering France and Italy is part of the gorgeous French Riviera and is well connected by train, airplane, and helicopter to the rest of Europe. It’s the perfect zero-tax residency if you prefer European glamour to island living, and you’ll be in the company of some of the wealthiest people on earth. Monaco requires that prospective residents deposit €500,000 in a Monaco bank and purchase at least €500,000 in Monaco real estate.
Maybe you haven’t heard of Turks and Caicos Islands, but now is a good time to ask around. You can get a residence permit here quickly and it’s more affordable than in the other countries we’ve mentioned thus far.
The rogue of the British Overseas Territories, Turks and Caicos unveiled an economic residency program that offers quick residence permits to foreigners who either spend at least $300,000 building a new home or remodeling a distressed property, or who invest at least $750,000 in a company majority-owned by locals.
Vanuatu is another less known haven where you can get residency relatively easily, all on the basis of how much money you’re willing to invest.
One of the few tax-free countries where obtaining second citizenship is possible, Vanuatu offers a very straightforward residency program that rewards those who invest more. Foreigners can invest about $89,000 for a one-year residence visa, renewable annually. Invest more and you’ll get three, five, ten, or even fifteen years. Government fees for Vanuatu residence are a bit higher than usually, but considering the low investment and the variety of interesting property investments there, it’s worth considering if you crave island life in the South Pacific.
These countries tax the local source income of citizens and foreigners alike. Money earned from activity in a country is taxed there, while overseas income is tax-free.
If you are going to become a resident of one of these low tax countries, you should make sure that any income you earn overseas or remit into the country isn’t taxable as local source income; consult a tax advisor.
A British Overseas Territory in the Caribbean’s Lesser Antilles, Anguilla is a small player in the world of offshore trusts and offshore banking. Anguilla also offers retirees who purchase property and provide bank statements as evidence of self-sufficiency to obtain a residence permit.
Stunning nature and cultural abundance of Costa Rica might be inspiring enough to jump through the bureaucratic loops to get a residence permit.
Costa Rica has long been the second residency of choice for American retirees and investor expats. The requirements have become more stringent in recent years, but anyone with $2,500 in monthly income they bring into Costa Rica can become a resident.
At the very intersection of Europe and Asia is Georgia that will pleasantly surprise you with the level of tax freedom it offers to all entrepreneurial expats.
One of the most underrated countries on Earth, Georgia is fast becoming one of the world’s most free economies. The pro-business government slashed the number of taxes from 21 to 6 and now to 5, and rates decrease each year. Income earned outside of Georgia is not taxed in Georgia, although you may need to provide proof. Georgia offers almost all foreigners a 360-day tourist visa, and anyone can open a Georgia company in order to qualify for residence. Buying real estate might also qualify you. If you do invest in Georgia, you can utilize the country’s new Estonia-based tax model which is basically one of the tax-free countries where taxes are only paid on distributions.
Gibraltar offers residence visas to wealthy investors willing to pay an annual flat fee to live there.
If you have around $3 million, you may be eligible to become a resident of Gibraltar. Residents under the territory’s investor-friendly Category 2 visa pay a maximum tax of approximately £29,000 per year in exchange for permission to reside on the tip of the Mediterranean. Similar to London’s “non dom” program, Category 2 residents can escape Gibraltar’s progressive tax rates. While you won’t pay $0, you will have residency in a highly respected European jurisdiction for a predictable flat price.
If you crave the adventure of Mayan ruins and a life in Central America, Guatemala is one of four countries in the region that offer territorial taxation. Obtaining residence in Guatemala is easy if you can show proof of $1,000 monthly income, although you must be willing to live there a good part of the time or they’ll cancel your visa. If you are willing to live in Guatemala full-time, it’s possible to get citizenship after five years.
While often belittled as a dodgy gambling outpost in the shadow of Hong Kong, Macau is an enigmatic and fascinating place. Just one hour from Hong Kong by boat, the special administrative region of China features a few excellent banks, as well as zero tax on foreign earnings. Foreign investors can obtain residency by investing 3 million Macau patacas, or roughly $375,000 into the country. However, because Macau is technically part of China’s “one country, two systems” policy, it is essentially impossible to obtain citizenship there.
If you’re craving to move to Southeast Asia, Malaysia makes it easier with its convenient, yet neglected residency program.
Malaysia is one of the most underrated second residency programs on earth, especially for entrepreneurs and investors who want to live in Asia full-time, but can’t afford Singapore. Malaysia’s “My Second Home” (or MM2H) program is extremely straightforward and doesn’t require much help from anyone to get. If you’re under 50 years old, you’ll need to show proof of $2,300 monthly income and deposit approximately $70,000 at today’s exchange rates into a Malaysian bank. You won’t be able to touch your money for ten years, or until you cancel the visa, unless you decide to buy real estate. If you’re over 50 years old, the bank deposit is cut in half.
You don’t need a lot to settle in Nicaragua, only $750 of income and the will to live in the country longterm.
From the beaches of San Juan del Sur to the colonial charm of Grenada, Nicaragua is a great place to have a second residency. Obtaining Nicaraguan residency is extremely easy and only requires proof of income — generally about $750 per month — but you need to live there for six months each year or else your residence permit, and your territorial tax benefits, will expire.
Panama is all the craze right now, which is why the rules to get residency there are becoming more and more strict.
Panama has some of Latin America’s strongest offshore banks and has become an open country for immigration, especially for citizens of Western countries. For these citizens, Panama’s Friendly Nations visa program offers instant permanent residence with a low bank deposit of $5,000 and one “economic tie”, usually a Panamanian company or the title deed to real estate.
Foreign income isn’t taxed in Paraguay and you can get citizenship here after only three years.
Paraguay is well-known as a cheap second passport program, allowing foreigners to obtain instant permanent residence with a mere $5,200 bank deposit, and citizenship in three years. However, Paraguay also makes for an attractive second residency with the potential to get a passport later. Taxes on local source income are quite low at just 10%, and foreign source income is typically not taxed.
Singapore is no tax haven for entrepreneurs; not only is a company in Singapore far more costly to start and maintain than its Hong Kong counterpart, but tax rates are 0-17% on corporate profits and a flat 20% on the high personal salary you’ll be required to take if you want residency in Singapore as part of the deal. In short, an active business owner living in Singapore would pay at least $20-25,000 a year for the privilege. On the other hand, investors with around $4 million to invest can move to Singapore and enjoy no tax on bank interest, capital gains, or foreign profits.
Hong Kong used to be THE place to go to get second residency, but since so many millionaire businessmen used this privilege, the programs have become quite demanding.
Hong Kong is still an excellent flag to plant for some entrepreneurs, although we recommend it less these days, especially as Hong Kong banks have become impossible. However, Hong Kong is not the easy second residency it once was.
Hong Kong recently “suspended” its Capital Investment Scheme which allowed anyone to plunk US$1.29 million in a bank or brokerage account and live in Hong Kong.
It’s still possible to obtain second residency in Hong Kong by starting a business and opening a physical office there, but that will put you on the hook for Hong Kong taxes, reasonable as they are.
Located not so far from the tourist-filled beaches of Cancun and the Yucatan Peninsula, Belize has been an expat-friendly haven for decades. Formerly known as British Honduras, the country has made itself one of the more attractive places for expats with cash. Considering Belize is a small, independent, English-speaking country, it’s no surprise so many expats would flock there. The country is also considering making its Qualified Resident Program easier to apply to in hopes of competing with second residency options in other Central American countries. The fact that Belize boasts zero capital gains taxes for residents or non-residents alike doesn’t hurt its appeal, either.
Switzerland, one of the world’s renowned centers of banking and stores of wealth, makes the list with no capital gains tax on trades of securities. Gains from selling private property are not federally taxable while gains from business property are taxed as income. Cantonal and municipal taxes are imposed on both types of property. Of course, Switzerland taxes capital gains on other investments as income, but foreigners may be able to avail of a flat tax scheme as well.
With its progressive tax rates, the longer the property is owned, the lower the tax. Canton-level rules apply for immovable property, with top burden ranging from 25% to 50%. After four to five years of ownership, a maximum relief of 50% to 70% of payable tax is allowed. Short-term gains may be imposed of up to 50% for properties sold within first four or five years.
Singapore completely abolished capital gains taxes, in that way encouraging expats around the world to invest and help the country grow.
Singapore once again joins the list of nations offering competitive incentives for entrepreneurs and capital. The city-state as a whole has been renowned for making it attractive for foreign capital to flow into its small jurisdiction and be given a strong basis for banking security as well as tax incentive. There is no capital gains tax in Singapore. While certain elements of financial policy have gotten tighter for expats and newcomers to the country, Singapore still remains a solid choice for English-speaking low-tax nations.
Belgium has quite a demanding tax system, though no capital gains tax. Bear in mind that even if you don’t pay that tax, there might be another one coming on a different basis, so know what you’re getting into.
While Belgium is mostly free from capital gains, there are corporate situations where a “participation exemption” is imposed and tax may be owed. Belgium isn’t exactly a low-tax country, even as far as Europe goes, but it’s zero capital gains rate in most cases is one of the best in Europe. The Netherlands also does not tax investment returns, but it does impose a sort of wealth tax in investments.
New Zealand isn’t called heaven on Earth just because of its stunning nature and scenery. It has one of the very few truly free economies on the planet and you can forget about capital gains taxes here.
One of only six “free” economies in the world according to the Heritage Foundation , New Zealand offers stability and independence and is a growing “safe haven” jurisdiction for assets. New Zealand does not impose a capital gains tax on the sale of equities or other investments. It does have a formal law stating that real estate purchased for the express purpose of resale can be made subject to capital gains taxes, however, this law is rarely enforced.
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