If you are tired of having most of your money taken away from you to pay ridiculously high taxes, it’s time to make a change. You can save money on taxes by moving out of a high-tax country and creating a low-tax plan.
While there isn’t one simple solution, saving money on taxes is also not as complicated as you might think. It may be as simple as moving from a high tax country to a low or zero tax country.
What countries don’t have taxes? As you continue to read, you’ll find a list of 19 countries with no tax as well as learn how you can save money by moving overseas and what you need to consider when making your tax plan.
In this article, we’ll discuss
- How can you save money on taxes by moving overseas?
- Setting up a low tax structure
- Countries with no income tax
- Should you move to a zero-tax country?
- Territorial tax countries
- Tax planning for US citizens
HOW CAN YOU SAVE MONEY ON TAXES BY MOVING OVERSEAS?
If you are a US citizen living in the US or are currently living in another high-tax country, you can save money by moving overseas.
Many countries have lower tax rates than the US or other Western countries. This is key. You need to spend time in low or no-tax countries. If you move overseas to another country with taxes just as high or higher than the country you currently live in, that won’t help you out.
However, if you plan accordingly, you can even pay as low as zero tax. As you continue reading, we’ll cover how you can save money on taxes by creating a zero or low tax plan and which countries have low or no income tax.
SETTING UP A LOW TAX STRUCTURE
You don’t have to move to a zero-tax country to pay low or zero income tax. What you do have to do is create a solid tax plan.
You can save money on taxes by setting up a low or zero tax structure. This means coming up with a holistic plan that will help you save money on taxes in all areas of your life.
You need to consider where you live, where you work or have a business, where you bank, and where you invest. There isn’t one place that has the best tax deals for every area of your life. It’s pretty much impossible to find the perfect place.
Creating your plan for saving money on taxes may include multiple countries. You may live in a country with low or no income tax, do your business in another country, and invest in yet another country.
Breaking things apart in this way will help you to save money and provide better financial security by diversifying your assets.
COUNTRIES WITH NO INCOME TAX
What countries don’t have taxes?
There are multiple zero-tax countries throughout the world. Many can be found in the Caribbean or Gulf Coast. These are countries that have zero income tax.
Many consider these places to be “tax havens.” These are places you can live to save money on taxes. While some of these countries may have a sales tax or other types of taxes, all of the ones on this list are countries with no tax on income.
Here are 19 countries without an income tax.
Residents of the Bahamas do not have to pay income tax – no matter where their income is sourced. A one-year residency permit in the Bahamas can be obtained through a $1,000 dollar investment and can be renewed each year. A long-term residence by investment permit can be obtained if you make a minimum $250,000 investment into Bahamian real estate.
To get residency in Bahrain you have to be retired and invest $135,000 in property or $270,000 in a Bahraini company.
You can establish temporary residence in Bermuda through a work visa. Bermuda even offers a one-year residency to nationals who want to live in Bermuda and work remotely. You don’t have to work for a local Bermuda company.
While Bermuda won’t charge you income tax, it’s one of the most expensive places to live. Because it’s an isolated island, it can be hard to get basic necessities for a reasonable price. A gallon of milk can cost as much as $15.
THE BRITISH VIRGIN ISLANDS
The British Virgin Islands require you to show bank statements that demonstrate your financial wealth and pay a $1,000 surety bond to obtain a residence permit. These islands are difficult to immigrate to. Only 25 residency permits are given out per year. Additionally, you have to stay in the British Virgin Islands for 270 out of 365 days per year to maintain the residency. Permanent residency can only be obtained if you’ve lived on the islands for at least 20 years.
While you may want to move to Brunei, Brunei may not want you. This zero-tax country is not very open to foreigners.
There are three parts you need to fulfill to obtain a resident permit on Grand Cayman island. First, you must have an annual income of at least 125,000 EUR. Second, you need to make an investment of 500,000 EUR. Third, out of that 500,000 EUR investment, at least 250,000 EUR must be invested in real estate. The smaller Cayman Islands are a bit cheaper to get into. They require you to have an 80,000 EUR annual income and make a 250,000 EUR investment.
Recently, Kuwait has decided to give expats Kuwait Residency Cards rather than Civil IDs. Migrant workers in Kuwait can get a one-year temporary residence permit. Previously, this permit lasted for two years.
To apply for citizenship or permanent residence in the Maldives you need to be Sunni Muslim. The Maldives doesn’t even have a permanent residence program for foreigners, which makes the Maldives a pretty impossible option.
Monaco is not the ideal zero tax escape plan for you if you’re French. If you are a French citizen living in Monaco, you are still required to pay tax to the French government. Citizens of any other country can enjoy the zero-tax lifestyle in Monaco, but for a price.
Monaco is known as a place of a luxury. To get a residence permit you have to deposit a minimum of 500,000 EUR in a Monaco bank and purchase real estate in Monaco for a minimum of 500,000 EUR.
Generally, real estate in Monaco is going to be even pricier than that. After you’ve spent at least 1,000,000 EUR, you’ll then be interviewed individually in order to get your residence permit. To keep this permit up, you are required to live in Monaco for a minimum of six months every year.
While Nauru is a zero-tax country, it’s not really a place you would want to go live. The island was home to an Australian-run detention camp and has a pretty decimate economy.
Oman has a limited number of residency permits, which can make it harder to get into. You may be able to obtain a residence permit in Oman through employment or through a family member.
To obtain permanent residence in Qatar, you have to live in Qatar for at least 20 years and know Arabic. While it may take a long time to obtain permanent residency there, keep in mind that Qatar is one of the only nations on the Gulf Coast that offers permanent residency to foreigners.
SAINT KITTS AND NEVIS
Saint Kitts and Nevis have a citizenship by investment program. As a single applicant, you can make a donation of $150,000 plus fees to the Sustainable Growth Fund to obtain citizenship or you can invest a minimum of $200,000 into government-approved real estate.
Saudi Arabia began to offer “premium residency” in 2019. Saudi Arabia offers a renewable one-year residency for an annual fee of 100,000 Saudi riyals upon approval. A permanent residency costs 800,000 SR.
Somalia is another zero-tax country that you don’t want to live in. A civil war started in the country in the 1990s and the government has struggled to regain control.
TURKS AND CAICOS
To get a residence permit in Turks and Caicos you must either spend $350,000 to build a new house or remodel or you can invest $750,0000 into a locally owned company.
UNITED ARAB EMIRATES
You can get a residency visa in the UAE by starting a foreign-owned company in a free trade area. The United Arab Emirates does not offer an option for foreigners to obtain permanent residence, however, they do issue residence visas that last 10 years.
You can obtain residency and citizenship in Vanuatu through a donation. You can get a one-year residence visa by investing $89,000 in Vanuatu. A higher donation can get you a permanent residence permit. Citizenship by investment can be obtained in Vanuatu for $130,000. The process can take as little as two months, making it one of the fastest citizenship programs in the entire world.
Western Sahara isn’t a place you want to move to – in fact, it isn’t really a country. Technically, Western Sahara is a territory, however, it is recognized as a full member of the African Union. These technicalities make this a difficult place to live and invest in.
SHOULD YOU MOVE TO A ZERO TAX COUNTRY?
Zero income tax may seem like a dream, however, moving to the Caribbean or Gulf Coast might not be your dream location. While you may love not paying income tax in Vanuatu, you might not love living there.
Every person has different preferences, so maybe spending your life in the Bahamas or the UAE is exactly what you want. But it also might not be.
There are also other challenges to moving to a zero-tax country. Many of these countries require that you have a work permit or make an investment in order to become a resident. If you aren’t a resident of that country, you aren’t going to be allowed to live there and won’t get any of the tax benefits.
Some of these countries aren’t easy to get into. Don’t make moving to one of these tax-free countries your Plan A until you know whether or not you have a chance at establishing residency there.
There are ways to create a tax plan that doesn’t involve moving permanently to a zero-tax country. You can pay zero income tax by living in a territorial tax country as long as your income is foreign-sourced.
TERRITORIAL TAX COUNTRIES
What is a territorial tax country?
Territorial tax countries are countries that have domestic taxes such as taxes on income sourced in the country, income made from an investment within the country, capital gains on selling real estate in the country, etc.
Territorial tax countries do not make you pay income tax on foreign-sourced income. This means that if you move to a territorial tax country but do your business and earn your income from a different country, you do not have to pay tax on that foreign-sourced income to the country you live in. As long as you don’t have a salaried job within the country, you won’t have to pay income tax there.
If you properly structure your overseas tax plan, you can pay zero tax without moving to a zero-tax country. Instead, you can live in a territorial tax country. This gives you a larger variety of options of countries to consider moving to in order to save money on taxes.
In order to make this work, you do actually need to spend time in a territorial tax country in order to become a tax resident there. Every country is going to have a different set of specific requirements for what it takes to become a tax resident there, so make sure to do your research.
Territorial Tax Countries include:
- COSTA RICA
TAX PLANNING FOR US CITIZENS
If you are a US citizen, your tax plan may be a bit more complicated. The US is one of two countries in the world that has a citizenship based tax. This means that whether you live in the US or not, as long as you are a US citizen, you are obligated to pay US tax.
There are a few ways you can get tax breaks if you are a US citizen living outside of the US, such as the Foreign Earned Income Exclusion. These exclusions and exceptions make it so US citizens can save money by moving overseas without renouncing their US citizenship.
However, even if you qualify for a tax break, as long as you are a US citizen, you are legally obligated to file your US tax forms to the IRS.
If you want to escape the US tax net completely, the only way to do so is to renounce your US citizenship and move out of the country.
Whether it’s moving to a zero-tax country like Bermuda or moving to a territorial tax country like Malaysia, there are ways to save money on taxes by moving overseas.
If you are able to obtain residency in one of the countries without an income tax, moving there can be a great option. Moving to a territorial tax country is another great option if you are going to have your income sourced from another country.
Overall, you can come up with a great plan to save money by going offshore and moving overseas. There are better places for you to live than your current high-tax country.