As our founder, Simon Black is fond of saying, legally reducing your taxes is the highest investment return you’ll ever make.
If you’re American, Uncle Sam will want to take a bite out of your earnings no matter where in the world you live. But nonetheless, most people can unlock some powerful tax benefits by moving overseas…
Now, at the outset, let’s distinguish between two types of countries – those that have low (or no) taxes as standard, and those that offer juicy tax incentives to attract new foreign residents to their shores.
Countries like Oman, Cayman Islands and Bermuda all boast a 0% personal income tax rate. Yet these places are either not great to live in, or tend to be prohibitively expensive.
Then there are places like Georgia, Montenegro, Serbia and Bulgaria, where personal income tax rates tend to be 10% (or even less) as standard. Moreover, in places like Bulgaria and Hungary, the corporate tax rate too, is exceptionally low (just 10% and 9%, respectively).
Note: In many of these places, there will also be social security contributions…
Many of these places offer an excellent quality of life at a reasonable price. A fair number of Sovereign Man team members (and some of our friends) have lived in places like Georgia and Hungary over the years.
And one of our new team members spent a fair while being based in Belgrade, Serbia. (He loved it enough to apply for residency there.)
In addition, there are countries like Portugal, Greece, Italy, Uruguay and Israel, who all offer attractive tax incentives (or straight-up tax holidays) to lure new residents to their shores.
And as a rule, these tax incentives for new residents tend to lapse after a certain number of years…
In a recent Knowledge Series article, we looked at 20 countries with low or no personal income taxes. But today, we take a look at eight countries offering highly attractive tax incentives for new foreign residents…
Eight countries offering tax holidays for new foreign residents in 2023
|COUNTRY||TAX INCENTIVE FOR NEW RESIDENTS||KEY REQUIREMENTS/ RESTRICTIONS||BENEFIT DURATION|
Non-Habitual Residency (NHR) Program: Your worldwide income can be tax-free for the first 10 years.
The program is particularly useful for receiving dividends from abroad.
Retirees also benefit from a 10% flat tax on public pensions. Private pensions are taxed ordinarily.
You have to spend over 183 days per year in Portugal, OR have your primary home there.
You cannot have been a resident in Portugal for the 5 years preceding your application.
You need to maintain a home in Portugal (buy or rent)
|2. Greece||Retirees (Article 5B): A 7% flat tax on any foreign sourced income, including pensions.|
Have pension income.
Not have been a tax resident in Greece for five of the past six years, AND;
Come from a nation that has a double taxation treaty with Athens (the US, Canada and the UK are on the list), AND;
Agree to live in Greece for more than six months per year.
Employed and self-employed people (Article 5C): 50% tax reduction on Greek-sourced income.
(There are no tax breaks on foreign-generated income.)
Not have been a tax resident in Greece for five out of the past six years, AND;
Transfer your tax residency to Greece from a country that has entered a tax treaty with Greece, AND;
Declare your intention to reside in Greece for at least two years.
|High Net Worth Individuals (Article 5A): €100,000 annual flat tax payment regardless of value of foreign sourced income, plus an additional €25,000 per dependent.|
You cannot have been a Greek tax resident for the previous seven of the last eight years, AND;
Invest €500,000 in Greek enterprises, stocks, real estate, shares or other securities within a period of three years, OR;
You must already hold a Greek Golden Visa.
Northern Italy: 70% discount on your Italian-sourced income (employment or self-employed.)
Southern Italy: 90% discount on your Italian-sourced income (employment or self-employed.)
The qualifying Southern regions are Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise and Apulia.
You cannot have been an Italian tax resident for at least 2 years.
You must also commit to staying in Italy for at least 2 years.
5 years, renewable for another 5 years.
(Conditions are less favorable on renewal.)
Retirees: Pay a flat tax of just 7% on your worldwide (non-Italian) income, including pension.
You must have a pension, AND;
You cannot have been an Italian tax resident for at least 5 years, AND;
You must move to a town with fewer than 20,000 inhabitants in Southern Italy.
|High Net Worth Individuals: €100,000 annual flat tax payment regardless of value of foreign sourced income, plus an additional €25,000 per dependent.||You cannot have been an Italian tax resident for the last 9 years.||15 years|
Beckham Law: New residents can avoid taxation of non-Spanish income for 5years (technically 6 years).
And there are no wealth taxes
For Spanish sourced income, you’ll only pay a 24% flat tax rate on income of up to €600,000 a year.
Take employment with a Spanish company that you don’t control. (And IF you’re a shareholder at all, you can’t own more than 25% of the company.) AND;
You cannot have been a Spanish resident for the past 10 years. AND;
The majority of your work must be conducted within Spain. If your employment requires work to be performed abroad, income from these activities cannot exceed 15% of your total income.
Annual lump sum tax of about CHF120,000 – CHF160,000 (and even more for non-Europeans).
This annual payment takes care of your worldwide income and wealth taxes, and tends to vary per canton.
(Cantons like Appenzell, Ausserrhoden, Basel-Stadt, Schaffhausen and Zurich do NOT offer lump sum taxationprograms.)
You are moving to Switzerland for the first time, or you have not lived there for at least ten years. AND;
You are not allowed to be involved in “gainful activity” in Switzerland (i.e. employed or self-employed there). Gainful activity outside the country is allowed.
For citizens of non-EU / EFTA countries, a minimum age requirement of 55 years generally applies.
|Unlimited/ Indefinite Validity|
Uruguay is home to (mostly) territorial taxation and taxes only foreign interest and dividends (at a flat rate of 12%). Other non-Uruguayan income is tax-free.
Additionally, you can request:
Option 1: No tax on foreign interest and dividends for the first 11 years, and 12% thereafter, OR;
Option 2: Pay flat 7% on foreign interest and dividends indefinitely.
You have to:
Purchase a property worth approximately $500,000. AND;
Spend at least 60 days in the country annually.
You can invest in one or several properties, or choose a combination of residential, commercial and agricultural properties.
|11 years for Option 1/ unlimited for Option 2|
New and qualifying returning residents can enjoy a:
10-year tax holiday on foreign-sourced income: dividends, interest, rent, royalties, pensions and annuities, business income, salaries derived from outside of Israel, capital gains on the sale of assets located abroad, etc.
During the same period, you will not need to report your foreign income to Israeli authorities.
Come to Israel as a new immigrant, OR;
Come to Israel as a returning resident (by having lived outside Israel for at least 10 years).
Note: You don’t have to be Jewish to benefit from this tax incentive, however non-Jews, in practice, are less likely to qualify for Israeli residency under Hebrew immigration law.
New foreign residents are subject to taxation only on their Chilean-source income during the first 3 years in Chile
(After that, worldwide taxation starts to apply.)
|Available to all new tax residents. To become a tax resident in Chile, you generally have to spend more than 183 days per year there.||3 years|
So where should you choose to move to then..?
Obviously, this will depend in large part on your unique situation and objectives…
But the better question to ask would be – where should you move to first?
If you are a remote worker – or at all nomadically inclined – it would be entirely possible to spend 10 years in Portugal tax-efficiently… before moving to Spain for 5 years, and then settling in Italy for either 7 or 15 years, depending on your age and wanderlust levels at the time…
But especially in Southern Europe – where the steadily aging local population is starting to affect their economic growth and competitiveness – you can expect a red tax carpet rolled out upon arrival.
If you’re willing to move abroad, you can unlock some serious tax benefits in the process with the above-mentioned tax incentives. And this list is not complete; there are various other countries seeking to attract new residents.
Even in many Southern European countries – which are traditionally renowned for their high income taxes – new residents can benefit, too.
Plus, when you look beyond continental Europe, there are scores of other countries that are just low-tax by default, so you really are spoiled for choice in 2023.
And considering that these tax deals last between five and fifteen years, you could enjoy low taxes for a good while by moving from one country to another.
Hence, the world really could become your tax oyster in 2023…
The above information is present for purely informational purposes, and should not be relied on to make any financial or immigration related decisions.
The main goal of this article is to present you with the basics of various tax incentives in Europe. Moreover, reading this material does not create any client-advisory relationship between Sovereign Man and the reader.
We are not tax advisors, and do not provide personal tax advice. However, we consulted with various professionals in this field who helped us craft this report.
Also – Americans, beware: Most nationalities of the world will be able to sever ties to their respective local tax authorities. But not Americans. They will always remain US taxpayers and will continue being liable for worldwide taxation to the IRS.
Whatever your nationality is, make sure you talk to your local tax advisor before moving abroad. This way, you will make sure you duly report and pay your US taxes while living overseas (Americans), or properly transfer your tax residency to a new country (most other nationalities).
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