Best tax-free countries with no income tax

Article Breakdown

“Zero income tax country” may sound enticing to a wealthy individual looking to reduce their tax burden. However, there are several factors to consider when selecting a low-tax country to live in: the country’s overall lifestyle, other taxes imposed on its population, and the availability of residency or citizenship for foreigners.

Here we rank the top tax-free countries to reside in, as well as an overview of additional options.

Is it feasible to live in a country without paying income taxes?

best-tax-free-countries

Bermuda, Monaco, the Bahamas, and the United Arab Emirates are among the most popular countries that offer the financial benefit of zero income tax (UAE).

There are a handful of countries that do not impose income tax, and many of them are quite nice places to live. However, living in a tax-free country is not as simple as packing a suitcase and purchasing a plane ticket.

Taxation is one of the most common ways for a country to make money, and income tax usually plays a significant role in it. Some countries, however, do not levy income taxes on its inhabitants or residents. It is feasible if the state generates sufficient revenue through other sources.

Some countries, such as Qatar and Kuwait, are rich in natural resources and rely on the oil and gas trade for a living. Others, such as the Bahamas, draw enough tourists to generate significant revenue from that sector. Finally, the absence of income tax may be a government decision to entice investors to the country.

Several countries with no income tax are attractive places to live and easy to enter. After spending 183 days there in a year, you can become a tax resident and benefit from lower taxes and other perks.

Low taxation vs. no taxation

Countries with no income tax have a simple system in which you can basically live tax free with zero personal income tax.

Low-tax countries, on the other hand, adopt territorial systems that only tax sources of income that are local. We will also mention some alternatives to consider.

Singapore’s territorial tax structure, for example, attracts wealthy expats by only taxing local income rather than international investments.

Living tax-free in a country with a territorial system may give you more alternatives for second homes, but you may end up paying tax if you rent out your property or invest in a local business.

Renouncing Citizenship to Avoid Taxes

One important thing to keep in mind is that citizens of the United States cannot avoid paying income taxes in the United States simply by relocating to another nation.

All US residents, regardless of where they choose to live, are legally required to submit US income taxes in the same manner as if they were in the US. The US is the only country together with Eritrea that taxes based on citizenship.

Renouncing citizenship may appear tempting, but it is not a simple undertaking.

To begin with, many countries do not provide easy access to citizenship. In most cases, the procedure is time-consuming and costly. Some governments will purposely keep the entry barrier high in order to attract only top-tier investment.

Second, the loss of dozens of multimillionaires and billionaires who chose to gain citizenship in more tax-friendly countries and tax havens has been devastating to US tax authorities. As a result, federal authorities have made it increasingly difficult and costly to renounce US citizenship, imposing an expatriation tax that can become exceedingly costly.

For some, repatriation is more important than the tax penalty. The following is our examination of various countries that are completely livable—and quite beautiful—but do not levy income tax.

UAE (United Arab Emirates)

United Arab Emirates Country Landscape Photo

Aside from zero income tax, the UAE is a country in the Middle East that currently has no taxes for legal companies; however, a 9% federal corporate income tax for enterprises with large net profits is planned. Oil corporations and foreign banks are also subject to a corporate tax.

Although the UAE does not grant citizenship by investment, it is possible to obtain a renewable residence visa by investment starting at $205,000.

Every foreigner possessing a residency visa in the UAE is considered a tax resident. However, in order to obtain a Tax Residency Certificate, one must stay in the country for at least 180 days. If you earn income in another country and wish to use a double tax treaty to decrease your taxes there, you’ll need this certificate.

The United Arab Emirates provides a wide range of leisure and educational opportunities, as well as investment opportunities for enterprises from all over the world and government assistance to expats.

However, because the UAE is largely Islamic, there are norms and customs to follow: women are instructed to dress modestly everywhere, save on the beach, public shows of affection are generally frowned upon, and alcohol purchasing is prohibited.

Antigua and Barbuda

Antigua and Barbuda Country Landscape Photo

Antigua and Barbuda is one of the best zero income tax countries in the Caribbean. Aside from no income tax, individuals in Antigua and Barbuda are also exempt from paying taxes on wealth, capital gains, and inheritance.

Companies that register as IBCs (international business companies) are excused from paying taxes for the next 50 years, including zero corporate tax and tax on revenue from real estate, securities, and other assets – they only pay an annual fee based on the amount of authorised capital, and no payroll taxes.

However, Antigua and Barbuda does not have many tax treaties, and the most of them are with Caribbean countries. This means that even if you obtain citizenship in that nation, you will most likely have to pay taxes in the country of your other passport.

Antigua and Barbuda is a stunning island nation with pink and white sand beaches, coral reefs, and turquoise lagoons. The islands are well-known for their luxurious marinas, and celebrities such as singer Eric Clapton and fashion designer Giorgio Armani have purchased properties there.

Foreigners with a net worth of $100,000 or more can obtain Antigua and Barbuda citizenship by investing $100,000 or more. The investor must be over the age of 18, have a legal income, and have no criminal background.

It is also allowed to include a spouse, financially dependent children and parents, and unmarried siblings in the application. Because citizenship in Antigua and Barbuda is not inherited, an investor must ensure that all eligible family members are added within the first five years of earning citizenship.

Aside from tax advantages, the Antigua and Barbuda passport entitles its possessor to:

  • enter Schengen nations without a visa and stay for up to 90 days out of 180;
  • visit the UK without a visa and stay for 180 days;
  • obtain a B-1/B-2 US 10-year visiting visa; and
  • travel visa-free to 150 countries.

The Bahamas

Bahamas Country Landscape Photo

The benefit of not having to pay income taxes in the Bahamas is based on permanent residence rather than citizenship, making it one of the simpler countries to attain an income tax-free existence. Permanent residents must stay in the country for at least 90 days, while expats must keep ownership of a home for at least ten years.

The residence must also fulfill a minimum purchase value established by the Minister “from time to time,” with those who pay more than BSD $750,000 receiving “rapid consideration.”

As far as Caribbean islands go, the Bahamas is one of the less expensive ones to live on. Overall, the country’s infrastructure and services are excellent. Medicine is one of the few areas where services are regarded subpar. Many US expats who have decided to live in the Bahamas nonetheless come back to the US for major medical care.

Nassau, as one would expect from a vacation destination, has a somewhat high crime rate. Overall, the Bahamas are a perfect spot for many tax ex-pats because to their proximity to the United States and their gorgeous environment.

Bermuda

Bermuda Country Landscape Photo

Bermuda is a British overseas territory and a more appealing Caribbean income-tax-free location than the Bahamas, but it is also a far more expensive country to live in. Bermuda’s somewhat secluded location makes it one of the most costly places to live in the Western world.

Bermuda is far more developed than the majority of the Caribbean islands, with great roads and public transit. Bermuda is also regarded as the most attractive and pleasant zero tax country in the Caribbean, with its famous pink sand beaches and upmarket restaurants.

Many American expats working in Bermuda work in the country’s well-developed financial industry.

Vanuatu

Vanuatu Country Landscape Photo

Individuals are not taxed on their own income, inheritance, capital gains, or capital export. Companies can avoid corporate and other taxes for the next 20 years by paying a $300 annual fee. However, because Vanuatu has not established tax treaties with the majority of the world’s countries, anyone with a Vanuatu passport or a company may be required to pay taxes in another country.

Vanuatu also boasts the quickest citizenship program, with a second passport available in 1­3 months for an investment of $130,000.

Vanuatu’s passport grants visa-free admission to 96 countries, including the United Kingdom, Singapore, and Hong Kong. It also permits you to apply for a 5-year multi-entry tourist visa in the United States. Since 2022, Vanuatu citizens, will still require a visa to visit Schengen nations.

St. Kitts and Nevis

Saint Kitts and Nevis Country Landscape Photo

Residents of Saint Kitts and Nevis do not pay income, dividend, royalties, or interest taxes. The corporate tax rate is 33%, the VAT rate ranges from 10% to 15%, and property ownership is taxed at 0.2 to 0.3%.

The islands are well-known for their magnificent scenery, which includes mountains, jungles, and beautiful beaches with black volcanic sand. Visitors come to St. Kitts and Nevis to sunbathe, snorkel, sail around the coasts, and sample local cuisine.

Citizenship in Saint Kitts and Nevis is available for an investment of $150,000 or more. The investor must be over the age of 18, have a legal income, and have no criminal background. It is also allowed to include a spouse, financially dependent children and parents, and unmarried siblings in the application.

Saint Kitts and Nevis passports are among the strongest in the Caribbean for visa-free travel. It offers visa-free travel to 157 countries, including some less accessible ones like Singapore, Hong Kong, the United Kingdom, Ireland, and all Schengen countries.

Citizenship in Saint Kitts and Nevis is inherited, which means that if you have a passport, your offspring may as well.

The Cayman Islands

Cayman Islands Country Landscape Photo

The Cayman Islands, like the Bahamas, attract enough tourists to keep the government afloat without the need for income tax.

However, if you intend to live there for an extended period of time, be prepared to invest a significant amount of money.

If you want to live on Grand Cayman, you must earn $145,000 per year and invest at least $600,000 in real estate or local businesses. After that, you must wait another eight years for permanent residence.

Furthermore, as in most Caribbean countries, the more money you invest, the easier it is to obtain permanent residence.

However, if you choose to relocate to a less-popular island, such as Cayman Brac, you can invest less.

If you have the money to invest in becoming a permanent resident, the Cayman Islands can be an appealing zero-tax option.

What other countries do not levy income taxes?

Other countries do not have income taxes. It’s worth noting, though, that none of them offer citizenship by investment. Some of them allow you to gain residency through investment, although it is usually much more expensive than obtaining citizenship or residency in the countries listed above. Furthermore, not all of these nations are suitable for living in or visiting.

Let us look at a list of other tax-free countries in more detail. Previously, the Maldives and Oman were included on this list; however, the Maldives has already implemented an income tax, and Oman is planning to do the same.

Monaco

Monaco Country Landscape Photo

Monaco has long been regarded as one of Europe’s most attractive and desirable places to live. It is well-known as a year-round holiday destination for ultra-high-net-worth individuals. Monaco, located on the French Riviera, features huge, well-developed marinas that are frequently occupied by a diverse range of yachts from across the world. The Monaco Grand Prix is a favorite of the wealthy, with several apartments renting for $10,000 or more per night during the race.

Monaco is a city-state about the size of the Vatican. It boasts one of the lowest rates of crime in the world. One disadvantage is that Monaco is also one of the most expensive places in the world to live. It is simple to gain access to Monaco’s tax-free financial environment, but it is not inexpensive. A valid residence visa can be issued in less than three months, but at least 500,000 euros must be deposited in a Monaco bank.

Andorra

Andorra Country Landscape Photo

Andorra, located in the Pyrenees mountains between France and Spain, has long been known as a tax haven since it does not levy personal income taxes. That changed in 2015, when the country implemented a progressive tax rate of 10% for individuals earning more than 40,000 euros per year. In comparison to other countries’ personal income tax rates, Andorra’s low rate may make it an appealing alternative given its other distinctive characteristics.

Because of its mountainous terrain, Andorra is a popular destination for skiers and mountain climbers. Apart from ski tourists, life in Andorra is largely peaceful and calm. Andorra is well-known for its low tax rates as well as the absence of inheritance and gift taxes. In keeping with its tax-friendly stance, Andorra has one of the world’s most sophisticated offshore banking industries.

Is it feasible to reduce taxes without relocating?

There are various countries where you can gain residency or form a company in order to reduce your tax burden — without having to live there for the majority of the year. Some of these options are listed below.

Cyprus

You can become a tax resident of Cyprus if you spend at least 60 days there each year and no more than 183 days in any other country. Cyprus has much lower taxes than many other countries. Cyprus used to have a CBI program, but has terminated this program in 2020.

Malta

The Global Resident Programme enables one to obtain a residence visa in Malta. The residence permits you to pay taxes in Malta that differ from the regular tax rates: for example, if you earn money outside of Malta and do not transfer it to the country, you do not pay income tax in Malta.

Investors in the GRP pay an annual tax of €15,000 or more on foreign income transferred to Malta. Malta is also the only European Union country that still has a CBI program.

Check to see if your primary country of residency has a double tax treaty with the country where you want to relocate or create a business. If there is no such treaty, you may end up paying taxes in two nations instead of just one.

Frequently Asked Questions

How can countries generate revenue in the absence of taxes?

Tourism, trade, and money from international corporations brought to the country by its cheap taxes and exciting investment prospects are the most popular alternative sources of income for the government.

Where should I relocate to avoid paying income taxes?

There are now 14 countries in the world that do not have an income tax. When deciding between them, you should definitely consider lifestyle, immigration ease, and business and travel options. Some of these countries will grant you residency in exchange for your investment, while others may even grant you citizenship.

Do I have to relocate to another country to reduce my tax burden?

No, this is not always necessary. In other situations, you may become a tax resident in a short period of time, thus it is more of a matter of traveling than of relocating abroad. In other circumstances, you can move your firm abroad and reduce your tax burden without having to relocate.

Do I have to pay taxes if I get a second citizenship By investment?

Yes, you will continue to be required to pay taxes in your respective countries. However, if the nations have a double tax treaty, you can avoid paying taxes twice by paying them in one country or reducing their amount in both.

Which countries have no taxes?

Antigua and Barbuda, St. Kitts and Nevis, the United Arab Emirates, Vanuatu, Brunei, Bahrain, the Bahamas, Bermuda, Cayman Islands, Monaco, Kuwait, Qatar, Somalia, and Western Sahara are the 14 countries having no income tax.

Get The Latest Updates

Subscribe To Our Newsletter

No spam, notifications only about investment visas & updates.

You might also enjoy