Introduction:
Following are the countries that are tax free and also offer you the opportunity to establish a second residence. So, take a look below!
Bahamas:
There is no income tax in the Bahamas, and the country earns its income from tourism. Residents of the Bahamas pay no tax on the income they earn from anywhere in the world, whether in or outside of the Bahamas.
You can enter The Bahamas as a tourist and then apply for the temporary or permanent residence in duration two months of your arrival there.
An annual residence permit that is renewable costs around $1,000 per year. Even though it is not a requirement in official terms, it is beneficial to have a home in the country to get approved with ease.
After 20 years of temporary residence, you can try for a permanent residence, or directly invest $750,000 in real estate or a business that will create at least one local job and get the permanent residence at once.
British Virgin Islands:
This British overseas area has no income tax, inheritance/gift taxes, capital gains tax, housing taxes, VAT or any other type of taxes.
Getting a work permit in this country can be a complex process. However, a residence visa as a self-sufficient individual is very simple. You can acquire it in less than a month, most of the time.
You simply need to show bank statements that display that you can afford to live there with ease. Also pay a $1,000 surety bond. Then you’ll be all set and done.
Brunei:
The Sultan of Brunei has lots of wealth. He doesn’t really need people to immigrate to his sultanate for investment reasons.
However, with a large and solid investment, you can get residence or permanent resident status in this country which lies in the Borneo part of Malaysia.
Cayman Islands:
To live in Grand Cayman, you must have an annual income of around $150,000. Also, you should be able to keep around $500,000 in a Cayman Islands bank, and invest $1.2 million in the country, with half of the total investment being in real estate. These requirements aren’t that much when compared with other countries.
Monaco:
Monaco is one of the perfect zero tax residencies if you prefer a European lifestyle to island living. Also, you’ll be in the company of some of the richest people on the planet.
Monaco asks that potential residents show some proof of accommodation. This might involve presenting a rental contract, having corporate real estate as a company official, or buying real estate worth at least €500,000.
And yes, you’ll need a lot of good luck to even find a parking space for a price that low in Monaco.
The applicants open a bank account in Monaco and make a deposit of €500,000. However, some banks will require a minimum initial deposit of least €1,000,000 in Monaco, which a majority won’t be able to afford.
Turks & Caicos:
Turks and Caicos started an economic residency program that offers residence permits to people who either spend at least $300,000 in making a new home or re-making a distressed property. Or invest at least $750,000 in a business/company which the locals own.
You will also enjoy zero income tax being a resident of Turks and Caicos. Also, there won’t be any corporate tax, capital gains, or property tax. Also, no inheritance tax either in Turks & Caicos if you are a resident there.
UAE:
The UAE has many different benefits for businessmen and investors, including second residence and zero tax benefits.
You can set up a free zone company and start a 100% foreign-owned company in the UAE. Also, you can get both a second residence and also a tax residence certificate which is very beneficial. You will need to follow some rules and check in at least multiple times a year. So that you keep your residence status active there.
Having an office in the country is also a requirement.
Vanuatu:
Vanuatu offers a residence program that benefits those who invest more and more.
People can invest about $89,000 in real estate or a business and qualify for a 1-year residence visa. That is renewable on an annual basis. If someone invests more, they are granted a residence permit which is applicable for three, five, ten, or even fifteen years at max. That means the more you put in, the more you get.
You will also need to get a bank account in Vanuatu to verify that you are self-sufficient by showing that you have around $2,200 or more in monthly income. Or double that if you are including your spouse on the application as well.
2nd Residence & Territorial Tax Countries:
The following places will tax the local source income of citizens and foreigners as well.
Costa Rica:
Costa Rica has always been the second residence of choice for American citizens and investors too.
The requirements have become more complex in past years. But anyone with around $2,500 in monthly income can become a resident.
Costa Rica is not really an amazing place and it is highly bureaucratic. But if prefer the beaches or tropical areas, it may be worth looking into.
Georgia:
Georgia is quickly becoming one of the world’s freest economies apparently. The pro-business government of Georgia cut down the number of tax rates recently.
Income that is earned outside of Georgia is not taxed. But you may need to provide proof that the income is from somewhere else.
Georgia gives almost all people a tourist visa that is valid for a year. Anyone can open a Georgia company in order to become eligible for a residence. Purchasing some real estate might make you eligible too.
Guatemala:
Guatemala is one of the best countries that offer territorial taxation and a good lifestyle.
Getting a permanent residence in Guatemala is simple if you can show proof of $1,250 income per month. But you have to be willing to live there a good part of the time. Else your permit will get canceled at once.
You are also able to get temporary residence. All you have to make an investment of at least $100,000 USD in Guatemala. But as you can get permanent residence for a lesser amount, this option isn’t wise to opt for.
Hong Kong:
If you can afford it, Hong Kong is one of the most exciting places in Asia. The tax policy of Hong Kong is very good.
It isn’t really a tax haven. But it offers low tax rates to people who want to base their business there. Also potentially zero taxation for investors or those who have their businesses overseas, which is a major advantage.
Entrepreneurs can get a residence permit by creating a startup in Hong Kong. They have to prove that they will make a substantial contribution to the economy of Hong Kong.
Malaysia:
The MM2H program of Malaysia is one of the most beneficial second residence programs for entrepreneurs and investors who want to live in Asia. But they do not prefer to live in Singapore, specifically.
The program is very simple.
If you are under the age of 50, you are required to show proof of $2,400 in income on monthly basis and deposit $72,000 at today’s exchange rates into a bank in Malaysia. You also need to show that you have around $120,000 in liquid assets as well.
You can’t touch your money for ten years unless you decide to purchase some real estate. If you are over 50 years old, the bank deposit is half in amount then.
Nicaragua:
Nicaragua is affordable than other southern countries.
With the beautiful beaches, Nicaragua is a good place to have a second resident.
Getting a Nicaraguan residence is very easy. It requires proof of income which is about $750 per month but you are required to live there for 6 months every year or else the residence permit and territorial tax benefits, get expired.
Panama:
Panama has some of the best offshore banks. It is an open country for immigration, especially for people from Western countries.
For such citizens, Panama’s Friendly Nations visa program offers quick permanent residence with just a low bank deposit of $5,000. A single economic connection, usually with a Panamanian company or the title deed to real estate there.
Paraguay:
Paraguay is famous for being a cheap second passport program, which lets foreigners get a permanent residence instantly with a small $5,200 bank deposit, and citizenship in three years.
This is an attractive second residence option with the potential to get a passport at some later on. The tax rates for local source income are very low at just 10%. Foreign income is usually not taxed at all, which is very beneficial.
Singapore:
Well, Singapore is basically no tax haven for all the business people. Not only is a business in Singapore far more expensive to start and maintain than in Hong Kong. But tax rates are 17% on corporate profits and 20% on the high personal salary. For this you’ll be required to take if you want to be a resident in Singapore.
Briefly, a business person living in Singapore will pay at least $20-25,000 per year for the privilege. It is a bit costly if we look at it in comparison with other countries.
Thailand:
Thailand is not a good place for living, investing, or doing business. But there are a lot of people who do it still. Thailand is a territorial tax country and it also offers many different residency options to the people as well, which might offer lots of benefits.
The main residence programs that foreign investors will qualify for are the business visa, investor visa, retirement visa, and Thai Elite Visa, each of which has their own advantages.
The Philippines:
The Philippines offers one of the lowest age requirements for a retirement visa in the entire globe. If you are 35 or older, you are eligible for the Philippines’ Special Retiree Resident Visa (SRRV). Then you get the right to permanently live in the Philippines.
There are lots of investment options, with the SRRV Classic being the most desired one. If you are between 35 49 years of age, you are eligible for the visa by depositing $50,000 in a local bank of Philippines. Those who are older than 50 and can show a monthly income of $800 only need to deposit $10,000 for becoming eligible.
Following a 30 days holding period after the visa is issued; you are able to convert your deposits into active investments as well. You must maintain the deposit for the complete duration of your residency however.
2nd Residence & Lump Sum Tax Countries:
You can pay a lump sum tax in the following countries. Also, pay exactly zero tax on all income from foreign sources:
Anguilla:
Anguilla is a minor player in the world of offshore trusts and the offshore banking industry. This has 2 residence schemes that people can use to easily their taxes with proper planning, in an effective manner.
Your first choice is to become a permanent resident by making a donation of around $150,000 or investing in the real estate side for $750,000, which will make you eligible to live in the country for as long as you want while reaping benefits of the zero income tax system. If you live there for about six months a year, you will also qualify as a tax resident there.
If you do not want to live there for six months of the year, your second option is to pay a lump sum tax of $75,000 per year. You must also buy a home worth $400,000 as well. This will reduce the duration of time you are required spend in the country to maintain your tax resident status to 45 days a year, which is going to be very beneficial for most people.
Italy:
For 100,000 EUR per year, you can get an Italian residence permit and live there, free from all other federal, local and other forms of taxes for all the years that you are enrolled in the this program of Italy.
Dividends paid to you from foreign businesses are excluded from tax too, but you will be taxed on all income from the Italian sources.
You can take benefits of this lump sum tax for a total period of fifteen years.
If you are only interested in residence, Italy offers a Golden Visa program but you will have to pay the normal 23-43% tax on your global income if you choose to live there as a resident then.
All in all, if you have a high income and you like to live in Italy, the lump sum tax is the best option for you.
Gibraltar:
If you have about $3 million, then you are eligible to become a resident in Gibraltar. Residents under the investor friendly Category 2 visa only pay a maximum tax of around £28,360 per year in exchange for having the ability to be a resident.
Category 2 residents can avoid Gibraltar’s progressive tax rates. You will not pay $0, you will have residency in a highly respected European jurisdiction for a predictable flat price which is very beneficial.
Gibraltar is also a territorial tax country, which indicates that any foreign source income will not be taxed either, which most people will find very advantageous.
Greece:
Greece made its program like Italy’s lump-sum tax regime, so it’s not new that they also demand a €100,000 payment for a tax resident status.
Those are a part of this program will be safe from double taxation and also exempted from reporting requirements and local taxation on the income from foreign source.
Switzerland:
If you can support yourself on savings and overseas investments, you might be eligible for a residence permit in Switzerland by paying a lump sum tax of at least 400,000 Swiss francs, which is kind of a good offer.
To determine your individual lump sum tax, you will need to show all your assets to the Swiss authorities so that they can process everything. They will use this information to calculate your yearly rent expenses and also your annual tax is going to be seven times that amount.
Know that this program is only available in non-German-speaking cantons. Other negatives include the high cost of living and the fact that you will not be exempt from inheritance, capital gains and wealth taxes.
2nd Residence In Other Countries That Are Tax Free:
If you’re not as worried about finding a new country to call home and simply want to live tax-free for some time, you can achieve that by getting a second residence in a country that has a tax exemption or the opportunity to become a non-domiciled tax resident then.
It is getting difficult to become a non-domiciled resident in most countries and it does not always guarantee a zero-tax situation in a majority of cases.
For example, Portugal made changes to the tax laws governing its non habitual residence program so that foreign pensions received by residents are no longer tax-free but have a 10% tax.
Besides this country, you can also get non domiciled status in Ireland, UK, Malta, and Cyprus.
But the best choice for a temporary tax exemption should be Uruguay, which has a multi-year exemption on some different types of income.
Wherever you go, there will be different conditions that must be dealt with to make your tax free situation a good scenario.