The Best European Tax Havens Where You Can Pay Zero or Low Taxes
The best European tax havens can offer a choice of lifestyle for all tastes and budgets. Fortunately for those who want to live a tax free lifestyle without paying half of what they earn to the state Europe has plenty to offer. Europe offers class, style and sophistication that no Caribbean Island could hope to match.
The great thing about Europe is because of its relative small size you can be anywhere in a few hours. So, which countries are the best European tax havens of 2021?
While, Monaco may not be for everybody it is perhaps the last true tax haven in Europe. Monaco does not levy any kind of income tax on its residents, unless your French! For everybody else you’ll never have to deal with the Monaco tax authorities. You can live an enviable lifestyle on the Mediterranean with a perfect year round climate. Monaco is one of the best European tax havens to be based if you can afford it.
See how to get Monaco residency here.
Andorra was a pure tax haven until recently when it introduced a 10% income tax. You will have to pay 10% on all income over €40,000. Andorra has the lowest VAT rate in Europe at only 4.5%. Some may find Andorra a bit remote. It doesn’t have its own airport and it’s a 2 and a half hour drive from the nearest airport in Barcelona.. However many Spanish online entrepreneurs have been moving there in recent years to escape Spain’s high tax rates.
It’s definitely an option as one of the best European tax havens if you’d like a contrast to the glamour of Monaco.
Portugal can be a tax haven for most people, with the right planning. Provided you haven’t lived there in the last 6 years you qualify for the non-habitual resident’s scheme. Under this scheme all income that’s in the form of dividends, rental income, etc will be tax free for 10 years. Your affairs can be structured before arriving in Portugal to make sure you have the right kind of income to make sure your tax rate is zero.
Portugal has something for everybody from ancient cities like Lisbon and Porto to the amazing beaches of the Algarve.
See our article here for how to live in Portugal tax free
Isle of Man
The Isle of Man is located in the Irish sea between Great Britain and Ireland. The Isle of Man is not subject to the UK’s tax rules. It operates a low tax system with a top rate of 20%. Tax residents who are high earners can elect to have their maximum tax capped at £200,000 per year. So somebody earning £2,000,000 per year would have a tax rate of only 10%.
The Republic of Georgia is a pleasant country between Europe and Asia. It is unusual for Europe, as it’s a territorial tax country. You will not pay any tax there on foreign income. You’ll only pay tax on money earned in Georgia. For a foreign resident with income being earned elsewhere Georgia is a tax free option in Europe. The banks in Georgia are not yet part of the Common Reporting Standard (CRS) so you can still bank in private there too. It’s not so well known as some of the others on our list but Georgia has the potential to be one of the best European tax havens while staying firmly below almost everyone’s radar.
Bulgaria has the most straightforward tax system in the EU. There is a flat tax rate of 10% for everybody, no matter how much you earn. Income earned outside Bulgaria is not taxed, so it can also be a zero tax country for those with income from abroad. You will become a tax resident in Bulgaria by staying there for more than 183 days per year.
Bulgaria is another under-rated country. It’s part of the European Union but not part of Schengen. It’s easy to get residence and you can live tax free. The cost of living in Bulgaria is cheap too making it one of the best European tax havens for the 2020s.
The United Kingdom
The UK can be a tax haven for foreigners – at least for a few years. The UK operates a system known as the remittance basis. Unfortunately it has been tinkered with a little in recent years. However you can still live tax free in the UK if your income comes from sources outside the UK. You will only pay tax on money remitted as income to the UK. You can live in the UK for 7 years, effectively tax free (with some planning) using the remittance basis.
After 7 years you can elect to pay a fixed charge of £30,000 per year. Even this is a pretty good deal for high earners. For someone earning £1m per year their tax rate would be only 3%. A 3% tax charge to live in one of the world’s great cities like London will be a tempting prospect for some. That’s why the UK is, surprisingly, one of the best European tax havens.
Click here for more details of the UK’s remittance tax system from HMRC
Ireland also operates a remittance based taxation system so wealthy foreigners can live in Ireland tax free. Tax will be payable on funds remitted to Ireland as income, like in the UK, however there are options to categorise the funds received so that they are not income. Interestingly a UK citizen can move to Ireland and use the remittance tax system to live there tax free. An Irish citizen can live in the UK tax free provided they have no UK source income. Definitely something for over taxed UK and Irish nationals consider if they don’t want to venture too far from home.
The Channel Islands
The Channel Islands are closer to France than to Great Britain, however they are British protectorates. They make their own laws, while the UK is responsible for foreign affairs. Jersey and Guernsey are the largest Channel Islands. Both have maximum tax rates of 20% but have special arrangements that can lower this. In Guernsey you can elect to pay a fixed tax rate of £40,000 per year provided you spend at least 90 days outside Guernsey. Sark is the smallest of The Chanel Islands and it has no income taxes. If you want a very peaceful life free of all taxes and bureaucracy Sark may well be one of the very best European tax havens.
As you can see some of the best European tax havens fly below the radar and are not viewed as tax havens by the rest of the world. Countries like the UK, Ireland and Portugal are seen as high tax, bureaucratic countries. However with a little careful planning it’s possible to make Europe a tax haven for you and your family. You can choose the kind of lifestyle you want. You can even get residency in one of the tax haven countries and still spend significant time in high tax countries like France and Italy without paying taxes there.
Liberty Mundo helps high net worth clients with tax minimisation, second residencies and asset protection strategies. Get in touch with us to start building your plan to live tax free with your assets fully protected.