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 relatively small size, and you can be anywhere in a few hours. So, which countries are the best European tax havens of 2023?
Monaco
While Monaco may not be for everybody, it is Europe’s last true tax haven. Monaco does not levy any kind of income tax on its residents unless you’re French! For everybody else, you’ll never have to deal with the Monaco tax authorities. You can live an enviable lifestyle in 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
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 two-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
Portugal can be a tax haven for most people with the right planning. You qualify for the non-habitual resident’s scheme if you haven’t lived there in the last six years. Under this scheme, all income that’s in the form of dividends, rental income, etc, will be tax-free for ten 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 between Great Britain and Ireland in the Irish sea. 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%.
Georgia
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. Georgia is a tax-free option in Europe for a foreign resident with income earned elsewhere. 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
Bulgaria has the most straightforward tax system in the EU. No matter how much you earn, there is a flat tax rate of 10% for everybody. 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 underrated 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 seven years, effectively tax-free (with some planning), using the remittance basis.
After seven 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
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 categorize 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 to 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 minimization, 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.
