Tax Havens are Not Always Sunny Caribbean Islands – The Whole World Can Be a Tax Haven!
Have you ever wondered why so many billionaires live in what appear to be super high-tax countries? Surely these people are too smart to pay taxes of more than 40% of their income. With the right tax planning, you can live tax free almost anywhere in the world. Let’s look at a few places where the super-rich live tax-free.
How Anyone Who’s Not British Can Live Tax Free in The United Kingdom
If you live in the UK, but your permanent home is in another country you could live tax free in this otherwise high-tax country.
If that is your situation, you will be classified as non-domiciled and will be taxed on the remittance basis. Say you are German and you decide to move to London. You would qualify to be taxed on the remittance basis and organize your affairs to live tax free in London.
The remittance basis of taxation means that you will only be taxed on income that you remit to the UK. So, if you’re earning money through a Panamanian company, you’d only have to pay tax on the money that you sent from Panama to the UK. Other than that, you could live tax free.
It is, of course, easy to avoid sending money to the UK. You can always borrow money from your offshore company or trust to cover living expenses. In that way, you wouldn’t be liable for any UK taxes.
In recent years there has been some political debate about billionaires living in the UK tax free.
In response, HMRC introduced a new rule. If you have stayed in the UK for 7 out of the last nine years and want to continue on the remittance system, you will have to pay £30,000 per year.
If you have been in the UK for 12 of the last 14 years, you will pay £60,000.
If you have a seven-figure income, you can still live in a top-class, first-world city like London with a single-digit tax rate. Only payable after seven years of living tax free. It’s an attractive proposition for anyone who isn’t British to live in an otherwise high-tax country without having to pay much in tax.
That’s the real reason that more billionaires choose to live in London than any other city in Europe.
See HMRC’s latest guide to The Remittance Basis Here
Italy’s Low Tax Offer Could be Improved
If you’re a High Net Worth person and would like to live in Italy, there is a version of the non-domiciled scheme here too.
Unfortunately, it is much more expensive than the UK’s offering.
If you’d like to live on the Italian Riviera without paying tax on your worldwide income, you can live here and pay the Italian tax authorities €100,000 per year plus €25,000 for each family member.
This is, in effect, a special deal with the Italian Tax authorities. They want to attract wealthy residents from nearby Switzerland and Monaco.
It’s not cheap, but if you have a seven-figure income, it could still offer significant savings on your home country. And you get to live in a beautiful, first-world country.
Live Tax Free in Australia if You’re a Temporary Resident
If you’re considered a temporary resident for tax purposes in Australia, you won’t be taxed on your foreign income or capital gains.
There are several routes to getting a temporary resident permit here.
New Zealand citizens living in Australia are always considered temporary residents for tax purposes. It’s a perfect opportunity if you are a high net worth New Zealander to relocate to Australia and live tax free.
Other nationalities will have to get a non-permanent visa to take advantage of this opportunity.
Non-permanent visas are available for Investors and entrepreneurs and are issued for four years.
You can invest $1.5m in Australian government bonds or $595,000 in a business. Alternatively, you can secure $200,000 in funding from a separate party as an entrepreneur.
Take Advantage of Portugal’s NHR Scheme to Live Tax Free on The Algarve
Portugal offers the Non-Habitual Resident scheme.
If you are a Non Habitual Resident of Portugal, you will effectively not be taxed on any overseas income.
This is especially useful if your income is in the form of dividends or rent payments. It doesn’t work so well if your income is in the form of management fees. It’s important to structure your affairs properly to take advantage of this scheme.
To qualify for the NHR scheme, you can’t have been resident in Portugal for the last six years.
Once you do qualify you will keep the status for at least 10 years.
Portugal is a beautiful country with one of the best climates in Europe. An ideal location to live a tax free life.
Live Tax Free in Ireland With The Irish Version of Remittance Tax
Ireland is an attractive location for High Net Worth Individuals to relocate to.
Ireland offers the remittance basis of tax, which is very similar to the UK. If you become a tax resident of Ireland and are classed as non-domiciled, your income from overseas sources will only be taxed if you send it to Ireland.
Irish rules on non-domicile are much less restrictive than the UK. There is no minimum charge here, no matter how long you’ve been in Ireland.
Ireland offers great links to the rest of Europe. It’s a short flight away from London or Paris. There’s spectacular scenery and friendly locals.
If you structure your affairs carefully, you can live tax free in Ireland.
