Become an Ex-Taxpayer in one of these Countries
European tax havens for individuals are few and far between. In fact there are only 2 pure tax havens in Europe. Of course there used to be more but pressure from international organisations like the EU and the OECD have diminished the number of European tax havens in recent years. Just because it’s not a pure tax haven doesn’t mean you can’t find a way to live there tax free. Some might be surprised to see countries like the UK, Ireland and Portugal in a list of European tax havens. But with the right planning it can be done.
Monaco is one of only 2 pure European tax havens. Pure in that it has no income tax or capital gains tax. Despite the disadvantages of living in Monaco I wrote about here, it’s undoubtedly the best tax haven in Europe. That’s because there’s always plenty going on. It has a fantastic, sunny climate and you’ll be left in peace by the local authorities. It has a great choice of restaurants and bars. It has major events like the Monaco Grand Prix. You’re in the heart of the French Riviera, with everything that you’re ever likely to need available.
When you need to escape, you’re only 7 minutes by helicopter from Nice Airport. You can be anywhere in Europe in a couple of hours. There are also daily flights to the middle east and the USA.
This all comes at a price though. Monaco has the most expensive real estate in the world. You’ll also need a letter from a Monaco bank confirming that you can afford to live there without working.
If you can afford Monaco, it’s definitely the best of the European tax havens.
Sark is in The Channel Islands. It’s close to Guernsey. Sark has no income taxes, capital gains taxes, inheritance tax or sales tax. There aren’t much in the way of any government regulations at all. There are no employment laws, for example. The Financial Times described Sark as a ‘libertarian paradise island’. This may sound like the most perfect of our European tax havens but, it’s only suitable for those who want the quietest of lives. Sark is a small island with less than 500 inhabitants.
There are no cars allowed on the island. You get around by horse drawn cart, bicycle, or tractor. You’ll have to take the daily boat to the island of Guernsey for most things. Many shops and restaurants on Sark are only open during the tourist season. Still, if you want to opt out of modern life and live a quiet life it could be for you.
The United Kingdom
The UK may not spring to mind as one of Europe’s tax havens. In fact, by value of wealth and by the number of wealthy foreign residents the UK is the biggest European tax haven. There are more billionaires living in London than any other European city. The UK offers a pretty good deal to wealthy foreigners. This is because of the remittance basis of taxation.
If your income sources come from outside the UK and you keep them outside the UK, you’ll never be taxed in the UK. Only income that’s remitted to the UK from overseas is taxed. It is easy to structure your affairs so that any money sent to the UK is in the form of loans and therefore never taxed.
UK governments have recently made amendments to the remittance basis of taxation. Now, after 7 years non domiciled individuals taking advantage of the remittance bass will pay a fixed charge of £30,000. This increases to £60,000 after 12 years. This is still a small price to pay if your income is high enough. Provided you’re not of British origin the UK can be one of the best European tax havens.
Ireland is known as a low tax jurisdiction for corporations. That’s why many multi nationals choose Ireland as their European headquarters. What’s less well known is that Ireland can be a tax haven for individuals too. Ireland operates a similar remittance-based tax system to the United Kingdom. Provided you’re not of Irish origin you can move to Ireland and take advantage of the remittance basis of taxation there.
Ireland is also in the unique position of being in the European Union and having a common travel area with the United Kingdom. There are no border controls between Ireland and the UK.
Ireland doesn’t have an annual charge after 7 years of living there like the UK does, so it may even be a better option for some. It’s worth considering for those that don’t qualify for non-domiciled status in the UK. You can qualify for Irish citizenship after 5 years of living there.
Portugal is another high tax country that transformed itself into a European tax haven for a certain type of person. After the financial crisis in 2008 Portugal wanted to attract high net worth individuals to the country. They came up with the Non-Habitual Residency scheme. This allows anybody who hasn’t lived in Portugal for the last 6 years to move to Portugal and opt to be taxed as a non-habitual resident.
The scheme is not as straightforward as some but in essence if your income comes from dividends, rental income, royalties, etc. you won’t be taxed in Portugal. Professionals relocating to Portugal and working there are taxed at 20%.
If you’re able to structure yourself properly Portugal is one of our favourite European tax havens. It has the best climate in Europe, with 300 days of sunshine per year, great food, nice people and it’s affordable for most.
Andorra was a pure tax haven until 2015. There was no income tax until then. Under pressure from the European Union, Andorra introduced an income tax. It’s still one the lowest tax rates in Europe though. And you’ll likely never pay it if you structure your affairs correctly. The tax rate is 10% but only on income above €40,000 per year.
The bigger drawback for Andorra is the fact that it’s not close to an international airport. The closest is Barcelona which is more than 2 hours away from Andorra.
The former Soviet republic of Georgia has made huge advances in the last 30 years since it became independent. It has a very straightforward tax system. Georgia is also the only country with territorial tax in Europe. Provided your income comes from outside Georgia you can live there tax free. Georgia also makes it easy to register as a taxpayer there. You only have to spend 3 weeks every year to get a tax id from Georgia.
Georgia has one of the most relaxed immigration regimes in the world. When you enter you can stay for up to 364 days. If you want to stay longer just cross the border for 24 hours and re-enter.
Anyone buying a property for more than $100,000 can become a long-term resident.
Georgia certainly won’t be for everybody but it has certain advantages which you might find compelling.
European tax havens can be more interesting than tax havens on small Caribbean islands. With plenty of culture and entertainment they’re difficult to beat. While other countries may offer the lowest taxes in Europe for business, those listed above are amongst the best tax havens you’ll find in Europe.