11 Low Tax Countries for Living in Europe

Written by Andrew Henderson
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Ever dreamed of living in Europe?

Many of us have.

However, Europe’s stereotypically high tax rates have turned many successful entrepreneurs and investors away from the idea in search of zero-tax countries in the Caribbean, Middle East, or the Pacific Ocean.

Here’s the deal: while living in Europe and paying zero income tax is a rare feat, it is possible for almost anyone to live in Europe full-time and pay low taxes on their income… even if they’re not a millionaire.

I’m not talking about living like a digital nomad. Sure, it’s possible to spend three months in the summer living in Europe, then spending another few months further south in a country like Serbia. So long as you don’t establish tax ties in any one country, your only concern is making sure you aren’t on the hook for taxes in your home country.

However, as I increasingly work with seven- and eight-figure business owners, one recurring theme I hear is the desire for a home. For many successful people, dragging a suitcase around the world just isn’t their thing. They want a (nearly) full-time home AND the benefits of minimal taxation.

That’s where low tax countries come in.

The good news is that you don’t have to move to the Bahamas or Dubai to enjoy low tax countries rates so long as you’re able to invest some of your money in Europe. While some countries like France will always be off-limits to those seeking excellent tax planning, I’ve made a list of nearly a dozen European countries with favorable tax rates.

1. ANDORRA

living-in-andora-reduce-taxes

Nestled into the mountainside, this medieval village shows the beauty of the Andorran countryside.

Pressure from the European Union caused Andorra to implement its first ever income tax in 2015, but Andorra still remains a low tax haven conveniently nestled between high-tax Spain and France.

Long known as a destination for duty-free shopping, Andorra is an idyllic mountainous country that also happens to offer residence permits to investors and business owners. Fortunately, Andorra has positioned itself to attract those of more average means than other low tax countries like Monaco.

Andorra is perfect for those with capital gains or generational wealth; it has no wealth tax, no gift tax, no inheritance tax and the only capital gains tax is assessed on most sales of Andorra real estate.

The only tax is an income tax, of which a generous 24,000 euros is exempt, and the top rate of 10% takes effect at the 40,000 euro level.

Unless you’re well-noted in your field, there are two ways to qualify for residence: make an investment or start a company. Either way, you’ll need to pledge to spend 90 days per year living in Andorra, rent or own a property, maintain a bond, and maintain health insurance; many residents are exempt from the already low tax rates depending on how their income is earned.

To start a company, you will need to present your CV and a business plan, as well as deposit a 50,000 euro bond for a single applicant. This route requires far less upfront capital but you do need to actually run a business, which means living in Andorra should be part of your overall corporate and tax planning. If you prefer to be a passive resident, you may invest 400,000 euros in Andorra, which can include an investment in real estate.

2. BULGARIA

Low-tax living in Bulgaria

Bulgaria offers Eastern European city charm, plenty of beach resorts on the Black Sea… and a flat 10% tax rate with no minimum.

At a flat 10%, Bulgaria has the European Union’s lowest personal income tax rates. Corporate income tax rates are the same flat rate of 10% (tied with Cyprus), and Bulgaria maintains tax treaties with many countries that could allow for special tax treatment for some international entrepreneurs.

Basically, Bulgaria’s tax system is simple: live there and pay 10%. You can become a fiscal resident by living in Bulgaria for at least 183 days in a year, or by convincing the tax office that Bulgaria is your “center of life”. While merely staying in the country is often easier, the “center of life” test gives you more flexibility and involves a number of factors.

Eastern Europe is one of the world’s most underrated places for living in my opinion, although out of the Balkan countries I would personally prefer living in Serbia or Romania. That said, Bulgaria has the advantage of being a rather open place to operate, with bank accounts being easy to open and a substantial low-tax offshore company industry attracting plenty of entrepreneurs and capital.

3. CZECH REPUBLIC

Cost living in Prague, Czech Republic low tax countries in Europe

Despite being a top tourist destination in Europe, Prague has one of the cheapest costs of living in central Europe.

The Czech Republic is often ignored as a low tax jurisdiction despite the fact that it has streamlined both personal and corporate income tax rate to reasonable levels. Considering that Prague is one of the most cooed-over cities in Europe, the idea of living in the Czech Republic is worth considering.

As a low-tax residency, the Czech Republic (or Czechia, as they prefer) is best suited for European Union citizens. That’s because self-employed Europeans can not only avail themselves of Czechia’s 15% flat tax rate but may also apply a lump sum tax deduction in lieu of actual expenses. For most business owners, the lump sum can reduce the flat tax by 40% or 60%, leaving an effective tax rate of 6% or 9% on self-employed entrepreneurs.

Like Portugal and other European Union countries, real tax planning is required if you choose to live in Czechia. For one thing, you will need to rent or own an actual home; the good news is that the cost of living in Prague is surprisingly low given how popular the city is for tourists and digital nomads.

4. GEORGIA

Low tax countries in Europe Georgia

Georgia has a diverse tourism landscape. For instance, Mtskheta, Georgia is home to a UNESCO world heritage site.

While Georgia may not be in the center of Europe, its position in the Caucasus places it squarely between eastern Europe and Asia. Fun fact: Georgia also happens to be the only European country with a largely territorial tax system, meaning properly structured foreign source income is not taxed in most circumstances.

For non-US citizens, it is easy to create an international structure and pay zero tax on profits while being a legal resident of Georgia. It is also possible to maintain a part-time home base in Georgia without incurring tax obligations. You can even become tax resident without living in Georgia if you can prove wealth or high income.

While Georgia’s capital of Tbilisi is not Paris, Georgia is one of the safest countries in the world and a favorite of ours here at Nomad Capitalist. The cost of living is extremely low, and activities like smoking and gambling are extremely cheap compared to the highly over-regulated European Union.

5. GIBRALTAR

Tax-free countries like Gibraltar for residence visas low tax countries in Europe

Gibraltar offers residence visas to wealthy investors willing to pay an annual flat tax.

Gibraltar has long been a popular tax residence for British citizens, but Gibraltar’s benefits as a low-tax residence are available to anyone. Nestled at the southern tip of Spain, Gibraltar is a British Overseas Territory and not a sovereign country, but is able to set its own tax policies.

There are two ways to become resident in Gibraltar: start a company or demonstrate a high net worth. As is usually the case with these programs, it is easier for entrepreneurs to qualify by forming a company but proving wealth is easier in the long run.

The High Executive Possessing Specialist Skills method, or HEPSS, allows entrepreneurs with Gibraltar companies to pay a maximum tax on their salary. You must earn more than £120,000 per year, but will only be taxed on £120,000. That essentially translates to a flat tax of £29,940, although you must also consider any Gibraltar corporate tax. You will need to own or lease a home in Gibraltar.

The Category 2 visa program is also appealing but requires a £2 million – roughly $2.5 million – net worth to qualify. There are few requirements besides proving this level of wealth; the main requirement is to purchase or lease a “qualifying” home.

Other than that, you may not carry out almost any business within the territory of Gibraltar. You will pay a minimum annual tax of £22,000, and a maximum annual tax of £28,360 based on Gibraltar’s oddly progressive-but-then-regressive income tax rates ranging from 10% to 29%.

6. MALTA

Low-tax living in Malta

Malta allows foreign citizens to pay an annual flat fee and exempt their foreign income from Malta tax

Malta is one of only four countries on this list that are part of the Schengen Area, and one of only three that are also part of the European Union. Malta has developed some of the EU’s most tax-friendly programs for both individual residents and corporations, with corporate tax rates as low as 5% possible for non-resident companies.

Malta has long had a flat-fee residence program available, but as I have discussed in the recent post the newer Global Residence Program has become the second residency of choice. Unlike Andorra and Monaco, Malta does not require any physical presence on its two Mediterranean islands, meaning you can establish residency but not live there at all. Furthermore, they have prided themselves on reducing bureaucracy and even allowing residents to include domestic staff on their applications (similar to Malaysia’s MM2H program).

Maltese residents are not subject to tax in Malta on foreign sourced income that is kept outside of the country. What’s more, they are not subject to tax on foreign capital gains even if those gains are sent to a Malta bank account. Other income, including pensions, can be taxed once at a flat 15% thanks to Malta’s tax treaty network.

The cost of maintaining the residence in Malta is a flat 15,000 euro “minimum tax” payable each year. With proper planning, this should also be the maximum tax. It is also possible to obtain a tax residence certificate.

7. MONACO

countries with no income tax

Monaco eliminated income taxes entirely in 1869, making it the only sovereign zero-tax jurisdiction in Europe.

While Monaco is not a full member of the European Union, it is a de facto participant in the borderless Schengen Area, offering excellent mobility. Monaco’s exclusivity and proximity to France and the rest of Europe make it a more serious tax residency than some tiny island in the middle of the ocean.

According to the tiny principality, it is not a tax haven. It does allow foreigners to establish residence in Monaco merely by proving their wealth. Doing this generally requires a 500,000 euro bank deposit and purchase (or in some cases, rental) of a property there.

Seeing that parking spaces can often sell for up to 1 million euros, residence in Monaco is reserved for the wealthiest entrepreneurs and investors. It’s also reserved for those actually willing to live there; you must spend three months per year for the first nine years, at which point you can obtain what is effectively permanent residence but requires 183 days of stay per year.

If you’re interested in getting a residency or second passport in Monaco, we have just published our Ultimate Guide where you can get all the details.

8. MONTENEGRO

Offshore Montenegro company low tax countries in Europe

Montenegro has low corporate taxes and is one of the least expensive countries in Europe to start a company.

Montenegro boasts the lowest headline personal income tax and corporate income tax rates in Europe, both pegged at a flat 9%.

Like many of its western Balkan neighbors, Montenegro has sought to attract business to its small country – population: 620,000 – by lowering tax rates. While almost all of eastern Europe offers rather reasonable tax rates in the teens, Montenegro offers the lowest tax rates and the benefit of a country you might actually want to live in.

Locals know Montenegro as Crna Gora, meaning “black mountain”, but the Italian name stuck and gives the country an air of sexiness by sounding similar to Monaco. Personally, I believe it is a completely stunning place to visit during the summer season, which is why I purchased my beach house for holiday getaway right there, where I relax, do some writing and enjoy the sunsets and Mediterranean cuisine.

Montenegro’s government seems to have played to that notion, inviting foreign investors to develop luxury resorts on its pristine coastline in a bid to be the jewel of the Adriatic Sea. It was enough to attract me to buy a home in Montenegro.

Montenegro allows foreigners who buy residential property to obtain a temporary residence card, renewable yearly. If you spend fewer than 183 days in Montenegro, you will generally not be taxed. If you live in Montenegro the majority of the time, you will become tax resident and be liable to pay the flat 9% rate on your income.

While Montenegro isn’t a zero-tax country for full-time residents, it is a very attractive home base primarily for Europeans seeking a legitimate low-tax residency to appease their home government.

9. PORTUGAL

countries-with-the-highest-tax-portugal

Even though Portugal is a high tax country, foreigners can take advantage of a ten-year Non-Habitual Resident Tax exemption that exempts up to 100% of their income from Portuguese tax.

Most people don’t associate Portugal with low tax countries.

In most cases, they’re right; Portugal is hardly a tax rate favorable place for the average resident. However, foreigners can take advantage of a ten-year Non-Habitual Resident Tax exemption that exempts up to 100% of their income from Portuguese tax.

While this exemption doesn’t allow you to live in Portugal tax-free forever, it is long enough to allow you to claim Portugal citizenship if you meet the rather lenient physical stay requirements.

The first step to living in Portugal is to obtain Portugal residency; this can be done by purchasing real estate through the well-known Golden Visa program, but can be done more easily by hiring people or by merely proving you have rental income overseas.

There is a catch, though: the most tax-optimized structures won’t qualify for Portugal’s tax exemption. Income from blacklisted tax countries is not subject to exemption, meaning your offshore company in the BVI or Hong Kong won’t work. Substantial tax planning is needed to ensure that all of your business and passive income is structured to eliminate taxes while you live in Portugal.

10. SWITZERLAND

Low-tax living in Switzerland

Switzerland was one of the first countries to allow wealthy taxpayers to negotiate a flat annual tax with its cantons

There is no doubt that Switzerland has become less friendly both for immigration and banking in recent years. That said, it is still one of the safest and most respected countries in the world with a location at the heart of Europe. Swiss residency offers an air of legitimacy that many other low-tax residencies can’t match. Foreigners have two residency options to choose from.

The first is to form a new company in Switzerland and hire local employees. This company will pay corporate income tax based on which canton (region) it is incorporated in, and you as the manager will pay Swiss income tax.

The more common and lower tax method to living in Switzerland is the Lump Sum Taxation method, also known as “taxation according to expenditure”. Under this method, a family may move to Switzerland and pay a flat annual tax based on their cost of living rather than their actual income. This has often been described as negotiating a flat tax, and each canton has their own policies.

Generally speaking, expect to pay at least $150,000 and up to $1 million in flat tax each year depending on which canton you want to live in. You will also not be able to legally reside in Zurich. If your income exceeds $1 million each year, maintaining your home and tax residency in Switzerland would give you a moderate tax rate. If your income is in the millions, Switzerland could reduce your tax rate below 10%. While Switzerland is hardly a cheap place to live, it has one of the highest standards of living in the world.

11. UNITED KINGDOM

United Kingdom Low tax countries in Europe

The UKis far from a tax haven, but there are certain exemptions from the rule when it comes to tax rates, which you can take advantage of if you’re a wealthy entrepreneur.

Like Portugal, the United Kingdom isn’t exactly a haven in terms of low tax countries for all… but it is for a select group of wealthy individuals. By exploiting the difference between domicile and residence, certain foreign citizens can live in London and pay an annual flat tax.

This “non-dom” system has been popularized thanks to Middle Eastern and Russian billionaires who take up residence in the United Kingdom yet claim they are not running their businesses from Kensington. Because their income is a foreign source, it is eligible to be taxed on a remittance basis; keep the income out of the UK and it is not taxed.

Obtaining residency in Britain requires a substantial investment, but for the right person, the tax benefits outweigh the initial costs. Claiming non-dom tax benefits may be free for up to six years, after which the remittance basis charge is anywhere from £30,000 to £90,000 depending on how long you’ve been a resident.

Tax residence in the UK is a highly complicated topic and always worth discussing at length with a tax professional before claiming any benefits, particularly as some non-dom benefits must be claimed in advance.

Tax-Free Countries in Europe

Andrew Henderson
Last updated: Mar 10, 2020 at 2:02PM

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45 Comments

  1. Orestis

    Hey Andrew, what’s your opinion about Cyprus? It’s very close to Bulgaria with 12.5% corporation tax and zero tax on dividends..

    Reply
  2. Alex

    Romania – for revenues up to 500.000. Revenue tax of 1% plus dividend tax of 5%.

    Reply
    • Cornel Harsan

      This article is also about resident tax, which in Romania is 16%+5.5 .. so Romania does not qualifies as a cheap place to live.

      Reply
      • Stefan Dumitru

        Simple workaround for that.As Alex said make a company.Invoice it all and pay 3% on revenue and 5% on dividends.So no extra charge for that and all is OK

        Reply
  3. Vinay Rao

    Pls give.me.more idwa on Bulgaria taxation in salary and education system there

    Reply
    • Stefan Dumitru

      All the costs for a company for a employe is around 35%

      Reply
  4. Von

    Great advice, will you be spanning out in to cryptocurrency advice in the near future?

    Reply
  5. Michael

    Czech Republic 9% tax seems to be quite misleading!
    How about the 7% “solidarity” rate on top on higher incomes?
    How about the *massive* social security payments? Can we avoid those? These are a tax also you know.
    Also is there a restriction, can a self employed person have only ONE source of income? If not, it won’t work for most foreigners getting paid by their foreign employer!
    Please clarify.

    Reply
  6. Francesco

    Hello, what about Lithuania or Belarus?

    Reply
    • sar

      Lithuania: 15% net profit

      Reply
      • JC Denton

        5% corporate tax if company have revenue not more than EUR 300 000 and not more than 10 employees

        Reply
  7. Hana Bělíková

    To clarify on Czech republic – the 15% is applied to all income under 1300000 CZK (60 000 USD), on anything above that a “solidarity” or progressive tax of extra 7% is added to all income from employment or self-employed activities, making the tax rate for that portion 22%. On top of that, the percentage deduction is also limited to an equivalent of 2mil CZK (100 000 USD approx) for this year, next year the threshold will be half that. This means that if you do % deduction, you can only deduct what would be the respective percentage of the threshold amount.
    Also, bear in mind potential requirement to pay health insurance and social security insurance, which are mandatory here, unless you can prove you pay these in another contract country. 🙂

    Still not a bad deal, just not as sweet as just 15% on everything with a flat 60% deduction.

    Reply
    • Mark

      It would also help to know how retirement funds are taxed in these countries. For example, I have long wondered how Czechia would tax withdrawals from a US 401k, IRA or even HSA. How can we find that info?

      Reply
  8. ottavio

    Re Portugal.
    Income from Hong Kong is exempt, irrespective of the black list issue, given that there is a DTA between Portugal and Hong Kong. However, if the HK corp is yours, CFC rules would apply.

    Reply
  9. Bhartesh g.Upadhyaya

    what about greece ,poland,holand and others?

    Reply
  10. Jeff

    Here’s a question I’m dying to know … what happens if you live in, say, Spain for 175 days. And then move to, say, Montenegro for 175 days … and then you’re on vacation in Asia for the last 2 weeks of the year.
    Technically and legally you have not spent 183 days in any one place.
    Who gets your taxes?
    And I am talking about literally not having residency in any one place, though technically I remain a US citizen, I am not residing anywhere for 183 days (and though the US does tax global income, it offers a $104,100 expat exemption at the moment). So If you make, say, $100,000 … where are you paying taxes??

    Reply
    • Joel

      It’s not that simple

      Reply
    • Harri

      There is no law requiring you to have tax residence in one country. But it will certainly raise eyebrows…

      Reply
    • Joe Nanda

      The question is, what will you do when Spain and Montenegro tax office ask you to pay taxes or prove you have paid them elsewhere. One of those countries can claim you have stronger connection to them than to the others (e.g. hospital visits, your spending history etc..) and will present you with tax bill. Sounds too far off? I heard from my accountant that ton of folks in Silicon Valley try to claim their residence is in Nevada and not California. Very often, the CA tax office just obtains their bank statements and shows them, look, you do most of your shopping here in California, so here’s the tax bill… Try to argue against that then…

      Reply
  11. Julia

    6% income tax for self employed in Russia

    Reply
  12. Henrik Grenstam

    Don´t forget Estonia.

    Reply
    • Alpha

      Estonia was for banking only I thought? Tell me more…

      Reply
  13. Frank Timmins

    Surely Ireland is better than Britain for longer term [ie., more than 6 years] non-domicile status.

    Reply
  14. ottavio

    you should now add Italy to the list.
    since last year, persons who have not been Italian tax residents for at least 9 of the last 10 years, can take tax residence in Italy opting for a lump sum taxation of all foreign source income of 100.000 € per year, with the arrangement lasting up to 15 years, at the discretion of the taker.

    Reply
  15. Juan Arajo

    One thing to bear in mind: taxation is one thing, social security fees are another, and you are simply wrong if you chose your startup form based solely on these factors. You can start up a company and all of a sudden fully liable, limited only by everything you own, regardless your residency.

    Reply
    • Andrew Henderson

      Sure, there are indeed many factors involved in any tax planning.

      Reply
  16. Stef

    Any info about Slovenia, Croatia or Serbia ? for self employed. Would it qualify as a cheap place to live ?

    Reply
  17. Marcel

    Hi,
    I am resident in the Netherlands and am an individual business coach.
    My clients are from all over the world.
    I would like to register my consulting company in a low tax country.
    Keeping this on mind and also VAT, which countries do you suggest?
    Thanks,
    Marcel

    Reply
    • Boris

      I will suggest Montenegro. With 9% tax. Also country is very friendly for foreign investors, so maybe in future you can get some benefits: few years without taxation(example: Porto Montenegro,Lustica development), free place for your office, 50% cheaper oil(without taxes price)… etc..

      Regards,
      Boris

      Reply
  18. Odis Misenhimer

    some truly nice and useful info on this web site, also I conceive the design and style has fantastic features.

    Reply
  19. hatim nalim

    Thanks God for Gulf Arabian a lot of money and 0% taxes

    Reply
  20. Peter Van Aardt

    What about my living permanently on a yacht cruising the world and setting up a business (assembly of a new technology we have developed) in a country where this can be done. Spain /Montenegro /Russia/Estonia /UAE /CHINA… which country you think would be best. Yacht flag either Kenya or one of the island nations or Panama etc.

    Reply
  21. Nan Kargahi

    What about Poland?

    Reply
  22. Subbu

    What about Belgium and Ireland? Can you please throw some light

    Reply
  23. Sim

    Hi,

    Is there anyway of lowering taxes when your income is made solely in the Uk ?

    Thanks,

    Sim

    Reply
    • Stasa Momcilovic

      Hello Sim,
      If you are interested you can send us your application and we’ll see how we can help you.
      Here is the link https://nomadcapitalist.com/apply

      Reply
  24. Scott

    Hungary also has a flat tax of 15% and generous tax deductions for having children.

    Reply
  25. SS

    In Portugal you will also have to pay 21,4 Social Security tax. You can find it on Seguranca Social website

    Reply
  26. Omar

    this article and most of your other articles don’t mention how these nations treat worldwide income.

    Reply
  27. Sunil Kumar

    Hello,

    I want to open a Import Export business in Europe but not aware about Tax Rates about there.
    Can any one help me for lower tax rate country in Europe.

    Please assist me.

    Sunil Kumar

    Reply
  28. Robert

    I have made significant capital gains investing in stocks recently, is there any place in the world where is it legal to buy tax credits related to capital losses from other individuals who have lost money investing, so to partially/totally offset my capital gains tax bill? Thanks

    Reply
    • Stasa Momcilovic

      Hello Robert, thank you for your comment!
      If you are interested you can send us your application and we’ll see how we can help you.
      Here is the link https://nomadcapitalist.com/apply

      Reply

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