Having a second citizenship is an important part of international diversification, but having a backup passport alone does not reduce your tax obligations if that’s your goal.
US citizens can have as many passports as they want (we know one guy who has eight), but they are still liable to pay taxes to the Internal Revenue Service (IRS) for as long as they carry a US passport.
Citizens of certain countries, such as Australia, the United Kingdom, Canada, Norway and others, may encounter various obstacles if they wish to stop paying taxes in their home country, even after leaving.
While US citizens must renounce their citizenship to fully escape their government’s worldwide tax net, there are other countries where becoming tax non-resident is hardly a walk in the park.
Nowadays, every government agency you deal with wants to know which country you’re a resident of. For that reason, it is essential to establish tax residence in a country that won’t try to get its hands on the money you earn elsewhere.
Getting a second residence in a tax-free country can go a long way to getting your high-tax home country off your back while saving you thousands (if not hundreds of thousands) in taxes every year.
It’s all about ‘going where you’re treated best’ in a world where many residents of high-tax countries are on the hook to pay income taxes on their worldwide income.
No matter your situation, having a second residence in a tax-free country gives you a lot more freedom.
Before exploring the specific countries where you can enjoy a tax-free life, let’s first address the different types of tax systems and incentives you can use as part of your offshore strategy.
What is a Tax-Free Country?
We’ve noticed that people tend to have differing misconceptions about going offshore.
They either think it’s too easy or too difficult.
Those who think it’s too difficult often believe that the only way to live tax-free is to uproot their entire life and move to a tax haven.
But this isn’t always the case.
Those who think it’s too easy also believe they can just incorporate an offshore company, continue to live where they are and somehow avoid paying taxes.
It doesn’t work that way. If you want the benefits of going offshore, you actually need to go offshore.
Yet, others think they can live the life of a perpetual nomad and avoid taxes by not living anywhere permanently. That may have worked in the past, but unfortunately, it’s no longer a realistic option for most people.
Many countries have tightened up their approach to determining which country you consider your tax home and are, therefore, liable to pay tax in.
That means the introduction of a whole raft of tests and requirements that must be passed in order to prove that you are no longer a tax resident of the jurisdiction where you don’t want to be a tax resident.
By finding a new tax home, you can create a strategy to structure your affairs to go where you want while deciding how much tax you want to pay.
And this doesn’t have to involve you running off to live in a small, zero-tax country like Monaco.
On the other hand, if you want to live in Monaco, you can create a fairly straightforward plan and live there tax-free. However, every situation is different, and zero-tax countries are not the only option. zero-tax countries are not the only option.
How to Live Tax-Free
There are various ways to live tax-free, and there is usually more to it than just getting a second residence or citizenship.
Each approach is unique, but in general, the options for tax-free second residencies are as follows:
- Zero-Tax Countries: Become a tax resident of a country that does not impose income taxes or capital gains taxes.
- Territorial Tax Countries: Become a resident of a territorial tax country that only taxes the income you earn within its borders, then make sure you don’t have local-source income.
- Lump-Sum Tax Countries: Become a resident of countries that will only charge an annual lump-sum tax. Technically, these are not tax-free countries, but you can view the flat tax as a government fee for your second residence, which allows you to live tax-free for the rest of the year.
- Exemptions and Non-Domiciled Countries: Become a resident of a country that normally has high taxes but where you can apply for an exemption or special status as a non-domiciled resident. This will allow you to live in the country tax-free for a set period of time.
This analysis is not a list of all the zero-tax countries in the world. We’ve previously examined countries with zero income tax but not all have second-residence programs or are desirable locations for lifestyle purposes.
But if you’re here to discover the tax-free countries of the world where you can get a second residence, you’re in the right place, so read on.
Second Residence in Tax-Free Countries
1. The Bahamas
The Bahamas has no income tax, choosing to earn its money from tourism instead. Residents of the Bahamas pay zero tax on income earned there and on money earned anywhere in the world.
You can enter the Bahamas as a visitor and then apply for either temporary or permanent residence within two months of arrival. A renewable annual residence permit will cost you US$1,000 a year. Even though it is not officially required, it is beneficial to have a home on the island in order to be approved.
After 20 years of temporary residence, you can apply for a permanent residence permit. It is also possible to speed up the process by applying through its residence-by-investment scheme. This allows permanent residence in return for investing at least US$750,000 in real estate or a business that creates at least one local job.
If you want to fast-track your application to get a guaranteed response from the Bahamas’ Immigration Department within 21 days, you can increase the investment amount to US$1.5 million with a one-off fee of US$10,000.
If you’ve opted to buy a home on the island, you’ll then be issued a Homeowner’s Card on an annual basis that allows you, your spouse and any minor children to live in the Bahamas.
2. The British Virgin Islands (BVI)
This British overseas territory and island nation applies no income tax, capital gains tax, corporate income tax, inheritance or gift taxes, land or housing taxes, wealth tax, sales tax or value-added tax (VAT).
While getting a BVI work permit can be a bureaucratic process, obtaining a residence visa as a self-sufficient person is relatively easy and, in most cases, can be done in less than a month.
You simply need to provide bank statements showing that you can afford to live there and pay a US$1,000 surety bond.
3. Brunei
The Sultan of Brunei has so much money that he doesn’t really need investors to immigrate to his sultanate, thanks to the enormous oil and gas reserves at its disposal. With a population just short of 1.5 million, Brunei is among the world’s richest countries by per capita gross domestic production (GDP)
As such, Brunei does not impose income tax on individuals. With a large enough investment, you can obtain residence or permanent resident status in this tiny country nestled on the northern coast of the island of Borneo in Southeast Asia — though we wouldn’t recommend it.
4. Cayman Islands
The crown jewel of the Caribbean offshore world, the Cayman Islands is one of the more expensive residence options available.
The cost of permanent residence starts at US$1.2 million to invest in qualifying real estate and that figure doubles if you want citizenship through real estate investment. However, you can also obtain residence by forming a company in the Caymans and employing yourself.
These options give you immediate permanent residence with no physical presence required on the Caymans other than being there one day per year.
5. Monaco
Talk about class and sophistication; Monaco oozes it.
The principality bordering France and Italy is part of the gorgeous French Riviera and is well-connected to the rest of Europe. It’s the perfect zero-tax residency if you prefer European glamour to island living, and you’ll be in the company of some of the wealthiest people on earth.
Monaco requires that prospective residents show proof of accommodation. This may involve presenting a 12-month rental contract, holding corporate real estate as a company director or purchasing property worth at least €500,000.
Applicants must also prove that they have sufficient financial resources by opening a bank account in Monaco and making a minimum deposit of €500,000. However, some banks require a minimum initial deposit of at least €2,000,000.
6. Turks and Caicos
Another British Overseas Territory, Turks and Caicos, offers quick residence permits to foreigners who either spend at least US$300,000 building a new home, remodelling a distressed property or investing at least US$750,000 in a company majority-owned by locals.
If you’re good for the investment, you can enjoy zero personal income tax as a resident and also a zero corporate tax rate, no capital gains tax, no property tax and no inheritance tax.
7. United Arab Emirates
The UAE offers many advantages for foreign investors and entrepreneurs, including the potential for zero taxes. Note, however, that this has been compromised by the introduction of a 9% corporate tax rate.
The Arab country is one of the oil and gas industry leaders in the region and by setting up a free-zone company, you can start a 100% foreign-owned company in the UAE and get a tax residence certificate. You will also need to have an office in the country, even if it is simply a hot desk at a local co-working space.
Another option to get a residence permit is to invest 2 million AED (over US$540,000) in public investments or real estate held for at least ten years.
If you’re looking for a less expensive residence or offshore solution, this is probably not your best option. However, it may work for those looking for a jurisdiction that can offer zero personal taxes.
As highlighted above, you need to bear in mind that although a low corporate tax rate is still an appealing aspect of setting up in the UAE, recent tax reform has introduced a 9% corporate tax.
8. Vanuatu
Vanuatu offers a straightforward residence program that is relatively affordable when compared to other similar programs.
You will also need a bank in Vanuatu to certify that you’re self-sufficient by proving that you have roughly US$2,000 or more in monthly income – or double that if you include your spouse or partner on the application.
Government fees for Vanuatu’s residence program are on the high side, but with low investment requirements and a variety of interesting property investment options, it’s worth considering if you are drawn to South Pacific island life.
Vanuatu is also one of the few tax-free countries where you can also obtain citizenship. Be sure to check out our other articles to learn more about Vanuatu’s residence and citizenship-by-investment programs.
Residence in Territorial Tax Countries
The following countries only tax locally sourced income, leaving your worldwide assets alone.
Much as we dislike any form of taxation, we believe that this is the fairest way of doing things. Money earned from activity in a country is taxed there, while overseas income that has nothing to do with the place is not.
If you become a resident in one of these countries, you should ensure that any income earned overseas or remitted into the country is not taxable as local-source income. We recommend consulting a tax advisor to make sure you’re fully compliant with local tax rules.
9. Costa Rica
If you’re looking for countries with the lowest taxes in the Americas, Costa Rica has long been the second residence of choice and one of the best countries for US citizens to retire.
The requirements have become more stringent in recent years, but anyone with US$2,500 in monthly income can become a resident. An alternative option is for the applicant to prove a US$60,000 investment in a Costa Rican bank.
Costa Rica is highly bureaucratic, but if you enjoy sandy beaches and tropical jungles, it may well be worth considering.
10. Georgia
Though still unheralded, Georgia is fast becoming one of the world’s freest economies. Its pro-business government has slashed the number of taxes from 21 to 5, with decreasing rates making it one of few countries that doesn’t tax foreign-sourced income.
Georgia offers almost all foreigners a 360-day tourist visa, and anyone can open a Georgian company in order to qualify for residence. Buying real estate can also qualify you.
If you do invest in Georgia, corporate taxes are a flat 15%.
11. Guatemala
If you hanker after a life of adventure in Central America, Guatemala is one of four countries in the region with territorial taxation.
Obtaining permanent residence in Guatemala is easy if you can show proof of a US$1,000 monthly income, although you must be willing to live there for a substantial part of the year, or it’ll cancel your permit.
You can also get temporary residence as an investor if you spend at least US$100,000 in the country, but you can get permanent residence for much less through other routes. Additionally, if you are willing to live in Guatemala full-time, it’s possible to apply for citizenship after five years.
12. Hong Kong
If you can afford it, Hong Kong is one of the most exciting cities in Asia. While this special administrative region of China is tightening its banking and corporate policies to gain approval from the West, its tax policies remain friendly.
Hong Kong isn’t a tax haven, but it’s one of the countries that offers low corporate taxes to entrepreneurs who base a company there and potentially zero taxation for those with businesses overseas.
Entrepreneurs can obtain a residence permit by creating or joining a start-up business in Hong Kong and proving that they will make a substantial contribution to the economy.
Reintroduced in March 2024, the Capital Investment Entrant Scheme (CIES) program also enables foreign nationals to obtain residency by making a significant capital investment of HKD$30 million (around US$4 million) and meeting additional requirements.
13. Macau
While often belittled as a gambling outpost in the shadow of Hong Kong, Macau is an enigmatic and fascinating place. Just one hour from Hong Kong by ferry, it boasts excellent banks, as well as zero tax on foreign earnings.
In the past, you could obtain residence in Macau with an investment of US$375,000, but the official residence-by-investment program was shut down in 2007. As with Hong Kong, you can still get residency by starting a local company. However, there are some hurdles to jump through to make this program work.
You must invest MOP$500,000 (about US$62,700) in a business and hire yourself as a manager to apply for residency and a work visa. The catch is that you must prove that you could not find anyone to fill the managerial position in Macau, which is a nuisance.
Initial residency is temporary and valid for seven years. If you live in Macau and become a tax resident, you will only pay corporate taxes on income over MOP$600,000 (US$74,000) earned in Macau. After that, corporate income is taxed up to a top rate of 12%.
14. Malaysia
Malaysia’s MM2H program is one of the best second-residence programs for entrepreneurs and investors who want to live in Asia full-time.
If you’re under the age of 50, you’ll need to show proof of RM40,000 (US$8,400) in monthly income and deposit approximately RM500,000 (around US$105,000) in a Malaysian bank.
You will also need to prove that you have RM1.5 million (around US$316,000) in liquid assets.
The MM2H program is divided into three tiers: silver, gold and platinum. Regardless of the investment tier, after one year, applicants have the right to receive 50% of their deposit for real estate, medical expenses, domestic travel or education.
You can learn more about Malaysia’s MM2H program and other visas here.
15. Nicaragua
We’ve called Nicaragua ‘the next Costa Rica’ as it becomes more open and affordable than its southern neighbour. However, in territorial tax countries like Nicaragua, you will need more planning to live tax-free.
The country offers a range of options for a second residence, but bear in mind that living there is not for everyone. Firstly, you can invest US$30,000 in Nicaragua through a ‘Sociedad Anónima’ – a type of limited company where you control with a majority interest.
Obtaining Nicaraguan residence is extremely easy for retirees and pensioners and requires proof of income, from US$600 per month. You’re required to live there for six months each year or your residence permit and tax benefits will expire.
16. Panama
Panama has some of Latin America’s strongest offshore banks and is open to residence for citizens of Western countries.
Panama’s Friendly Nations visa program offers instant permanent residence if you can demonstrate professional or economic ties, either by means of an employment contract, real estate ownership or certified deposit.
To be approved, Friendly Nations Visa applicants must own Panamanian property valued at a minimum of US$200,000 or hold fixed-term deposits in a national bank in Panama for the same amount.
17. Paraguay
Paraguay is well-known as a cheap second-passport program, allowing foreigners to obtain instant permanent residence with a mere US$4,500 bank deposit and citizenship in three years. Foreign investors can secure permanent residency through an investment program by making a minimum capital contribution of US$70,000.
Paraguay makes for an attractive second residence, with the potential to get its passport later. Taxes on local-source income are low at just 10% and foreign-source income is typically not taxed. Learn more about residency in Paraguay.
18. Singapore
Singapore is a favourable location for entrepreneurs, even if starting and maintaining a company there is more costly than in Hong Kong. Still, the headline corporate tax rate is 17% on locally sourced income and you don’t need to pay tax on overseas income received in Singapore
The Global Investor Program has a minimum investment of SGD$10 million (around US$7.4 million) in a new local business entity or in expanding an existing local business by hiring at least 30 employees.
According to updated regulations, the investment must have a minimum duration of eight years and can be in a broad range of sectors, including aerospace, automotive, chemicals, healthcare, medical technology and others.
Investors can move to Singapore and enjoy no taxes on bank interest, capital gains or foreign profits. If you’re interested you can learn more about residency in Singapore here.
19. Thailand
Many people like Thailand as a place to live, invest and do business. If you’re one of those, Thailand is a territorial tax country that offers a variety of residence options.
The main residence programs that foreigners can qualify for include the business visa, investor visa, retirement visa and Thai Elite Visas. Here’s a quick summary of each program:
Business Visa: If you run a company in Thailand, you can apply for a non-immigrant visa that is good for 90 days and then upgrade it to a one-year visa that can be renewed. However, foreigners cannot own more than 50% of a Thai company.
Investment visa: Invest roughly US$270,000 in stocks, bonds, real estate or any other Thai investment vehicle and qualify for a temporary visa that you can renew annually as long as you maintain the investment.
Retirement Visa: If you are 50 or older, you can get a retirement visa by either showing proof of a THB800,000 deposit (about US$22,000), a monthly pension, an income source of THB65,000 or more (around US$1,700) or a combination of both.
Thai Elite Visa program: This program now includes gold, platinum, diamond and elite reserve options.
At the lower end, you will need to pay THB 900,000 (US$24,500) for a five-year visa. Each option comes with unique benefits and perks.
20. The Philippines
The Philippines offers one of the lowest age requirements for a retirement visa anywhere in the world. If you are 35 or older, you can apply for the Philippines’ Special Retiree Resident Visa (SRRV) and receive the right to permanently reside in this tropical paradise.
There are several different investment options, with the SRRV Classic being the most popular. If you are between 35 and 49 years old, you can qualify for the visa by depositing US$50,000 in a local bank. Those over 50 who can prove a minimum monthly income of US$800 (or US$1000 for a couple) only need to deposit US$10,000.
Following a 30-day holding period, and after your visa is issued, you can convert your deposit into active investments or choose to keep the money in the bank. You must maintain your deposit or investment for the entire duration of your residency.
With the SRRV, you will receive government assistance in obtaining a tax identification number and establishing the Philippines as your tax residence. You will also enjoy tax-free remittance of your pension and annuities.
To learn about all the benefits and different investment options of this residence program, check out our guide to the Philippines SRRV.
Residence in Lump-Sum Tax Countries
Lump-sum tax countries like Switzerland will grant you residence in return for an annual fixed tax payment.
As we have seen with the programs listed above, there are different requirements and varying levels of investment needed regardless of the tax situation you’ll enjoy once you become a resident. This is the price of entry, and in lump-sum tax countries, it’s an annual fixed tax.
For years now, a number of higher-tax countries have offered special tax regimes to attract wealthy individuals. Some countries will let you pay a fixed lump-sum tax each year to qualify for a residence.
It is essentially a donation for the privilege of living in the country and you’ll usually need to maintain a certain standard of housing and a minimum level of wealth to qualify. The benefit of these programs is that lump-sum tax countries are often higher quality destinations.
Currently, you can pay a lump-sum tax and pay zero tax on foreign source income in the following countries:
21. Anguilla
A British Overseas Territory in the Caribbean’s Lesser Antilles, Anguilla is a relatively small player in the world of offshore trusts and banking. Anguilla has two residence schemes that, with proper planning, you can use to dramatically lower your taxes.
Your first option is permanent residence by making a donation of US$150,000 or investing in real estate of US$750,000. This allows you to live in the country for as long as you want and enjoy zero income tax. If you live in Anguilla for at least six months a year, you will also qualify as a tax resident.
If you do not want to spend six months of the year on the tiny island, your second option is to pay a lump-sum tax of US$75,000 each year. You must also purchase a home worth US$400,000. This will reduce the amount of time you must spend in the country to maintain your tax resident status to 45 days a year.
22. Italy
By becoming a tax resident, you can benefit from Italy’s €100,000 annual flat tax with no requirement to pay other federal, local, wealth or inheritance taxes for the duration of your residence.
Dividends payable to you from foreign companies are also excluded from tax but you will be taxed on any Italian-sourced income. You can take advantage of this flat tax for a total of fifteen years.
Italy also has a residence scheme for retirees that gives holders the option to benefit from a flat 7% tax on all foreign source income. If you earn enough to justify it, and would like to live in Italy, the lump-sum tax regime is an attractive choice.
23. Gibraltar
If you have around GBP£2 million (circa US$2.55 million), you may be eligible to become a resident of Gibraltar. Residents under the territory’s investor-friendly Category 2 visa pay a maximum tax of approximately GBP£44,740 per year in exchange for permission to reside there.
Similar to other ‘non-dom’ programs, Category 2 residents can escape Gibraltar’s progressive tax rates. While you won’t pay zero taxes, you will have residence in a highly respected European jurisdiction for a predictable flat price.
Plus, Gibraltar is a territorial tax country, which means that any foreign source income won’t be taxed.
24. Greece
Greece fashioned its program after Italy’s lump-sum tax regime, so it’s no surprise that it also requires a €100,000 payment each tax year to gain tax resident status.
Those who take advantage of this program will be protected from double taxation and exempted from reporting requirements and local taxation on their foreign source income.
25. Switzerland
If you are able to support yourself with savings and overseas investments, you may qualify for residence in Switzerland by paying a lump-sum tax.
To calculate your individual lump-sum tax, you will need to disclose all your assets and details of your spending to the Swiss authorities. They will use this information to determine your annual ‘rent expense’, and your annual tax will be seven times that amount.
It should be noted that this program is only available in non-German-speaking cantons or administrative divisions.
Other drawbacks include the high cost of living in Switzerland and the fact that you will not be exempt from inheritance tax, wealth tax and some capital gains taxes.
For more details about these and other programs, check out our analysis of these six lump-sum tax countries.
Live in Zero-Income Tax Countries
Even in high-tax countries, lowering your taxes by investing in residence there may be possible. However, it will take plenty of work and planning to avail of tax incentives like lump-sum taxation or non-dom status.
If you’re not particularly interested in finding a new permanent home but would rather live in a country without paying taxes for a few years, you can achieve that by acquiring a second residence.
This can still be complicated as the requirements are subject to frequent change. For instance, Portugal has recently put an end to its Non-Habitual Residents regime, and the UK has followed suit, announcing the end of its non-dom program from April 2025.
Besides Portugal and the UK, you can also obtain non-domiciled status in Ireland, Spain, Cyprus and Malta. But for how long?
If you’re prepared to change your mindset and explore the full range of options available to you, countries like Uruguay offer a multi-year exemption for certain income types. If you can prove you have a certain level of guaranteed monthly income, you can get a residence permit and enjoy tax-free living for a number of years in the ‘Switzerland of Latin America’.
If you want lower taxes but you’re unsure of the next steps, contact the Nomad Capitalist Team here.
The world of tax and residence is ever-evolving, and keeping track of the changes is a challenge in itself. We’re here to guide you through these shifts, offering clarity and tailored advice. Wherever you go, there will be unique conditions that must be met to make your tax-free offshore strategy a success.
If you’re looking for a second residence and aren’t sure where to start, apply now to start your journey. We take every aspect of your situation into consideration as we help you design a holistic offshore plan, including residence, citizenship, taxes, business, investments and more.
