As a taxpayer, I am sure you have once found yourself fantasizing about living in a utopia where you get to keep all the money you have earned and not pay any taxes come the end of the year. For most people living in countries with high tax rates, like the US or Australia, the idea that a country can work without taxes seems too good to be true. People who have heard of ‘Tax Havens’ (i.e. countries with zero or very low taxes) often have a negative image of it, believing them to be some elaborate fraud created by big corporations and rich individuals, which is so far from the truth.
However, income taxes aren’t the only source of revenue a country can have. Oil-rich countries earn their taxes through oil sales, and the same goes for countries having other mineral resources. Similar to this, other countries don’t levy income tax to attract foreign investment or to boost travel economy, and with the increase of movement around the world, perpetual travellers and digital nomads are looking for places where they can save their money and not have to give a portion of their hard earned cash over to the government each year. Or if we put it in other words – there are countries that will support your journey to financial freedom more than others by offering low tax rates and letting you keep your income.
There are currently around 22 countries in the world with zero income tax. But we’ve only listed 20 of them. If you move here and establish your tax residency, you will enjoy the benefit of paying 0% tax at year-end! However, there are other costs associated with moving to each of these countries, such as high cost of living, huge investment requirements to get residency, or other government fees. After all, every country needs to earn revenue one way or another!
So, here’s a summary of the well-known tax free countries, including their pros and cons for the digital nomad lifestyle.
Bahamas is one of the most famous tourist spots, with no income or capital gains tax on the earnings of its residents. The islands heavily rely on the tourism industry for earning revenue. You can get a temporary residence permit of 1 year by paying $1000, or through buying property. However, the cost of living is high, which may make up for what you don’t have to pay in taxes in the Bahamas.
St. Kitts and Nevis
St. Kitts and Nevis is yet another tourist heavy country with no income tax. It is famous for its economic citizenship program, where you can get citizenship at a comparatively low fee, starting from a $150,000 donation to the government, or via investment in real estate. Getting permanent residency is also quite economical and a
rather simple process.
Turks and Caicos
The Turks and Caicos is a British overseas territory with high reliance on tourism and financial services. Getting a temporary residential permit can be inexpensive and can
be renewed each year. Permanent residency laws are not overly strict and require you to be of ‘independent means’. If you are a working nomad, Turks and Caicos might
be a good temporary destination for you!
Vanuatu is yet another zero-income tax island nation that relies on tourism and private investment for revenue. Vanuatu also provides the opportunity to get a second passport with relatively low hassle. Its citizenship investment program is one of the best in the world, and also accepts Bitcoin as a form of payment. The drawback of Vanuatu is that tourism on the island is not as vibrant as other tropical destinations, not to mention that it can be difficult to get to the island.
Among the gulf countries, Bahrain is probably the most favorable spot for professionals living a nomadic lifestyle. The process to get a resident permit is comparatively easier by investing in property of more than 50,000BD and earning more than 500BD. You can get a work visa via a local employer, who would make you eligible for a residence permit. However, keep in mind that getting a citizenship is very difficult for outsiders, as this is the case with all middle-eastern countries.
St. Barths is a French overseas territory known for its luxurious tourism. The cost of living is fairly higher relative to other Caribbean islands, but getting a residency isn’t difficult, especially for EU citizens. For the first five years of residency you will be subject to 30% tax, but after that you can enjoy a tax-free life on the island.
Wallis and Futuna
The Wallis and Futuna Islands are French overseas territory, making it easy for EU citizens to move in and out as the immigration laws are similar to France. For non-EU
citizens, the process is different and more strict. The island is financial backed by France, and coupled with fishing, this allows them to be tax free. Tourism isn’t well
developed on the island, however you can get beautiful beach locations to relax for relatively low prices.
Nauru is one of strangest geographical locations, which was once the wealthiest country in the world due to phosphate mining. However, after the depletion of phosphate reserves, the country’s economy now runs in shambles and it is used as a detention center for asylum seekers by Australia. During its glory days, citizenship was also free, but today there is nothing overly attractive about the island, and being tax-free might be its only redeeming quality.
Bermuda is a famous tax haven known as a luxurious vacation spot for the wealthy, due to its steeply high living costs. Being tax-free, it earns its revenue from tourism and the insurance industry. There are few options to get a residency in Bermuda, namely the Global Work Permit, New Business work Permit, Global Entrepreneur Work Permit for different categories of occupation. A permanent residency requires 10 years of residency and $50,000 in fees.
Monaco is one of the most posh countries in the world. Located on the French Riviera, it is known for its luxurious casinos and Formula One track. Despite being tax-free, it is affordable only for millionaires due to the high cost of living and costly residency permit, requiring a minimum of €500,000 real estate investment and a deposit of same amount in Monegasque Bank.
The British Virgin Islands
The British Virgin Islands in an island nation located in the Caribbean, and know for its scenic beaches and vibrant night life. This tourism hotspot doesn’t need to tax its residents in order to operate. Permanent residency can be applied only after a residency of 20 years in the country!
Maldives is a small island nation known for its expensive resorts. While it is not overly expensive for a short trip, permanently living in the Maldives is almost impossible for outsiders. All the outsiders that work here are in the hospitality industry, brought from developing countries. Only Sunni Muslims can be citizens and permanent residents on the island. Citizenship, even for foreigner Muslims, is not available. The island is also unfortunately facing dangers due to global warming and high debts.
Brunei is small country with one of the highest per capita incomes, owing to vast oil reserves. A large majority of the wealth in Brunei is in the hands of the Sultan and his associates. The country is a dictatorship with very limited personal, social and economic freedom. Getting permanent residency or citizenship is next to impossible, not to mention that it is of no financial use for digital nomads.
Becoming a resident of Vatican City is impossible unless you are a high ranking member of the Catholic Church. Famed as the world’s smallest “country”, Vatican City earns its revenue mostly through donations by religious members, earnings from religious tourism, and investment. All the citizens are members or employees of the Church, ruled by the Pope, and there are no taxes. Ain’t that an interesting fact?!
Kuwait, similar to its neighbouring gulf countries, rely mostly on oil for its income, which allows it to be income tax free. Although it has a large expat population, gaining residency here is quite difficult and requires a sponsorship visa from an Employer Company. This system is highly criticized as a means of forced labor. For digital nomads having a location independent business of their own, getting a long-term visa is not possible as per current laws.
The United Arab Emirates is a group of states in which Dubai and Abu Dhabi are the most well-known. The Emirates have acquired their huge wealth through oil and gas,
however in recent decades, they have diversified into the tourism and service sector, specifically Dubai, which is known for its megaprojects. The country is known to host a huge number of expats who are sponsored by their employers, and acquiring residency can be simply obtained by setting up a company there.
Cayman Islands are another British overseas territory enjoying tax free status due to tourism and a thriving financial sector. Cayman Islands is a famous tax haven for establishing overseas companies by corporations to manage taxes, making it one of the more costly places to live. Obtaining a permanent residency is a luxury not
afforded to most people, as you need to have an income of $145,000 or more, and invest at least $600,000 in property if you want to live on Grand Cayman island. This
investment is cheaper for the other, less-favourable islands in the country.
Yet another middle eastern country that is oil rich. However, Oman is also developing its tourism and shipping industry rapidly. The government is working to attract more expats into jobs in the country. Similar to other countries in the region, you can obtain a work permit via sponsorship, but there is an investment residency program option
as well, however, the amount of investment required is quite high.
Qatar has the highest per capita income in the world, making the need of taxing its citizen obsolete. Permanent residency is very difficult and visa rules are similar to Oman and Kuwait.
The Pitcairn Islands
The Pitcairn Islands is a British overseas territory with a population of only 50 people, located in the middle of the Pacific Ocean. Renowned as the most isolated sovereign state, its economy is based on fishing. Immigration here is very easy, but keep in mind there isn’t anything to do for permanent residents on the island, not to mention that reaching the island is a dreadful journey via ship, available only a few times each week.
While some of these tax-free options may seem enticing after learning more about them, it is clear that most of these 22 tax-free countries either have difficult regulations for residency or expensive investment programs to obtain citizenship. If you are a remote worker seeking a tax-free country to obtain citizenship in, some of these countries may be a good option, however it is also worthwhile to weigh the pros and cons of residency in a tax-free country versus living in a low-tax country. In a low tax country, you may still need to pay taxes, but you may have an easier time obtaining residency and will surround yourself with more digital nomads and remote workers. But if you’ve got some wealth accumulated and are ready to buy property or make an economic investment into those countries, then maybe some of the above mentioned countries may be your ticket to living a tax free life!
Where do you think is the perfect place for you to obtain residency or citizenship to lower your taxes? Let us know down below!
Ps: We didn’t include in this guide Somalia or Western Sahara because honestly.. we want you to stay safe!
Do you want professional help with your own International Tax Strategy and Corporate Structure?
Check out our current services. We are here to guide you and help you navigate through the complex world of International Taxes and Business Structures.
We hope you have enjoyed this article. If you have any further questions please leave us a message below and we’ll get back to you as soon as we can.
NOTICE: The content of this article is not to be considered as a legal opinion or tax advice. Wanderers Wealth does not hold itself out as a legal or tax advisor. If you want to receive a legal opinion or tax advice on the matter in this article please contact us directly and we will refer you to a legal practitioner.