In most places worldwide, investors, collectors, and homeowners are taxed on any profit from the sale of capital assets at quite painful rates. For example, residents pay the capital gains tax at the rate of up to 42% of their income from sources in Denmark, 35.2% – in Norway, and 34% – in France. This does not mean, however, that capital gains tax is just an unfortunate fact of life.
What countries have no capital gains tax? Apparently, zero-tax jurisdictions like the Cayman Islands and Dubai do not levy even such taxes as inheritance and gift taxes. Moreover, some countries charge quite a low-rate capital gains tax (for example, Kenya – at 5%). Besides, the rules and rates may differ for taxation of personal vs corporate capital gains. Some countries do not tax one or the other. Short-term vs long-term capital gains may be subject to different rules, and different rates may apply to certain categories of income (shares, bonds, etc.). That is why, to define what country is without capital gains tax and whether relocation to such a capital gains tax-free destination can secure wealth accumulation and asset protection for a long time, most people refer to professional help.
Experts say that there are about two dozen jurisdictions that have no capital gains tax in 2022. Let us go through the top 5 of them. Surprisingly, these are not only offshore countries. Some are economically advanced old European ones, and all of them are quite attractive to expats for many reasons, besides the fact of having no capital gains tax.
Belgium – # 5 in the list of countries with no capital gains tax
Belgium, being a high-tech West-European country, is not a tax haven. The main reason for putting Belgium on this Top 5 list of countries with no capital gains tax is because it has no personal capital gains tax (provided certain conditions are met).
Corporate capital gains are regarded as professional income and are taxed at the normal CIT rate of 25% unless certain terms are observed. For example, if the subject-to-tax, the one-year holding period, and the participation conditions are met, the net capital gains on shares are fully exempt from this tax. The wealth tax in the country is small (0.15%). It is payable by tax residents and non-tax residents having property in Belgium. Besides, the dividend income received by a company in Belgium can be offset in many cases, and some corporate capital gains in Belgium can be subject to deferred and spread taxation regime.
Malaysia – # 4 in the list of countries with no capital gains tax
The expat community in Malaysia has been growing in recent years, despite the fact that getting a passport in Malaysia takes some effort. What’s the reason for this popularity?
First, Malaysia is often referred to as an alternative to China in terms of manufacturing capacities and business opportunities. Besides, it is a very picturesque tourist destination with an attractive climate, national parks, vibrant cosmopolitan cities, rainforests, beaches, and cultural gems. Last but not least, as you may know, Malaysia offers very favorable tax rates in general and capital gains tax rules in particular.
Malaysia has no capital gains tax for stock exchanges and capital assets. Moreover, in 2020, to help boost the property market and provide financial relief to homebuyers and homeowners during the pandemic-induced Movement Control Order and State of Emergency, the Malaysian government introduced additional tax incentives concerning the capital gains tax.
In 2020-2021, Malaysia reintroduced the Home Ownership Campaign (HOC) which included stamp duty exemptions as well as some other measures. Then, since 1 January 2022, the zero-percent Real Property Gains Tax (RPGT) rate has been set for Malaysian citizens and permanent residents’ disposal of residential property in the 6th year and subsequent years after the acquisition – instead of the former 5% and 10% rates. However, certain limitations apply to this rule. For example, foreigners and companies still have the RPGT rate maintained at 10%. As for the RPGT 2022 for property disposal by any individual or company from year 1 through year 5, the rates range from 10% to 30%. But they are chargeable only if there is a profit gain from the disposal of the real property. Furthermore, capital gains tax exemptions affected certain types of royalty income. Interest income of a non-resident person is also not taxable when it is earned from deposits placed in designated financial institutions in Malaysia. Finally, you should consider Malaysia if you are a crypto investor looking for a favorable tax regime.
New Zealand – # 3 in the list of countries with no capital gains tax
Relocation to New Zealand is a very smart decision in many ways. Expats find it particularly important that there is still no comprehensive capital gains tax for private persons in this beautiful country.
New Zealand is another advanced country in Southeast Asia. It is one of the world’s freest economies, along with Hong Kong, Singapore, Switzerland, and Australia. However, it has long been considered an offshore jurisdiction. This perception is enhanced by the new Trusts Act 2019 (the Act) in force since 2021, the secure data protection policy, and the fact that New Zealand typically has no capital gains tax.
Exceptions do exist, though. The corporate capital gains tax is levied at 28%. Besides, certain categories of assets, profit-making activities, and investments are taxable if the income is qualified as personal income or trading profits. The personal income tax is charged at the initial rate of 10.5%, and the rates grow up to 39% depending on the income amount. Please note that the law treats income, profits, and capital gains as different categories.
There are proposals to introduce a comprehensive capital gains tax, but for now, New Zealand is proud to remain a capital gains tax-free country. There is also no inheritance tax and even no payroll tax.
Many foreigners start international trusts and holdings in New Zealand and avoid double taxation thanks to the DTAs. Big investors who apply for a second passport or residence permits, and permanent residency in attractive safe regions, often choose New Zealand as their new second home.
Belize – # 2 in the list of countries with no capital gains tax
There is no capital gains tax in Belize. This means that profit from the property or an investment in Belize is not taxable. There is also no inheritance tax.
Belize is a small country in South America, formerly British Honduras. English is the main official language, which makes Belize stand out among its neighbors.
For years, expats from the U.S., Canada, and other parts of the world, have been coming here on holidays, for tax breaks, and a nice climate. Residents pay the flat rate income tax at 25%, as do non-residents, on income earned in Belize. There are non-taxable thresholds of income.
If you decide to start your business in Belize, please note that the country is not a tax haven any longer, due to the new taxation rules and corporate tax reforms. However, the benign rates and tax exemptions, including the absence of the capital gains tax, make it one of the most sought-after tax-neutral and capital gains tax-free countries.
Hong Kong – # 1 in the list of countries with no capital gains tax
Hong Kong is the number 1 country on the list of free economies of the world (according to Heritage). Investors recognize Hong Kong as one of the best places for their asset protection and growth.
Every year, entrepreneurs and high-class professionals from all over the world arrive in Hong Kong for business and work. The Quality Migrant Admission Scheme helps them obtain residence permits before finding a job, while the RBI provisions offer a chance to create one’s job by investing in a new company.
The official languages are Chinese and English.
Hong Kong does not levy capital gains tax. Its corporate tax is 16.5% and is collected only if profits are made in this jurisdiction. Some types of income are also exempted from taxation: dividends, interest on tax reserve certificates, and income from bonds issued under certain conditions. Even gains from the sale of fixed assets are tax-free.
If you are thinking of taking advantage of the business opportunities, benign taxation regime, and many other advantages of the top 5 jurisdictions recommended hereby as no capital gains tax countries, please consult our experts on the matters of tax residency. During a free private online consultation, you can discuss important details of the capital gains tax for private persons and legal entities, as well as the current taxation regime in the country of your liking. Besides, you should compare the benefits and incentives available in several capital gains tax-free countries.
If you have specific questions about international tax planning, advantages of offshore taxation rules, relocation overseas, residence by investment opportunities, and a second citizenship, foreign property acquisition, asset protection, worldwide banking, or overseas company formation, please contact us at our email address info@offshore-pro.info or in messengers given at the top of this page.
