The change of tax residence allows to optimize expenses and thereby increase income significantly. That is why many businesspersons from countries with a large fiscal burden are looking for tax havens that can help maintain profits and increase wealth. It is not necessary to use distant overseas jurisdictions to achieve these goals. Low taxes in Europe are quite real. There is no need to waste time on long flights if you can get favorable tax conditions much closer. Let’s take a closer look at the countries that can provide the most advantageous tax residency in Europe.
How to choose the best option for tax residency in Europe
There is no unequivocal answer to the question about the tax residency of which particular jurisdiction will be the best choice in 2022. Each option has its pros and cons, depending on the complexity of obtaining tax residence, the speed of this procedure, and other points such as the goals and capabilities of an applicant.
When looking for a tax haven, you need to pay attention to where the lowest taxes are in Europe and also to some other parameters. These are, for example, the prospects that a particular jurisdiction gives, the conditions for life, and the quality of medicine. Indeed, often the tax resident status provides for the need to live in the country for a certain period, which everyone wants to live fully, in a comfortable and cozy environment, and feel safe.
You can choose the most suitable country for obtaining tax residence in Europe by consulting with our experts.
Top 10 countries in Europe with low taxes
Tax residence in Europe in a low-tax jurisdiction makes it possible to significantly reduce the fiscal burden and, simultaneously, get very comfortable living conditions.
The most favorable conditions for individuals are provided in the following countries:
|Country||Standard taxes for individuals|
|Andorra||Andorra tax residents are taxed on all worldwide income. However, there are no taxes in the country on wealth, gifts, inheritance, or capital gains (except for capital gains from purchasing and selling real estate in Andorra). Since 2015, a progressive personal income tax calculation system has been introduced (one of the lowest taxes in Europe): up to EUR 24,000 – 0%; EUR 24,001 – 40,000 – 5%; from EUR 40,001 – 10%. For married couples, the authorities withhold income tax of 10% from the amount of more than EUR 40,000. Tax is also charged on interest on bank deposits but from an amount exceeding EUR 3,000. The capital gains tax on the sale of real estate is 15%, but every year the rate decreases, and from the 13th year of owning the property, you can sell it without incurring fiscal obligations.|
|Bulgaria||Tax residents in Bulgaria are subject to fiscal obligations on their worldwide income. The fixed personal income tax rate in the country is only 10%.In addition to income tax, contributions to state social and medical insurance are applied in Bulgaria: social insurance – from 24.7% to 25.4% (where an employer pays from 14.12% to 14.82%, and an employee – 10.58%); health insurance – 8% (where 4.8% is paid by the employer, and 3.2% – by the employee). Bulgaria has no capital gains tax, but a real estate tax exists. Its size is from 0.01% to 0.45%. A personal income tax of 10% makes Bulgaria one of the countries with the lowest taxes in Europe.|
|Czech Republic||The personal income tax rate in the Czech Republic is 20%, and there are no local income taxes in the country. Inheritance and gift tax are not regulated by a special law. They are considered a profit tax and have a rate of 15%. However, the country has special regimes establishing one of the lowest taxes in Europe – 6-9%.|
|Georgia||The income tax rate in Georgia is relatively high – 20%, but it applies only to local income. In addition, the advantage of Georgian tax residency is a low dividends tax rate – 5% (withheld only when distributing profits from local companies). There are also two special regimes in Georgia interesting for tax residency: individuals with an annual turnover of less than GEL 30,000 who do not use hired employees and registered as a micro business entity are exempt from taxation; private entrepreneurs with an annual turnover of up to GEL 500,000 can register as a small business entity and pay only 1% of gross income per year. Such special statuses allow naming Georgia as a country with low taxes.|
|Gibraltar||The personal income tax rate depends on the chosen system: surcharge or gross income. The surcharge system calculates income tax excluding surcharges, while the following rates apply: first GBP 4,000 – 14%; next GBP 16,000 – 17%; further – 39%. Gross income-based system: first GBP 10,000 – 6%; next GBP 7,000 – 20%; further – 28%. Gibraltar also has social security contributions: 10% of the employee’s gross income, with a minimum of GBP 6.05 and a maximum of GBP 30.25 per week; 20% of gross employer income, with a minimum of GBP 18.15 and a maximum of GBP 40.15 per week; 20% of gross self-employed income, with a minimum of GBP 12.10 and a maximum of GBP 36.85 per week. There are no such tax liabilities In Gibraltar: VAT, wealth tax, inheritance tax, property tax, dividends tax, and gift tax. The country also uses various tax deductions that reduce the fiscal burden and create conditions for Gibraltar to retain its status as a European country with low taxes for a long time.|
|Liechtenstein||Liechtenstein has a very loyal progressive income tax system, thanks to which the principality has almost the lowest taxes in Europe. Here, annual income is exempt from personal income tax: for individuals in the amount of CHF 15,000; for married couples – CHF 30,000. The maximum income tax rate is 8%, applied on annual income above CHF 200,000 for individuals and above CHF 400,000 for married couples. The principality has no inheritance, real estate, and gift taxes. Still, there is a capital gains tax (from 3% to 24% depending on the amount) and social contributions (4.7% pension contribution and 0.5% unemployment insurance).|
|Malta||The Maltese authorities have developed many very attractive tax incentives. Residents of Malta are not taxed on income from foreign sources, which are kept outside the country and are not transferred to the jurisdiction. Moreover, they are not taxed on capital gains generated by foreign investments (even if such income is transferred to a bank account in Malta). Other income, including pensions, can be taxed once at a flat rate of 15%, thanks to Malta’s extensive network of tax treaties. The cost of retaining Malta residency is fixed at EUR 15,000.|
|Monaco||Since 1870, there has been no personal income tax, capital gains tax, wealth tax, or property tax in Monaco (which does not apply to French citizens). There is a tax on rental income of 1%. The almost complete absence of fiscal obligations makes Monaco the European country with the lowest taxes. However, it is challenging to obtain tax residence here without having a high income and great wealth.|
|Montenegro||In Montenegro, residents are required to pay tax on worldwide income. However, the personal income tax rate is one of the lowest in Europe – 9%. There is also local income tax in the country, depending on the municipality (from 13%).|
|Portugal||Often, experts do not position Portugal as a low-tax jurisdiction. However, foreigners who have obtained residency can benefit from a ten-year 100% exemption on their income from some Portuguese taxes. Read more in our article Non-Habitual Residence (NHR) in Portugal.|
How to get favorable tax residency in Europe
To pay low taxes in Europe, you need to obtain the resident status of the desired country. Usually, to become a tax resident, you have to fulfill several conditions, among which there is the need to live in the country for 183 days during the year. However, some countries offer more loyal conditions, as well as a residency by investment programs.
In the table, you will find the conditions for obtaining tax residency of the countries described above:
|Country||Options for obtaining tax residency|
|Andorra||Stay more than 183 days in a calendar year. Have a business in the country.|
|Bulgaria||Have a permanent address in Bulgaria. Live in the country for more than 183 days in each 12-month period. Have vital interests in Bulgaria (family, property, work, business).|
|Czech Republic||Stay more than 183 days in a calendar year. Permanent residence in the Czech Republic (permanent address).|
|Georgia||Reside in the country for more than 183 days in each 12-month period. Documentary evidence of property ownership worth more than GEL 3,000,000 (not necessarily in Georgia) and income of more than GEL 200,000 per year for the last three years. Read more about the legal residence and citizenship of Georgia in 2022.|
|Gibraltar||Stay during an aggregate period of at least 183 days per year. A period of stay in Gibraltar for three consecutive years during which the total number of days spent in the country exceeds 300 days.|
|Liechtenstein||The presence of a residence permit. Stay in the country continuously for more than six months, excluding short-term breaks.|
|Malta||A foreigner can apply for residency in this country under the Malta Residency Visa Program. In addition, citizenship by investment is available in the country.|
|Monaco||Stay in Monaco continuously for more than 183 days and documentary evidence of high income/business in the Principality. Read more about the residence of Monaco for self-sufficient individuals.|
|Montenegro||Spend at least 183 days in a tax year in Montenegro. Have permanent residence or personal and economic activity in Montenegro. Act now to become tax residents of Montenegro before this option expires.|
|Portugal||The easiest way for obtaining Portugal tax residency is Portugal Golden Visa Residence Program. If you are considering moving to Portugal without significant investment, then the D7 Visa may be suitable for you.|
It is pretty challenging to choose on your own a country with the best tax residence in Europe. In addition to the need to process large amounts of data, you should consider that fiscal legislation is constantly changing, and jurisdictions that previously had the status of a tax haven may lose it. Therefore, it is better to consult with the Offshore Pro Group experts who always keep abreast of events. Write us at email@example.com, and we will answer all your questions regarding tax residency in Europe.
Which country in Europe is tax free?
Monaco has no personal income, capital gains, wealth, or property tax. However, many other countries on our list offer no global income taxes or preferential tax programs.
Which European country has the lowest corporate tax rate?
Hungary (9%), Ireland (12.5%), Lithuania (15%), Poland (19%), and the United Kingdom (19%) have the lowest corporate income tax rates.
Which European country has the lowest income tax?
The countries with the lowest standard personal income tax rates in Europe are Montenegro (9%) and Bulgaria (10%). At the same time, thoughtful tax planning with our expert assistance will help you profitably use tax initiatives from other countries.