You would be surprised to know that several income tax-free countries in the world offer the financial benefit of having to pay it. Many of them are also pleasant countries in which to live, with some popular ones being Bermuda, the Bahamas, Monaco, and the United Arab Emirates. However, reaping the advantage of living in one of the income-tax-free countries is more complex than buying a plane ticket.
Tax avoidance by renunciation of citizenship
Citizens of some countries (such as the U.S.) cannot escape paying their country’s income taxes by just moving to another country. Regardless of where they reside physically, they are still legally obligated to file their homeland’s income taxes precisely as if they were living there.
However, no matter how tempting it may seem to be income tax-free in other countries, giving up your former citizenship takes work. But many countries do not easily grant citizenship. The process is usually lengthy, technical, and expensive. Some tax-free salary countries purposefully keep a high barrier of entry only to attract the highest investment.
Secondly, tax authorities in the U.S. took a big hit by the loss of countless multimillionaires and billionaires who chose to obtain citizenship in tax-free countries in Asia and Europe. The authorities have made it more difficult and expensive to renounce US citizenship to counter this completely. An example of a barrier is imposing an extremely expensive expatriation tax. For many, repatriating can be significantly more than the tax penalty incurred.
Which countries are tax-free?
Below we present a list of some of the best income-tax-free countries to live in. So, what countries are tax-free in 2022? Of course, it is customary to list the top 10 tax-free countries, but we have identified 4 main ones: the Bahamas, Bermuda, the United Arab Emirates, and Monaco.
The easy taxes of the Bahamas depends on residency rather than on obtaining citizenship, which is why it is one of the easier countries to live an income-tax-free life. Permanent residents need a minimum residency requirement of at least 90 days, while ex-pats must keep ownership of a residence for at least ten years. The residence also needs to meet a minimum purchase amount prescribed by the Minister “from time to time”, with people purchasing a residence of more than BSD 750,000 enjoying “speedy consideration”.
The Bahamas is one of the relatively less-expensive countries in the Caribbean islands, making it an ideal tax-free country for retirement. Overall, the country offers good infrastructure and services, with the only industry where services might be considered below-par being medical care. Many U.S. ex-pats who have made the Bahamas their home still go back to the U.S. for quality medical care.
As is to be expected with a tourist area, the capital city of Nassau has a somewhat high crime rate. However, the distance to the U.S. and the beautiful natural beauty make the Bahamas one of the best tax-free countries in 2022, as well as in 2019, 2020, and 2021.
Bermuda is even more attractive than the Bahamas and is one of the top tax-free countries. However, living here is more expensive due to its relatively isolated location.
The country is much more developed than most other Caribbean islands, with great roads and public transportation. Beyond that, its famous pink sand beaches and upscale restaurants are some reasons Bermuda is one of the most pleasant and scenic countries in the Caribbean.
Many U.S. expatriates here work in the country’s well-developed financial sector. So Bermuda can be considered one of the great tax-free countries for business.
The United Arab Emirates
Several oil countries in the Middle East have no income tax, and the UAE is definitely one of the most attractive among them, with a stable government and economy. The UAE is a strong interaction financial hub and hosts a more multicultural environment than most countries in the Middle East, meaning you can enjoy excellent dining and entertainment options. The educational facilities available are also very good, and, for the most part, the country has an English-speaking populace.
Note! Spread betting tax-free countries are the Bahamas, United Arab Emirates, and Monaco.
This small European tax-free country is located on the French Riviera and is not much larger than the Vatican. It has long been considered one of the most desirable and tax-free countries to live in and is well-known as a perennial vacation spot for ultra-wealthy individuals. Monaco has extensive, well-made marinas that are almost always occupied by an excellent selection of yachts from all around the world. The Monaco Grand Prix is one of the city’s highlights, with many apartments around the street circuit renting for more than $10,000 a night during the days of the event.
It also boasts one of the lowest national crime rates in the world. The largest drawback of living in Monaco is that it is one of the most costly places in the world to live. Getting access to Monaco’s income-tax-free environment is quick but far from cheap. A residence permit can be made in less than three months but only after depositing a minimum of 500,000 euros in a Monaco bank.
Note! Bahamas and Monaco are among the best gains-tax-free countries for forex trading.
Frequently Asked Questions (FAQs)
There are few such zones in the world, so it is not surprising that people are interested in tax-free countries. Here are some popular questions.
How do tax-free countries work and earn?
Consider the methods that each tax-free country uses to support its economy:
- One of the most common ways for tax-free countries to generate income is to impose tariffs on imported goods.
- Income-tax-free countries require foreign companies established and operating in their jurisdiction to pay the registration fee. Also, banking, insurance, and other corporations must pay additional annual renewal fees to operate in tax-free countries.
- Some income-tax-free countries have a departure tax. It is a fee when a person leaves the country, or a tax that airline passengers have to pay for using an airport is called.
Thus, customs and import duties, company registration and renewal fees, and departure tax are some ways that tax-free countries work and earn.
Which countries are tax-free for cryptocurrency?
If you are a crypto investor, here is a list of the best tax-free countries in the world in 2020, 2021, and 2022:
- Cayman Islands;
- El Salvador;
- Puerto Rico;
As you can see, the countries where cryptocurrency (like bitcoin) is tax-free are located in Asia and Europe. So it’s up to you to choose.
The bottom line
The list of tax-free countries is partial. Many other countries in the world do not charge income tax. However, choosing a country only on this indicator is unreasonable. These countries were chosen due to their general livability, taking into account their scenic beauty, economy, and population.