You don’t want to pay taxes again? You hate it when they take your money and use it for whatever they want?
In this post you will discover the options you have for living a tax-free life in 23 countries without income tax.
In Germany, you have to work for 192 days until you can line your own pocket. In Austria, it is even a few days longer than that. This means that you work for the state for more than half a year.
And how do they thank you for it? They soon make sure that you work for them for even longer!
But as you groan under the tax burden, you are far from sharing your fate with all of your fellow inhabitants in this world. Maybe you can remember a famous saying (which is wrong):
Only two things are certain: taxes and death.
This saying is, in fact, very wrong. Many, many people are living tax-free – and you could soon be too!
You do not even have to travel the world as a Perpetual Traveller. All you have to do is settle down in a suitable country and enjoy a relaxed life there.
You probably don´t believe it, but you do have a very large selection to choose from. Twenty-three counties in the world do not impose income tax – and 36 other countries only tax domestic income.
Tax exemption on foreign income is a particularly interesting policy, which we will soon discuss. This provides broad opportunities for tax-free living in 60 countries around the world, provided that you are travelling as a freelancer or with an online company.
Those of you who do not have an entrepreneurial streak, do not despair!
23 countries in the world do not tax their citizens at all, at least not their income. They raise money through indirect Value Added Taxes, have affluent oil and mineral deposits or have a very attractive financial services sector with low or absent tax rates.
As you can see from the map in the cover picture, these are mostly small states – so small in fact that they are displayed on the map much larger than they actually are (the blue areas). Most of them, but not all, are island states. Other than that, a pattern can only be seen in the oil-rich Gulf States.
Did you already know that there are 23 countries without income tax in the world?
Of course, this idea is easier said than done. In order to profit from tax-exemption, you must first live in that country. And this is often very difficult in the cases of these 23 countries without income tax, which we will briefly introduce below.
You simply may not want to live in some countries. Either because it is extremely unsafe, or because it is extremely boring. In many other countries, you cannot live at all because you have to be a millionaire to be able to afford it. Besides, most countries are aware of the incentives that their tax exemption policy offers. Therefore, they don´t just let any old person in, they sometimes have very high standards. Generally, the only option is to be the spouse of a local citizen or to be posted by a multinational company to your target country.
Having said that, there are other ways for you to live income tax-free. If you are an independent freelancer or entrepreneur, be patient and wait for the article about countries with tax-exemption for foreign income that is coming soon. However, if you are employed or you would like to be, you could be sent by a company to one of the following countries.
The following ranking is based on purely subjective factors which primarily include the ease of access to the country as well as the quality of life there. Ease of access refers to you being able to obtain a permanent residence permit without huge problems. Quality of life refers to whether the countries can offer an equally exciting lifestyle without you fearing for your life.
Are you curious about these 23 income tax-free countries?
If so, then read on and see which countries are income tax-free. This ranking only mentions countries with their own statehoods; enclaves such as Campione d’Italia have been left out. But first, subscribe to my newsletter to make sure you don’t miss out on any exclusive information.
23 Countries Where You Do Not Have To Pay Income Tax
Somalia – for many, understandably so – is at the bottom of our ranking. This is certainly not due to the local “anarchy,” which doesn´t really exist. Ultimately, it is a failed state that is trying with all its might to cling to its remaining power. Absent income taxes are probably a consequence of this because otherwise, even the last-remaining loyalists would flee. Apart from that, Somalia, even under its apparent anarchy, is not so bad. A study conducted by American economist Peter Leeson concludes that the general quality of life has increased under this so-called anarchy in comparison to under the functioning state.
The real problem in Somalia is actually access to the country unless you own a sailboat or would like to be hijacked. Mogadishu, the capital city, is arguably the most expensive city in the world for tourists.
Tourism in Somalia? Yes, it is possible.
You have to dig deep, however. You should budget expenses of between €800 and €1000 per day.
Without a military escort, you cannot leave the airport. Similarly, secure hotels, armoured cars along with interpreters and tour guides cost a lot. The government soldiers, up to 6 which can be rented for €50 per day per soldier, are still relatively cheap there. But exploring Somalia with an escort of 10 men certainly has its charm. We here at Tax Free Today will certainly see this in person within the next few years….
22. Vatican City
Unless you are about to become the Pope, entrance to Vatican City is limited. Of course, you can join the Swiss Guard or just be a happy priest or another employee on the Vatican grounds. But if you are not very Catholic, you will be less likely to enjoy the activities offered to you by the Vatican. After all, Rome offers you a cosmopolitan city just next door.
Brunei is a small, rich caliphate on the island of Borneo, surrounded by Malaysia. Thanks to its oil wealth, the country is not only very affluent but also essentially closed to foreigners who want to stay for a longer period of time. While tourists can easily enter, employees of large international corporations, at best, have the opportunity to obtain a permanent residence visa in Brunei. This visa, of course, goes hand in hand with a Muslim country, which makes certain activities more difficult.
Bermuda is one of the tax havens for the rich. This makes it one of the most expensive countries in the world. The small Atlantic island lies north of the Caribbean and is home to a thriving financial services sector. However, emigration is rather difficult.
A 1-bedroom apartment costs around $2,500 per month, a 2-bedroom is $3,500 and a 3-bedroom is $5,500. An ocean view, garden and pool easily cost $15,000 per month – and this is just the start. Almost all other costs are three times as high as in Canada and the USA – which are not cheap countries.
There are 3 ways to obtain a right of residence:
- Global Work Permit: A company sends an employee to their branch in the Bermuda Isles
- New Business Work Permits: An existing company creates a new site in Bermuda
- Global Entrepreneur Work Permit: A private investor opening a new business
Therefore, income tax-exemption in Bermuda is only possible if you have a very well-paid job in the financial sector or an equivalently large fortune to set up a company in this sector.
Qatar is a rich country, thanks to its oil reserves, and also relatively open to the West. However, it still remains very difficult for foreigners to profit from the country’s tax-exemption. If you do not want to marry a Muslim local, again the possibility of being sent to the country by a company remains, if need be.
18. Western Sahara
Western Sahara is the largest non-recognised state in the world. Situated south of Morocco, despite independence attempts, it is still very dependent on its northern neighbour. As the name implies, much of the territory is the Sahara Desert, through which the Bedouins travel with their camels. The lack of governance and the sheer amount of nomads make taxation here very difficult.
Therefore, Western Sahara is not at all suitable for emigration, even though the habitable Canary Islands lie only a few kilometres northwest. Apart from the phosphate and fishing industries, there is very little in this poor, Muslim country. So you hardly profit from the income tax-exemption here.
Another tax-free Gulf state is Kuwait. Again, the abundant oil supply allows for tax-exemption but, just as in most other Gulf states, acquiring a permanent residence permit is very difficult here. Almost the only option for this is to be sent into the country by a company.
Oman is not all that different to the other Gulf states. Although, as well as the employee option, there is also the option of obtaining an investor visa in Oman. However, this visa requires you to subject yourself to the arbitrariness of the Omani Ministry of Finance and is reserved for extremely wealthy individuals with the contacts to match.
15. The Maldives
The Maldives is considered by many to be an unreachable dream destination. However, it is not actually that difficult or expensive to enter the country as a tourist. Almost everyone can afford to have their honeymoon in the Maldives. Flights are available for €400 and hotels are also reasonably priced. Of course, not those hotels which overlook the beautiful Indian Ocean.
However, living permanently in this Muslim country is much more difficult. If you do not want to get married, you may not have the chance to work in one of the 5-star luxury resorts and obtain a residence permit. The price levels in the Maldives are indeed very high.
The small Principality of Monaco on the French Riviera, in which VIPs frolic about (like Boris Becker officially did long ago), is also expensive. As the playground of the super rich, it boasts one of the world´s most impressive marinas, an exquisite casino and its own Formula One track running through the city – although it is just a little larger than Vatican City. No crime comes as a side benefit here: hundreds of cameras monitor every step of their citizens. However, the citizens want to be seen – whether eating with Prince Albert, shopping for expensive jewels, sitting on their yacht or gambling in the casino.
This whole ensemble naturally comes at a price. In the worst location possible and with luck, you will be able to find a small studio for €1500 per month. The already expensive prices in the French Riviera are easily tripled in Monaco. Since residence permits are practically only available to millionaires, this, of course, does not matter too much.
These wealthy people have to deposit €500,000 in a Monegasque bank and buy a property for at least another €500,000, which is very difficult anyway in a small city-state, which only increases the prices more. An individual interview, as well as a minimum stay of 6 months per year, are required in order to qualify for the residence permit and tax-exemption.
Nauru is not so different from Monaco – at least it didn’t use to be. One of the smallest states in the world, Nauru was once the wealthiest state (with the most important people). This was thanks to the phosphate mining, which is now exhausted and has plunged the island into deep trouble. Capital was only consumed, and not invested. So now, Nauru is portrayed in the media as a refugee camp for those trying to gain access to Australia.
Tax-exemption still exists in Nauru. Until a few years ago, there was also an attractive Economic Citizenship Programme to acquire a second citizenship, which has now been closed due to pressure from the USA. However, life on Nauru with its environmental problems is much less enjoyable.
12. The United Arab Emirates
The United Arab Emirates are well-known for their oil wealth, mega projects and their high quality of life. To be exact, the Emirates are several small Gulf states, of which Dubai and Abu Dhabi are the most famous. But the others in the union also offer exciting opportunities, which we will talk more about in a separate article. For permanent immigrants, despite its tourist profile, the country has somewhat less to offer. International assignments by companies to Dubai or Abu Dhabi are by all means an option but otherwise, the options are limited and require lots of capital for potential investors.
11. The Pitcairn Islands
There are also limited options on the Pitcairn Islands. Pitcairn is certainly the most isolated (semi-sovereign) state in the world, located in the middle of the Pacific 5000km from New Zealand and 5700km from South America. The inhabitants of Pitcairn are almost all descendants of the survivors of the famous “Mutiny on the Bounty” – encountering problems including incest etc. Lacking in the natural beauty seen on other Pacific Islands, Pitcairn hardly presents an argument in favour of permanent residence. Even Great Britain, whose last overseas territory in the Pacific are these Islands, would prefer to get rid of Pitcairn.
Immigration is, therefore, no problem – the Pitcairnese probably even embrace it. However, the Islands have no airport – so apart from 4-6 freighters per year and the occasional cruise ship, there is no way to reach it.
10. Norfolk Island
Similarly, but perhaps even more so, residents of the Australian-owned Norfolk Island are experiencing this. Incidentally, many Pitcairnese emigrated for this reason. Blessed with a certain independence from Australia, you live a tax-free life here and can easily enter the territory from Australia or New Zealand.
The inhabitants here are relatively wealthy thanks to the strong tourism sector, which also means opportunities for potential immigrants. Although it belongs to Australia, Norfolk Island has its own immigration regulations, which are more relaxed than Australia’s. However, what makes this country really interesting is the possibility of obtaining permanent Australian citizenship through residence on Norfolk Island. First of all, you have to obtain a residence permit, unless you are Australian or New Zealander. More on this soon in a separate article.
9. Cayman Islands
The reason why we have not really mentioned any of the Caribbean Islands so far is because they are all at the end, high up in the ranking. The Caribbean not only offers fabulous beaches but also lots of tax-free Island states, including the most notorious of them all – The Cayman Islands. The financial service industry is thriving on the Cayman Islands, making the island, just as in Bermuda, somewhat more expensive. If you do not want to just have a letterbox on the Island, but you would rather emigrate, that is also an option. However, apart from good beaches, the Island does not offer that much choice of activities.
In addition to the many other common opportunities, wealthy individuals have an easy job of profiting from the tax-exemption in these Islands – depending on the exact island of course.
With an annual income of around €125,000 and an investment of €500,000, of which €250,000 must be spent on real estate, you can obtain a residence permit on the island of Grand Cayman. The smaller islands in the archipelago only require an annual income of around €80,000 and half of the investment (€250,000).
8. The British Virgin Islands
The British Virgin Isles are only slightly inferior to the Cayman Islands – at least in terms of tax-exemption. However, immigration has become very difficult. The government grant only 25 residency permits per year and these require a minimum residence of 270 days out of the year on the islands.
After the United Arab Emirates, Bahrain is probably the most attractive Gulf state because you can become a resident here without a company assignment or without getting married. Below you will find an accurate description of how to get a residence permit for this small Gulf state.
Generally speaking, you have to purchase property worth around €120,000, deposit around €35,000 in a Bahraini bank and earn at least €1,200 per month (according to the current exchange rate). Aside from meeting the other standard conditions such as a spotless Certificate of Good Conduct and health checks, there is not much standing in your way for a life in the Persian Gulf. For retired people, who have worked in the public or private sector for over 15 years, the process is even easier; they simply have to prove they have a pension worth around €1,200.
Vanuatu is just another Pacific Island – but a thoroughly attractive one. Living here is like being in paradise – something which attracts many pensioners. The tax-exemption is certainly a factor. In addition to the usual options of marriage, foreign assignment and investment, Vanuatu also offers opportunities for landowners and “retirees”. You qualify for a residence permit if you purchase land worth about €80,000 and earn €2,000 a month.
5. Wallis and Futuna
The islands of Wallis and Futuna are French, a so-called “Collectivité d’outre-mer” of France in the Pacific Ocean. The islands near French Polynesia voted for increased independence a few years ago, allowing them to determine their own taxation matters. The islands are tax-free thanks to the generous financial support of the motherland (France). Of course, the isolated island life is anything but exciting – and in this case, you have little more than the tax-exemption.
Nevertheless, the islands are so high up in our ranking because access for EU citizens is very easy. As a part of France, the islands fall under the European freedom of establishment which is why Germans, Austrians and The Swiss could easily settle there. However, only a few have.
4. Saint Barthélemy (St. Barts)
Virtually the complete opposite to Wallis and Futuna are the French Caribbean Islands of St. Barts. Similar to Monaco, the French overseas territory is probably the most attractive playground for the rich in the Caribbean. And the price level demonstrates this, even though immigration poses potentially no problem for EU citizens. High-end tourism brings adequate wealth to the island – and of course tax-exemption. Otherwise, no-one would come…
However, there is a catch: new residents are subject to taxation by France, a high-tax country, in their first year. Only from the second year onwards will new residents enjoy the local tax-exemption. Nevertheless, an interesting option.
3. Turks and Caicos
Another British overseas territory is the Turks and Caicos Islands. These were once independent of the United Kingdom but in recent years, due to internal problems, they have been put on a tight leash again. As a classic offshore destination, the country is therefore rather disreputable. There is still a high quality of life – and tax-exemption here is easy for anyone to obtain. However, in the long run, the island gets boring quite fast.
A renewable residence permit without a local work permit is already available for €1,000 per year. This can be converted into a permanent residence permit after 5 years for a certain cost, depending on whether you are employed, an entrepreneur or retired.
2. St Kitts and Nevis
St Kitts and Nevis are also considered rather disreputable but are widely known for having the longest-running Economic Citizenship Programme, allowing you to obtain a second citizenship. Those who simply want to buy their way to tax-exemption have it a little easier.
St Kitts and Nevis allow quick citizenship for a $250,000 donation. With additional fees, this adds up to over $300,000 for individuals and $400,000 for couples. An investment in real-estate is also another way to gain this citizenship but is subject to the wishes of the government and therefore it often yields little return and is significantly more expensive. With the new second passport, you have visa-free access to 130 countries, making St Kitts and Nevis a very attractive option for wealthy individuals from the Middle East, Russia or China.
However, those who do not want to invest so much money can also settle on the island almost without any problems, so long as they come from the right country. According to the government’s website, to apply for a residence permit costs just under $200 and requires you to fill out or verify various forms. Maybe this is because no-one wants to live on these rather unattractive islands. Actually, anyone who buys a passport is under no obligation to spend even one day a year here.
1. The Bahamas
And top of our ranking is the Bahamas. This archipelago off the coast of Florida has a high standard of living and is in close proximity to the United States. Therefore, it owes its relative wealth to the Americans – and also its high prices in comparison to other Caribbean islands.
For years now, an annual fee (starting at $1,000) or the purchase of a property has qualified you for residency in the Bahamas. Naturally, the more expensive the property, the faster you will gain access to the permanent residence permit.
In addition to dozens of beaches, where you can see beautiful mermaids emerge from the water in that James Bond type of way (for example, like in Thunderball or Never Say Never Again), you can also enjoy a variety of entertainment. Although the capital Nassau has a bad reputation in terms of crime, the many foreigner-friendly residential areas with high security attract the willing-to-pay Expats.
Is there tax free country for you?
23 countries without income tax are quite a few to choose from. It will take some time until you have dealt with everything. However, you will probably exclude many countries from the outset.
It may be nice to pay no taxes, but often the money you save is eaten up by high living costs or fees to obtain a residency.
Or you live in a place that is tax-free, but also free from other activities. Or tax-free, but not at all free in other respects, for example, many Islamic countries.
If there is no suitable country for you in these 23, do not despair yet.
In addition to the 23 countries without income tax, there are still 36 other countries with tax-exemption on foreign income. Tax-free foreign income means that you can still live tax-free in the destination country, as long as you earn your money outside of that country. As an independent freelancer or entrepreneur, these countries also offer you a variety of opportunities. And best of all: many of them offer an extremely high quality of life and very easy-to-obtain residence permits. More on this soon here on the Tax Free Today blog.
If you want to know which countries are right for you not just in terms of residence, but also for exclusive advice on offshore companies, offshore accounts and all the other factors of Flag Theory, you can become a subscriber or even book my consulting services.
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