Best 1st world countries with low to zero income tax?

[Marzio]

Malta is 0% income if you don't bring your money inside the country no?

Malta it's 5000€ flat fee if your foreign income is over 35K + anything that you bring in the country (even paying with a foreign debit card)

 

[Don]

Malta is 0% income if you don't bring your money inside the country no?
So if you keep money on bank accounts in other countries is 0%, why should he pay 35%?

Yes, it's possible if you don't remit income to Malta.
Malta structures can provide a 0-5% total tax rate.
It's, however, not so good for personal tax residency.
Locally sourced income might be taxed at a higher rate of 35%.

 

[uranio]

Yes, it's possible if you don't remit income to Malta.
Malta structures can provide a 0-5% total tax rate.
It's, however, not so good for personal tax residency.
Locally sourced income might be taxed at a higher rate of 35%.

ok, so if he doesn't generate money inside Malta, can generate outside Malta, get residency in Malta and pay 0% right?
(up to 35k, after 5k flat fee)

 

[Don]

ok, so if he doesn't generate money inside Malta, can generate outside Malta, get residency in Malta and pay 0% right?
(up to 35k, after 5k flat fee)

If you are a resident of Malta and spend most of your time there, then there's a higher chance it's perceived as locally sourced income (depending on the substance).
Note that corporate tax and personal income tax are separate matters.
You can also set up your business structure in Malta but reside somewhere else where this income is not taxed.
From a tax perspective, branches of overseas companies are only taxable in Malta on income arising in Malta and on income arising outside Malta but received in Malta.

 

[uranio]

If you are a resident of Malta and spend most of your time there, then there's a higher chance it's perceived as locally sourced income (depending on the substance).
Note that corporate tax and personal income tax are separate matters.
You can also set up your business structure in Malta but reside somewhere else where this income is not taxed.
From a tax perspective, branches of overseas companies are only taxable in Malta on income arising in Malta and on income arising outside Malta but received in Malta.

So, let's suppose I get my LLC in Delaware dividends paid to my Hong kong personal bank account
I have Malta residency, and stay in Malta only 3-4 months p/year.
Rest of year around the world.
This is a 0% scheme on Malta, no?

 

[Don]

So, let's suppose I get my LLC in Delaware dividends paid to my Hong kong personal bank account
I have Malta residency, and stay in Malta only 3-4 months p/year.
Rest of year around the world.
This is a 0% scheme on Malta, no?

Assuming you qualify as a Maltese domiciled tax resident and your income is not considered as sourced from Malta, and company has no PE or become Maltese tax resident. And then you still have to pay some minimum level of tax 5k eur.

 

[Konstanz]

List just go on. Hot girls, cheap, low tax, near Europe etc etc. What else? Tropical climate, not island etc etc

 

[scooterguy]

List just go on. Hot girls, cheap, low tax, near Europe etc etc. What else? Tropical climate, not island etc etc

Classic "troubled soul", countless accounts looking for impossible solutions for likely fictitious problems.

 

[banafinfodafuggiano]

- Zero to max 15% income tax -

Take for example Bulgaria with 10% rate, or even Kosovo.
Cyprus and Malta both have up to 35% personal income tax rates. Estonia has 20% flat rax.
That being said if you consider only personal income tax rate it doesn't tell you much about your overall tax burden, and make you overlook all the exemptions and structuring possibilities. You should also take into account how you earn your income, and banking.
It could open up more possibilities if you could tolerate the compromise of not staying more than 6 months/year in certain jurisdictions, e.g., splitting your time in 2-3 countries.
Your citizenship plays a fairly important part here, as well as your budget.

- Does not consider foreign companies a local resident company for Tax purposes when the Director is a tax resident

Not many options here, but Estonia, Latvia are examples.

- Low to zero capital Tax gains a bonus

This is often possible to be structured as 0%

- Not crazy expensive to rent a house/villa/townhouse (Dubai is a bit out of our range $15,000 for a house in the middle of nowhere)

Rent a villa in Albania for a bit less than 6 months a year. Manage a branch office there with e.g., 5% tax.

- Be near Europe or near Asia

Egypt: While predominantly in Africa, a small part of Egypt (the Sinai Peninsula) lies in Asia.

Caucasus Countries (Georgia, Armenia, Azerbaijan): These countries are often considered to be at the boundary of Europe and Asia, with different definitions placing them in different continents.

- Generally safe, I said first world year. Definitely not Mauritius and not crazy expensive Monaco either

Live in Saudi Arabia for 30 days a year for 0 tax residence, spend rest of the time somewhere else without triggering personal tax residence.
Saudi has top level safety. No tolerance for alcohol, drugs, perverts, adulterers.
Its also near Asia.

Estonia and Latvia sound ok.

Exactly.

There are only a handful of countries that don't care like Panama for example so his requirements should be really filtered by which countries don't care about people creating a PE in their country.

Based on his requirements, San Marino is the best option.

https://orbitax.com/news/archive.php/San-Marino-Budget-Law-for-2021-45110

Exactly.

There are only a handful of countries that don't care like Panama for example so his requirements should be really filtered by which countries don't care about people creating a PE in their country.

Based on his requirements, San Marino is the best option.

https://orbitax.com/news/archive.php/San-Marino-Budget-Law-for-2021-45110

This is interesting,

what is foreign sourced income though?

Is ecommerce from sales from Canada foreign income if I manage all the companies from within San Marino?

 

[GalacticGazelle]

If OP receives only dividends, why not consider Slovakia, which has a withholding tax (WHT) rate of 7%? If dividends are received without any active involvement from OP in Slovakia, they may be exempt from Corporate Income Tax (CIT).

- Zero to max 15% income tax -

Take for example Bulgaria with 10% rate, or even Kosovo.
Cyprus and Malta both have up to 35% personal income tax rates. Estonia has 20% flat rax.
That being said if you consider only personal income tax rate it doesn't tell you much about your overall tax burden, and make you overlook all the exemptions and structuring possibilities. You should also take into account how you earn your income, and banking.
It could open up more possibilities if you could tolerate the compromise of not staying more than 6 months/year in certain jurisdictions, e.g., splitting your time in 2-3 countries.
Your citizenship plays a fairly important part here, as well as your budget.

- Does not consider foreign companies a local resident company for Tax purposes when the Director is a tax resident

Not many options here, but Estonia, Latvia are examples.

- Low to zero capital Tax gains a bonus

This is often possible to be structured as 0%

- Not crazy expensive to rent a house/villa/townhouse (Dubai is a bit out of our range $15,000 for a house in the middle of nowhere)

Rent a villa in Albania for a bit less than 6 months a year. Manage a branch office there with e.g., 5% tax.

- Be near Europe or near Asia

Egypt: While predominantly in Africa, a small part of Egypt (the Sinai Peninsula) lies in Asia.

Caucasus Countries (Georgia, Armenia, Azerbaijan): These countries are often considered to be at the boundary of Europe and Asia, with different definitions placing them in different continents.

- Generally safe, I said first world year. Definitely not Mauritius and not crazy expensive Monaco either

Live in Saudi Arabia for 30 days a year for 0 tax residence, spend rest of the time somewhere else without triggering personal tax residence.
Saudi has top level safety. No tolerance for alcohol, drugs, perverts, adulterers.
Its also near Asia.

Hello @Don, in the scenario you provided, could you clarify the specific reasons for recommending Kosovo or Bulgaria over Slovakia?

 

[CoffeeCherryTea]

I see some Canadians are happy in EU-Bulgaria, which now likely partially also becomes EU-Schengen zone in March at least for air and sea travel (aka Air Schengen). Fixed rate to Euro, could get Euro in 2025. 10% income tax, 5% dividend tax through company setup. As freelancer 6% income tax for authors or royalties, 4% for farmers. Possibility to receive dividend pre-payments throughout the year and live on them. Major cities like Sofia and Plovdiv are decent, Varna on the black sea has the climate and little snow. Neighbor Romania also has a lot to offer. With steady income relatively easy to obtain residence visa for Canadians.

 

[Forester]

Just my 2 cents re: Bulgaria/Kosovo/Slovakia. Local languages there are a disaster for an average Canadian and % of locals speaking decent English (or French ) is low. In addition, Bulgarians use non-Latin (Cyrillic) alphabet and (geo-)political situation in Kosovo is IMO also of concern.

 

[Don]

If OP receives only dividends, why not consider Slovakia, which has a withholding tax (WHT) rate of 7%? If dividends are received without any active involvement from OP in Slovakia, they may be exempt from Corporate Income Tax (CIT).


Hello @Don, in the scenario you provided, could you clarify the specific reasons for recommending Kosovo or Bulgaria over Slovakia?

I might be a little biased, but hear me out:

If he keeps the Canadian business setup its probably best to move residency to a jurisdiction which has a (non-shitty) DTT with Canada to avoid double tax residency.
I would then choose the one with lowest withholding taxes and narrow it down to the jurisdiction that applies the lowest total taxes on dividends.
https://taxsummaries.pwc.com/canada/corporate/withholding-taxes
Amongst those I would choose the one which has great tax planning options, flexible to qualify as tax resident and easy residence options. I also can't blame OP for his personal preferences.

Slovakia might be great for passive income, but not so good for new business setup (21% CIT + 7% WHT).

As Estonian resident he would pay 5% WHT on dividends only in Canada and 0% in Estonia (in Cyprus/Malta 15%).

Estonia can also provide opportunities for future business setups with much lower overall tax rate (e.g., 0%-5%).

A rather unique benefit of Estonia is that it doesn't have in its laws management and control test for determining corporate tax residence, so its less likely that Estonia would go after a foreign corporate structure.

Tax residency doesn't require any physical stay offering maximum flexibility.

 

[andrew28fl]

I'm looking to relocate from Canada to a new country. The new country must have all of these requirements:

- Zero to max 15% income tax
- Does not consider foreign companies a local resident company for Tax purposes when the Director is a tax resident
- Low to zero capital Tax gains a bonus
- Not crazy expensive to rent a house/villa/townhouse (Dubai is a bit out of our range $15,000 for a house in the middle of nowhere)
- Be near Europe or near Asia
- Generally safe, I said first world year. Definitely not Mauritius and not crazy expensive Monaco either



It seems like East Europe or Asia can have great options but what countries are not crazy expensive and also have low taxes in these areas?

As a non-resident of Canada, you pay tax on income you receive from sources in Canada. The type of tax you pay and the requirement to file an income tax return depend on the type of income you receive. Generally, Canadian income received by a non-resident is subject to Part XIII tax or Part I tax.

https://www.canada.ca/en/revenue-ag...anada-non-residents/non-residents-canada.html
I am not sure if this applies to you. Is your e-commerce connected to Canada?

 

[Sols]

Take a close look at the tax treaties Canada signs. In several of its treaties, place of incorporation is a tie breaking condition, which often means a company incorporated in Canada is not tax resident anywhere other than Canada.

 

[GalacticGazelle]

I might be a little biased, but hear me out:

If he keeps the Canadian business setup its probably best to move residency to a jurisdiction which has a (non-shitty) DTT with Canada to avoid double tax residency.
I would then choose the one with lowest withholding taxes and narrow it down to the jurisdiction that applies the lowest total taxes on dividends.
https://taxsummaries.pwc.com/canada/corporate/withholding-taxes
Amongst those I would choose the one which has great tax planning options, flexible to qualify as tax resident and easy residence options. I also can't blame OP for his personal preferences.

Slovakia might be great for passive income, but not so good for new business setup (21% CIT + 7% WHT).

As Estonian resident he would pay 5% WHT on dividends only in Canada and 0% in Estonia (in Cyprus/Malta 15%).

Estonia can also provide opportunities for future business setups with much lower overall tax rate (e.g., 0%-5%).

A rather unique benefit of Estonia is that it doesn't have in its laws management and control test for determining corporate tax residence, so its less likely that Estonia would go after a foreign corporate structure.

Tax residency doesn't require any physical stay offering maximum flexibility.

Perhaps this doesn't apply to his situation, and I could be mistaken, but based on my understanding, if someone has an LLC partnership in Delaware and receives dividends, they would only incur a 7% tax rate in Slovakia. In Bulgaria, the tax rate would be 10%, and Bulgaria is in the non-Schengen area.

 

[Don]

Perhaps this doesn't apply to his situation, and I could be mistaken, but based on my understanding, if someone has an LLC partnership in Delaware and receives dividends, they would only incur a 7% tax rate in Slovakia. In Bulgaria, the tax rate would be 10%, and Bulgaria is in the non-Schengen area.

Thats Slovakian WHT rate you are referring to. This also might be reduced by a treaty.
SMLLC will not have tax residency in US so it is highly likely to qualify as Slovakian tax resident and be exposed to CIT in Slovakia.

 

[jafo]

Bulgaria is in the non-Schengen area.

Doesn't matter for OP. OP has Canadian and Spanish passport (if my mind doesn't betray me)

 

[wellington]

Can’t go wrong with Thailand

Bangkok / Phuket is akin to first world for most things - and to be blunt, the areas it isn’t work to your advantage.

Then ask yourself - what is first world - as the UK is 12-18 hrs for A&E these days, the US banking system is broken, the European Union is rife with mafias and Islamic terrorism, they are all broken systems breaking down.

From East Africa through to the pacific the monsoon region specifically in the Indian Ocean is at peak productivity by age demographics which will result in an economic boom and a “great wash of opportunities and wealth creation” will result in infrastructure and private enterprises coming into build these countries out to akin to what the west had and threw away.

Thailand doesn’t have interest in taxing overseas companies / operations that are completely outside of Thailand - I had that discussion around the new tax set up with the revenue department myself - so as long as you are just a director and are not operating a company on the ground they are not interested.

Any income you make if remitted would be taxed through - with all the deductions you can make it doesn’t work out too bad.

Savings are still tax free if from before 2023 tax year when remitted.

 

[manukahoney]

Thailand if you like Asia, Spain if you like Med. With 1.2 mil NW your tax liability will be very limited anyways and with 4% withdrawal you will get around 50k per year - that a very comfortable living in Thailand even in expat populated areas and a decent life in south Spain. I would say Thailand will give you more run for your money so it all goes down the lifestyle you are after. Maybe do a year in Thailand, see if you like it and if not - you can always come back to Spain.