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Which EU country is best to choose for tax residence: rates, benefits, conditions for those who have EU citizenship

The taxation system is an important component of the formation of a state institution. At the same time, different tax laws apply in different countries, in particular in Europe. Government of each country sets tax rates based on a number of factors. As a rule, they try to create favorable conditions for residents. This is primarily due to the fact that it will be profitable for taxpayers to work for the state, while not remaining offended themselves.

In the post-Soviet countries, the tax system is far from ideal. Therefore, many who have managed to make more or less decent capital are interested in the opportunity to choose another country – a profitable tax haven.

It is generally not difficult to obtain a tax residence in a particular European country. It is enough to know some nuances, as well as legislative norms. In addition, there are a number of countries that offer the most favorable conditions for their taxpayers, thereby earning a reputation as the best tax residents.

The highest tax residency and low taxes

There are countries that offer not only low, but even zero tax rates. For example, if we are talking about global income. In addition, there may be benefits in the form of a refund of a certain share of the tax paid. Government of such countries, as a rule, is aimed at attracting investors and global business.

Advantage is also that the resident himself is not required to move and live in this country. In addition, the government of the countries undertakes to keep information about income in strict confidentiality. This part also attracts many owners of capital. But in order to be able to pay taxes in a particular European country, it is necessary to obtain a residence status. In some countries, this is permanent residence or citizenship. For others, a temporary residence permit will be enough.

Consider the countries where the best tax system operates.

Cyprus

Cyprus is among the leaders in terms of a favorable tax system. Among the advantages:

  • no tax on passive income,
  • no double taxation,
  • the opportunity to obtain citizenship,
  • there is no need to live on the island.

And among the benefits is the presence of zero taxes on income received outside Cyprus and on profits from securities (and shares, including).

In order to become a resident of Cyprus, obtain citizenship, have a zero tax rate, you can open a company on the island or purchase any real estate. Having lived in the country for two months, a resident is exempt from tax on dividends, sale of securities, deposits, rental income, and defense tax.

Monaco

Monaco attracts taxpayers by the absence of a personal income tax (income tax and capital gains tax). Foreigners can obtain a residence permit, which will allow them to become residents of the country. To obtain a residence permit, you need:

  • buy or rent a property,
  • have a bank account (1 million euros).

In addition, before becoming a resident, a foreigner will have to live in the country for 183 days. As a rule, Monaco attracts wealthy citizens. The country itself is quite expensive. But for capital owners who want to ease the tax burden, this is not a problem.

Malta

The program for obtaining a residence permit also exists in Malta. One of the directions of this program is specifically provided for tax purposes. In order to obtain a residence permit, you need to buy (from 275 thousand euros) or rent (from 9.6 thousand euros per year) housing. A residence permit is issued without the right to work, while it assumes that at least six months a year a resident must reside in Malta.

As for the direct payment of taxes, there is a tax obligation – 15 thousand euros per year. This is a fixed amount. By the way, when buying government bonds, you can also get permanent residence or even become the owner of a Maltese passport by making an irrevocable contribution to the country’s Development Fund.

Latvian

Low income tax (for legal entities – 15%, for individuals-23%) is the main advantage of taxation in Latvia. In addition, there are minimum requirements for business registration in the country. As for investments in the capital of the enterprise, they can be from 50 thousand euros, and are also a reason for obtaining a residence permit.

One more plus – there is no control over profit and foreign income in Latvia (that is, from foreign companies).

Switzerland

Switzerland is known to us as a country with a high standard of living, so many are surprised that this state has an acceptable tax system.

In each region of Switzerland, the so-called accord tax is calculated for each resident. In fact, this tax is paid from expenses that a resident allows himself. The rate is fixed. It is at least 230 thousand euros.

Payment of this tax is a condition for obtaining a residence permit. Also, initially, those who apply for a residence permit are:

  • bought or rented a property (the amount does not matter),
  • can confirm financial viability,
  • has medical insurance.

To get the status of a tax resident, you also need to live in the country for 183 days

In many countries, including those listed above, the general rules of tax rates do not depend on who is a resident – an EU citizen or a resident of a non-European country. But in each country, government can offer certain tax programs that are already available to certain categories of foreigners and immigrants from certain countries.

Other tax havens in Europe

These countries are the main tax havens in Europe. But this does not mean that the government of other European states has not provided for various tax programs, both for citizens and for immigrants. For example, the British government offers tax benefits to foreign citizens. Some types of visas assume that a foreigner may not pay tax on worldwide income that he does not transfer to the country

But in Portugal there is a program for foreign investors who, having received the status of “non habitual resident”, can not pay taxes on world income. And the income received on the territory of the country will be taxed at a fixed rate of 20%.

Special tax benefits for wealthy foreigners also apply in Italy. In order to become a participant of the program, you need to own a capital of 100 thousand euros. The essence of the program is that the taxpayer can choose a fixed rate for himself. This benefit is valid for 15 years.

How not to pay taxes in two countries

Many people mistakenly think that by becoming a tax resident in a new country, they are automatically exempt from paying taxes at home. But this is not the case. Therefore, if the change of tax residence is aimed precisely at stopping paying fees in your native state, before deciding on this step, it is necessary to study the tax legislation.

This is especially true for those countries whose government does not require permanent residence on their territory. This means that, in fact, the taxpayer will reside in another state, and, accordingly, as its citizen, will be subject to certain taxes.

Thus, it may happen that a resident, instead of simplifying the fate of a taxpayer, will pay a fee in several countries. Therefore, the main thing you need to pay attention to is the rule of staying in the country and the source of income – external or internal. This will determine what taxes a resident will be exempt from in which country.

Doing business in Europe is promising and not as difficult as it may seem at first glance, if you understand the legislation of the chosen country, analyze competitors and the labor market. With the right choice of business direction and country, you can achieve excellent results, develop your business and, thanks to this, move to a developed country of the European Union.

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