At all times, people have tried to avoid burdensome taxation in their homeland, but in most cases it all comes down to discussing the situation in the region and nothing is being done to improve the life of the population. It is good that there are places on the planet where there is no such oppressive feeling of fees and taxes, then a new life really begins. Low taxes are always better than high taxes. They indicate a higher standard of living. That is why many seek residency. The desire to settle on an island territory or one of the European powers is natural for residents of areas with an excessively high fiscal burden.
Benefits of tax optimization with a second citizenship
People tired of paying high corporate taxes may have heard that a second passport can help legally reduce the tax burden. This tool, in particular, is considered by international entrepreneurs with high incomes who want to control their assets more effectively in the context of tax planning and diversify the relevant risks.
If you are one of these people, there is good and bad news for you. First, using citizenship by investment to reduce fees legally can be pretty effective. Some wealthy individuals are already using this optimization tool for fiscal planning, and immigration consultants are helping others who want to do the same.
The bad news is that it’s not as easy as it sounds. But, on the other hand, making a personal document in a low-tax jurisdiction is a perfectly legal way to become a citizen of tax-free countries, or at least pay slightly fewer fees in general. Still, you will need to do a lot of work and carefully plan everything to make such a strategy come true and be successful.
Initially, it is necessary to understand that a foreigner abroad can have two statuses – immigration resident and tax resident. Their peculiarities are:
Immigration residency status gives the advantage of legally residing in the country. In other words, it is obtaining a residence permit based on business, employment, and real estate purchase as a financially independent foreigner.
Tax residency status – it determines in which country you will pay taxes.
Having a residence permit in one of the EU countries with no taxes does not automatically make you a tax resident. However, a long stay abroad may define you as a taxpayer.
Top 5 EU low-tax countries
Due to low taxation, Montenegro, Andorra, the Czech Republic, and Georgia do not provide bad conditions. However, we recommend looking closely at the top five in the list below.
In Cyprus, you can get the coveted status under the “60 Days Rule”, which stipulates that a person stays in Cyprus for at least 60 days per year and is doing business or is employed in a Cyprus company.
It’s hard to turn down such an exciting island republic as Malta. It is the central area of Valletta with its luxurious streets and St. Julian’s with its entertainment and nightlife. And most importantly, living on the island is a real opportunity to avoid such fiscal charges as inheritance tax, income received from another power, wealth, as well as dividends.
The conditions are pretty simple: to apply for citizenship, you must first apply for an e-residence card for a year. Then pass the documented data about yourself to the embassy and buy or rent real estate. The main document will be ready within four months.
Duties in Ireland are traditionally low, so the country forms a favorable regime for investment activities.
As in other jurisdictions, income tax in Ireland is a basic payment for legal entities. In addition, the state is actively involved in signing numerous international treaties to avoid a double burden.
Bulgaria attracts investors and entrepreneurs with its transparent and simple taxation system and lack of pressure from the government. Here is the lowest income tax rate in the European Union – 10%. In addition, capital gains are included in the taxable base.
Income tax is levied on tax residents and local citizens at a rate of 10%. However, non-residents pay it only on income received within the state and residents – on all. The amount of the transport fee depends on what kind of car is purchased, new, or used – the older the vehicle, the higher the payment amount.
The income tax levy is only 15%. However, the income tax is 23 %. On the positive side, there is no income tax to be paid in Latvia for: dividend income; income from the sale of securities and royalties.
So, if your business is based on selling stocks, bonds, or royalties, you can count on zero percent. The cultural European capital is attractive not only as a tourist destination, but also as a backup plan for your family, which guarantees peace and tranquility.
Thus, the above low tax rate countries are attractive to foreigners, not only with the climate and standard of living but also the low fiscal burden. Bulgaria stands out against the general background, where you always know what to expect, there is a minimum fixed rate. Cyprus and Malta are not far behind. Georgia and Andorra. As noted by an expert on the investment program of St. Lucia Zlata Erlich (company Immigrant Invest), in the territory, a person needs to live for several months or about a year to become a full-fledged taxpayer. Which area to choose for capital investment and business development? The income shouldn’t be taxed; countries in Europe with low taxes or without them are a priority.