Relocate Abroad for Tax Reasons

If you want to be compliant with the tax laws and significantly reduce the amount of income tax you pay, there is very often only one serious solution; relocating to another country country with a more favorable tax regime. On this page we present four possible options for your consideration.

 

Relocating Abroad - What works, what doesn't work

Some clients still think they can formally take up residence somewhere but never actually be there and still enjoy tax benefits. This is nonsense. If you have a flat in Monaco and pretend to live there but you spent most of your time in France you are actually liable for income tax in France.

Much more than in the past it is increasingly important that you actually 'live what you say'. Relocating therefore means to move with your family if you have one. It means to have a proper apartment or house. It means that you spent time where you live. It means to cut ties with your old place of residence, to a certain degree.

Having a business in Germany that you actively manage, then moving to Switzerland but still managing the day to day operations of that same business is questionable and could be interpreted as avoidance, at least if not done properly.

So to be clear...every solution presented here is under the assumption that the person truly relocates to that place and lives there, sends their children to school there, has some work interest there and starts to build relationships with the local community there.

Four possible locations you should consider

We have selected the following four destinations for several reasons:

  • We know them well
  • They share the same Western culture
  • They are well connected in terms of transport infrastructure
  • We have an office or partner there
  • They have significant tax benefits
  • You can actually live a normal life there, with your family
  • They are affordable
  • It is relatively easy to get a residence permit there

UK

The UK is the number one low-tax destination in the world. This is why so many rich Russians, Indians etc move there. Because of its Non-Dom regime foreigners don't pay any tax on their foreign income as long as it is not remitted to the UK. Income remitted to the UK is taxed at the usual tax rates.

Malta

Malta also has a Non-Dom regime and works with the remittance basis. There is however a minimum tax of €4,000 that non-doms need to pay. The Maltese government is keen to attract highly qualified foreigners to the island and has therefore introduced a number of tax incentives. There is for example a new income tax rate of 15% for income generated on Malta for key employees in the financial services industry. Income over €5,000,000 is tax free. Compared to the UK, Malta is very cheap and has much better weather. Malta is part of the EU so for EU citizens there are no visa issues.

Switzerland

Switzerland's tax system is different to most other tax systems in the world as there are different tax rates in every village. The places with the lowest taxes tend to be the one in the more central, mountainous parts of the country and can be as low as 15% overall. Other places like Zurich or Bern have much higher tax rates of 30%. More interestingly foreigners are able to make a personal tax deal provided your overall tax amount is at least CHF 100,000. Another advantage that Switzerland has is that they have no controlled foreign company legislation. That means that you can legally own and operate offshore and other foreign companies from Switzerland as long you pay tax on the income you receive from there. Switzerland has signed many agreements with the EU so it is quite easy for EU citizens to take up residency there.

The Bahamas

If you don't want to pay any tax move to the Bahamas. There is no income tax whatsoever. Nassau is around half an hour's flight from Miami. There are 700 islands, most of them are uninhabited. The population of the Bahamas is around 300,000. This gives you the option to set up a real business operation there. They have a stable democracy and a good general infrastructure. It is not too difficult to get a work permit and visa. Houses are more affordable than you may think. And yes, you can actually move there with a family. Some clients decide to take a so called 'tax holiday' on the Bahamas. This means they move there for a few years, make a lot of money that is tax free and move back to where they come from.

Services provided by St Matthew

We have in depth knowledge of all the places listed here and can help you with all aspects of your move. We have local, reliable partners who work with international clients every day.

Normally a relocation project is only part of an overall solution that we design. So normally what would also be done is the setup of a corporate structure that you could use to run your business once you are relocated.

Next Steps

We recommend your first step shuld be to fill in our free evaluation request form. A consultant will look at the information provided and will discuss your relocation project with you.