Living A Low-Tax lifestyle: The Ideal Destinations For Digital Nomads

Tax. It’s a necessary evil that most don’t like paying.

But following the COVID-19 pandemic, in a world where more people than ever are working remotely, there is a growing group of entrepreneurs, businesspeople, and skilled professionals who are more mobile than ever before and able to work from almost anywhere in the world.

With this being the case, these people have an almost unprecedented opportunity to relocate to a different country in order to improve their quality of life, all while keeping their existing job.

And although the tax rate of a country shouldn’t be the primary reason why you might choose to move there, it is likely to factor into your decision.

But where are the best options? Using data from 2020 compiled by KPMG, let’s look at some of the countries that offer the most competitive rates of income tax.

Note: In almost all cases, proper tax planning will be necessary in order to achieve the stated taxation levels listed below, so consulting a professional tax adviser or steuerberater is highly recommended.

Zero Tax

Several countries do not charge any tax on your personal income under most circumstances. These are:

Brunei

Bermuda

Bahrain

Bahamas

Monaco

United Arab Emirates

Saudi Arabia

Qatar

Oman

Kuwait

Cayman Islands

Panama

Saint Kitts and Nevis

Remember though that the trade-off for a 0% tax rate will usually be a very high cost of living and limited public infrastructure, so make sure you’re earning serious money before you consider relocating to any of these places.

Low Tax

Perhaps surprisingly, many of the countries that charge only minor levels of income tax on their citizens are located in Europe.

Generally known for having comprehensive social welfare programs such as pensions, sick pay, unemployment benefits, and healthcare, some European nations are able to provide most or all of these things while only imposing a minimal level of income tax.

These include:

Estonia – 20%

Lithuania – 20%

Ukraine – 18%

Hungary – 15%

Belarus – 13%

Russia – 13%

Moldova – 12%

Bosnia & Herzegovina – 10%

Bulgaria – 10%

North Macedonia – 10%

Romania – 10%

Serbia – 10%

Montenegro – 9%

The High Tax Countries To Avoid!

Perhaps you already have a country in mind to relocate to. If so, take a look through this list to see if it features. If it does, you can then decide whether the increased taxation levels are outweighed by the positive things that the country has to offer.

The countries with the highest levels of (top rate) income tax in the world are:

Finland – 57%

Denmark – 56%

Japan – 56%

Austria – 55%

Aruba – 52%

Belgium – 50%

Israel – 50%

Netherlands – 50%

Slovenia – 50%

Ireland – 48%

Portugal – 48%

Iceland – 46%

Luxembourg – 46%

Australia – 45%

China – 45%

France – 45%

Germany – 45%

South Africa – 45%

Spain – 45%

United Kingdom – 45%

While many of the countries listed above are great places to live that offer an excellent quality of life, this clearly comes with a price tag attached.

For some, paying the extra levels of income tax will be worth it for what the country can offer them, while for others it won’t. Therefore, make sure you carefully consider your personal circumstances before committing to relocate, and make absolutely sure that you seek professional advice from a tax adviser.

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