Tax Havens : the top 10

Bradley Hackford, a firm specialising in international relocation, has published its 2015 ranking of the 10 top tax havens.  The ranking is based on five criteria:

  • the rate of tax burden on the natural persons residing in that country ;
  • the country’s quality of life ;
  • the country’s physical and legal security ;
  • the quality of the economic investment programme developed by the local government to encourage new residents in the country to invest.
  • the speed of processing documents ;
  • the geographic location of the country, its accessibility and its key attractions.
1 – Antigua and Barbuda

Antigua has a programme for citizenship-by-investment that allows the country’s nationality to be acquired as well as residency.  Combining nationality and residency, the program meet a new expatriate need related to the ongoing evolution of tax considerations connected to citizenship.

To obtain the country’s nationality one must make a non-refundable contribution of $ 250,000 into the citizenship programme. An alternative is to opt for purchasing a property that has been approved by the government’s citizenship programme worth at least of $ 400,000. With citizenship comes the right to residence an a total tax exemption on offshore income. Only income generated from activities carried out in Antigua and Barbuda are taxable.

2 – United Kingdom

The UK offers the option of acquiring non-domiciled resident status. This status is open to foreign nationals (“non doms”) who can live in the UK without being taxed on income from non-local sources or on wealth kept outside of the UK.  They are taxed on a “remittance basis”, i.e. on income brought into the UK.

Non doms benefit from these specific regulations for their first seven years of residence ; after seven years they must pay a minimum tax of £ 30,000 every year. The location and quality of life of London make it a particularly attractive place for people with significant assets.

3 – Monaco

The Principality of Monaco, attracts residents from countries such as Italy, Russia and, more recently, Switzerland. Obtaining residency requires the ability to demonstrate significant wealth. Residents do not apy any absence of income tax (French nationals continue to pay their taxes in France).

4 – Andorra

Andorra is a small principality located between France and Spain, attractive for the French and Spanish from the border areas as well as non-European foreigners, especially Russians, who appreciate the country’s geographical location and its high level of security. Financially independent individuals can obtain residence for an an investment of €350,000 in the country and a deposit of €50,000.  The income tax rate for individuals is 10 %.

5 – Bahamas

The location of the country, its close proximity to the United States as well as its 0 % income tax rate for natural persons makes the Bahamas the jurisdiction of choice for establishing a physical and tax residence. Furthermore, the country offers excellent quality of life and wholly satisfactory political stability. Obtaining residency requires investing in a local property of a minimum value of US $ 500,000 (or a minimum of US $ 1,500,000 for the process to be accelerated).

6 – Mauritius

International investors appreciate the country for to its simple residence procedures and the tax advantages for residents. The main procedure for obtaining Mauritian residency is through the purchase of a property on the island with a minimum value of $ 500,000, as approved by the local programme, which is called IRS. The income tax rate for individuals is 15 %. Mauritius is attractive for the French, who appreciate the use of the French language on the island as well as English

7 – Malta

Taking up residence in Malta can, under certain conditions, be interesting as only income from Malta is subject to taxation. There are several specific statuses aimed at Europeans, non-Europeans and retirees that effectively allow them to benefit from a system that is comparable to that for the non-domiciled in the UK. Internationally sourced income that is not repatriated to Malta is not taxed.

8 – Gibraltar

In Gibraltar, residents ‘Category 2’ status can benefit from an attractive and predictable tax regime, while also benefiting from the advantages that come from the country being a part of Europe. For individuals, tax is limited to the first £ 80,000 earned per year. Any income above this amount is not taxed £ 80,000. The maximum tax is thus £28,360. However, an individual must pay a minimum of £22,000 of tax per year.

9 – United Arab Emirates – Dubai

Dubai allows individuals to set up a company in one of Dubai’s free zones and to obtaining residence in the country. Individuals pay no tax ; companies pay a corporate tax rate of 0 %. Companies in the free zones can be 100 % owned by foreigners.

10 – Cayman Islands

The Cayman Islands are a renowned destination with a tax rate of 0 % for companies and for individuals. The Cayman Islands have a special economic zone that allows for professionals to obtain residency by incorporating a company within the zone. It is also possible to choose residency without a work permit by demonstrating current foreign income and by undertaking a local investment of CI $ 500,000.

When determining the rankings, countries that have a nil tax rate for individuals have been taken into account : Anguilla, Bahrain, Bermuda, Dubai, Kuwait, Oman and Qatar.  Countries that offer specific attractive tax statuses also rank high. That is the case for Switzerland that has a tax regime that is a flat-rate tax regardless of income earned.

Portugal offers ‘non-habitual resident status’ where non-habitual residents are exempt under certain conditions or enjoy a favourable special tax regime depending on the type of income.

Bulgaria has an income tax rate of 10 % for individuals.

Finally, it is to be noted that Belgium is also mentioned as it can offer significant tax advantages, subject to the suitable structuring of assets.

Author: Marc Quaghebeur

Marc Quaghebeur is a Belgian tax lawyer with Cabinet DAVID specialising in international tax issues and cross border estate planning. He is a member of the Brussels Bar and the Society of Trust and Estate Practitioners. He

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