According to the current state, there are jurisdictions in the world with different control systems that can bring certain advantages and disadvantages with them. Today I present to you 6 coarse shapes of control systems, and how you can benefit from them! However, one should not forget that countries with the lowest tax rates do not necessarily have to be lucrative to live in. So for example, Afghanistan has very low tax rates, but because of bad infrastructure and war conditions is not suitable as an immigration goal, so I will introduce a lucrative country to every tax system, which might become your new home country.
Indirect Tax System
Currently, there are 23 countries, which only impose indirect taxes. This means no direct taxes such as income tax or taxes on a capital income, but exclusively indirect taxes such as value added tax, tobacco tax or inheritance tax. However, as in the case of Monaco, e.g. Accounting and corporation tax, from 35% to a maximum of 40%, but this applies only to local corporations.
Bahamas, an archipelago off the coast of Florida, attracts with a high standard of living, beautiful beaches and varied entertainment. The cost of living is high compared to other Caribbean countries, but not necessarily more expensive than in the United States. An annual fee of $ 1000 or purchasing a property entitles you to a stay in the Bahamas already. The capital Nassau has a bad reputation due to high crime rates, but there are many foreigner friendly residential areas with high security. Highly qualified health care can be found in “Bahamas Grand Bahama” and “New Providence”. Modern hospitals turn into Freeport, Nassau and Out Island. In addition, Florida is only an hour away by air.
Additional interesting countries: Bahrain, United Arabic Emirates
Territorial Tax System
There are 41 countries with a territorial taxation, which means that only domestic income is taxed. The model is particularly attractive for non-independent entrepreneurs who earn their money through the Internet or get their income through a suitable offshore company in another country. A contribution will be published shortly, where I present three easy ways to found an offshore company.
Territorial Taxation in Certain Countries only on an Entrepreneurial Level
It is important to note that countries such as Estonia and Singapore offer territorial taxation only at an entrepreneurial level and not on the personal level. This means that a local company has to be established and, in addition be a tax-free offshore company in another country. In this construction, the local based company does not pay taxes on the additionally established offshore company, which must occur as branch / subsidiary of the local company. Someone who simply has such sales abroad cannot usually claim them with this kind of territorial taxation.
However, this article refers to states with territorial taxation on a personal level, which will be much easier for most of them. I now want to introduce you to 2 of these states.
The capital of Tbilisi is clearly recognizable by its glass bridge, but the city has a lot to offer for people who like to live in a big city. Next to the beautiful River Park with gondolas that drive right up into the mountains, there are many shops in the city center. However, English is rarely understood, which is why it can be recommended to learn Russian or Georgian in the end. On entry, almost all nationalities get a generous right of residence of 365 days including a work permit, and whoever wants to stay longer simply applies for a WorkResort Permit 40 days before the other one ends, which is very easily given and normally has to be renewed annually. Those who are diligently studying Georgian (and the alphabet) can obtain citizenship through a test after only five years. Territorial taxation means that only domestic income is taxed and since no foreign tax laws are applied, a tax-free company can be taken with a Georgian residence anywhere in the world, and profits can be paid out tax-free.
Despite the economic boom in Georgia, one should not forget that there are still challenges, such as the geographic location in the middle of the Caucasus powder barrel, which creates a degree of instability. In return, however, the cost of living is very cheap, and apartments in the city center of Tbilisi only cost around $ 15,000 -30,000.
Panama, compared to other countries, has expensive living costs, neither a central bank nor a military, and has a strong growth. The USD and the Panamanian Balboa (PAB) are accepted as payment currency. If you would like to live between big cities and beautiful beaches, and are ready to learn Spanish, Panama City is your way to go!
As in Georgia, there is no tax exemption on foreign income because of territorial taxation and no foreign tax laws. For domestic income, no matter from which source is a tax deduction of $ 11,000. Once the excess is exceeded, a flat rate of 15% and $ 50,000 is the highest rate of 25% between $ 11,000 and $ 50,000. The long visa-free visibility of 180 days after arrival is generous, after which there is the possibility to apply for a “Friendly Nation Visa”. Currently 50 “friendly countries” are eligible for this program. A company is established in Panama (or the purchase of an existing company) or an employment relationship in a Panamanian company. It should be taken into account when setting up the company that foreigners in Panama are not allowed to carry out any retail business or store business.
Additional interesting countries: Philippines, Hong Kong, Paraguay, Guatemala, Namibia, Malaysia, Nicaragua
This is a tax system where, after a certain period of residence in a country, the tax liability on your entire world income is incurred. Thus, in Germany, 183 days can be tax-free, if certain conditions are fulfilled, which I want to explain in more detail right now. The unlimited tax liability applies according to §1EStG if the official place of residence and stay is in Germany. In this case, you are “unrestrictedly income-taxable with your world income. Limited tax liability according to § 40EStG: If you have already logged out in Germany, and you are usually no longer there, but still continue to receive income from activities in Germany, they must be completely taxed. Extended limited tax liability according to §3 AStG: The case is the most complicated, because if you live in a tax paradise (defined by the legislature, if the tax burden is less than a third) and economic relations are maintained in Germany, then that would be your income still paid in Germany. The solution: You are logged out of Germany, you do not have a food point in Germany anymore, you do not have any income from Germany, and you do not have any economic relations in your old home country. It is important to note that even an old children’s room can be designed as a food point, which means that you can become a taxpayer again.
Non-Dom Taxation System
The non-dom system is a mixture of residence and territorial taxation. It is differentiated between the residence and the domicile. In this context, the term domicile describes the country in which most of his life has been spent. The home country so to speak. For the purpose, the citizenship of the father is decisive, or the trace of the paternal line.
On the other hand, residence is to be equated with the habitation. This means that when a non-dom country is emigrated, and thus no residence in the country can exist, the territorial tax system is being applied to this citizen. In principle, each foreigner is automatically a non-dom (non-dom). However, it should be noted that in many non-dom states there are foreign tax laws, which are applied only to domestic citizens, but not to non-domains as in the case of UK.
The difference from the Territorial Control System is that the non-dom control system has certain special rules. One example of this is the transfer clause, which states that the foreign income is tax-exempt until it is passed on to the domestic market. Thus, it should be avoided to transfer high cash flows from abroad to domestic accounts. Foreign accounts thus remain tax-free, as well as cash withdrawals and credit card payments in Germany.
Interesting countries with these Non-Dom regulations are for example Cyprus, Ireland, Malta and the United Kingdom.
Tax Liability Linked to Citizenship
The most unfavorable case is when a state links the tax liability to citizenship. In addition to Eritrea, which does not have the technical means to enforce this type of tax liability, the tax burden on citizenship has been coupled in the US under President Obama, which has given rise to particularly rich emigrants. However, the prerequisite for this is a dual citizenship, since there may be problems with the extension of the visa and in the worst case, they will be deported to their home country. In the near future, a contribution will be made on why a dual citizenship can be a good insurance and which can be obtained relatively easily. If you are interested, you can register at the top right of my newsletter, which will automatically inform you about new items + additional information on the development of My Global Door and much more!