When people mention tax havens thoughts invariably turn to exotic locations in faraway places. While that is certainly true in some cases many people seem to be unaware of the numerous tax havens located in the European Union.
While the EU is not in the best of shapes at the moment economy wise, and some countries are imposing increased tax rates, some EU countries are actually making life easier for foreign workers. Here are some of the countries that offer good options for expatriates.
Portugal has a number of bonuses for foreign expats. For one all new tax residents can benefit from a 10 year income tax free 'holiday' (temporary reduction or elimination of tax), which includes pensions. Also, there are a number of countries with which they have double tax treaties to ensure no double taxing can occur. Capital gains is a factor, however if you become a resident of Portugal and sell property in the UK, this will not incur CGT in Portugal. There are also offshore structures that will further enable you to shield your income and gains.
British expats in France are given a wealth tax holiday of five years that shelters all non-French assets from French wealth tax. France also has the added bonus of being one of the only countries that the UK has a double tax treaty with for inheritance tax. With good financial planning expats in France can avoid any inheritance tax in both countries, and also avoid French succession laws. France also has little tax on annuities.
Spain has a special legislation for foreign workers known as the Beckham Rule, named so after the English footballer joined Spanish side Real Madrid. The Beckham Rule is in place specifically to attract foreign workers. The rule enables foreign workers to opt for a flat-rate tax of 24 percent on all their Spanish income, as opposed to the rising scale of 15-43 percent given to Spanish natives.
In Cyprus expats are subject to virtually no capital gains tax, and foreign pensions are taxed at just five percent. Insurance bonds also incur virtually no tax.
Expatriates in Malta are taxed via remittance at a rate of only 15 percent, and zero tax on any income that is stored offshore. Any capital gains received out of Malta are free from any tax.
In Sweden there is no wealth tax, inheritance tax or gift tax.
QROPS (Qualifying Recognised Overseas Pension Schemes) is a type of pension transfer that enables you to take a UK pension out of the UK and thus creating a wealth of tax bonuses. If you are a British expat then taking out a QROPS should be a very serious consideration. Speak to an IFA to see if a QROPS is right for you.