Top countries with no taxes part 2 – Part one is here.
Moving to a country with a low tax alternative
The idea of moving to a country without income tax is naturally attractive. However, for many, it may be nearly impossible to move to one of the countries where there is no income tax. In most of these countries, it is difficult to establish permanent tax residency, and becoming a full citizen is even more difficult.
This is why it is certainly worth looking at low tax countries and countries with friendly territorial tax systems in search of a suitable tax-free second residence as well. Many of these countries with territorial taxation make it much easier for foreigners to obtain a residence, as well as expand your choice.
Some of the top choices in this category include Hong Kong, Singapore, Malaysia, and Panama. Accommodation requirements are particularly simple in Malaysia and Panama. Panama has the added benefit of minimum physical presence requirements, which means you don’t need to reside in Panama for more than half a year to maintain your residency (as in most other countries).
If you are a digital nomad or international entrepreneur, then becoming a tax resident of a country with a territorial tax system can actually offer the same benefits as a country without any income taxes.
Where are the worst taxes in the world?
Where the worst taxes are France is considered to be the country with one of the harshest tax systems. The French themselves constantly complain about the amount of their taxes, and some of them even flee to other countries and pay taxes there.
The French usually fill out their income tax return in February and send it to the local tax office by mail. It is necessary to indicate absolutely all types of income: salaries, benefits, profit from renting apartments, etc. Everything must be indicated as honestly as possible because tax authorities will still find unaccounted income and impose a substantial fine for incorrectly indicated information.
The main feature of income tax in France is that for its calculation, not a specific individual is taken, but a household. Single people are considered a one-person family. And to calculate taxes for them, a coefficient is applied 1. If there is a husband and a wife in the family, then the coefficient will be 2. Spouses with one child – a coefficient of 2.5, etc.
The total amount of income is divided by this coefficient, and it is already calculated from it tax rate. That is, in France it is very unprofitable to be single and childless. Taxes will be as high as possible. The more children there are in the family, the lower the tax. This is a form of support for the birth rate.
In addition, the size of the taxable base and the amount of tax can be reduced in other ways. For example, deductions can be obtained if you make charitable contributions or invest in medium and small businesses, pay for the education of children in kindergartens and schools, support disabled relatives, spend on the purchase of energy-saving appliances in the house, etc. As for the rates, the annual household income is up to 9710 euros (or 809 euros per month) is tax-free.
Households with an income of up to 26 thousand euros per year (2234 euros per month) pay tax at a rate of 14%, up to 71,898 euros – 30%, up to 152,898 euros – 41%, over 152,260 -41%. In addition, the income of wealthy French people is subject to an additional tax. From 250 to 500 thousand euros – 3%, from 500 thousand euros – 4%. The famous tax on millionaires, according to which the state took 75% of the income from the owners of income over 1 million euros, has been canceled.
Taxes in France Regarding progressive rates: with an annual income of € 9.7 thousand, no tax is paid; with income up to € 26 thousand – 14%, up to € 71 thousand – 30%, up to € 153 thousand and above – 41%. Interestingly, for those who have a high income of 250, 500, and more thousand €, there is also an additional tax of 3-4%. Earlier, there was also a special tax for millionaires, but it was decided to abandon it.
The procedure for levying income tax in each specific country is individual. For example, in Russia, there is a uniform rate of 13% for everyone (regardless of income level). This is the so-called flat income tax rate. In Russia, the transfer of this tax to the budget is carried out directly by the organization in which the employee works.
Most developed countries have a progressive income tax rate. Those. the higher the annual income, the higher the rate.
There are also countries where there is no income tax at all. Basically, these are either tiny principalities in Europe, or small island states, or the countries of the Middle East.
Some countries that wish to attract more foreign investment and wealthy citizens may offer special tax treatments. These special preferential tax regimes for new tax residents can last as long as you like (Switzerland, UK, Malta) or be limited in time (for example, Canada or Portugal).
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