Non Habitual Residence
Various tax advantaged locations are listed below including a high level over view of their tax regimes which are subject to change / correction.
There are specific alternative tax regimes in some of these jurisdictions that may be available to non citizens that can bring additional benefits. A typical example of this is the Non Habitual Residence schemes that can in certain circumstances be availed of in countries such as Portugal and Malta. These non habitual residence schemes are outlined below under the heading” NON HABITUAL RESIDENCE.
Optimal Tax Locations
ANTIGUA & BARBUDA
• Individuals are taxed on income derived or sourced from the country only
• Capital gains are not subject to tax
• No capital duty, capital acquisitions tax, inheritance tax, net wealth/net worth tax
• Treaties are in force with CARICOM and the United Kingdom
• Non-residents are taxed only on Bulgaria-source income
• Individuals who have a permanent address in Bulgaria but whose center of vital interests is not in the country are not considered a Bulgarian tax resident
• No stamp duty, capital duty, wealth/net worth tax
• Property tax ranging from 0,6% to 1,9%
• Transfer tax on properties ranging from 3%-8%
• A non-resident individual is taxed on Cyprus-source income only
• Progressive tax rates imposed up to 35% on incomes above EUR 19,500
• No capital duty, capital acquisitions tax, inheritance/estate tax, wealth/net worth tax
• No capital gains, no property tax, stamp duty, capital acquisitions tax, inheritance tax, net wealth/net worth
• Non-resident individuals are taxed on income derived or sourced in Dominica
• Tax treaty is in force with CARICOM
• Non-residents are taxed on Greece-source profits only
• No capital duty, no net wealth/ net worth tax
• Stamp duty for individuals is 3,6%
• Property taxation includes a main tax depending on the characteristics of the property and an additional tax calculated for properties value exceeding EUR 300,000
• Inheritance tax ranging from 1-10% for close relatives
• Non-residents are taxed on Grenada-source profits only
• No capital gains, stamp duty, capital acquisitions tax, no inheritance tax, net wealth/net worth tax
• Real property tax is ranging 0-0,5% depending on the property’s use
• Foreign resident individuals are taxed on Hungarian-source income only
• The general personal income tax rate is 16%
• No capital duty
• The tax for residential real estate property purchases is 9%
• Inheritance is fully exempt in case of close relatives, otherwise is 18%
• Persons who are resident or domiciled in Malta are taxable on their income
• No capital duty, real property tax, no inheritance, net wealth/net worth tax
• Tax is generally due on any gain on the transfer of property
• Non-residents are taxed on their Portuguese-source income only
• Real estate income is taxed at a flat rate of 28%
• A municipal tax is levied on property sales and transfers
• 10% stamp duty on inheritance/estate tax with exceptions on a few cases
• No net wealth/net worth tax
• Non-residents are taxed on Spanish-source income
• For capital gains progressive rates apply
• Stamp duty is applicable at 0,5-1%
• Capital acquisitions tax is 7%
• As real property tax the municipal authorities levy a real estate tax, with a temporary surcharge of up to 10%
• Inheritance estate tax ranges from 7-34%
• No personal income tax, capital duty, capital acquisitions tax, inheritance/estate tax, net wealth/net worth tax
• Property tax ranges 0,2-0,3% depending on the property’s use and location
• Stamp duty on the transfer of real estate property ranges from 2% to 18,5% and payable by the seller
• Tax treaties are in force with CARICOM, Monaco, Switzerland and the United Kingdom
NON HABITUAL RESIDENCE
Portugal introduced the Non Habitual Residency programme in 2009 which aimed at attracting EU residents into the country. Qualification means satisfying a residency test and in addition demonstrating that you have not been a tax resident of Portugal in the preceding five years. To be resident under the scheme you need to spend 183 days a year in Portugal and / or own or rent on a long term basis a residence there with the intention of making it your habitual residence.
The scheme gives those who become resident in Portugal the opportunity to benefit from a tax exemption on certain types of income for a period of 10 years provided residency requirements are met each year. In other words 0% Portuguese tax on income sourced outside of the country (with some exceptions).
Qualifying income includes:
- royalties sourced outside of Portugal
Foreign pension income, for example from UK pension funds, is exempt from Portuguese tax provided it is taxed in another country under the terms of the tax treaty, or is not regarded as Portuguese source income under domestic legislation.
However the UK/Portugal treaty states that pension income should be taxed in the country of residence and therefore no tax will be due - in other words a double exemption.
Similarly a pension transferred to a Malta QROPS will benefit from the fact that Maltese rules allow the QROPS to be taxed in the country of residence provided a double taxation agreement exists. Therefore under the NHR 0% tax will be levied.
Investment income including:
- rental income
If the above categories are earned outside Portugal they are exempt from tax provided it may be taxed in the state of source under a tax treaty, or it may be taxed under the terms of the OECD Model Tax Convention and is not regarded as arising in Portugal.
Capital appreciation would appear not to be exempt from local Portuguese tax levels which are 30%.
UK dividends, for example, will be tax free in Portugal under the NHR regime since the UK/Portugal treaty provides that they may be taxed in the UK (even though in practice they may not actually be under the disregarded income rules). Note that this tax-free income option does not apply to income generated in a blacklisted tax haven such as the Channel Islands.