From quality of life to job opportunities, cost of living and weather, there are several factors you should keep in mind when moving abroad. But what are the world’s most convenient countries when it comes to taxations? A new report has attempted to find out.
Entitled Global Opportunities, the study by accountancy and business advisory firm BDO looked at which countries worldwide had the best tax regimes for three different groups of people – entrepreneurs, senior executives and pensioners.
It found that the UK is among the three best countries in the world for both entrepreneurs and senior executives, while pensioners should consider moving to Portugal or New Zealand.
According to the report, in fact, the most favourable tax regimes for entrepreneurs are those in Switzerland, the UK, and Monaco. Certain cantons in Switzerland allow individuals to fix their annual tax total under a lump sum arrangement, no matter how much they receive in dividends and capital gains that year.
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The UK offers the remittance basis of taxation on foreign dividends and foreign capital gains, while Monaco doesn’t tax them at all. The study didn’t take into consideration corporate tax.
Senior executives, however, should look at Hong Kong or Singapore, as those countries have low personal income tax rates – 17 per cent maximum in Hong Kong and 20 per cent in Singapore. Both cities also have no capital gain tax and no net wealth, inheritance or gift taxes.
Hong Kong and Singapore were followed by the UK, whose tax regime exempts remuneration paid for duties performed abroad. Spain was fourth thanks to the fact that it offers new residents low tax rates for a limited period of time.
Things are different, however, for individuals who are about to retire, who according to the report should consider moving to countries such as Portugal, New Zealand and Cyprus – Portugal and New Zealand do not tax foreign pensions for a fixed period, while Cyprus residents enjoy low pension tax rates.
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They should, however, only move to countries with favourable treaties with the country where the pension was sourced to reduce withholding taxes.
‘There are many countries around the world that have favourable tax regimes for foreigners living in their country,’ said Richard Montague, tax partner at BDO.
‘Some of these countries may have traditionally been considered high tax jurisdictions but turn out to be exactly the opposite when tax breaks for new residents are considered.’
