11 Countries with The Lowest Taxes in Europe: 2023 Tax Guide (2024)

Ever dreamed of living in Europe? Many of us have.

Europe’s stereotypically high tax rates have turned many successful entrepreneurs and investors away from the idea in search of zero-tax countries in the Caribbean, Middle East, or the Pacific Ocean.

The good news is that you don’t have to move to the Bahamas or Dubai to enjoy low tax countries rates so long as you’re able to invest some of your money in Europe.

In this article, we’ve made a list of nearly a dozen European countries with favorable tax rates to lessen your tax burden.

Nomad Capitalist is a turnkey solution for offshore tax planning, dual citizenship, asset protection, and global diversification, find out more here.

Live in Europe And Pay Low Taxes

Here’s the deal: while living in Europe and living in one of the countries with the lowest taxes is a rare feat, it is possible for almost anyone to live in Europe full-time and pay low taxes on their income… even if they’re not a millionaire.

We’re not talking about living like a digital nomad. Sure, it’s possible to spend three months in the summer living in Europe, then spend another few months further south in a country like Serbia.

So long as you don’t establish tax ties in any one country, your only concern is making sure you aren’t on the hook for taxes in your home country.

However, a recurring theme among the seven- and eight-figure business owners we work with, is the desire for a home.

For many successful people, dragging a suitcase around the world just isn’t their thing. They want a (nearly) full-time home AND the benefits of minimal taxation.

That’s where low-tax countries come in.

While some other countries like France will always be off-limits to those seeking excellent tax planning, the following are well worth considering.

1. Andorra

Pressure from the European Union caused Andorra to implement its first-ever income tax in 2015, but Andorra still remains a low tax haven conveniently nestled between high-tax Spain and France.

Long known as a destination for duty-free shopping, Andorra is an idyllic mountainous country that also happens to offer residence permits to investors and business owners.

Fortunately, Andorra has positioned itself to attract those of more average means than other low-tax countries like Monaco.

Andorra is perfect for those with capital gains or generational wealth; it has no wealth tax, no gift tax, no inheritance tax, and the only capital gains tax is assessed on most sales of Andorra real estate.

The only tax is an income tax, of which a generous €24,000 is exempt, and the top rate of 10% takes effect at the €40,000 level.

Unless you’re well-noted in your field, there are two ways to qualify for residence: make an investment or start a company.

Either way, you’ll need to pledge to spend 90 days per year living in Andorra, rent or own a property, maintain a bond, and maintain health insurance; many residents are exempt from the already low tax rates depending on how their income is earned.

To start a company, you will need to present your CV and a business plan, as well as deposit a €50,000 bond for a single applicant.

This route requires far less upfront capital, but you do need to actually run a business, which means living in Andorra should be part of your overall corporate and tax planning.

If you prefer to be a passive resident, you may invest €400,000 in Andorra, which can include investment in real estate.

2. Hungary

Beating Bulgaria, Hungary has a corporate income tax rate of 9% tax rate with no minimum. Personal income tax is also one of Europe’s most reasonable, with a standard rate of 15% of taxable gross income.

Dividends, capital gains, and interest are taxed at a fixed rate of 15%, with a maximum annual social contribution of €2,000.

To qualify as a tax resident, you must either spend 183 or more days in Hungary within a calendar year or have a permanent home there. Alternatively, your center of interest must be in the territory if you have multiple homes in various countries, including Hungary.

Non-residents only pay corporate income tax for business activities conducted by any Hungarian company. You now have the choice to pay any Hungarian corporate income tax liabilities in either US dollars or euros.

Although Hungary offers low corporate and reasonable personal income tax, it is far less immigration-friendly compared to many of its fellow EU member states. (It should also be noted that Hungary has been one of Europe’s most significant advocates of wealth confiscation.)

3. Bulgaria

At a flat 10%, Bulgaria has the European Union’s lowest personal income tax rate. Bulgaria’s corporate tax rate is also 10%, meaning it has the second-lowest corporate tax rate in the EU, after Hungary. Bulgaria also maintains tax treaties with many countries that could allow for special tax treatment for some international entrepreneurs.

The payroll taxes are capped at 19.6%.

Basically, Bulgaria’s tax system is simple: live there and pay taxes at only a 10% rate. You can become a fiscal resident by living in Bulgaria for at least 183 days in a year, or by convincing the tax office that Bulgaria is your “center of life”.

While merely staying in the country is often easier, the “center of life” test gives you more flexibility and involves a number of factors. Eastern Europe is one of the world’s most underrated places for living, although out of the Balkan countries you may prefer living in Serbia or Romania.

That said, Bulgaria has the advantage of being a rather open place to operate, with bank accounts being easy to open and a substantial low-tax offshore company industry attracting plenty of entrepreneurs and capital.

Check out Bulgaria’s citizenship by investment program and see if getting Bulgarian citizenship will help your tax strategy. If you need a residence or a company in the EU for business purposes, then Bulgaria is ideal.

4. Czech Republic

The Czech Republic is often ignored as a low-tax jurisdiction despite the fact that it has streamlined both personal income tax rates and corporate tax rates to reasonable levels.

The Czech Republic has long been an attractive relocation destination for foreigners. Prague, in particular, regularly appears on lists of the best European cities.

As a low-tax residency, the Czech Republic (or Czechia, as they prefer) is best suited for European Union citizens.

That’s because self-employed Europeans can not only avail themselves of Czechia’s 15% flat tax rate but may also apply a lump sum tax deduction in lieu of actual expenses.

For most business owners, the lump sum can reduce the flat tax by 40% or 60%, leaving an effective tax rate of 6% to 9% on self-employed entrepreneurs.

Like Portugal and other European Union countries, real tax planning is required if you choose to live in Czechia.

For one thing, you will need to rent or own an actual home; the good news is that the cost of living in Prague is surprisingly low given how popular the city is for tourists and digital nomads.

5. Georgia

While Georgia may not be in the center of Europe, its position in the Caucasus places it squarely between eastern Europe and Asia.

Fun fact: Georgia also happens to be the only European country with a largely territorial tax system, meaning properly structured foreign source income is not taxed in most circ*mstances.

Georgia’s income tax is set at 1% for individuals with an annual income of up to 500,000 Georgian Lari (GEL), which is about ($194,000 U.S.) with 0% personal income tax on foreign-sourced income.

So for non-United States citizens, it is easy to create an international structure and pay zero tax on profits while being a legal resident of Georgia. It is also possible to maintain a part-time home base in Georgia without incurring tax obligations.

You can even become a tax resident without living in Georgia if you can prove wealth or high income. While Georgia’s capital of Tbilisi is not Paris, Georgia is one of the safest countries in the world and a favorite of ours here at Nomad Capitalist.

The cost of living is extremely low, and activities like smoking and gambling are extremely cheap compared to the highly over-regulated European Union.

6. Gibraltar

Gibraltar has long been a popular tax residence for British citizens, but Gibraltar’s benefits as a low-tax residence are available to anyone.

Nestled at the southern tip of the Iberian Peninsula, bordering Spain to the north, Gibraltar is a British Overseas Territory. This means that, although it’s a sovereign country, it is able to set its own tax policies.

There are two ways to become a resident in Gibraltar: start a company or demonstrate a high net worth. As is usually the case with these programs, it is easier for entrepreneurs to qualify by forming a company but proving wealth is easier in the long run.

The High Executive Possessing Specialist Skills method, or HEPSS, allows entrepreneurs with Gibraltar companies to pay a maximum tax on their salary.

You must earn more than £120,000 per year, but will only be taxed on £120,000. That essentially translates to a flat tax of £29,940, although you must also consider any Gibraltar corporate tax. You will need to own or lease a home in Gibraltar.

The Category 2 visa program is also appealing but requires a £2 million – roughly $2.5 million – net worth to qualify. There are few requirements besides proving this level of wealth; the main requirement is to purchase or lease a “qualifying” home.

Other than that, you may not carry out almost any business within the territory of Gibraltar. You will pay a minimum annual tax of £32,000, and a maximum annual tax of £37,000 based on Gibraltar’s oddly progressive-but-then-regressive income tax rates ranging from 10% to 29%, with 12.5% as the standard tax.

7. Malta

Malta is one of only four countries on this list that are part of the Schengen Area, and one of only three that are also part of the European Union. The island nation has developed some of the EU’s most tax-friendly programs for both individual residents and corporations, with corporate tax rates as low as 5% possible for non-resident companies.

Malta has long had a flat-fee residence program available, but as I have discussed in the recent post the newer Global Residence Program has become the second permanent residency of choice.

Unlike Andorra and Monaco, Malta does not require any physical presence on its two Mediterranean islands, meaning you can establish residency but not live there at all.

Furthermore, they have prided themselves on reducing bureaucracy and even allowing residents to include domestic staff on their applications (similar to Malaysia’s MM2H program).

Maltese residents are not subject to tax in Malta on foreign-sourced income that is kept outside of the country. What’s more, they are not subject to tax on foreign capital gains even if those gains are sent to a Malta bank account.

Other income, including pensions, can be taxed once at a flat 15% thanks to Malta’s tax treaty network. The cost of maintaining the residence in Malta is a flat €15,000 “minimum tax” payable each year. With proper planning, this should also be the maximum tax. It is also possible to obtain a tax residence certificate.

8. Monaco

While Monaco is not a full member of the European Union, it is a de facto participant in the borderless Schengen Area, offering excellent mobility.

Monaco’s exclusivity and proximity to France and the rest of Europe make it a more serious tax residency than some tiny island in the middle of the ocean. Monaco’s personal income tax still stands at a 0% tax rate, while its corporate income taxes are now set at 25% since the start of January of 2022.

Doing this generally requires a €500,000 bank deposit and purchase (or in some cases, rental) of the property there.

Seeing that parking spaces can often sell for up to €1 million, residence in Monaco is reserved for the wealthiest entrepreneurs and investors.

It’s also reserved for those actually willing to live there; you must spend three months per year for the first nine years, at which point you can obtain what is effectively permanent residence but requires 183 days of stay per year.

If you’re interested, read more in our guide to Monaco residency or citizenship.

9. Montenegro

Montenegro boasts about being one of the lowest personal income tax and corporate income tax rates in Europe, both pegged at a flat 9%.

Like many of its western Balkan neighbors, Montenegro has sought to attract business to its small country – population: 620,000 – by lowering tax rates. While almost all of eastern Europe offers rather reasonable tax rates in the teens, Montenegro offers the lowest tax rates and the benefit of a country you might actually want to live in.

Locals know Montenegro as Crna Gora, meaning “black mountain”, but the Italian name stuck and gives the country an air of sexiness by sounding similar to Monaco.

It’s a stunning place to visit during the summer season, a perfect location to relax, and enjoy the sunsets and Mediterranean cuisine.

Montenegro’s government seems to have played to that notion, inviting foreign investment investors to develop luxury resorts on its pristine coastline in a bid to be the jewel of the Adriatic Sea.

Montenegro allows foreigners who buy residential property to obtain a temporary residence card, renewable yearly. If you spend fewer than 183 days in Montenegro, you will generally not be taxed.

If you live in Montenegro the majority of the time, you will become a tax resident and be liable to pay the flat 9% rate on your income.

While Montenegro isn’t a zero-tax country for full-time residents, it is a very attractive home base primarily for Europeans seeking a legitimate low-tax residency to appease their home government.

It also has a citizenship by investment program if you’re looking into expanding your passport portfolio and your investment portfolio.

10. Portugal

Most people don’t associate Portugal with low-tax countries. In most cases, they’re right; Portugal is hardly a tax rate favorable place for the average resident.

The country’s tax revenue (%GDP) stood at 23.4% as of March 2022, compared to Switzerland’s latest value of 9.2%.

However, foreigners can take advantage of a ten-year Non-Habitual Resident Tax exemption that exempts up to 100% of their income from Portuguese tax.

While this exemption doesn’t allow you to live in Portugal tax-free forever, it is long enough to allow you to claim Portugal citizenship if you meet the rather lenient physical stay requirements.

There is a catch, though: the most tax-optimized structures won’t qualify for Portugal’s tax exemption. Income from blacklisted tax countries is not subject to an exemption, meaning your offshore company in the BVI or Hong Kong won’t work.

Substantial tax planning is needed to ensure that all of your business and passive income is structured to eliminate taxes while you live in Portugal.

11. Switzerland

There is no doubt that Switzerland has become less friendly both for immigration and banking in recent years. That said, it is still one of the safest and most respected countries in the world with a location at the heart of Europe.

Swiss residency offers an air of legitimacy that many other low-tax residencies can’t match. Foreigners have two residency options to choose from. The first is to form a new company in Switzerland and hire local employees.

This company will pay corporate income tax based on which canton (region) it is incorporated in, and you as the manager will pay Swiss income tax.

The more common and lower tax method for living in Switzerland is the Lump Sum Taxation method, also known as “taxation according to expenditure”.

Under this method, a family may move to Switzerland and pay a flat annual tax based on their cost of living rather than their actual income.

Generally speaking, expect to pay at least $150,000 and up to $1 million in flat tax each year, depending on which canton you want to live in.

12. The United Kingdom

Like Portugal, the United Kingdom isn’t exactly a haven in terms of low tax countries for all, but it is for a select group of wealthy individuals.

By exploiting the difference between domicile and residence, certain foreign citizens can live in London and pay an annual flat tax. This “non-dom” system has been popularized thanks to Middle Eastern and Russian billionaires who take up residence in the United Kingdom yet claim they are not running their businesses from Kensington.

Because their income is a foreign source, it is eligible to be taxed on a remittance basis; keep the income out of the UK and it is not taxed.

Obtaining residency in Britain requires a substantial investment, but for the right person, the tax benefits outweigh the initial costs.

Claiming non-dom tax benefits may be free for up to six years, after which the remittance basis charge is anywhere from £30,000 to £90,000, depending on how long you’ve been a resident.

Tax residence in the UK is a highly complicated topic and always worth discussing at length with a tax professional before claiming any benefits, particularly as some non-dom benefits must be claimed in advance.

Countries with The Lowest Taxes in Europe – FAQs

Optimize Your Tax Rate

There are many countries that offer generous tax exemptions, have minimal property taxes, tax holidays, and other incentives for you to move there.

We can help you figure out which countries would treat you best, choose your personal and business tax rate so you regain control of your life.

Our team sits down with government officials and pinpoint loopholes that we can leverage. We get clients that ended up paying double their tax bill because there was no holistic plan set up for them.

There are endless scenarios that can go wrong, but you don’t need to learn this firsthand.

We’ll be happy to serve you.