11 countries with the lowest taxes in Europe: 2023 Tax Guide

Have you ever dreamed of living in Europe? Many of us do. The high tax rates in Europe have pushed many successful entrepreneurs and investors away from this idea in search of zero-tax countries in the Caribbean, the Middle East, or the Pacific. The good news is that you don't need to move to the Bahamas or Dubai to benefit from low tax rates; you just need to invest your money in Europe. In this article, we have compiled a list of nearly a dozen European countries with reasonable tax rates to help reduce your tax burden.

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Nomad Capitalist is a comprehensive solution for offshore tax planning, dual citizenship, asset protection, and global diversification. Live in Europe and pay low taxes. Here’s the deal: while living in Europe and residing in one of the countries with the lowest taxes is rare, almost anyone can live in Europe full-time and pay low taxes on their income... even if you’re not a millionaire.

We're not talking about living as a digital nomad. Of course, it's possible to spend three months in the summer living in Europe, and then spend a few more months in the south of a country, like Serbia. As long as you don't establish tax ties with any country, your only concern is to avoid getting caught in tax obligations in your home country.

However, a recurring theme among business owners with seven- and eight-figure incomes is the desire to have a home. For many successful people, dragging suitcases around the world is not their style. They want (almost) a permanent home and the benefits of minimal taxation. This is where low-tax countries come into play.

1. Andorra

This medieval village, located on the mountainside, showcases the beauty of the Andorran countryside. However, Andorra has always remained a low-tax haven, conveniently situated between the high-tax countries of Spain and France. Andorra is ideal for those with capital gains or inheritance, as it does not tax wealth, gifts, or inheritance, and the income tax on property sales in Andorra is only levied on property owners. The only tax is the income tax, which has a generous exemption of 24,000 euros, and a 10% rate applies starting at 40,000 euros. To obtain residency, one must either invest money or open a company, but in any case, a commitment to reside in Andorra for 90 days a year is required. The investment threshold is 400,000 euros in Andorra, which can include investments in real estate.

2. Hungary

Hungary has a corporate income tax rate of 9% with no minimum amount. The personal income tax is also one of the most reasonable in Europe, with a rate of 15% on 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 euros. To qualify as a tax resident, you must reside in Hungary for at least 183 days during the calendar year or have a permanent home there, or if your main place of residence is in the territory, even if you have several homes. Non-residents pay corporate income tax only on business activities conducted by any Hungarian company.

3. Bulgaria

Bulgaria offers stunning European urban charm, numerous beach resorts on the Black Sea, and has one of the lowest personal income tax rates in the European Union at 10%. The corporate tax rate in Bulgaria is also 10%, making it the second lowest in the EU after Hungary. This country also has tax treaties with many countries, which can provide special tax benefits for some international entrepreneurs. The tax on payments is capped at 19.6%. If you live in Bulgaria for most of the time, you become a tax resident and must pay 9% tax on your income.

4. Czech Republic

Czechia is often overlooked as a low-tax country, despite having reasonable personal income tax and corporate tax rates. It has long been an attractive relocation destination for foreigners.

5. Georgia

Georgia is located between Eastern Europe and Asia; it offers tax benefits. The income tax in Georgia is 1% for individuals with an annual income of up to 500,000 Georgian Lari (GEL), which is about ($194,000 US), with a 0% tax on personal income from foreign sources. Therefore, for non-U.S. citizens, it is easy to create an international structure and pay zero profit tax while residing in Georgia. It is also possible to have a partial home base in Georgia without incurring any tax obligations. You can even become a tax resident without living in Georgia if you can prove sufficient wealth or high income. Georgia is one of the safest countries in the world and a very attractive place to live and do business.

6. Gibraltar

Gibraltar has long been a popular tax residency for British citizens, but its advantages as a low-tax place of residence are available to everyone. Located at the southern tip of the Iberian Peninsula, bordering Spain, Gibraltar is a British Overseas Territory. This means that, while it is a sovereign country, it can establish its own tax policy. There are two ways to become a resident in Gibraltar: by opening a company or demonstrating a high net worth. Generally, it is easier for entrepreneurs to qualify by forming a company, but in the long run, proving wealth is simpler. Having specialized skills and entrepreneurship with a company in Gibraltar allows you to pay the maximum tax on your salary. You will need to earn over £120,000 a year, but you will only be taxed on £120,000. You will also need to own or rent a home in Gibraltar. The second program – the Category 2 visa – is also attractive, but it requires a net worth of £2 million to be eligible. The main requirement is to purchase or rent a "qualified" home.

7. Malta

Malta is one of the four countries on this list that is part of the Schengen Area and one of the three that are also members of the European Union. The island nation has developed some of the most tax-friendly programs for individual and corporate residents, with the possibility of setting a corporate tax rate as low as 5% for non-resident companies. Malta has long had a fixed payment residency program, but more recently, a Global Residence program was introduced, which has become a second permanent residency option. Unlike Andorra and Monaco, Malta does not require physical presence on its two Mediterranean islands, meaning you can establish residency without actually living there. Malta also prides itself on reducing bureaucracy and allows residents to include household staff in their applications. Maltese residents do not pay tax to maintain residency in the country, but they do pay tax on foreign income and tax on foreign capital gains sent to a bank account in Malta. Other income, including pensions, may be taxed once at a fixed rate of 15% due to Malta's tax network.

This list of countries offers optimal tax conditions for those who want to live in Europe and pay less in taxes. Each country has its unique requirements and programs for obtaining residency or citizenship, and here we have only briefly touched on the main points. Before making a decision on which country to choose for living and tax planning, it is advisable to consult with an experienced tax advisor to take into account individual circumstances and tax opportunities.

• Andorra
• Hungary
• Bulgaria
• Czech Republic
• Georgia
• Gibraltar
• Malta