Top Tax Havens around the World
- Posted: February 16, 2023
- Posted by: Travis Lynk
- Last Reviewed: February 24, 2023
Keep reading for our guide to the best tax havens worldwide for American citizens.
- Puerto Rico and the United States
- The Bahamas
- British Virgin Islands
- The Cayman Islands
- The Channel Islands
Learn about the Best Tax Havens
If you’re the kind of person who wants more favorable tax treatment for your business and personal wealth, you’ve got plenty of company.
Fortunately, there are also plenty of places all over the world that want to help you achieve this goal. These countries, states, and territories offer tax incentives and loopholes you can use to keep more of your money.
What you need is a tax haven.
What Is a Tax Haven?
A “tax haven” is a place where a business or an individual investor can keep their funds while paying meager taxes—with rates as low as 0%, in some cases.
Tax havens tend to charge investors only modest fees and taxes, but these charges add up. The income generated is valuable revenue that boosts economic growth in such places. The arrangement is a win-win for both sides.
A good tax haven gives clients discretion and easy access to their funds. Some tax haven countries share little or no financial information from investors with foreign tax authorities.
A few tax havens are called “offshore financial centers,” according to the Tax Justice Network. These “pure” tax havens often have laws designed to evade tax legislation in foreign entities and enhance secrecy for banks and legal entities. They’re getting harder to find, as international support for a global minimum tax has grown.
If you’re looking for a tax haven for your cash, one of these ten places might fit the bill.
Top 10 Tax Havens
We’ve come up with this personal and corporate tax haven index using key factors Americans take into account when considering a move, such as:
- Lowest tax rates
- Access to affordable high-quality living
- Ease of adjusting for those accustomed to a Western lifestyle
Puerto Rico and the United States
Occupying much of North America, the United States offers varied tax policies, as each jurisdiction determines its own rates on income taxes.
- Alaska, Florida, Montana, South Dakota, and Wyoming are among the U.S. states that do not impose state income taxes. Federal taxes still apply, though.
- Delaware does not impose corporate taxes on corporations incorporated inside the state that do business outside of the state.
Located in the Caribbean Sea, the U.S. territory of Puerto Rico is a spectacular tax haven for businesses and individuals. Much of this is due to Act 60, a piece of legislation passed to boost economic development on the island. Puerto Rico residents generally do not pay federal income taxes, but they do pay taxes to the Puerto Rico government. And Puerto Rico keeps those taxes low for certain businesses and individuals.
- Under the Act 60 Export Services Tax Incentive, a qualified business enjoys a corporate tax rate of only 4%. That’s lower than the 21% corporate tax rate (plus state taxes, in many cases) on the mainland.
- Under the Act 60 Individual Resident Investor Tax Incentive, someone who qualifies as a bona fide resident of Puerto Rico pays 0% Puerto Rico income taxes on dividends, interest, capital gains, and gains from cryptocurrency assets.
- Depending on where you settle in Puerto Rico, you will probably save somewhere between 5% and 70% off the cost of living in a typical U.S. city.
- English is one of Puerto Rico’s official languages.
Nestled between Cuba and Florida in the Caribbean Sea, this island nation is a popular tax haven for many U.S. and European residents and has implemented strict laws on banking secrecy.
- The Bahamas does not enforce income, sales, capital gains, estate, or gift taxes.
- It generally does not require much financial reporting from investors.
- The Bahamas has a high cost of living; real estate, electricity, and gas are expensive in this tax haven relative to the United States.
The next place on our corporate tax haven index is Bermuda, a British Overseas Territory in the North Atlantic Ocean. This tax haven charges no corporate, capital gains, or estate taxes.
- Bermuda has a much higher cost of living than the United States; it costs 99% more to live here than in the United States on average. Property taxes are staggering, approaching 50%.
- Residents are limited to one car per household.
British Virgin Islands
The British Virgin Islands is another major tax haven in the Caribbean Sea. More than 500,000 companies keep around $1.5 trillion in funds here.
- The British Virgin Islands does not impose personal income, corporate, inheritance, sales, or gift taxes.
- It is highly protective of the financial privacy of its clients, as it has no tax treaties with other countries.
- However, real estate is costly and roads can be dangerous in this tax haven.
The Cayman Islands
Yet another Caribbean Sea tax haven, the Cayman Islands is one of the world’s most famous offshore financial centers. Corporations and individuals get favorable tax treatment in this British Overseas Territory.
- The Cayman Islands does not impose personal income, capital gains, corporate, estate, gift, inheritance, or property taxes.
- Offshore corporations can transfer money freely and do not have to provide financial reports to local government authorities.
- Fees for doing business here and the cost of living are high.
The Channel Islands
Situated between England and France in the English Channel, the islands of Jersey and Guernsey have strong reputations as corporate tax havens. Each hosts many international banks, fund managers, and trust companies.
- Permanently established companies in Jersey pay no corporate taxes or taxes on dividends and capital gains.
- Jersey and Guernsey are safe places with fast internet speeds.
- Housing prices are high, however, and Jersey’s personal income tax rate is 20%.
Located in Western Europe, Luxembourg shares borders with Belgium, France, and Germany. Luxembourg’s corporate tax laws, which include the lack of withholding tax and numerous corporate tax loopholes, have attracted foreign direct investment and corporations worldwide.
- Non-resident companies in Luxembourg owe no taxes on income gained outside of Luxembourg.
- Residency in Luxembourg offers few tax advantages to individual investors, however.
This tiny country is sandwiched between the Mediterranean Sea and France. It’s a popular tax haven for wealthy individuals.
- If you can claim residency in Monaco, you keep 100% of what you earn in this tax haven; there are no personal income or capital gains taxes.
- However, Monaco imposes corporate taxes on profits generated outside of the country. You pay taxes on all purchases, and these value-added taxes are high.
- This tax haven is also densely populated, with some of the highest property prices in the world.
This small Southeast Asian country located between Indonesia and Malaysia is another favorite tax haven that has attracted many foreign investors.
- Singapore has a 17% corporate income tax. However, incentives and other loopholes make it competitive for multinational corporations.
- Singapore imposes a high tax rate of up to 22% on individuals.
- This tax haven is modern, secure, and offers reasonably priced accommodations.
The final place on our corporate tax haven index is Switzerland. Located in central Europe, Switzerland is one of the oldest tax havens in the world and remains a top destination for corporations and high-net-worth individuals.
- The country’s personal income tax rate is 11.5% and its corporate tax rate is 8.5%, but additional deductions, allowances, and local taxes may apply.
- Switzerland now shares information about millions of bank accounts with dozens of other countries, including members of the European Union.
- The safe and neutral country offers excellent value for healthcare services.
- However, the country’s real estate tends to be expensive. Housing rules are strict.
Why Puerto Rico?
As this corporate tax haven index shows, the world offers wealthy investors many tax havens, each with a different set of pros and cons.
Americans relocating from the mainland can enjoy the best of all worlds in just one of these:
Americans Can See Lower Federal Taxes and More in Puerto Rico
The United States implements a worldwide income tax system. If you’re an American citizen, you are still responsible for federal income tax payments if you leave the country.
Getting out of your federal income tax responsibility in this manner would generally require you to renounce your U.S. citizenship. This step would be unfavorable for most Americans, who would lose access to Medicare benefits and have to pay a $2,350 renunciation fee and exit tax calculated as a capital gains tax, among other downsides.
Becoming a bona fide resident of Puerto Rico allows you to escape from paying most U.S. taxes legally without giving up the advantages of U.S. citizenship. With a few exceptions (for example, if you’re an employee of the federal government), you shouldn’t have to file a U.S. federal income tax return at all on your Puerto Rico source income.
Reasonable local taxes, federal tax exemptions, and the overall low cost of living have also made this sunny Caribbean paradise an attractive option for many businesses and individuals. Thousands of Americans have relocated from the mainland to the island to reap the benefits of Act 60 and other generous tax incentives.
Follow in their footsteps to this tax haven, and you’ll remain in the United States without having to pay most U.S. taxes.
Puerto Rico is truly the best tax haven for Americans.
Moving to the Ideal Tax Haven Isn’t Taxing with PRelocate
And there you have it—a brief overview of some of the best tax haven countries and other jurisdictions.
Is Puerto Rico a tax haven for you? Suppose you’re searching for tax breaks and a low cost of high-quality living in a familiar and comfortable location. In that case, you can have it all if you establish residency on the Island of Enchantment.
However, if you want to pay almost no taxes, you must remember to play by the rules.
Our friendly expert team has spent years helping many others to navigate the complexities of relocating to this tax haven. PRelocate can save you time and money. Our thrilled clients take full advantage of the benefits that come with establishing residency on the island.
We’d love to help you too.
We’re happy to discuss anything related to your move to the island.
Disclaimer: Neither PRelocate, LLC, nor any of its affiliates (together “PRelocate”) are law firms, and this is not legal advice. You should use common sense and rely on your own legal counsel for a formal legal opinion on Puerto Rico’s tax incentives, maintaining bona fide residence in Puerto Rico, and any other issues related to taxes or residency in Puerto Rico. PRelocate does not assume any responsibility for the contents of, or the consequences of using, any version of any real estate or other document templates or any spreadsheets found on our website (together, the “Materials”). Before using any Materials, you should consult with legal counsel licensed to practice in the relevant jurisdiction.
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