Relocate to a Tax-Friendly Nation

Many of our clients have found financial success and disappointingly find out they are located in a jurisdiction where they are penalized for having large amounts of wealth. That is why we recommend relocating to a new nation that has more favorable tax treatment for high-earning investors. This article covers why we recommend relocating and how to move to some of the most tax-friendly nations. You’ll find that there are many benefits to relocating to a new nation beyond the favorable taxes.

Why Relocate?

Many of our clients seek out offshore investment for tax benefits. Many countries or territories offer tax incentives for foreign investors that benefit the investor and encourage the growth of their own economy by attracting wealth from around the world. There are legal ways for people and corporations worldwide to reduce their tax responsibilities by moving to countries that provide banking services to foreign entities, allowing them to grow their wealth. For a person, tax-favored jurisdictions offer lower or no capital gains tax, tax on interest, inheritance, or personal income. Corporations have also saved billions by reporting earnings to subsidiaries in countries that tax corporations less. You may be wondering why a country would offer these tax incentives? The host nation benefits by drawing in capital to their banks and other financial institutions. This money can create and fuel a successful financial sector and grow the economy.

How to Relocate to a Tax-Friendly Nation

Now, let’s look at how to relocate to tax-friendly nations across the globe. It’s essential to keep in mind that moving offshore requires a great deal of planning, and this cannot act as a how-to guide for moving abroad. Contact Alpen Partners when you are ready to take the leap.

Switzerland

Switzerland is a hotspot for wealthy investors and is very tax-friendly. It offers low taxation on foreign corporations and individuals. While the country is not exactly tax-free, the government does offer wealthy investors to pay a lump sum which is much lower than the rate. Further, the country taxes households rather than individuals, which can lower and simplify taxation for wealthy families. To qualify for some immigration programs for wealthy individuals, an investor must prove they have at least USD 1 million at their disposal before the time of application. The applicant can gain the residency permit by either creating a Swiss company or paying a lump sum taxation (LST) fee that can be as low as USD 170,000 or CHF 150,000.

Portugal

Portugal is well known for being an excellent place for expats to live and retire. The affordable price of living, ideal location, and ease of immigration are all leading factors. Many investors also look to Portugal as a great place to save on taxes.

On October 6th, 2023, Portugal’s government enacted the “Mais Habitação Law,” significantly reforming the Golden Visa program by eliminating real estate investments as a pathway to obtaining a Golden Visa. Despite these changes, the program remains active with revised investment options, such as venture capital funds, job creation, and support for artistic production or cultural heritage. These shifts aim to address housing affordability issues and redirect investments towards broader economic and cultural benefits.

Existing Golden Visa holders’ rights remain intact, including renewals, family reunification, and applications for permanent residency. New investment pathways include capital transfers of €500,000 or more in qualifying non-real estate venture capital funds, creating at least ten jobs, and investing in research activities. Additionally, investors can support artistic and cultural development through capital transfers of €250,000 or more, or by forming commercial companies with significant capital and job creation. These changes reflect the government’s intention to diversify investments into areas that can drive broader economic and cultural benefits.

The Portuguese government also plans to reintroduce the “Non-Habitual Resident” scheme to attract skilled workers, offering tax breaks on Portuguese-sourced income and foreign income. This scheme, originally launched in 2009, was extended until the end of 2024 for those prepared to move to Portugal in 2023. While the “Mais Habitação Law” has altered the Golden Visa program by removing real estate options, it continues to offer viable investment pathways. Prospective applicants must navigate this new landscape with careful consideration of the revised investment criteria, as Portugal aims to balance attracting foreign investment with addressing housing market concerns.

Also, there are no wealth taxes or gift or inheritance taxes in Portugal. Not only is it appealing to live in Portugal, but it is also relatively easy for an individual to move their life there. The country’s Golden Visa allows an individual to make a variety of investments and receive permanent residence. The only requirement to keep resident status is to stay in the country for two weeks every two years.

Monaco

Monaco is probably the best place for those looking to save on taxes. It is a tax-free country as long as you are not a French citizen. The country completely eliminated income tax way back in 1869. This makes Monaco Europe’s only sovereign zero-tax jurisdiction. There is a hefty up-front fee, but that is nothing compared to the tax savings that come with living here. The other downfall is residents are expected to live in the country, which is not always ideal for those hoping to earn residence and be back home. Luckily, Monaco is a beautiful South Mediterranean country that is home to some of the world’s wealthiest investors. Monaco’s residency-by-investment program grants individuals residence by placing a €500,000 deposit into a bank account in Monaco. The application process takes around three months to complete and will require several compliance and due diligence tests. During the process,  individuals will provide proof of lease or purchase agreement showing they intend to reside in the country, and sufficient funds to live in Monaco.

The UK

Not only is the United Kingdom a beautiful, multicultural nation with high standards for education, healthcare, and business, it also offers a unique tax treatment for some foreign residents. The UK offers what is known as non-domiciled (non-dom) residence for foreigners living in the country. A non-dom resident will be considered a tax resident, but their domicile remains in their home country. A person who is classified as a non-dom can pay their taxes on a remittance basis. Remittance basis of taxation means the individual is taxed on UK income and gains and ONLY foreign income and gains brought back to the UK. This residency lasts for three years and four months. After this time, they can apply to extend the time a further two years. After six years, the resident can apply for citizenship.

The US

Many may think the United States has some of the worst taxation, but by comparison, the US is a country that taxes its high-earning residents the least. Also, with access to the most exciting global markets globally, many high-earning investors move to the US to take advantage of what they have to offer. There are several ways for an investor to move to the United States. With the EB-5 visa, investors can obtain permanent residency in the US by means of qualified investments. The E-2 is a way for individuals from certain countries to work and live in the United States. With this option, investors can build their own business as a foreign entrepreneur.

Relocate with Alpen Partners International

In conjunction with respected law firms in various regions of the world, Alpen Partners International advises high-earning clients on expatriation and relocation needs. It can be difficult to navigate the world of tax savings by relocating. Each country offers its own benefits and downfalls, and it is often difficult to understand which country works best for your needs. Alpen Partners International, and our team of experts, can guide investors through the world of residency by investment, relocating, and more. Not only will we work with you to create your relocation plan, but we will be there with you every step of the way, and not just with relocation. Alpen Partners International assists in all levels of financial and life planning for high-net-worth individuals, including tax planning, asset protection, portfolio diversification, and more. Contact the experts of Alpen Partners International today!