The 10 Best Tax Haven Countries: A Comprehensive Guide
A few years back, tax haven countries were only sought after by the ultra-rich and famous. This trend has changed in recent years. Nowadays, moderately wealthy families and individuals also search for the best tax haven countries to minimize or evade their tax liabilities with no legal repercussions.
An IMF study shows multinational companies have directly invested $15 trillion worldwide using empty corporate shells, making 40% of the total foreign investment. Basically, how this works is that the companies funnel money through these empty corporate shells to avoid paying taxes in their home countries. These investments have no actual business activities.
An interesting fact: Citizens from oil-producing and otherwise financially wealthy countries own $7 trillion of the wealth in tax havens. Yes, that’s right!
While the premise may sound legally murky, it’s not. Some of the best tax haven countries in the world let foreigners stash their wealth with no questions asked.
Now, you may be wondering: “Does every country have taxes?” To find the answer, let’s explore the top 10 countries that have no taxes.
How We Ranked the Best Tax Haven Countries
Tax haven countries do not require foreigners to be residents to park their money in the country’s financial institutions. Instead, most of these countries have lax regulations surrounding foreign ownership and provide strict laws that protect the privacy of the investors.
That’s why multinational corporations relocate 40% of their profits to tax havens annually, per UC Berkeley and University of Copenhagen research.
As for our ranking of the best tax haven countries, we took the Financial Secrecy Index into account. It’s a Tax Justice Network (TJN) report that ranks countries based on how much they facilitate offshore activities and financial secrecy. The index uses three scales to determine rankings:
- Secrecy score
- Global scale weight
- FSI value
The FSI value is a combination of the global scale weight and secrecy score. So, we will use it in our ranking below.
The Top 10 Best Tax Haven Countries
Now let’s answer the very question that you are here for: “What countries have no taxes?” Here are the 10 best tax haven countries you should know about.
Luxembourg
FSI Value: 804
Luxembourg isn’t only known for its beautiful landscapes and castles, but it’s also one of the top financial centers in Europe. U.S. PIRG Education Fund reports that 30% of Fortune 500 companies in the U.S. have their subsidiaries in Luxembourg.
An example is Amazon. The ecommerce giant funnels its European sales through its Luxembourg headquarters. Besides companies, Luxembourg also has generous tax policies for individuals. For example, there is a 0% tax on capital gains and royalties. There are plenty of other tax deductions, such as medical treatment, parental allowances, transport, etc.
Germany
FSI Value: 681
Germany has made its name as a tax haven country due to its lax policies, such as zero taxes on interest and privacy for account holders. Foreign companies in the country also enjoy tax advantages as there’s only a 5% tax on capital gains.
Non-resident companies don’t have to pay taxes on income or dividends they generate from foreign branches or subsidiaries. Germany has repeatedly been criticized by the OECD (Organization for Economic Co-operation and Development) for its intransparent deals.
However, the country continues to attract foreign businesses due to its strong economy and favorable tax policies.
United Arab Emirates
FSI Value: 648
The UAE is quickly becoming one of the best tax haven countries due to the introduction of new policies. The country has seen a rapid rise in foreign investments and business opportunities since the 2008 financial crisis.
In 2023, the UAE started charging a 9% tax on corporate gains in its attempts to support tax transparency globally. Despite this, the UAE remains an attractive destination for investors. In fact, Al Jazeera reports that UAE is the fastest-growing as $200 billion recently flowed into the country.
British Virgin Islands
FSI Value: 621
The British Virgin Islands, a colony of the United Kingdom, is a group of islands located in the Caribbean Sea. While the local officials claim that their jurisdiction isn’t a tax haven, the reality is far from it.
The current population of the British Virgin Islands is a little over 31,000 individuals. However, the region is home to over 400,000 companies. That’s about 13 companies per person.
On top of that, the country has an estimated $1.5 trillion in assets. Its economy holds over 5,000 times its worth in foreign financial investment.
Apart from a secrecy score of 71, other factors that make it a suitable tax haven country are:
- Subtropical climate
- Pristine waters
- No exchange controls, making it easy to transfer investment funds privately
- Compliance (has never been blacklisted by the OECD or FATF)
Guernsey
FSI Value: 610
Guernsey is among the best tax haven countries due to its zero corporate general tax, a democratic government, legislative independence, and exemption from value-added, inheritance, and capital gains taxes.
The safe and secure environment, combined with political stability, makes Guernsey a favorable location for offshore companies.
Netherlands
FSI Value: 556
The Netherlands is not all about Dutch cheese and tulips. It’s also one of the best tax haven countries, which is why Fortune 500 companies like IBM, Google, and Fiat Chrysler funnel their profits through their Dutch subsidiaries to lower taxes.
The country gained notoriety for being in the ‘’Double Irish Dutch Sandwich’’. Basically, Google and other companies use the Netherlands as a ‘’conduit’’ country. Basically, Google shifts its profits to Bermuda through the Netherlands and Ireland.
Cayman Islands
FSI Value: 516
For many of us, the Cayman Islands are merely a tourist destination to explore. However, the region holds banking assets equal to 1/15th of the whole world. The Cayman Islands are a preferable tax haven country for hedge funds because there are no income taxes or corporate taxes, even on dividends or interests you earn on an investment.
Many of the Fortune 500 countries, including Wells Fargo and Pepsi, have their subsidiaries in the Caymans.
Cyprus
FSI Value: 510
In 2015, Cyprus lost its status as a tax haven county. However, it has recently reclaimed the position with a secrecy score of 62. Like Bermuda, it is truly one of the countries that have no taxes. These benefits are not limited to corporations only.
Part of the reason Cyprus is an offshore paradise for corporations is that it has low corporate tax rates. Plus, it’s geographically close to Europe and Russia, making it easy to do business with them.
Non-resident digital nomads in the country enjoy many tax exemptions like non-resident companies. For example, non-residents have exemptions on capital gains, royalties, employment income, interest, and dividends. If you live in Cyprus for 60 days or more, you can become the country’s tax resident and enjoy its tax incentives.
Panama
FSI Value: 474
If you’ve heard about the Panama Papers leak, you know that Panama is popular for its tax haven practices. In fact, it’s one of the oldest tax haven countries in the world. The secrecy score of 73 means that it’s quite challenging to get information on the country’s financial activities.
Panama does not impose any capital gains, corporate, estate, or income taxes on offshore entities or their owners.
Since the country does not have any tax treaties with other regions, offshore entities can operate with minimal interference from foreign tax authorities. The lack of exchange control laws further allows offshore companies to repatriate their profits with ease.
Bermuda
FSI Value: 245
Don’t be fooled by the small size or low FSI value of Bermuda. Documents from the Dutch Chamber of Commerce show that Google moved $23 billion in profits to Bermuda in an arrangement to lower its foreign tax bill.
Google isn’t the only one who is doing this. Bermuda has no taxes on capital gains, dividends, income, or profit, which entices global companies and individuals to use the country as a tax haven. The country also has no limits on profit accumulation. There’s also no requirement for dividend distribution.
Takeaway
With that, we have come to the end of our list of the best tax haven countries worldwide. Remember that the tax laws in different countries are subject to change, especially as the global community continues to push for greater transparency and regulation in the financial sector.
However, tax havens will continue to exist and attract individuals and businesses looking for lower taxation rates, confidentiality, and ease of doing business.
Tax avoidance is legal, while tax evasion is not, so make sure to consult with an expert and comply with all tax laws in your home country. That’s where we can help you out!
At Work, Wealth & Travel, we have a team of experts specialized in helping people navigate the intricate world of taxes, citizenships, and residences. We guide you throughout the process to ensure you make the right decision for your new business endeavor. Connect with us today.
Frequently Asked Questions
Do all countries have taxes?
It’s common to wonder: does every country have taxes? The short answer is that most countries do. However, some countries, like the UAE, Bahamas, Monaco, and Bermuda, do not have personal income taxes. Similarly, some countries do not have any corporate taxes. Examples include the Cayman Islands and Bermuda.
What countries have no taxes?
Some of the countries that do not have taxes include Monaco, Bahamas, UAE, Bahrain, Bermuda, and the Cayman Islands. However, these countries may have other types of taxes, such as value-added tax or excise duties. Similarly, there may be a variable income tax rate for certain types of businesses in these countries. It’s always best to research the specific taxation laws of a country before making any financial decisions.
