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Benjamin Franklin may have said death and taxes are inevitable for everyone – but he forgot to mention that there are still a few places where expats can move and pay no tax.
Tax havens are not illegal – anyone can freely keep their money and investments offshore, provided they are not salting away their fortunes to evade tax.
So tax avoidance is OK. Avoidance is taking reasonable steps by manipulating the rules to pay less tax.
Evasion is a criminal enterprise to cheat the tax system and is illegal.
When most of us dream of living in a tax haven, we ponder relaxing with a cocktail on a sun-kissed, white sand beach lined with palm trees and lapped by warm crystal blue waters.
Funnily enough, that image is correct – most tax havens are based on Caribbean islands or desert countries in the Middle East, although some notable exceptions exist.
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Why are countries tax havens?
Collecting taxes is the way most countries raise money to fund their governments. Some countries rely on a different model – zero tax. This is possible when enough money to pay for government spending rolls in from elsewhere.
For example, the United Arab Emirates (UAE) has enormous wealth from selling oil and gas. Other countries, like The Bahamas and Bermuda, raise their money by attracting many tourists.
Ten countries with zero personal taxes
Read on for a list of the world’s most popular tax havens – and you may find some surprises along the way.
United Arab Emirates (UAE)
The UAE is one of the Gulf States with an economy driven by fossil fuel exports. The best-known emirates are the modern steel and glass cities of Dubai and Abu Dhabi. Oil and gas roles are available for expats, but other careers are available – in financial services, healthcare and teaching.
The UAE does not levy personal taxes, so expats are free of income tax, capital gains tax (CGT) and inheritance tax (IHT).
The UAE also has a forward-thinking attitude to rewarding expats with residence and retirement visas.
An estimated 60,000+ British expats have moved to the UAE.
Read more about living in Dubai in our comprehensive guide.
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Bahrain
Another of the zero-tax Gulf States with an economy heavily reliant on extracting and exporting fossil fuels, although the government is trying to expand into financial services, construction and manufacturing.
Bahrain has no personal income tax, CGT or IHT.
Expats can apply for residence but are not considered unless they own property valued at US$530,000; they are retirees with a $10,500 monthly income or can display exceptional talent in their field.
As one of the smaller Gulf States, the British expat population is low – around 12,000.
The Bahamas
The Bahamas is an island nation nestling in the warm blue waters of the Caribbean Sea.
The islands are popular with wealthy US retirees due to closeness to the state and the adoption of English as a main language.
The economy is mainly grounded in financial services and tourism.
Expats pay no income tax, CGT or IHT. The cost of living is roughly a third more expensive than in London. However, expat jobs are hard to come by except for roles in tourism or banking.
The Bahamas has a small British expat population of about 5,000.
Bermuda
Bermuda is often considered a Caribbean destination in the Atlantic Ocean, 1,250 miles from Cuba and 980 miles from Florida.
Another former British territory, Bermuda is much-loved as a tourist and retirement destination by Americans. The economy is based on banking and tourism. Outside of those sectors, Bermuda has few jobs for expats.
Expats pay zero personal taxes but must have a permit to work in Bermuda. You must live in Bermuda for at least 15 years before residency is considered. The British expat permanent population numbers just 400 people.
Hamilton, the capital, tops global cost of living tables as the most expensive city to live in worldwide.
Cayman Islands
The Cayman Islands are considered one of the busiest tax havens in the Caribbean, home to countless companies sheltering their worldwide profits there.
Besides levying little or no corporation tax, expats pay no personal taxes in the Cayman Islands.
However, the cost of living is among the highest in the world – ranking ninth.
The economy is based on financial services, including insurance and banking and is home to thousands of hedge funds.
Expats can apply for residence once they have lived on the islands for eight years. Around 500 British expats live and work in the Cayman Islands.
Monaco
Monaco is a postage stamp-sized city on the Mediterranean coast of the South of France, not far from Nice. The small nation has a reputation for fast living, expensive yachts and homes, and a smart casino frequented by smooth spies in dinner jackets and evening dresses.
Expats living in Monaco pay no personal taxes. The economy generates cash from tourism and corporate taxes. Monaco has 300 permanent residents, including singer Shirley Bassey and champion cyclist Chris Froome.
Kuwait
Often voted as one of the most unfriendly countries for expats, Kuwait is another Gulf State without any personal income tax, CGT or IHT.
Kuwait relies heavily on exploiting huge oil and gas fields to generate income for the government. Like most of the Gulf economies, Kuwait is trying to shift away from dependence on exporting oil and gas.
The government has a policy of putting Kuwaitis first for management and executive posts, but still relies strongly on expat labour. Around 10,000 British expats live and work in Kuwait.
Oman
Oman has no income tax, CGT or IHT for expats, but few jobs either.
Around 8,000 Brits live in this Gulf State. In-demand jobs include engineering, oil and gas, IT and teaching.
Expats can stay in Oman if they have a work permit or can apply for permanent residency after a stay of 183 days.
Around 8,000 British expats live in Oman.
Qatar
Qatar is almost a pariah state in the Gulf due to accusations of hosting terrorist and radical organisations, allegations of corruption linked to hosting the 2022 World Cup, and the funding for Premier League soccer club Manchester City.
However, the country has a booming economy based on oil and gas exports.
Other expat roles are in engineering, construction, tourism and finance.
Qatar is home to more than 12,000 British expats.
Saudi Arabia
Saudi Arabia has the largest Gulf State economy. The government is trying to diversify into other sectors, but income is reliant on oil and gas.
The government is investing in massive infrastructure projects to promote economic diversification. Expat jobs outside oil and gas include engineering, construction, medicine and teaching.
Expats pay no personal taxes on earned income. Saudi Arabia has strong non-liberal laws regarding LGBTQ+ communities and women’s rights.
Many of the county’s 26,000 British expats living in Saudi Arabia cities of Riyadh or Jeddah.
10 Countries Where Expats Pay No Income Tax FAQ
This is not a complete listing of zero-tax countries. A few more countries, such as Antigua & Barbuda, Brunei, Somalia and Western Sahara, do not charge personal taxes. However, some of these countries are considered dangerous or undesirable places to live.
FATCA is the US Foreign Account Tax Compliance Act and CRS, the Common Reporting Standard, are tax data swapping networks involving most major economies. Under the agreements, the tax authority in one country informs the tax authority in another country if a non-national has an offshore bank account or investments.
Most tax havens cooperate with FATCA and the CRS.
Keeping your money and investments in a tax haven is not illegal – but trying to hide your wealth is. Anyone can have an offshore bank account, provided the details are passed to the tax authority in the country where you live.
Putting wealth offshore is tax avoidance, which is perfectly legal in most countries, but plotting not to pay any tax by deception is tax evasion and a crime.
Europe has several low tax havens to choose from, but all levy income tax and other personal taxes except Monaco.
Many tax havens only allow residency for wealthy expats who can afford to buy a home worth £200,000 or more and invest up to £1 million in a business.
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