Top 12 European Countries with Low-Tax You Need to Know
Whether you are a business enthusiast, professional, digital nomad or an individual looking forward to living in and starting a new enterprise in Europe, one of the most cogent factors you would want to consider is the tax rate of the country you will be choosing.
While efficient tax structure and payment could contribute to the economic and political growth of a nation, tax rates should, however, be made convenient to its payers. You would usually find many countries in Europe with high, moderate and low tax rates.
With a low tax rate, you would be able to save more on your revenue and, more so, be able to meet up with tax payments every year. Incorpuk in this guide thus provides a comprehensive list of the top 12 European countries with low taxes.
Top 12 European Countries with Low-Tax
Here are top 12 Europeans countries with low tax
1. Andorra
Andorra is one of the countries in Europe with the lowest tax rate. The nation started implementing income tax only in 2015. It is located between Spain and France, and it's still one of the tax haven regions in Europe. As a business owner seeking permanent residence in Europe, Andorra is one of the best places to consider.
For individuals with generational wealth, you could expect no tax at all on your inheritance or gift, as Andorra doesn’t have a wealth tax. If you earn less than 24,000 euros, you could be exempted from income tax.
However, for earnings that are more than 40,000 euros, you could expect the highest tax rate of 10%. Corporate tax, on the other hand, is structured between a 2% to 10% tax rate.
To be a tax resident in Andorra, you could simply start your company or invest within the nation. Beyond that, you would be required to spend at least 3 months in a year in Andorra.
2. Bulgaria
Bulgaria charges a corporate tax rate of 10% making it one of the lowest corporate taxed countries in Europe. Beyond that, the country is known for the tax treaties that abound it with other nations.
With this, it is one of the most favoured countries for global entrepreneurs. Bulgaria also maintains a good quality of life, a natural and mountainous environment, high employment opportunities, reservation of cultural backgrounds and lots more.
As a Bulgarian non-resident earning some form of income in the country, you could expect that the tax rate will only be applied to the earnings generated only from Bulgaria. It is also one of the best nations to work with its ever-growing economy and sound healthcare system.
Beyond that, the country is also generally affordable to live with low-cost office rent and labour and highly accessible infrastructural facilities.
3. Hungary
This is another country with the lowest corporate tax in Europe. Corporate tax goes at a rate of 9% while individuals are taxed at a flat rate of 15%. Beyond that, there are also several tax allowances you could expect, especially for families.
Hungary's low corporate tax rate makes it one of the favoured areas for foreign nationals to set up businesses. As such, foreigners looking forward to being tax residents are expected to spend nothing less than 183 days in Hungary.
While the nation offers reasonable corporate and individual income tax rates, its immigration policies aren’t so friendly compared to many other European countries.
However, the country company formation process is quite easy and can be done online. It generally has a low cost of living with several governmental bodies offering incentives and initiatives to support foreign investments.
4. Czech Republic
The Czech Republic is one of the attractive places for foreigners looking to relocate. The country offers a tax rate of 15% to European citizens with a corporate tax rate of 19%.
As a foreigner looking forward to relocating and starting a business in Czechia, detailed tax planning is necessary, as you might be required to rent a home or own one to be qualified as a tax resident.
On the other hand, the country generally has a low cost of living with many technological advancements and digital experts. It is also one of the best countries for tourism in Europe.
Beyond that, the nation also boasts itself with highly developed infrastructure, fair economic regulations, an inclusive business environment, an efficient educational system and so on. The Czech Republic is located in central Europe, which makes it easily accessible to both western and eastern markets.
5. Montenegro
This is another small nation in Europe with an income and corporate tax rate of 9-15%. With its low tax rate, the country has attracted many business owners. As a foreigner, you would be able to obtain a temporary residence in the country by owning a residential property.
This way you can renew the residence every year and be required to pay a flat tax rate of 15% on your income. The country is actually one of the less popular nations in Europe, however; it is one of the most affordable and the safest.
Its tax structure is also less complicated and its company formation and maintenance process are relatively cost effective than most other European countries.
6. Malta
Malta's tax system could vary depending on the amount of income received. This is usually progressive from 0% to 35% with the highest rate applied on earnings that are up to 60,000 euros per year.
However, as a foreign national, you could expect a tax rate of approximately 15% on your earnings. As a resident of Malta, you do not have to pay income tax derived from other countries. So far the earnings haven’t been made available in Malta.
Whether you're a resident or nonresident, Malta is potentially a country where you could minimise tax burden even while earning high. The country is known for its low cost of living and technological advancement. It is a great place with beautiful beaches and a cultural and historical background.
Beyond that, it has an extensive job market and a variety of tech companies and is generally favoured by foreigners. The country also has 3 tax options for residents, this includes The Global Residence Program, The Malta Permanent Residence Programme and the Non-domiciled Tax Residence.
So, as a foreigner looking forward to obtaining Malta residency soon, you might want to consider either of the 3 tax options to go for.
7. Gibraltar
Gibraltar charges a tax rate of 12.5% for corporate investment. As an individual, you can be taxed with either the Gross Income-Based System or the Allowance-Based System.
Gibraltar's tax structure is highly favoured by the British due to its low tax residency. However, it is open to everyone. To become a tax resident in the country, you could either form a company or prove a high net worth in terms of wealth and income.
More so, you will be required to spend at least 183 days in a year within the nation. Interestingly, the country doesn’t also have a wealth tax rate, so you aren’t charged on your inheritance or gifts.
Located close to Spain, the country offers extremely beautiful beaches with a night lifestyle. It also offers a luxurious lifestyle, making it one of the most favoured for individuals looking out to explore a rich environment.
8. Estonia
Estonia offers a flat rate of 20% on income. It is one of the most technologically advanced countries in Europe, with several tech establishments. It also has a high standard of living, with a blend of modern and traditional culture.
Its standard educational system also makes it one of the best regions for family settlement. With the entrepreneurial nature of the country, it is one of the most exciting nations to start a business.
As a resident, you can equally be qualified for some business funding opportunities. The tax compliance policy of the nation is also less complicated, and as a company, you could expect to spend less time with tax filings.
9. Cyprus
This is another country that offers an income tax exemption for earnings that are up to 20,000 euros. Earnings that are beyond that are charged at a 20% tax rate, which is reasonably low compared to many other nations in Europe.
In cases where you earn more than 60,000 euros per year, then the highest tax rate of 35% is applied. Corporate tax is also quite low, with a rate of 12.5% for resident enterprises, while non-resident businesses pay no corporate tax.
Cyprus is generally a sunny region with many cultural backgrounds, a high quality of life and a diverse community of people from several nations.
10. Luxembourg
Luxembourg charges a tax rate of 15% on income that is up to 175,000 euros, while 17% is charged on income that is more than 200,000 euros.
In most cases, dividends of enterprise aren’t taxed. Many international business owners who have their companies in Luxembourg as holding companies are only taxed at a highly reduced rate.
You would usually find many big companies like Amazon and Apple having their subsidiaries located in the country due to the low tax. If you have a resident company in the country, then you would be taxed on the income generated worldwide.
As a non-resident company, only the income accumulated within Luxembourg is taxed. Luxembourg is one of the most developed regions in Europe and it is regarded as one of the most affluent countries to live in.
The country also has stable economic policies with favourable tax regulations. It is a business-oriented region with many technological and industrial facilities and multilingual talents.
11. Georgia
Georgia's tax rate on income is approximately 20%, although it offers a territorial tax option. This simply means the income obtained only within the nation is taxed and not the ones gained from any other country.
For small business owners, tax rates aren’t applied until a revenue of about 11,000 euros is generated. However, if you’re able to make an annual revenue of 180,000 euros as a company, then a 1% tax rate is applied on the turnover.
As such, it is a highly tax-friendly region for individuals looking to set up a business in the EU. To be a tax resident, you would be required to demonstrate a high net worth or income. On the other hand, you don’t have to live in Georgia to be a tax resident.
Georgia, as a country, is loaded with an old and naturally reserved environment, beautiful beaches and mountains, and so on. The cost of living is relatively low, and it is a great centre for digital nomads. Immigration rules in Georgia are also straightforward and you can expect a smooth transition when relocating to this country.
12. Lithuania
Lithuania is one of the places to set up business as the country only charges a 10% rate of corporate tax. Income tax, however, is charged at a rate of 20% to 32% depending on how high the income is.
Lithuania is also considered as one of the developed regions in Europe. If you are looking forward to starting your own enterprise while also saving on taxes, then this could be a country to consider. The country also boasts of great cost of living, beautiful historical events, beaches and lakes.
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Conclusion
So here is the list of our top 12 European countries with low-tax. While each country has a varying tax rate, structure, policies and regulations, you should consider selecting the ones that suit your specific business or personal needs. Kindly contact us here, if you have any question or would like to speak to one of our experts.