5 European Countries with Low Tax for Entrepreneurs (2024)

5 European Countries with Low Tax for Entrepreneurs

Having dual citizenship comes with many benefits and is something that a huge number of Americans are considering these days. But contrary to what some people may believe, having an extra passport doesn’t necessarily mean that you no longer have to pay taxes in your home country.

There is no limit to how many passports an American citizen can have, however, as long as you continue to have a U.S. passport, the IRS will still require you to pay taxes.

Having said all that, there are a couple of ways to make sure that you don’t have to pay any extra taxes, particularly if you’re planning to start a new business.

On one hand, you can become a resident of a tax-free country that doesn’t require you to pay taxes on income or capital gains.

Another option is to pick a country that only imposes territorial taxes. This means that you’ll only have to pay taxes as long as your income comes from within the country’s borders.

Bulgaria

Bulgaria has a flat tax rate of only 10%, which makes it the country with the lowest personal tax rate in the EU. Similarly, the corporate tax rate also sits at 10%, and thanks to the country’s tax treaties, many international business owners can expect to be eligible for special tax treatments.

Anyone can become a fiscal resident of Bulgaria by living there for 183 days or more over the course of a year. If that’s not an option, entrepreneurs can also try taking a test known as “center of life.” Just as its name suggests, this test requires you to prove that Bulgaria actually has a special place in your heart.

Gibraltar

Consider Gibraltar as a possible option only if you have about $3 million in your bank account. If that’s the case, you might be able to become a resident of the country and become part of the Category 2 visa program.

The taxes for Category 2 visa owners amount to around £29,000 each year, which isn’t necessarily that cheap, but this category is only really meant for entrepreneurs that own fairly successful businesses. All in all, the tax rate is much better than in other countries and the aforementioned cost doesn’t tend to change very often.

Monaco

Many of the world’s richest people call Monaco their home, so this isn’t really a good place for small-time business owners. On the other hand, wealthy entrepreneurs will definitely find Monaco very appealing, provided they can find a suitable place for their company’s headquarters.

Those interested in taking up residence in Monaco should be aware that the country requires potential new citizens to deposit €500,000 in a local bank and buy at least €500,000 worth of real estate in the country.

Malta

Malta is a great choice for anyone looking to pay fewer taxes as the country has a number of programs aimed specifically at this. Taxes can get as low as 5% for non-resident companies thanks to these programs.

Unlike some of the other countries on this list, Malta allows entrepreneurs to establish residency in the country without actually needing to live there. Citizens of Malta are not required to pay any taxes on income generated outside the country as long as said income is not used within Malta. Furthermore, residents are also not required to pay taxes on foreign capital, even if the income is wired to a local bank account.

Other types of income are subject to a one-time flat tax of 15%, thanks to the country’s tax-friendly programs. Those who wish to maintain their Maltese residency will need to pay a minimum tax of €15,000 per year.

Montenegro

At only 9%, this country has the lowest tax rates in all of Europe for both personal and corporate income. Most countries in Eastern Europe are great for establishing a business thanks to their low tax rates, but Montenegro is probably your best choice if that’s what you’re going for. Unsurprisingly, a lot of entrepreneurs are now flocking to the country, and business there is flourishing.

Foreigners can obtain a temporary residence card in Montenegro by purchasing residential property. The card needs to be renewed on a yearly basis and residents who spend less than 183 days in the country will not be taxed in most cases.

On the other hand, those who do wish to establish permanent residency in Montenegro or end up spending more than 183 days there will need to pay taxes. As mentioned, though, the tax rate is very small and only amounts to 9% of the total income.

All of this makes Montenegro seem like an ideal place to set up a temporary residency for any company that wants to cut back on taxes while also maintaining a presence in its home country.

If you would like more information about other countries, like Nicaragua, please contact our office HERE

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