What in the world are you doing with your money?

One of the perks of working and living overseas, and especially right now in Europe, is that you get paid in a currency which is stronger than that of your home country. But of course, it’s not always beneficial to send your money back home because of taxation laws. In Germany, you’re taxed at very high levels anyway, so double taxation is often not much of a concern. But there are others who live in places where no tax is taken in the host country at all — and then you really don’t want to be faced with giving up 30-40% of your income later on.

But tax havens are not all about palm trees and jet-set lifestyles; some of the world’s best investment locations are unassuming places that have quietly established themselves as important financial centres for those seeking to protect their money. While places like Monaco, the Caribbean and the Cayman islands regularly hit the headlines as playgrounds for the very rich who aim to keep their riches, there are many jurisdictions around the world that have been offering attractive expatriate tax benefits for years.

Deciding where to put your money will be the first and most important step in your offshore tax planning and it will pay to get the best advice possible to ensure you get it right. A key consideration is whether or not you plan to live there. Some havens offer excellent expatriate tax benefits but have a questionable quality of life that is possibly not what you had in mind when you began planning your new life abroad. Others offer a fantastic lifestyle but you will need the deep pockets of a millionaire to enjoy them.

photo credit: Cayusa via photopin cc

Havens in Europe

The best tax haven for you will depend largely on your personal and financial circumstances. If you need to be near the UK, there are many European locations to take advantage of. Places like the Isle of Man, Guernsey, Malta and Monaco all have advantageous tax benefits, especially for expat pensions, and make it possible to protect your investment for future generations. In Monaco, for example, residents pay no income tax, although they pay a lot for the privilege with a high cost of living and property prices so astronomical that a modest two-bedroom flat cost upwards of EUR2 million.

However it is not necessary to move to a glamorous principality, or even an island, to enjoy the tax benefits available to expats who plan wisely. Some of the big European states, like France, Portugal and Spain, offer tax incentives to foreign workers and new tax residents, while countries like Switzerland, Andorra, Lichtenstein and Luxembourg are well established as jurisdictions with tax legislation that is heavily in favour of investors.

Global tax shelters

Further abroad there are tax havens to be found in every corner of the globe. The Caribbean is very popular, with the Bahamas in particular being much sought after by American investors for its zero rate tax. Despite being one of the world’s smallest sovereign states, the Cayman Islands has become one of its biggest financial centres thanks to a tax regime in which corporations and investment entities can pay zero tax on income or corporate gains.

Add to these the commercial powerhouses of places like Hong Kong, Singapore and Dubai, all of which have liberal banking and taxation laws, and it is clear there is no shortage of choice for expats. At least one of them is certain to be right for your circumstances, providing a profitable return on your money and ensuring your tax obligations are never any higher than they absolutely have to be.

If you are looking to explore your expat tax shelter options, Whichoffshore provides professional expatriate information on offshore estate planning, QROPS pensions and more, in order to help British and other expatriates make the most of their money. For more information, please visit http://www.whichoffshore.com/

Comments

  1. Of course, American citizens or permanent residents who shelter their funds in these “havens” are breaking the law: we are required to file a tax return including our world wide income and investments and when taxes levied are lower than they would be in the US, to pay the difference to the IRS.

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