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Confronted with the high income tax rates in the UK, British citizens have been more interested in alternative taxation programs in recent years. One of them is the Non-Habitual Residency (NHR). According to a study by UHY (Urbach Hacker Young International Limited) in 2019, tax rates for salaries in the UK are higher than the European average. The rate in the UK is 46.1% while the European average is 44.2%. On the other hand, most of the Golden Visa programs offer either lower tax rates or complete tax exemptions for the applicants.
These programs also grant you residency and later citizenship in certain countries. This means that the programs pave the way for becoming an EU citizen again, considering Brexit.
We will now guide you through the top ten residency or citizenship by investment programs which also offer great tax treatments.
According to 2019 data on SEF (Portuguese Immigration and Borders Service), there are a total of 590.348 registered expats in Portugal. Around 35.000 of them are UK citizens. However, it is claimed that the total number of UK citizens is almost twice the mentioned number above. So, why do so many UK citizens choose to live in Portugal? To start with, Portugal offers irresistible tax treatments to expats. Naturally, tax-overwhelmed UK citizens try to find alternatives to pay fewer taxes.
Portugal offers two main tax treatments to expats. One is the Double Taxation Agreement (DTA) and the other is the Non-Habitual Residency (NHR) program. The UK has signed DTA with more than 60 countries in the world. NHR, on the other hand, allows you to be exempt from most of your foreign source income for ten years. Luckily, the UK is one of those countries.
Property investments in the country provide great returns including Portugal Golden Visa for UK citizens. Another data from SEF indicates that between October 2012 and July 2020:
Greece Golden Visa is one of the most popular Golden Visa programs in the world. It has by far the lowest investment threshold in Europe. The minimum investment amount is only €250.000. The program came into effect in 2013. From 2013 until September 2020, a total of 7.903 applicants and 23.618 dependents of these applicants have received their Greece Golden Visa. Enterprise Greece (an official agency of the Greek State) has released this data.
Greece also has signed a DTA with many countries. So, the income you receive outside of Greece will not be subject to taxation.
Moreover, the country has introduced a new tax law waiting for approval by the parliament. If it comes into effect, foreign retirees will be subject to a 7% tax rate on all of their incomes for a period of ten years. The condition is that they must move their tax residency to Greece. Also, it seems that the country will only admit applicants from high profile countries. The applicants must also agree that they will stay in the country for more than six months a year.
Greece does not impose any stay requirement in the country to qualify for a Golden Visa. You can invest in the country in different ways. You can either buy a real estate with a minimum value of €250.000 or you can invest in the country’s bank deposits, and government bonds. You can also sign ten years of a lease agreement for hotel accommodations or tourist residences.
According to data from IATA (International Air Transport Association), Malta holds the 8th strongest passport in the world.
According to 2019 data of ORIIP (Office of the Regulator of the Individual Investor Programme), around 50% of the applicants of the MIIP (Malta Individual Investor Programme) are from Europe, following Asia.
Also, 92% of Individual Investor Programme applicants chose to rent property, while the remaining 8% have bought luxury homes in Malta exceeding €900.000.
For the Malta Residency and Visa Programme, there is more than one investment type. First, you must contribute €30.000 to the government of Malta, and invest €250.000 in government bonds which you should maintain for at least five years. Then you can choose one of the investment options below:
Spain is one of the favorite holiday destinations of UK citizens. It also has the second most popular Golden Visa in the EU. The country signed Double Taxation Agreements (DTA) with around 90 countries, including the UK. This means that when you gain your Spain Golden Visa, the income you gain from the UK or any other country will not be subject to taxation in Spain.
As to the tax rates for expats: as a non-resident, (if you live in Spain less than 183 days) you will pay tax only on the income (at a flat rate) you earn in Spain. The general flat rate is 24%, and if you are from an EU/EEA country, it is 19%. Capital gains from transferred assets are taxed at 19%. For investment interest and dividends, the tax rate is 19%, however, they are typically lower through double taxation agreements. EU citizens are exempt from interest tax. Royalties are taxed at 24%. Pensions are at progressive rates, from 8% to 40%.
For your Golden Visa investment, the minimum value you pay for a Spanish Golden Visa is €500,000 for a real estate property. Other investment options include investments in public debt, shares of companies, investment funds, bank deposits, or establishing businesses. However, these types of investments vary between €1-2 million.
Ireland has a good reputation for protecting investor funds. The country welcomes foreign capital as well. The normal corporate tax rate is 12.5%, but it is reduced to 6.25% for IT companies. Furthermore, there is a 0% tax rate on foreign-sourced dividends.
According to data from the Irish Ministry of Justice, between the years 2015-2019, 74% of approved applicants applied for the Enterprise Investment option. So, if you plan to apply for Enterprise Investment, you can think of Ireland as an option.
Montenegro has a relatively small economy. For personal incomes, the general tax rate is 9%. If the income is above the average, then the tax rate is 11%. An exception to the flat rate is also available. Non-residents pay 5% on the interest income. Companies in Montenegro also pay a 9% tax rate as income tax, and for capital gains and interest income, the rate is the same.
Montenegro signed a DTA with the UK as well. Different countries have different withholding rates. For the UK, according to data on PwC, investors pay a withholding tax rate of 5/15% for dividends, 10% for interests, and 10% for royalties.
Latvia offers a residency by investment program. It also has signed the DTA (Double Taxation Agreement) with more than 60 countries. Unless you are a tax resident of Latvia, you will not pay taxes on the income you earn abroad. Individuals pay a fixed rate of 23%. For annual incomes up to €20,000, the tax rate is 20%. The information on the website of the Ministry of Finance shows the remaining tax rates as follows:
According to data on the UK embassy, the estimated number of permanent UK residents in Bulgaria is more than 5000. It is not certain how the UK expats will be treated in the future after Brexit officially comes into effect. As a rule, non-EU citizens can buy houses but not yards. So, the British will wait for the process.
Normally, if you are a tax non-resident, you pay taxes on your Bulgarian source income. If you have been in the country for more than 183 days in any 12-month period, you will become a tax resident in Bulgaria. In that case, your worldwide personal income is taxed at a flat rate. Foreign tax residents are subject to a 10% tax for fees for technical services paid to them. No deductions are allowed. Rental incomes from Bulgaria are also subject to a 10% tax. In the same way, capital from the disposal of a real estate in Bulgaria, and on disposal of securities are also subject to a 10% tax rate.
Belgium doesn’t technically have a Golden Visa. Instead, it is more like an entrepreneur visa investment. You can apply for it by establishing a Belgian company. The usual investment amount is between €350.000-500.000.
There are no taxes on capital gains and no tax on surplus value of a (private) real estate in Belgium. Not to mention that it has DTA with the UK as well.
Austria may also be a good option for UK citizens because the cost of living is very low compared to the UK. For example, rental costs in Vienna are 75% cheaper than in London. Furthermore, corporate tax rates are low, and there are no wealth or trade taxes.
Normally, Austria does not offer a passive investor visa program. However, investors can obtain permanent residency via different types of investments. These include the Self-Employed Key Workers Residence Visa Programme, Startup Founders Residence Visa Programme, and Financial Self-Sufficiency Residence Visa Programme. After five years of successful residency, you can apply for long term residency.
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