Tax-Free Countries: A Guide for Americans Moving Abroad

Tax-Free Countries: A Guide for Americans Moving Abroad
April 28, 2022

If you’re tired of having a large chunk of your hard-earned income vanish every tax season, you’re far from alone. But in the words of Benjamin Franklin, “In this world, nothing is certain except death and taxes.”Is that really true, though? For most people, yes. However, there are tax-free countries—countries with no income tax at all. And as you might guess, plenty of Americans have considered moving to one of those countries.To help you understand your options, let’s take a look at some tax-free countries around the world.

1. The Bahamas

With legions of tourists flocking to the Bahamas every year, the Bahamian government has no need to levy an income tax on its own residents. The Bahamas also boasts a thriving economy, beautiful beaches, and a laid-back lifestyle.

Needless to say, many Americans moving overseas dream of making the Bahamas their new home. So how easy is it to settle down in the Bahamas? That depends primarily on how much capital you can invest.

To get a temporary residence permit, you will only need to pay a fee to the immigration office. To become a long-term or permanent resident, however, you will be expected to make an investment in the country. This typically means purchasing property above a certain threshold.

The standard minimum for this is $500,000, but expats may want to invest more to increase their chances of being accepted for permanent residence. As a general rule, the more money that you invest in the Bahamas, the more likely you’ll be treated favorably by the immigration office.

After living in the Bahamas for at least 10 years with permanent residency status, you may be able to apply for citizenship. (This timespan is reduced to 7 years if you are married to a Bahamian citizen.)

2. Bahrain

Bahrain’s vast oil reserves have made it one of the wealthiest countries in the world. Because of this, the Bahraini government has no trouble funding itself without an income tax.

Getting permanent residence can be tricky though. (That’s going to be a common problem with countries on this list. After all, if it was too easy to move to a warm, beautiful country with no income tax, everyone would do it.)

To apply for permanent residency, you will have to be retired with a certain monthly income. You will also need to invest in a property in Bahrain or a Bahraini company. Finally, you will need to be recognized by a relevant authority in Bahrain as having exceptional skills or talent in:

  • Academics
  • Entrepreneurship
  • Science
  • Sports

…or another acceptable field.

Getting Bahraini citizenship is even harder. Before applying, you will have to live in Bahrain for at least 25 consecutive years and become fluent in Arabic.

3. The Cayman Islands

Like the Bahamas, the Cayman Islands’ booming tourism industry helps it remain a tax-free country. However, once again, moving to the Cayman Islands requires a sizable income and a serious investment into the local economy.

The standards are higher when moving to Grand Cayman, the largest of the three islands. If you choose Little Cayman or Cayman Brac for your new home abroad, you may find it easier. However, as always, the more you invest, the better your chances of being accepted.

4. Monaco

Monaco is a beautiful, luxurious little country on the French Riviera, renowned as a favorite playground for the elite of Europe. For expats who crave a vibrant, European lifestyle, Monaco may be ideal.

The process of becoming a resident—and ultimately citizen—is simpler in Monaco than in many other tax-free countries on this list. On the other hand, the price tag is generally higher. The required investment amount will be measured in millions of dollars rather than hundreds of thousands.

However, if you can afford the steep price of admission, Monaco could be your tax-free dream home.

5. Oman

The heart of Oman’s wealth is oil, but tourism and gas-based industry are also a factor in keeping Oman tax-free. As with most other tax-free countries, becoming a resident involves an investment in the local economy.

To help with this process, the Omani government offers an Investor Residence Visa right on its website. However, there aren’t many specifics given, including the minimum investment required. This makes it difficult to know how much you would be expected to invest to gain residency status.

Beyond this, Oman isn’t the most welcoming country for outsiders. Oman has also remained quite conservative. For example, you can’t even buy a bottle of wine in Oman without getting a personal liquor license from a local police station.

Among tax-free countries, Oman is certainly an interesting option, but may not be the best choice for many Americans moving overseas.

6. Qatar

In addition to Bahrain and Oman, there are several other tax-free countries in the Persian Gulf. One of these is Qatar. At a glance, Qatar is very similar to its tax-free neighbors: a small, conservative country that amassed a fortune through its oil reserves. However, Qatar does stand out in some ways.

To start with, many regard it as the most modern and developed country in the Middle East. In fact, despite its small size, Qatar has the highest per capita income in the world. This—among other factors—has given it an unusually large role to play in regional and even global politics. Qatar is also known for its relative peace and safety.

Naturally, all of these factors make Qatar an appealing destination for Americans moving overseas. That doesn’t make it easy, though. The regulations for obtaining permanent residence are strict. Expats must live in Qatar for more than 20 years to even be eligible.

7. Saint Kitts and Nevis

Of all the tax-free countries Americans can set their sights on, Saint Kitts and Nevis may be the easiest to call home. Acquiring citizenship through investment is not only simple and relatively fast, it’s also much cheaper than most other options. Saint Kitts and Nevis offers permanent residence and a passport in return for a mere $150,000 donation to the island nation’s hurricane relief fund.

Compare that figure to the Bahamas, which required at least a $500,000 investment in local property, or Monaco, which requires upwards of $1 million.

If you’re hoping to start a new life in a tax-free country, Saint Kitts and Nevis is well worth considering.

8. The United Arab Emirates

The United Arab Emirates (UAE) is yet another tax-free country in the Persian Gulf, and like its neighbors, the source of the UAE’s financial independence is oil. The UAE also has a reputation as one of the easiest tax-free countries in the Gulf to move to.

The UAE openly invites foreign investment, and the city of Dubai is known for its thriving expat community. The Index of Economic Freedom has also ranked the UAE as one of the freest economies in the world. Add in the high standard of living, and it’s no wonder so many expats have chosen the UAE for their new home.

Best of all, moving to the UAE doesn’t have to be overly difficult. There is currently no permanent residence program for foreigners, but the visa policies make it practical to live in the UAE for decades without much trouble.

9. Vanuatu

Like Saint Kitts and Nevis, Vanuatu is an island nation that derives its funding through tourism. And also like Saint Kitts and Nevis, Vanuatu makes it relatively easy for expats to settle down.

After a cyclone devastated Vanuatu in 2015, the Vanuatuan government introduced a citizenship-through-investment program to attract foreign investors and repair the damage done. Today, that program is one of the simplest (and cheapest) ways to gain residence in a tax-free country anywhere in the world. Vanuatu even accepts investments in the form of Bitcoin.

The primary roadblock to starting over in Vanuatu is actually reaching the South Pacific nation. It isn’t easy to find flights that will take you there, and those that do are generally long and expensive.

However, with the comfortable life and tax benefits that Vanuatu has to offer, finding a way there may be worth the extra trouble.

Are You Ready to Start a New Life in One of These Tax-Free Countries?

We hope this list of tax-free countries has helped you understand your options when moving abroad. If you have any more questions, we have answers.

At Greenback Expat Tax Services, we help Americans living abroad file their expat taxes accurately and on time. Just contact us, and we’ll be happy to help you in any way we can. We can even prepare and file your expat taxes for years to come.

Looking for tax consultations before moving abroad? Book a consultation with a Greenback expat tax specialist.

Who doesn’t love a tax break? Use our handy calculator to learn what you can save using the FEIE.

Use our simple excel calculator to get an estimate of how the foreign earned income exclusion will save you money. It will make your day!

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