Acquiring a new residency is a must for anyone seeking to become location independent. In part for the tax benefits and in part for the opportunity to obtain a second passport. In this article, I cover the most interesting options.

 

Residency vs tax residency

A residency is essentially a permission to reside within the borders of a country, usually for a predetermined amount of time. Most countries will grant residency provided that certain conditions are met. This can include having a job offer, being admitted into a university, marrying a local etc. Most countries will also grant long-term residents permanent residency provided that a sufficient level of integration has been achieved. It is important to understand however that being the resident of a country does not necessarily equate to being the tax resident of that country. Tax residency is determined by other factors such as domicile, physical presence and in some cases, citizenship.

To learn how to qualify as a tax resident of a country, please log into your Insiders Club account. Not a member? Click here to learn about the benefits of membership.

 

The road to a second passport

Acquiring a second passport may or may not make sense to you, it really depends on your long-term goals and personal circumstances. Module one of the Zero Tax Nomad course covers all there is to know about pros and cons of acquiring a second passport, how to go about it and how changing geopolitics may affect your plans. Click here to read it.

 

The best residency options

Andorra
Andorra is a small, developed country sandwiched between France and Spain. It has a top personal income tax rate of 10%, no capital gains tax (except for local properties) and no wealth tax. That is great in and of itself but it gets even better. Andorra runs a very accessible residency program for entrepreneurs which comes with a requirement for only 90 days to be spent in-country in order to qualify as a tax resident. This is unusually low especially for a European country.

Argentina
Argentina is a high tax country, its economy is in shambles and crime is rampant in all its major cities. Why is it on this list then? Because it is possible to become a citizen in as little as two years and because its passport is a very good one. This is an unusually short waiting period, especially in the region. It makes Argentina a decent option if what you are after is a second passport. Get in, become a citizen, get your passport, get out.

Bahamas
The Bahamas is a true island tax haven. There are no personal or corporate taxes. There is plenty of glamour however not to mention the world-beating dive spots and dreamy white-sand beaches. Qualifying for residency requires serious money however, at least half a million USD. It is much easier (and better) to qualify by virtue of being a CARICOM citizen. Check out the economic citizenship programs of Antigua, Dominica and St Kitts here.

Belgium
Thanks to the Belgium Residence Program, it is possible to become a Belgian resident with relative ease. After five years of residency, you can apply for permanent residency and citizenship. The great thing about this program is that there is no minimum investment amount. If you are bringing value into the country and pose no security risk, you are likely to be accepted. This makes it a great option for those with little savings and / or on a low income.

Bolivia
If you have a clean criminal record and 3600 USD in the bank, you can apply for Bolivian residency. It is one of the most accessible programs out there. Even better, you can apply for citizenship after only two years of residency. Tax-wise, Bolivia is considered a low-tax country with a top personal income tax rate of 13%. It is important to note however that Bolivia is not the easiest country in the world to live in. Visit as a tourist before you commit!

Brazil
There are tons of ways to qualify for residency in Brazil, they range from having a kid with a Brazilian national to receiving a monthly pension of at least 6000 BRL to being a high-level scientist etc. Depending on how you qualify, you may also be eligible to apply for citizenship as soon as one year into your residency. The personal income tax rate in Brazil is progressive and ranges from 4% to 25%.

Bulgaria – (read the detailed analysis)
Bulgaria has the lowest personal income tax rate in the European Union. This makes it a great / easy residency option for EU nationals thanks to freedom of movement. I do not recommend it if you are a non-EU national however unless you qualify for the express program that is. Apart from its advantageous taxation system, Bulgaria also happens to be one of Europe’s cheapest country to live in, it has reasonably comfortable weather and living standards are acceptable.

Chile – (read the detailed analysis)
Chile is a fantastic country, full of natural beauty and friendly people. It also is South America’s most developed country and thanks to its new resident tax exemption scheme, an unlikely tax haven. Qualifying for Chilean residency is not as easy as it used to be but it still is possible and a great option for nature-focused nomads. Those looking for a second passport should also consider Chile as its passport is one of the world’s best.

Costa Rica – (read the detailed analysis)
Costa Rica is a territorial taxation country, just like Hong Kong and Singapore. It also has amazing beaches, mountains and nature. Qualifying for residency is fairly easy and as long as you are properly structured, it is possible to live nearly / entirely tax-free. After living in the country for a few years (depending on your situation), you can also apply for citizenship and a Costa Rican passport.

Cyprus
Cyprus is a member of the European Union and is what I consider to be a medium-tax country. While its personal income tax rate ranges from 20% to 35%, the first 19500 EUR is completely exempt. Because the cost of living is fairly low, you could live on the island and only pay a minimal amount in taxes (for example, by paying yourself 24000 EUR from a company you own you would only pay 900 EUR). This makes it a decent entry-level option for EU citizens.

Dominican Republic
The Dominican Republic has always been a popular residency destination, especially for US and Canadian nomads. Not only does it enjoy year-round warm weather but it also is a territorial taxation country. This means that only locally-sourced income is subject to local taxation. This, combined with a very accessible residency program and low cost of living, makes the Dominican Republic a solid option for those who wish to live in the Caribbean but cannot afford the economic citizenship programs.

Ecuador
If you can prove that you will earn at least 800 USD per month after you move to Ecuador, you can apply for the pensioner residency visa. Simple as that. After three years of residency you can also apply for citizenship and an Ecuadorian passport. To be honest, this is not the most exciting program out there especially given Ecuador’s brutal taxation system but it may appeal to some especially as the country has many redeeming qualities.

France – (read the detailed analysis)
Unknown to most, France has a very accessible self-employment visa for non-EU nationals. Qualifying simply requires showing a proof of your work (you really have to be self-employed) and at least 1000 EUR for each month you will spend in-country (the visa is valid for 12 months so you should have at least 12000 EUR in your bank account). As long as none of the conditions of your visa have been breached, it can be renewed up to five times at which point you become eligible for permanent residency and citizenship.

Georgia – (read the detailed analysis)
Georgia the country, often confused with the US state, has one of the most accessible and nomad-friendly residency programs. It also is a very interesting option from a tax optimization perspective thanks to the HNW exemption which removes the need for qualifying individuals to spend 183 days in-country in order to qualify as a tax resident. Please note that the HNW exemption is only available to those with incomes of over 200000 GEL.

Germany – (read the detailed analysis)
Germany is not exactly a tax haven, nor a particularly attractive second passport option. Why is it on this list then? Because it has the most accessible residency visa for self-employed nomads in western Europe. Not to mention the fact that it is a great country to live in. The citizens of Australia, Canada, Israel, Japan, the Republic of Korea, New Zealand and the United States will be particularly interested to learn that they can apply for the visa in-country, there is no need to travel back home to apply.

Hong Kong
Hong Kong is one of the world’s greatest cities, it also is one of the best tax jurisdictions to call home. Qualifying is not easy however and definitely requires some work and potentially a financial investment. In my opinion it is absolutely worth it though (I am a resident of HK myself so I know what I am taking about). Being a HK resident has the added benefit of allowing you to benefit from easy access to some of the best banks in the world.

Malaysia – (read the detailed analysis)
Malaysia is a territorial taxation country, has a relatively modern infrastructure, most of its population speaks English, it enjoys year-round warm weather, a low cost of living and fantastic cuisine. It also is one of the easiest low tax countries in which to become a resident thanks to the Malaysia My Second Home program. For those looking to setup a local business, there is also the excellent Labuan option.

Malta – (read the detailed analysis)
Malta is a very interesting option for EU citizens, thanks in large part to its remittance-based taxation system. The way it works is simple: provided that you qualify as a non-dom, only the income that you remit to Malta will be subject to local taxation. This means that any income you leave overseas will be exempt. Non-EU citizens can also benefit from Malta’s taxation system but with restrictions and relatively large fees.

Mauritius
Mauritius’s taxation system works in a similar way to that of Malta, only remitted income is subject to local taxation. The main difference is that domiciled individuals can benefit from the remittance system (in Malta, only non-dom can). This makes Mauritius a very appealing option, especially for Africa-focused nomads. Mauritius is also a good place to run a business thanks to the very flexible and tax optimization-friendly GBC1 and GBC2 structures.

Mexico
Mexico is a large, populous country often underestimated as a residency option due to the severe safety issues it faces and its poor reputation. This is a shame because many parts of the country are very livable and perfectly safe. It is also very easy to become a Mexican resident although becoming a tax resident requires a bit of work (you need to make Mexico your center of interest). Tax-wise, apart from income tax there are very few personal taxes in Mexico.

Netherlands – (read the detailed analysis)
The Netherlands is not a tax optimization-friendly jurisdiction. It also is a fairly expensive place to live and the weather is very unpleasant most of the time. It has the easiest EU residency program for US citizens however and this earns it a place on this list. All you need to qualify is a US passport, a business plan and 5000 EUR in your bank account. After five years of normal residency you can even apply for permanent residency and citizenship.

Panama – (read the detailed analysis)
If you are the citizen of a country listed as a Friendly Nation by the government of Panama, you can become a permanent resident very easily / quickly. All you need is to establish a local tie and deposit 5000 USD in a local bank account. A local tie can be a Panama corporation, a job offer, a spouse etc. After five years of residency, it is possible to apply for Panamanian citizenship. This is a fantastic opportunity when you consider the fact that Panama is a territorial taxation country.

Paraguay – (read the detailed analysis)
Paraguay is the easiest low-tax jurisdiction in South America in which to become a resident. All that you need to qualify is to deposit 25 million GuaranĂ­es (less than 5000 USD) in a local bank account. After three years of residency, you can apply for citizenship and a local passport. Paraguay is a territorial taxation country, it also is very tax optimization-friendly. This makes it a very good option for South America-focused nomads.

Peru
Peru’s taxation system is nothing to write home about, the rates are high and it is not tax optimization-friendly. The reason Peru is on this list is because you can apply for citizenship after being a resident for only two years. This makes it a reasonably good option for those who are after an easy second passport. Qualifying for residency is also very straighforward for the citizens of developed countries.

Philippines – (read the detailed analysis)
The Philippines has become an increasingly popular residency option for nomads thanks to rising living standards, favorable weather, easy access to amazing nature and a taxation system that is very advantageous for long-term tourists. If you qualify for the NRAETB status (it essentially means long-term tourist engaged in business activities), you will only be taxed on your locally-sourced income. This is de facto territorial taxation.

Singapore
Singapore is not only a great tax jurisdiction, it also is a fantastic place to call home. It enjoys year-round warm weather, a first-world infrastructure, rule of law, direct air connections to most of the world’s major cities and a great banking system. Qualifying for residency is not as easy as it used to be but provided that you are bringing solid value to the country, you should have no problem. Singapore is a territorial taxation country although remitted income may be subject to local taxation in some cases.

Slovenia – (read the detailed analysis)
Slovenia is a high-tax EU country, with natural beauty but few other assets. What it does have is one of the EU’s easiest residency programs. All you need to qualify is to start a local business, invest 7500 EUR into it, wait six months then sponsor your own work visa using the business. Your work visa will be renewable and you will be able to apply for permanent residency after five years. Once a permanent resident, you can move to any EU country easily.

Spain – (read the detailed analysis)
Spain has become somewhat of a hub for nomads in recent years thanks to its entrepreneurial visa. The visa allows nearly anyone with a good business idea to move to the country and become a resident. In and of itself, this is not a particularly attractive option due to the high tax burden. Combined with the Spanish income tax exemption scheme, it becomes a fantastic option however. Please note that this is a complex program, if simplicity is what you are looking for then there are better options.

Thailand
Thailand is, for all intent and purposes, a territorial taxation country. Income generated abroad by residents is not subject to local taxation unless it is repatriated during the same tax year. Becoming a resident is very easy, even for those with no business or job. Thailand is also a very nice place to live in, thanks to year-round warm weather, a fantastic cuisine, world-class entertainment and a very good infrastructure (in Bangkok).

Uruguay – (read the detailed analysis)
Uruguay has been making headlines for a few years now thanks to its liberal, forward thinking policies. What few people know is that Uruguay is also one of the best jurisdictions in which to acquire a residency and second passport. It is even possible to do so entirely tax-free thanks to a five year foreign-sourced income tax exemption. Qualifying for residency is easy and within the reach of most nomads.

Taking action

To access the Zero Tax Nomad course, all our material about residencies / second passports and for personalized help, please log into your Insiders Club account. Not a member? Click here to learn about the benefits of membership.

 

Sources

https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-andorrahighlights-2016.pdf
https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-argentinahighlights-2016.pdf
https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/gx-tax-latin-america-in-focus-bahamas-highlights-july-2015.pdf
https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-belgiumhighlights-2016.pdf
http://www.iberglobal.com/files/bolivia_deloitte.pdf
https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-brazilhighlights-2016.pdf
http://www.iberglobal.com/files/2016/bulgaria_deloitte_ficha.pdf
https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-chilehighlights-2016.pdf
https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-costaricahighlights-2016.pdf
https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-cyprushighlights-2016.pdf
https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-dominicanrepublichighlights-2016.pdf
https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-ecuadorhighlights-2016.pdf
https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-francehighlights-2016.pdf
https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-georgiahighlights-2016.pdf
https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-germanyhighlights-2016.pdf
https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-hongkonghighlights-2016.pdf
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https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-maltahighlights-2016.pdf
https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-mauritiushighlights-2016.pdf
https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-mexicohighlights-2016.pdf
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http://www.iberglobal.com/files/2016/paraguay_deloitte_ficha.pdf
http://www.iberglobal.com/files/2016/peru_deloitte_ficha.pdf
http://www.iberglobal.com/files/2016/filipinas_deloitte_ficha.pdf
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  • timmy holohan

    Just to follow on with this subject, by saying no physical residence required is it also true to say that you cannot spend more than
    6 months in any other residence either or you will then be considered a resident there for that financial year?

    Also if you become a resident of any of the convenient options you mention above, most of which are territorial taxed and you do not return
    within the specified time period, what difference will it make to your tax liability if all your earnings have been from activities outside those countries?

    Is it a case where your residency will revert to your old jurisdiction (UK, Germany or wherever on a worldwide basis of taxation) and if so at what point, after two years in Panama, three years in Paraguay and so on, which will make you then liable for taxation in your home country after that period of time? Or will it be for that whole period including the time you were essentially a resident but because you broke the rules are then voided of that period also!!!

  • timmy holohan

    Just to follow on with this subject, by saying no physical residence required is it also true to say that you cannot spend more than
    6 months in any other residence either or you will then be considered a resident there for that financial year?

    Also if you become a resident of any of the convenient options you mention above, most of which are territorial taxed and you do not return
    within the specified time period, what difference will it make to your tax liability if all your earnings have been from activities outside those countries?

    Is it a case where your residency will revert to your old jurisdiction (UK, Germany or wherever on a worldwide basis of taxation) and if so at what point, after two years in Panama, three years in Paraguay and so on, which will make you then liable for taxation in your home country after that period of time? Or will it be for that whole period including the time you were essentially a resident but because you broke the rules are then voided of that period also!!!

  • If you are constantly moving, you will usually be deemed a tax resident of the country where you have the most ties. Such ties can include a home, a car, bank accounts, investments, a family, your legal status (permanent resident for example) etc. If you do not want to be deemed a tax resident in your country of citizenship (to use your example, UK or Germany) then it is simply a matter of establishing more ties elsewhere (for example, Panama) and satisfying the non-residency requirements (country of citizenship). Each country is different though, I recommend talking to a tax attorney in your country of citizenship about “domicile for tax purposes”.

  • If you are constantly moving, you will usually be deemed a tax resident of the country where you have the most ties. Such ties can include a home, a car, bank accounts, investments, a family, your legal status (permanent resident for example) etc. If you do not want to be deemed a tax resident in your country of citizenship (to use your example, UK or Germany) then it is simply a matter of establishing more ties elsewhere (for example, Panama) and satisfying the non-residency requirements (country of citizenship). Each country is different though, I recommend talking to a tax attorney in your country of citizenship about “domicile for tax purposes”.

  • peter93

    If you want to be resident in a particular country but have very few ties in general (say only a bank/investment account) and a global health plan somewhere in the world, how would you establish residency there and still be able to travel around? I.e. which countries have no physical presence or a few months minimum requirement to be considered resident?

  • Many countries will waive the time requirement if you qualified for residency using an investment option. Some also do not have time requirements (Malta for example). Then there is also the option of establishing more ties so that you qualify under the domicile rules.

  • Hey, thanks for this article! I’m curious about Hong Kong’s residency under the Quality Migrant Admission Scheme, but I do like to spend a lot of the year traveling around. Do you have any idea the minimum number of days per year you need to stay in Hong Kong to keep the visa and remain a tax resident? Much appreciated.

    As background I’m a Canadian citizen/resident with Irish citizenship as well, so I’m also curious about Malta.