Countries with Zero Foreign Income Tax

if you thought that in order to save tax you had to move to the country with a headline zero percent tax rate like the UAE or Vanuatu you're wrong there are actually a lot of countries around the world that will let you structure your affairs in an international way and pay zero tax I'm gonna give you a few examples in this video [Music] [Music] I'm Andrew Henderson and in the many many videos we have on offshore tax on our channel one thing you'll find is that people often make mistakes in two ways either they think it's too easy ie I'll just incorporate a offshore company and stay living where I live now or they think it's too difficult ie what we're talking about today a lot of people think that if they want to pay zero tax they need to move to a country that has no tax and that's not entirely the case now one of the other misconceptions is that you can just be a nomadic traveller with no permanent home that doesn't really work anymore ok and so a lot of the countries have really cracked down on that where as long as you don't spend more than a certain amount of time in Australia you won't pay Australian tags you're gonna need to do better than that today you're gonna want to have a place that you call home even if it's not for very long every year so you can still have the freedom to travel but you need to have someplace that you call home that place does not however need to be a headline zero percent tax rate jurisdiction so people all have heard about Monaco they've heard about again the UAE in many of the Middle Eastern countries Vanuatu these countries have no text Bahamas is another one they simply don't tax you okay and so they get their revenue from oil they get their money from gambling they get their money from whatever there's no income tax often time no estate tax gift tax anything you can live there tax free and if you want to live in Monaco there's nothing wrong with that it makes tax planning a lot easier to simply check out of your current country and check in to Monaco and spend your time there you won't have a lot of problems but let's say that you can't afford to live in Monaco or you simply like me you don't want it really live in Monaco full time what you can do is rely in the territorial tax country now these are often misunderstood and I've seen a lot of misinformation out on the internet when it comes to the territorial tax country but very simply a territorial tax country is one where they don't tax your foreign source income they only tax local income this is basically where you could have a job in the country and you're going to pay salary tax you have rental property in the country you'll pay rental income tax in many cases if you sell that rental property you'll pay a capital gains tax there many domestic taxes in that regard they function like any kind of other normal country but the exception is if your income is sourced from overseas you won't pay there so let me give an example I spent a good part of my year in malaysia which is one of these territorial tax countries I have friends who live and work in Malaysia they have jobs they have work permits and they pay taxes in Malaysia on their salaries the same as anyone else however I'm able to be live in Malaysia and if I lived there long enough to become a tax resident I would not be taxed on my worldwide income which means I can choose how I want to set up my affairs now if I decided to put all of my assets into Malaysian real estate I wouldn't really feel much of the effect but if I said you know what I'm gonna go to Georgia and invest in property there where I can pay 5% rental income tax on residential property and then when I sell it I can set it up properly to get 0% capital gains tax Malaysia would not add any additional taxes to that so here at nomad capitalists we talked about go where you're treated best and so this is just another way to compartmentalize your your money and your life to where Malaysia gives you the best of what it is it's the offer but ok we don't really want to invest in Malaysia because that's higher tax maybe not as much growth we invest over here and then Malaysia leaves us alone on that ok what a lot of times people think is they need to live work bank incorporate their business hire etc etc etc all in one place they say I'm leaving the United States I'm leaving Australia what's the new place I'm going to and instead you should look at like new places there might be three or five or even ten different places you want to structure your affairs around the world so that the territorial tax country will give you as I said the benefits of that so let's give you some examples of these territorial tax countries in Asia we mentioned Malaysia Singapore Thailand the Philippines in Eastern Europe Georgia in Central America Panama Nicaragua Costa Rica those are just a handful of examples okay so these are countries where you and you can go you can spend some I'm now just being a resident just spending some time in these countries doesn't necessarily mean you're a taxpayer okay so what I'm saying is if you become a taxpayer or a tax resident in these countries your foreign income wouldn't be taxed foreign income from corporations for an income from real estate investments etc etc now here's what the misinformation comes in that I see a lot of people getting confused with and I think people are perhaps being a bit aggressive just because its territorial doesn't mean there aren't any restrictions some of these countries for example will say if you're required to get a work permit because you're generating income from within the country that income could be deemed local source so in that case it becomes a balancing act of well how much of your company's revenue is generated by you that salaries should be taxed maybe the business shouldn't be taxed then it goes to controlled foreign corporation there's a lot of different rules that come into play right but some countries will say if you're doing work in a country then throwing that foreign source okay they might honor that real estate investment somewhere else are legitly foreign source right I mean a real estate investment somewhere else is obviously foreign they might differ though on work and so what the mistakes that people make is I'll just go and live in one of these territorial tax countries and I'll do my work I'll make my income I'll take my salary and it may not be that simple in all cases in some cases it is in some cases it's not other countries have rules on remitting income into the country ie you can keep all your banking outside of the country maybe you keep a small local bank account just for daily transactional purposes but if you bring money into the country in some cases it's bringing money into the country this year in other cases it's ever bringing money into the country right so they have those restrictions they say live on your foreign bank accounts other countries it pretty much is the wild wild west and you can do whatever you want and by the way there are other countries that have this tax system I mentioned the ones that probably have the most wide appeal to someone watching this so what you have to understand is you're not necessarily going for a headline tax rate there are plenty of countries that have exceptions have carve outs this is one of them there are plenty of others we have a whole video in series of videos on different tax systems and ways to save money but this is potentially a way when structured properly to pay as little as zero percent tax on your world wet affairs by having your company in a 0% place living place that doesn't tax foreign income and having real estate in a place that's very lightly taxed as well as bank accounts in a place where your interest is in tax as well as your stocks in a place where you know they're not gonna be taxed in buying stocks from countries that won't tax you so if you get all those things sorted out properly you can save yourself a lot of money hi I'm Andrew Henderson from nomad capitalists I wrote this book which you can find on Amazon to distill a lot of the stuff we talked about in these videos and a lot of the stuff I've learned over the last decade plus traveling all around the world teaching you about how to legally reduce your taxes build your personal freedom and create wealth faster definitely get a copy of this book if you want to learn more now if you want to watch more videos make sure you subscribe to our Channel and make sure you click the notifications bill so you never miss one of our new videos with more tips on how to go where you're treated best and if you're already a six or seven figure entrepreneur and you'd like to put these strategies in place for yourself go to Nomad capitalist calm and learn about how I can help you

Channel: Nomad Capitalist

Views: 72,630

Rating: 4.9220161 out of 5

Keywords: nomad capitalist, go where you're treated best, zero tax, zero tax planning, zero tax countries, countries with no income tax, countries with no taxes, countries with no taxes at all, territorial tax system, territorial taxation countries, territorial taxation, territorial tax for individuals, territorial tax countries, income tax, avoid taxes legally, tax reduction strategies, how to save money on taxes, save money on taxes, moving overseas, wealth creation strategies

Id: nnlMY4N5VrE

Length: 8min 18sec (498 seconds)

Published: Wed Aug 28 2019