For many investors, capital gains tax in Germany or Austria is set too high. After all, the state doesn't help when there is a loss, but when there is a profit, it takes a hefty cut. Therefore, here is a comprehensive article about the best countries to emigrate to that have or demand no capital gains tax.
Capital gains tax applies to all capital gains profits. In most countries, this includes stocks, derivatives, interest, bonds, crypto, and other securities. In some countries, such as Austria, this also applies to dividend distributions from corporations such as LLCs.
Below is the list of countries that do not levy taxes on capital gains and where capital gains are therefore tax-free.
Probably the best-known country without capital gains tax in Europe is Monaco. Generally, the Tax system in Monaco very advantageous for people with large fortunes and incomes. Because on a private level, there are largely no taxes on income of various kinds.
The Tax system in Switzerland is quite complex, as it is structured on three levels (federal, cantonal, and municipal). However, a flat tax exemption applies here in the area of capital gains.
But beware: Switzerland does indeed tax active trading. In addition, dividend payouts from companies such as LLCs are considered income and are subject to income tax. Overarching all of this is also a wealth tax, the rate of which varies depending on the canton and municipality.
The next neighbor and another European country that does not levy taxes on capital gains and dividends is Liechtenstein. For non-EU citizens it is very difficult to enter the country, but if you manage to do so, you can benefit from a variety of tax advantages. Among them is the lack of capital gains tax.
Another one popular country for expatriates is the UAE, led by the city of Dubai. Here, too, there are no taxes on capital gains from stock profits, cryptocurrencies, interest, and the like. Personal income is generally not taxed. Thus, the Taxes in Dubai very interesting for wealthy expats.
Another hotspot for wealthy people is Singapore. For good reason, because the city-state of Singapore has a tax system that is territorially limited. Foreign income, including capital gains, is exempt from tax. However, just like in Switzerland, one must also be careful here when it comes to trading.
A tropical holiday destination and tax haven at the same time represent the Bahamas. The island nation has largely freed its citizens from all private-level taxes, including capital gains tax. A very interesting country for anyone who has high incomes from various sources and likes the tropical climate.
Panama is also an interesting Central American country from a tax perspective. Because this country also offers a territorial tax system and exempts all citizens from taxes on foreign income. This also includes profits or income from capital gains.
A situation similar to that in Panama can also be found in Paraguay. The South American country also offers a tax system that does not tax foreign income and thus also exempts taxes on capital gains from abroad.
As noted above for some countries, there are numerous countries where active trading is no longer subject to capital gains tax, but rather falls under income tax or corporate tax. Each of these countries has different limits for this, such as how many trades you are allowed to execute or how high the profit from them may be in relation to your remaining income.
A classic example where many fall into the tax trap is Switzerland. Basically a country without capital gains tax, but with taxes on full-time or commercial trading. More about this on our Switzerland Tax Guide.
Those who want to pay less capital gains tax than, for example, in Austria or Germany, can do so in the following countries. While these countries do have tax rates, they are very low in international comparison, especially within Europe.
Andorra is a small country located between Spain and France and one of the few tax havens in Europe. Income and capital gains are taxed at a rate of only 10%. This rate is well below the European average.
Bulgaria, like Andorra, taxes income and capital gains at 10%. Corporate profits are also taxed at just 10%. This is a relatively simple and attractive tax regime for investors as well as entrepreneurs.
Another interesting model that legally eliminates taxes on various types of income (including capital gains) is so-called perpetual traveling. Translated into German as continuous traveling, it is practiced by so-called digital nomads practiced and ensures that one does not become liable for taxes in any country in the world. As a rule, the stay is limited to 180 or fewer days per year per country in order to evade taxes. Theoretically, one can travel between 3 countries or stay there temporarily for 4 months a year each in order to evade taxes.
The bottom line is that a great many countries have no or low taxes on capital gains while at the same time offering a high quality of life, or relocation makes sense. Thus, everyone must decide for themselves in which country they want to live and thus also voluntarily pay taxes.
For over ten years, Clemens has been advising entrepreneurs, investors and families on international company formation, tax strategy and relocation of residency. His focus: legal, bank-compliant structures that hold up in practice, not just on paper.
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Clemens Kohlbacher
