22 Countries Where You Don’t Have to Worry About Income Tax

Wouldn’t it be great to live somewhere where you don’t have to worry about paying income tax? Absolutely!

Fortunately, there’s plenty of places around the world that will let you live there without paying any local income tax. They come in three flavors:

1. Countries with no income tax, or no personal income tax.
2. Countries with territorial tax systems, where only income generated inside the country is taxed.
3. Countries where a tax treaty with the US results in a 100% tax credit for foreign-source passive income.

Here are 22 countries where US retirees can live without having to worry about paying tax to their governments:

Region	Country	Tax System
Europe	France	100% Tax Credit
Europe	Spain	100% Tax Credit
Central America	Panama	Territorial Tax
Central America	Costa Rica	Territorial Tax
Central America	Belize	Territorial Tax
Central America	Nicaragua	Territorial Tax
Central America	Guatemala	Territorial Tax
South America	Paraguay	Territorial Tax
South America	Bolivia	Territorial Tax
South America	Uruguay*	Territorial Tax
Caribbean	Bahamas	No Income Tax
Caribbean	Bermuda	No Income Tax
Caribbean	Cayman Islands	No Income Tax
Caribbean	Antigua and Barbuda	No Personal Income Tax
Caribbean	St Kitts and Nevis	No Personal Income Tax
East Asia	Philippines	Foreign-source income exempt
East Asia	Georgia	Territorial Tax
East Asia	Hong Kong	Territorial Tax
East Asia	Macau	Territorial Tax
Oceana	Vanuatu	No Income Tax
Middle East	Bahrain	No Income Tax
Middle East	United Arab Emirates	No Personal Income Tax

* For 11 years, then dividends and interests are taxed at 7-12%

There are some caveats:

1. We’re only talking foreign tax here. All US taxpayers must file and pay taxes on their global income, even if they’re not living abroad. Although there are some tax credits and exemptions if you’re still earning income from work, there aren’t any for passive income.
2. In most cases you won’t pay any income tax in countries where the local tax rate for your income bracket is lower than in the US. In such cases, you’ll get 100% tax credit for taxes already paid to the IRS (but you’ll need to file taxes to get it).
3. US tax treaties with some countries exempt Social Security income from tax, but not private pensions. They include Canada, the United Kingdom, Germany, Ireland, Italy, and Romania.
4. Don’t forget about inheritance taxes. Once you’ve got assets in a foreign country, like a house and bank accounts, you’ll be subject to estate taxes in France, Spain, Bolivia, Uruguay and the Philippines.
5. Finally, remember that some countries that exempt retirement income from tax, but till tax investment income, interest, and rent. In such places, there’s no tax on public or private pensions, but you will pay tax on income from investments or savings.

So there you have it… retire abroad and avoid paying local taxes altogether. Give me a shout, and I’ll tell you how.