For most countries, Income tax is the primary source of their earnings. But some nations choose not to tax citizens’ personal income as they are already furnished with other lucrative sources of revenue.
These tax havens are economically stable. Almost all of them promise good education, healthcare, and social security. But, to compensate for the potential revenue gap, these countries also levy high fees on imported goods and tax travel departures, thus increasing the cost of living.
Retiring in tax-free countries means you won’t have to bear the burden of income taxes anymore. But, expatriates wanting to settle in tax-free retirement countries must know the various factors at play in-depth. This article sums up the best expat retirement countries and their features to guide you to make the right choice.
The 7 Best Tax-Free Countries to Retire and Live: 2022
These no-tax countries generally have a booming economy and enjoy profitable sources of income, such as industries of tourism, nationalized oil production, and other offshore sites. Check what these tax havens have to offer you!
1. Monaco
This tiny nation on the outskirts of Vatican City has very agreeable tax laws. The country also has to offer scenic beauty, a rich culture, a better quality of life, and good education and healthcare plans.
- Climatic Conditions: Monaco has a pleasant temperate Mediterranean climate. The winters are mild and wet, whereas the summers are characterized by their hot and dry nature.
- Tax Rates: 0% on individual personal income. 1% tax on annual rent in case of rental properties.
- Social Security: Monaco’s social security system provides coverage for sickness, accident, maternity, and pension benefits to everyone with a business license.
- Healthcare: Monaco’s high-quality state-funded healthcare is overlooked by Caisses Sociales de Monaco (CSM) and is available to those who have contributed to CSM. It is one of the best countries to retire with good healthcare.
- Transportation: Monaco is well-connected with bus routes, rail, air, and water. You can take any means of transport and choose the explore the country.
2. Bahrain
Bahrain accommodates a relatively large community of expatriates because of its tax-free status and ease of living. Bahrain is one of the wealthiest nations that source its income from petroleum production and refining. Most social facilities are available only when you are a permanent resident of Bahrain, but that is a highly complex process.
- Climatic Conditions: Bahrain has quite extreme climate. While it is mildly cold in winter, the summers are scorching and arid.
- Tax Rates: 0% on individual personal income. Bahrain imposes a limited corporate tax on companies involved in refining, producing, and exploring hydrocarbons.
- Social Security: The social security law in Bahrain involves several insurance benefits such as – Insurance for old age, disability, and death, insurance for employment injuries, family allowances, etc.
- Healthcare: For all Bahraini citizens, healthcare is government-funded, and for all non-Bahrainis, healthcare is subsidized.
- Transportation: Getting around in Bahrain is convenient through public buses and taxis.
3. The Bahamas
The Bahamas is one of the most sought-after tourist destinations. The nation makes most of its income out of the tourism sector. It is one of the easiest countries to retire to, and you don’t have to undergo a long-drawn process to obtain a temporary residence permit. All secondary residents need to make a significant investment in the property.
- Climatic Conditions: The Bahamas is hot around the year. So, if you are a winter lover, steer clear of this nation. The summers are sweltering, whereas the winters are mildly cold.
- Tax Rates: 0% on individual personal income.
- Social Security: Social security benefits range from old benefits to family allowances, unemployment benefits, work injuries, and sickness, maternity benefits. There are several social insurance programs subject to several conditions you can read in-depth. Expats should know that the Bahamas deducts a significant chunk of your money which they claim as social security deduction.
- Healthcare: The healthcare system in the Bahamas provides services for free to sixty above people, expectant mothers, children, and civil servants.
- Transportation: The Bahamas is well-connected. The primary modes of transport for exploring the locale are ferries and rental cars/taxis.
4. UAE
UAE is one of the wealthiest countries in the Middle East, with flourishing oil production and refining units. The UAE consists of seven emirates, two of which are – Abu Dhabi and Dubai. It has a growing economy and an even thriving multicultural heritage, which reflects in the country’s folk arts, and Emirati architecture. Expats thinking of settling in this rich Arab country will gain access to a lot that this country offers.
- Climatic Conditions: UAE is pretty extreme regarding its weather all year round. It maintains a hot and arid desert climate, with winter spanning a few months.
- Tax Rates: 0% on individual personal income. However, some corporate tax is levied on foreign banks and companies handling oil.
- Social Security: The UAE limits its social security schemes to qualifying GCC and UAE national employees. UAE does not provide social security benefits to nationals who do not fall under the GCC category.
- Happiness Index: The recent 2021 report suggests that UAE ranked the happiest amongst the other Arab countries consecutively for the last seven years.
- Healthcare: Only if you are a UAE citizen will you be able to access free-of-cost world-class healthcare facilities in the UAE. UAE ranked among the top 10 healthcare systems.
- Transportation: Public transport in the UAE can be easily accessed. Metro is the most convenient and popular mode of transport in the country. The transport industry is very well-developed because of its status as a wealthy country.
5. Saudi Arabia
Expect a high standard of life in Saudi Arabia with lucrative employment packages, private hospitals, and international schools. Life in Saudi Arabia can be hard owing to strict government-imposed laws on clothing, drinking, and food. Expats might avoid these restrictions if they live in an expat housing compound.
- Climatic Conditions: Saudi Arabia typically has a desert sort of arid climate. Summers in Saudi are tremendously hot, and Winters can get very cold in some regions.
- Tax Rates: 0% on individual personal income. But this is applicable only if your income is from Saudi Arabian employment.
- Social Security: American retirees settling in Saudi Arabia will not need to pay any Social security rates. If the US retiree stays by using a permit or work visa for a Saudi Arabian company, then the employer must pay on the employee’s behalf.
- Healthcare: The country’s well-developed healthcare system offers free medical treatment to citizens and expats alike.
- Transportation: While public transport in Saudi is limited to buses and a few other options, people can get around the country in their private cars.
6. Panama
Panama qualifies as a literal tax haven with no tax imposed on individual earnings and no corporate or assets tax. If any offshore company does business outside of the Panama jurisdiction, no taxes are levied there too! This tropical country has a lot to offer regarding affordable healthcare, expat-friendly citizens, political stability, and a safe environment overall.
- Climatic Conditions: Since Panama is a tropical country, the weather is warm all year round, and the winters are mildly cold and not harsh. Panama has a long monsoon and is humid all year round.
- Tax Rates: 0% on individual personal income. No corporate tax or tax on assets and capital gains either.
- Social Security: Expats should apply at the national Migration Office for a certificate of affiliation to the Social Security Fund of Panama, receiving which they can access their social security benefits. Panama social security is maintained by the Ministry of Social Development and encompasses several price deductions, employee benefits, etc.
- Healthcare: The urban areas in Panama have excellent healthcare services. The Social Security Fund helps the residents of this country to avail of healthcare, and Ministerio de Salud ensures that you get other medical treatments not covered by Social Security Fund at low cost.
- Transportation: In the cities, the roads are pretty good and well-connected, and public transport such as buses and metros are abundant and cheap.
7. Qatar
Qatar is a potpourri of cultural attractions, scenic beauty, entertainment, and friendly citizens. Accompanied by several other benefits, such as a low crime rate, affordable healthcare, and good education, Qatar is endowed with several positive points owing to its income from oil and natural resources. But, one cannot ignore the cultural shock – especially the curtailing of social freedom.
- Climatic Conditions: The summer season in Qatar gets extremely hot, and it is difficult to go out for outdoor activities. The winters are mild and bearable.
- Tax Rates: 0% on individual personal income. As an expat, as long as you are not involved in business activities in Qatar, you will not be taxed on your respective earnings. Thus, for expats it is not a must to file tax returns.
- Social Security: Qatar does not do very well in this regard. For the citizens of Qatar, the nation offers several social security plans, but for expats the options are few.
- Healthcare: If you are an expat, you can avail public medical care in Qatar by applying for a health card. You can also buy private health insurance. Most companies offer this in the employment package.
- Transportation: You can take buses to your destination, and the bus route is pretty well-developed. Buses are free of charge. Metros are more prevalent in Qatar.
The Bottom Line
Retiring abroad in tax-free countries has pros and cons, but it is more common than one would think. More often than most, the best expat retirement countries have thriving economies and stable politics and don’t impose tax laws on personal income. The above listed are the top tax free countries 2022 that rank high on the Annual Global Retirement Index. They have several other means of earning, which ensure they are ready to offer you a high standard of living. These countries also provide good healthcare packages. You also have several options to indulge your free time in knowing the culture and customs of the locale and the scenic beauty of the places.