14 countries that do not tax foreign income

Tax treatment of foreign income

Introduction

The possibility of receiving foreign income tax-free can offer considerable financial advantages. This applies in particular to:

• Digital nomads
• Expats
• Investors with international sources of income

This article presents countries that grant tax exemption for foreign income or do not tax the income of non-citizens.

Importance of tax exemption for foreign income

• Enables considerable savings
• Increases financial flexibility
• Often a decisive factor in the choice of country of residence

List of countries - Tax exemption for foreign income

1. panama

• Foreign income generally tax-free
• Attractive for expats and investors

2. philippines

• Foreign income tax-free for residents (applies to citizens and foreigners)

3. portugal

• Non-habitual resident (NHR) status
• 10 years tax exemption on foreign income for new settlers
• Attractive for pensioners and wealthy individuals

4. spain

• "Beckham Law"
• New residents are only taxed on Spanish income for 6 years
• Foreign income remains tax-free
• Attractive for highly qualified specialists and investors

5 Singapore

• Foreign income tax-free as long as not transferred to Singapore or used there
• Advantageous for international business people and investors

6. thailand

• Foreign income tax-free, unless remitted to Thailand
• Attractive for expats and digital nomads

7 Uruguay

• Foreign income tax-free for residents for the first 5 years
• Extension possible through certain investments

8. cyprus

• Foreign income is generally tax-free as long as it is not transferred to Cyprus
• Attractive for international business people and retirees

9. Malaysia

• Tax exemption for foreign income until 2026
• Interesting for expats and investors

10. italy

• Special regulations for returnees
• No obligation to declare foreign income for persons who have not been resident in Italy for the last 9 out of 10 years

11. ireland

• Attractive regulations for persons with non-dom status
• Taxation only on Irish income and remitted foreign income
• Special regulations for foreign employees and persons over 65

12. united Kingdom (UK)

• Non-dom status allows 7 years of tax exemption for foreign income
• Attractive for wealthy individuals and international business people

13 South Africa

• Foreign income tax-free for the first 5 years of residence
• Interesting for new residents

14. malta

• Foreign income tax-free as long as not transferred to Malta or used there
• Annual minimum tax of 5,000 euros for "residents without domicile" with foreign income of 35,000 euros or more

Conclusion

The countries presented offer attractive tax regulations for foreign income. This is particularly interesting for:

• Expats
• Digital nomads
• Investors

Practical examples

Example 1: Digital nomad in Thailand

Sarah is a freelance web designer from Germanywho has decided to live as a digital nomad in Thailand.

• Annual income: EUR 60,000
• Taxes in Germanyapprox. 16,000 EUR
• Taxes in Thailand: 0 EUR (as long as the money is not transferred to Thailand)
• Potential savings: EUR 16,000 per year

Example 2: Pensioners in Portugal

Hans is a German pensioner who has decided to spend his retirement in Portugal and has applied for NHR status.

• Annual pension: EUR 40,000
• Taxes in Germany: approx. 6,000 EUR
• Taxes in Portugal: EUR 0 (for 10 years under NHR status)
• Potential savings: EUR 6,000 per year for 10 years

Resources and further information

For more detailed and up-to-date information on the tax regulations of the individual countries, we recommend consulting the official websites of the respective tax authorities:

• Panama: Dirección General de Ingresos (DGI) - Website: https://dgi.mef.gob.pa/
• Philippines: Bureau of Internal Revenue (BIR) - Website: https://www.bir.gov.ph/
• Portugal: Autoridade Tributária e Aduaneira - Website: https://www.portaldasfinancas.gov.pt/
• Spain: Agencia Tributaria Website: https://www.agenciatributaria.es/
• Singapore: Inland Revenue Authority of Singapore (IRAS) - Website: https://www.iras.gov.sg/
• Thailand: The Revenue Department - Website: https://www.rd.go.th/
• Uruguay: Dirección General Impositiva (DGI) - Website: https://www.dgi.gub.uy/
• Cyprus: Tax Department of Cyprus - Website: https://www.mof.gov.cy/mof/tax/taxdep.nsf/index_en/index_en
• Malaysia: Inland Revenue Board of Malaysia (LHDN) - Website: https://www.hasil.gov.my/
• Italy: Agenzia delle Entrate - Website: https://www.agenziaentrate.gov.it/
• Ireland: Office of the Revenue Commissioners - Website: https://www.revenue.ie/
• United Kingdom (UK): HM Revenue & Customs (HMRC) - Website: https://www.gov.uk/government/organisations/hm-revenue-customs
• South Africa: South African Revenue Service (SARS) - Website: https://www.sars.gov.za/
• Malta: Commissioner for Revenue - Website: https://cfr.gov.mt/

Frequently asked questions (FAQs)

What is the 183-day rule?

The 183-day rule is a widely used criterion for determining the tax residency. If you stay in a country for more than 183 days in a calendar year, you are generally considered to be resident there for tax purposes.

How does the Double taxation?

Double taxation occurs when the same income is taxed in two countries. Many countries have double taxation agreements to prevent this. Typically, the tax paid abroad is credited against the tax liability in the home country.

What does "non-dom status" mean?

"Non-dom" stands for "non-domiciled" and refers to people who live in one country but have their permanent home (domicile) in another country. In some countries, such as the United Kingdom and Ireland, non-doms enjoy special tax advantages.

Do I have to declare my foreign income in my home country?

If you have completely deregistered in your home country and no longer own a home or property there, you no longer have any connection with the tax authorities in your country of origin and therefore no longer have to report anything there. However, if you still have a valid address and registration in your home country, there is no point in moving, as you will remain liable for tax in your home country.

Which countries offer tax exemption for foreign income?

Countries such as Panama, the Philippines, Portugal, Spain, Singapore, Thailand, Uruguay, Cyprus, Malaysia, Italy, the United Kingdom (UK), South Africa and Malta offer tax exemption for foreign income under certain conditions.

How long is foreign income tax-free in Portugal?

Thanks to the Non-Habitual Resident (NHR) status, foreign income in Portugal is tax-free for 10 years.

What is the Beckham Law in Spain?

The Beckham Law in Spain allows new residents to be taxed only on their Spanish income for a period of six years, while foreign income remains tax-free.

Is foreign income tax-free in Singapore?

Yes, foreign income is tax-free in Singapore as long as it is not remitted to Singapore or used there.

What tax rules apply to foreign income in Malaysia?

Income from abroad is exempt from income tax in Malaysia until 2026.

What are the advantages of non-dom status in the United Kingdom (UK)?

Non-dom status in the United Kingdom allows residents to receive their foreign income tax-free for a period of seven years.