By Kelly Kiakou
Are you a digital nomad looking for tax-friendly countries to set up your remote work base? Well, you’re in luck! There are several countries around the world that offer attractive tax benefits to remote workers, allowing them to enjoy a better quality of life while reducing their overall tax burden. In this article, we will explore the top seven tax-friendly countries in Europe for digital nomads, including some additional information and updates.
Bulgaria: Unbeatable 10% Flat Tax Rate for Digital Entrepreneurs
Another tax-friendly destination for digital nomads is Bulgaria, with its lowest flat tax rate in the EU at only 10% for personal and corporate taxes, which offers attractive tax benefits for digital nomads and expatriates. This makes the country an ideal choice for those looking to establish their home-based or internet-based businesses.
As a freelancer, you only need to pay a flat 10% personal income tax, regardless of your annual revenue, and this amount is further reduced due to legally recognized costs. If you decide to register as a company in Bulgaria, the corporate tax rate remains at 10%, allowing for tax optimization. However, it’s important to note that if you receive dividends from your company, an additional 5% withholding tax is applicable. Despite this, the total tax burden of a Bulgarian company, including corporate tax and withholding tax, stands at 14.5%.
By setting up a company in Bulgaria, you can avoid social contributions, which are only required for income from employment. Additionally, the lower wages in Bulgaria compared to Western countries can lead to cost savings on compliance and managing your affairs. Overall, Bulgaria’s favorable tax environment makes it an attractive destination for digital nomads and entrepreneurs seeking tax optimization opportunities.
Greece: Remarkable 50% Tax Reduction for Remote Workers
Greece is emerging as a highly attractive destination for digital nomads, not only due to its breathtaking beauty but also thanks to its generous tax benefits and efforts to attract remote workers. In a significant development, Greece included the concept of “digital nomads” in its Immigration Code (Law 4251/2014) on September 4, 2021, with Law 4825/2021 becoming effective on the same day.
This policy allows remote employees from other countries to migrate to Greece and offers them a remarkable 50% reduction in income tax and social security payments. For instance, under this scheme, someone earning $40,000 will see their maximum tax rate decrease from 44% to just 22%.
This digital nomad tax incentive presents an exciting opportunity, especially if your plans involve enjoying gin and tonics while overlooking the Mediterranean coastline as the sun sets. Greece’s combination of stunning landscapes, favorable tax benefits, and welcoming attitude towards remote workers make it an irresistible destination for digital nomads seeking a fulfilling work-life balance.
Cyprus: Attractive 5% Corporate Income Tax and 0% Dividend Tax
Cyprus offers attractive tax benefits for digital nomads, particularly through the incorporation of a company. The preferential tax rates in Cyprus are as follows: a 5% corporate income tax (CIT) rate and a 0% rate for dividends received, both for local and foreign sources. However, it’s important to note that a 2.65% General Health System tax applies to rental income, interest income, and dividends. This tax is applicable for annual incomes of 180,000 EUR or more and will be deducted from your first yearly income. Different tax rates may apply based on your income bracket.
Moreover, certain foreign-sourced income may be exempt from the 12.5% corporate income tax. This includes interest earnings (excluding when interest income is the company’s main business activity), foreign exchange (FX) gains (excluding FX gains from trading in foreign currencies and related derivatives), and dividends/profits paid out by a foreign-owned company to the Cypriot entity.
With these tax benefits, Cyprus becomes an attractive destination for digital nomads looking to incorporate a company and optimize their tax situation. The combination of favorable tax rates and exemptions makes Cyprus a favorable choice for digital nomads seeking a tax-friendly environment while enjoying the island’s beautiful landscapes and vibrant culture.
Romania: Streamlined Tax Exemptions for Digital Nomad Entrepreneurs
Romania is quickly emerging as a sought-after destination for digital nomads, thanks to its thriving digital nomad community and attractive tax benefits. With a flat income tax rate of 10%, Romania offers lower tax rates compared to many other countries, making it an appealing choice for remote workers. Additionally, Romania has streamlined the process of obtaining residence permits, making it easier for digital nomads to settle in the country. The presence of coworking spaces and digital nomad-friendly communities further enhances the work environment for remote professionals in Romania.
Legislative changes and Law no. 69/2023 have introduced favorable tax benefits specifically tailored for digital nomads in Romania. Under these regulations, digital nomads working remotely for foreign companies using information and communications technology are exempt from paying income tax and social insurance contributions on their salary income earned from abroad. This tax exemption is applicable as long as the digital nomad stays in Romania for a maximum of 183 days within a consecutive 12-month period ending in a specific calendar year.
These tax incentives provide a compelling reason for digital nomads to choose Romania as their work base, enjoying a favorable tax environment while immersing themselves in Romania’s rich cultural heritage and breathtaking natural landscapes. Romania’s thriving digital nomad community, simplified residency process, and enticing tax benefits make it an ideal destination for remote workers seeking an optimal work-life balance.
Serbia: Zero Tax Rate for Working Nomads in Serbia
Serbia, a country known for its rich history and vibrant culture, is now actively targeting digital nomads with a new tax incentive. Starting in 2020, the Serbian government introduced a tax benefit specifically designed for digital nomads. Under this program, digital nomads can enjoy a zero tax rate for the income they earn while working in Serbia for a specified period of time, initially set at 90 days.
This tax incentive aims to attract remote workers and provide them with a favorable tax environment, making Serbia an enticing destination for digital nomads seeking to establish their work base. With its attractive tax benefits and diverse cultural experiences, Serbia offers a unique opportunity for digital nomads to balance work and exploration in a tax-friendly environment.
Croatia: Enjoy a Year of 0% Income Tax on Your Remote Work
Croatia is an exceptional destination for digital nomads, offering attractive tax benefits to those who choose to work there. With the introduction of the digital nomad visa in January 2021, Croatia has opened its doors to global digital nomads, providing a 0% income tax rate for a period of one year.
To qualify, digital nomads must work for a company outside of Croatia or operate their own company in communication technology or the Internet of Things (IoT). Proof of a minimum monthly income of €2,200 (US$2,675) is required, along with appropriate health insurance coverage. It’s important to note that this tax exemption is not available for European Union (EU) citizens.
Digital nomads can reapply six months prior to the end of their first year, and the approval process typically takes up to 20 days. Croatia’s tax benefits for digital nomads, combined with its stunning natural landscapes and vibrant culture, make it an enticing choice for remote workers seeking a favorable tax environment while enjoying all that Croatia has to offer.
Portugal: Tax-Free Overseas Income and Cryptocurrency Benefits
Portugal, with its appealing qualities such as safety, culinary delights, and pleasant weather, has become a favored destination for digital nomads. The Portuguese government has implemented the Portugal Passive Income Visa, also known as the D7 Visa, and the Non-Habitual Residence Tax to attract remote workers to the country. These programs offer enticing benefits, including tax-free overseas income and tax-free cryptocurrency. Additionally, Portugal has lower income requirements and minimum stay lengths compared to many other European countries, making it even more appealing for digital nomads.
One notable policy in Portugal is the Non-Habitual Resident (NHR) program, which grants tax advantages to individuals who relocate to the country. This program enables eligible individuals to enjoy tax benefits after settling in Portugal.
Considering these factors, it’s no surprise that Portugal ranks among the most tax-friendly countries for digital nomads, attracting individuals from both EU and non-EU countries. With its welcoming environment and favorable tax incentives, Portugal provides an excellent opportunity for digital nomads seeking a fulfilling work-life balance in a tax-friendly setting.
Georgia: Irresistible 1% Tax on Gross Revenue for Individual Entrepreneurs
Tbilisi, the captivating capital of Georgia, offers a dynamic blend of rich history and culture, reminiscent of its European roots. From the majestic Caucasus highlands for trekking and skiing to the serene black seashore for summer relaxation, Georgia presents a diverse array of experiences.
To facilitate remote work, Georgia has introduced the “Remotely From Georgia” initiative, allowing individuals from around the world to work in the country. To qualify, you must have a monthly income of at least $2,000 or a bank statement confirming $24,000 in savings.
One of the most enticing programs for digital nomads in Georgia is the favorable tax scheme for individual entrepreneurs. This program imposes a mere 1% tax on your business’s gross revenue, limited to $155,000. These appealing tax benefits make Georgia an irresistible destination for digital nomads seeking optimized tax status.
What adds to the allure of Georgia is its low cost of living, one of the lowest in Europe, coupled with excellent connectivity to the rest of the continent from the capital city, Tbilisi. The visa process is hassle-free, requiring a simple online application, eliminating the need for unnecessary visa runs or bureaucratic red tape.
If the streamlined digital nomad visa, generous tax benefits, and breathtaking landscapes aren’t enough to captivate you, perhaps the delectable cuisine and the distinction of having the world’s oldest wine culture will entice your senses.
With these tax-friendly countries in mind, you have the opportunity to optimize your digital nomad tax status while relishing a high-quality lifestyle in Europe. Let the allure of these destinations inspire your journey as a digital nomad.
Italy: 5% Flat Tax Rate and 70% Tax Deduction for Digital Nomads
Italy provides attractive tax benefits for digital nomads, aiming to attract highly qualified remote workers to the country. Digital nomads are required to pay taxes in Italy, but there are two favorable tax regimes available. The “Regime Forfetario” allows self-employed individuals earning up to €65,000 (~$69,202.25) annually to pay a flat tax rate of 5% for the first 5 years on a portion of their gross billings. The “Impatriates Regime” enables a 70% tax deduction on earned income subject to tax for self-employed and unemployed individuals. These tax regimes offer significant tax relief, optimizing the tax burden for digital nomads in Italy.
Additionally, Italy recently launched a digital nomad Visa program, further enhancing the appeal for remote workers. Self-employed professionals who register as Italian tax residents and commit to a minimum two-year stay can benefit from a 70% tax exemption on all income generated within the country.
These tax incentives, coupled with Italy’s rich cultural heritage and history, make it an enticing destination for digital nomads seeking a favorable tax environment while immersing themselves in the beauty and opportunities Italy has to offer.
Malta: Tax-Free Capital Gains and Attractive 5% Tax Rate for Businesses
Malta with its mild climate, relaxed atmosphere, and rich history, is an idyllic destination for digital nomads. Recently, Malta introduced the Nomad Residence Permit, allowing digital nomads to work remotely from this stunning island for up to a year, with the option to renew for three years.
One of the significant tax benefits of relocating to Malta is the remittance basis of taxes. Non-Malta residents are only required to pay taxes on their local income and a portion of their profits while being exempt from paying taxes on their worldwide income that hasn’t been remitted to Malta. Additionally, they enjoy tax-free capital gains, even if the money is brought back to Malta. Moreover, digital nomads are not required to file local taxes for the income earned from their remote work.
But the tax advantages don’t end there. By registering a firm in Malta as a digital nomad, the tax rate can be further reduced to 5% after availing of all available subsidies and tax relief programs. Malta also boasts the lowest cost for an EU-wide transferable company license, providing additional financial benefits for digital nomads.
With its appealing tax regime, stunning landscapes, and attractive business opportunities, Malta shines as another tax-friendly gem for digital nomads seeking exceptional work and lifestyle experience.
Digital Entrepreneurs have a unique and compelling opportunity to thrive in the dynamic landscape of remote work by taking advantage of the tax benefits offered to digital nomads in the highlighted countries. These tax-friendly havens present a wealth of opportunities for those seeking to establish and grow their businesses in a global, remote work environment.
By establishing their business in these tax-friendly destinations, entrepreneurs can strategically position themselves for success. The attractive tax regimes allow them to significantly reduce their overall tax burden, freeing up valuable resources that can be reinvested into their ventures. With lower tax rates, exemptions, and deductions available, entrepreneurs gain a competitive edge, enabling them to optimize their financial strategies and drive business growth.
As the world continues to embrace the remote work revolution, these tax-friendly countries become even more enticing for entrepreneurs. The global talent pool, cost-effective business operations, and flexibility to navigate international markets make them ideal locations to thrive as entrepreneurs in the digital age.