Escape Income Tax: Europe & Africa

How would you like to stop paying any income tax for the rest of your life? In this short series, I'm going to explain how this is done 100% legally by moving to Central America, South America, Europe & Africa, and Asia.

Unlike our American friends who must file and pay applicable income taxes based on citizenship regardless of where they live, there is an easy way for Canadian citizens to legally avoid paying income tax forever.

Read my first post of this mini series for more information on the proper way to become a non-resident of Canada for tax purposes, manage your accounts, and invest through an overseas brokerage for expats.

Countries with No Tax on Investment Income

There are a significant number of countries around the world which do not tax investment income on money located outside of the country you reside in. Other countries do not charge capital gains taxes on worldwide income. Both of these are countries I will focus on where you can legally not pay a dime in income tax for the rest of your life!

My picks include countries which have stable governments, are known to be friendly to expats, and are quite safe for foreigners. I'm also only considering options which have a moderate cost of living.

Some of the better known micro-states or islands with huge tax advantages are prohibitively expensive and only an option for the super-rich. In this region, countries like Switzerland, Monaco, Seychelles, and Mauritius are excluded despite having very appealing tax regulations.

My Picks in Europe & Africa

1. Georgia

Edited Photo. Source: Flickr - jagermesh

Top of the list for me in this region is the country of Georgia. Saddled on the border of Europe and Western Asia along the Black Sea, Georgia is a former communist state which has vigorously adopted capitalism in the last decade or so. The climate is varied and mild, the country is beautiful, it's cheap, and Georgia is making huge strides to achieve lasting prosperity.

Income Tax:  Low - No tax on any overseas income. Low tax on local income.

Obtaining Residency:  Easy - A Canadian can travel to and stay in Georgia visa-free for up to a year. If you want to stay longer, you can get a residence permit by making an investment of more than $120,000 USD in the country. This includes property investment or starting a business. The government is very business friendly and fosters entrepreneurship.

Climate:  Appealing - The coastal cities have a cooler subtropical climate with higher rainfall and temperatures which rarely fall below freezing. Summers are long and warm, but typically not extremely hot. The inland cities have a continental climate similar to the Okanagan Valley in B.C. Summers are warm, winters are relatively short and mild, and rainfall is low. It's a sunny, nearly perfect four season climate.

Cost of Living:  Low - The cost of living is 60 - 70% cheaper than a large city in Canada.

English Speakers:  Moderate - English speaking abilities are more common among younger people in the larger cities of Georgia. Russian is more common among older people. The native language – Georgian – is a difficult language to learn. It's alphabet is unique and the language is distinct from any other major language.

Freedom:  High - Breaking from the confines of communism after the Soviet collapse, Georgia has become one of the freest developing countries in the world. It ranks near the top in economic freedom and ease of doing business, so property investment is pretty sound. Corruption is relatively low and continuing to fall. There is still progress to be made in personal freedom and civil liberties, but this is steadily improving as well. Georgia is a safe country for foreigners.

2. Botswana

Edited Photo. Source: Flickr - Athena Lao

Africa might be for the more adventurous among us, but among African nations Botswana is a clear outlier. Situated north of South Africa, Botswana is a landlocked and mostly arid country with lots of natural resources. It is Africa's oldest and most stable democracy and its economy has been performing well for decades now. Botswana is doing a lot of things right and the benefits are clear.

Income Tax:  Low - No tax on any overseas income. Low tax on local income.

Obtaining Residency:  Somewhat Difficult - Botswana offers an investor class residence permit to individuals who invest more than $100,000 USD in the country. The permit process is not very clear, but the government favours those with business experience and investors who employ Tswana people. Botswana is an attractive place to invest in Africa and property rights are quite well established. Unfortunately there is no visa class for self-sustaining individuals.

Climate:  Moderate - The climate is generally quite dry and hot with high temperatures averaging in the mid-30C range. It's bone dry in western Botswana and rainfall increases to the east. Much of the country is flat and rolling scrub land. In the north, Botswana has the Okavango delta region which attracts one of the largest concentrations of large wildlife in southern Africa.

Cost of Living:  Low - The cost of living is 50 - 60% cheaper than a large city in Canada. This varies as the cost of living drops outside of the capital, Gaborone.

English Speakers:  High - Being a former English colony, English is the official language of government and is widely spoken.

Freedom: Moderately High - Botswana is country with high levels of personal freedom and low levels of corruption. It is the easiest country for business in continental Africa; property rights are quite well enforced and the judiciary is independent. Botswana gets some points off for crime issues, but it is one of the safest countries in Africa.

3. Namibia

Edited Photo. Source: Flickr - DConvertini

Namibia, on the southwest coast of Africa, is another rapidly progressing African country. Since independence from South Africa, Namibia has done better than it's former colonizer. Crime is lower, regulations are better, and the economy is growing quickly.

Income Tax:  Low - No tax on any overseas income. Low tax on local income.

Obtaining Residency:  Moderate - Namibia offers a temporary residence permit for individuals who can demonstrate economic self-sustainability. It's not a difficult process, but most be renewed annually. Another option, similar to Botswana, Namibia's investor visa is based on business start-up and capital investment with an advantage for local hires. For this permit, investors should provide capital of approximately $150,000 USD into a Namibian company. It's relatively easy for foreigners to start Namibian corporations, but regulation and transparency reforms are not progressing as quickly as they should.

Climate:  Appealing - Namibia might be known for it's hot deserts and massive sand dunes, but the climate of it's largest cities is very pleasant. Windhoek, the capital and largest city, is located in the central highlands. Thanks to the altitude, temperatures don't exceed the mid-30C range and rarely fall below freezing. Windhoek receives over 3,500 sunshine hours and rainfall is quite low. On the coast, Walvis Bay is bone dry and sunny, but temperatures are very mild thanks to the cool ocean current.

Cost of Living:  Moderately Low - The cost of living in Namibia's cities is approximately 40% cheaper than a large city in Canada.

English Speakers:  Moderate - A reasonable number of locals in the larger cities can speak English. It is important to learn the local language – Afrikaans – to have a good experience. Afrikaans might be the easiest language for English speakers to learn, so it shouldn't be difficult to acquire over time with proper practice.

Freedom: Moderate - Namibia scores quite well in personal freedom, but the government and judiciary suffer from lack of transparency and effectiveness. Unfortunately business freedom scores have actually moved backwards in recent years as reforms got bogged down. While better than most other African countries, Namibia suffers from a crime problem which affects personal safety scores.

Have you considered moving overseas on a more permanent basis? What would be your priorities in choosing a place to live?

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