Expat tax breaks across the world

International expats are fully aware there are only two unavoidable disasters in life – death and taxes.

Whilst it’s impossible to avoid death when it’s your turn to go, it’s entirely possible to avoid losing massive chunks of your salary to the local taxman, especially if you’re an American citizen who’s already paying equally large chunks of his or her salary to the IRS. Tax breaks for expats come in two flavours, the first being the host country’s less rapacious revenue office and the second involving heading for a country where there’s simply no income tax!

For taxation, the USA is one of the worst in the world, in spite of its variety of tax incentives and actual tax breaks, but many other world countries have a larger and more effective selection of incentives, cuts and breaks covering business incentives, corporate tax breaks and other interesting deals. Choosing the right country for your talents can mean the difference between having just enough to get by or having too much to bother counting it. Workers in a total of 12 world countries pay far less tax on average than do employees in the USA, mainly due to innovative and interesting tax cuts.

For example, in the UK the first £11,850 of your salary comes in totally tax free, and New Zealand uses the BBL taxation philosophy, roughly translated as less taxes for the average workforce and making it one of the world’s lowest tax regimes. Singapore has rejected the idea of a foreign income tax scheme and the Bahamas doesn’t tax individuals, whatever their earnings, relying on capital gains, estate and capital transfer taxes for revenue. Expat retirees are attracted to Panama, as its best tax breaks are reserved for pensioners as a result of its Pensionado Programme, aimed at international retirees, and Hungary’s corporate tax rate is just nine per cent.

The USA’s only cause for complacency as regards taxation is that it doesn’t as yet operate a Value Added Tax (VAT) regime as do a majority of world countries. Dependent on the country, some essentials are excepted, but this hated consumption tax is more or less unavoidable.