Looking for a tax-friendly country in Europe? Here's a quick guide to the top 10 destinations in 2025 that offer low taxes, simplified systems, and attractive benefits for professionals, entrepreneurs, and expats.
Key Highlights:
- Estonia: Flat 22% personal income tax, deferred corporate tax until dividends are paid, and a digital-first tax system.
- Portugal: 20% flat tax for scientific professionals under the new programme; progressive rates up to 48% for residents.
- Malta: Special programmes like a 15% flat tax on foreign income and exemptions for capital gains.
- Cyprus: Income up to €19,500 is tax-free; progressive rates up to 35% and non-domicile benefits for investment income.
- Georgia: 1% tax for individual entrepreneurs and no tax on foreign income.
- Bulgaria: Flat 10% tax for personal and corporate income, with no capital gains tax on EU stock trading.
- Hungary: Flat 15% tax on most income and allowances for remote workers.
- Czech Republic: 15% tax on income below CZK 1,867,728; 23% above, with exemptions for certain foreign workers.
- Andorra: No tax on income up to €24,000; 10% above, with exemptions for capital gains and low VAT (4.5%).
- Monaco: No personal income, capital gains, or wealth tax, but high living costs.
Quick Comparison Table:
| Country | Personal Income Tax | Corporate Tax | Key Benefits |
|---|---|---|---|
| Estonia | 22% (flat) | 22% deferred | Digital tax system, tax on dividends only |
| Portugal | 20% (special) | Up to 48% | New tax programme for innovation roles |
| Malta | 15% (special) | 35% | Exemptions for foreign income & gains |
| Cyprus | Up to 35% | 12.5% | Tax-free income up to €19,500 |
| Georgia | 1% (special) | 0–5% | No tax on foreign income |
| Bulgaria | 10% (flat) | 10% | Low personal and corporate tax rates |
| Hungary | 15% (flat) | 9% | Remote work allowances |
| Czech Republic | 15–23% | 19% | Tax exemptions for foreign workers |
| Andorra | 0–10% | 10% | Low VAT, no capital gains tax |
| Monaco | 0% | 25% (limited) | No income, capital gains, or wealth tax |
Next Steps:
- Choose Your Destination: Consider tax rates, residency requirements, and lifestyle factors.
- Understand Residency Rules: Most countries require 183+ days of residence for tax benefits.
- Seek Professional Advice: Consult a tax expert to optimise your financial planning.
For UK residents, these countries offer a mix of low taxes and attractive incentives, making them ideal for managing wealth and enjoying a better quality of life.
1. Estonia
Estonia continues to draw in foreign residents in 2025, thanks to its advanced digital systems and straightforward tax policies. The country’s e-Tax system, which allows 98% of tax declarations to be filed online, is a prime example of its focus on simplifying administrative tasks.
As of 2025, the personal income tax rate has increased to a flat 22% from the previous 20%. For foreign residents, only income sourced in Estonia is taxed. Estonian companies benefit from a system where the 22% corporate tax is deferred until dividends are paid. Similarly, investors can delay taxes on investment income until funds are withdrawn, encouraging long-term financial planning.
Changes in VAT rates have also come into effect this year. The general VAT rate rose to 24% starting 1 July, while accommodation is taxed at 13% from January, and press publications at 9%.
Additionally, a temporary defence tax is in place until 31 December 2028. This includes a 2% increase on VAT from 1 July and an extra 2% tax on personal income and corporate profits starting January 2026.
Even with these tax adjustments, Estonia remains an appealing choice for digital professionals, offering a tax-efficient and digitally driven environment.
2. Portugal
In 2025, Portugal introduced a new Tax Incentive for Scientific Research and Innovation Programme, replacing its previous NHR regime. This scheme offers eligible professionals a 20% flat tax rate on income from employment (Category A) and self-employment (Category B).
For residents, Portugal applies a progressive income tax system with rates ranging from 13% to 48%. Below are the current tax brackets for residents:
| Annual Taxable Income | Tax Rate |
|---|---|
| Up to €8,059 | 13.00% |
| €8,059 – €12,160 | 16.50% |
| €12,160 – €17,233 | 22.00% |
| €17,233 – €22,306 | 25.00% |
| €22,306 – €28,400 | 32.00% |
| €28,400 – €41,629 | 35.50% |
| €41,629 – €44,987 | 43.50% |
| €44,987 – €83,696 | 45.00% |
| Over €83,696 | 48.00% |
Non-residents face a 25% flat tax rate on income sourced within Portugal, while investment income is typically taxed at 28%.
Eligibility Requirements
To qualify for the programme, applicants must:
- Establish tax residency in Portugal.
- Not have been tax residents in Portugal during the last five years.
- Work in scientific research or innovation roles that meet the programme's criteria.
- Complete registration by 15th January of the year after becoming a resident.
Digital Nomad Visa Options
Portugal offers two main visa options for digital nomads:
- D8 Digital Nomad Visa: Requires a minimum monthly income of €3,480.
- D7 Passive Income Visa: Requires €900 in monthly passive income and a €12,000 bank deposit.
Certain foreign income from countries on Portugal’s white list may also be exempt under this programme. These measures aim to attract skilled professionals and promote innovation, enhancing Portugal's appeal as a competitive tax destination in Europe.
3. Malta
Malta's tax system stands out with its special programmes and unique approach to international income. Like Estonia and Portugal, Malta has created targeted initiatives to attract global professionals.
Tax Rates and Structure
Malta uses a progressive income tax system for residents, with rates ranging from 0% to a top rate of 35%.
The key appeal lies in its specialised tax programmes:
Global Residence Programme
This programme is tailored for non-EU nationals and offers:
- A flat 15% tax rate on foreign income brought into Malta
- A minimum annual tax payment of €15,000
- Exemptions for foreign capital gains, even when remitted
- No taxes on wealth or inheritance
To qualify, applicants must either buy property worth at least €275,000 (€220,000 in South Malta or Gozo) or rent property for at least €9,600 per year (€8,750 in lower-density areas). Other requirements include valid health insurance and passing a fit and proper test.
Highly Qualified Persons Rules
This scheme benefits professionals in industries like financial services, gaming, aviation, and technology. It offers a flat 15% tax rate on employment income. Eligibility depends on meeting minimum salary thresholds, and it applies to both remote and local workers.
Malta Retirement Programme
Designed for retirees, this programme provides a flat 15% tax rate on foreign income brought into Malta. A minimum annual tax charge of €7,500 applies, with an additional €500 per dependent. Applicants must demonstrate that at least 75% of their income comes from pensions.
Tax Residency Requirements
You can become a tax resident in Malta by either spending more than 183 days in the country within a calendar year or maintaining a permanent home there. Non-domiciled residents are taxed only on income sourced in Malta and foreign income brought into the country, while foreign capital gains remain tax-free.
FAQs
How long does it take to process a Global Residence Programme application?
Applications usually take 4–6 weeks to process, as long as all required documents are submitted. The Malta Residency Agency gives priority to qualified applicants.
Can I work remotely while on the Global Residence Programme?
Yes, remote work is allowed under this programme, making it attractive to digital professionals. However, the minimum annual tax payment of €15,000 must still be met.
What makes Malta's tax system stand out in Europe?
Malta combines competitive tax rates with special programmes and exemptions on wealth, inheritance, and foreign capital gains. This mix makes it a popular choice for international professionals.
4. Cyprus
Cyprus is an attractive option for digital professionals and expats, offering low tax rates and specific exemptions that make it appealing.
Tax Rates and Structure
Cyprus uses a progressive income tax system:
| Annual Income (€) | Tax Rate |
|---|---|
| 0 to 19,500 | 0% |
| 19,501 to 28,000 | 20% |
| 28,001 to 36,300 | 25% |
| 36,301 to 60,000 | 30% |
| Over 60,000 | 35% |
Income up to €19,500 is completely tax-free. The progressive rates are complemented by additional perks, especially for non-domicile residents.
Non-Domicile Benefits
New residents with non-domicile status enjoy exemptions from defence tax on dividends and interest, making Cyprus particularly appealing for those with investment income.
Tax Residency Programme
To qualify for tax residency in Cyprus, you need to spend at least 60 days in the country and meet certain other conditions.
Special Tax Regimes
Retirement Income
Retirees benefit from a special system where only pension income exceeding €3,420 per month is taxed at a flat rate of 5%.
Investment Income
Non-domicile residents pay no tax on dividends, and capital gains are exempt except for those linked to Cypriot real estate.
Permanent Residency Through Investment
Cyprus offers a route to permanent residency through investment. To qualify, you must invest a minimum of €300,000 in real estate or approved investment funds.
FAQs
What is the minimum stay required for tax residency in Cyprus?
You need to spend at least 60 days in Cyprus during the tax year, provided you are not a tax resident elsewhere.
How does Cyprus treat foreign-sourced income?
Non-domicile residents are exempt from defence tax on certain types of foreign income, including dividends and interest.
Can I run a business abroad while being a Cyprus tax resident?
Yes. Cyprus supports international business operations with a corporate tax rate of 12.5% and double tax treaties with over 50 countries.
5. Georgia
Georgia stands out as a destination for reducing tax burdens in 2025, thanks to its low tax rates and incentives designed for entrepreneurs and digital professionals. Here's a closer look at its tax structure and special regimes.
Tax Rates and Structure
Georgia’s tax system is straightforward, making it appealing for service-based entrepreneurs and IT professionals. Individual entrepreneurs can benefit from a 1% tax rate on their service fees if they meet specific legal criteria.
Special Tax Regimes
Georgia provides two key tax statuses for IT companies, aimed at software development and IT export activities:
| Tax Status | Corporate Tax Rate | Requirements |
|---|---|---|
| Virtual Zone Status | 0% | Focused on IT exports and software development |
| Special IT Status | 5% | Operations centred on technology |
Foreign Income Benefits
Under Georgia's territorial tax system, individuals are not taxed on income earned from foreign sources. This is particularly beneficial for:
- Digital entrepreneurs working with international clients
- Remote workers employed by foreign organisations
- Individuals earning investment income from overseas
FAQs
What qualifies as foreign-source income in Georgia?
Income earned from activities or services conducted outside Georgia is treated as foreign-source income and is exempt from local taxation.
How can entrepreneurs qualify for the 1% tax rate?
They must register as Individual Entrepreneurs, keep accurate records of their service fees, and ensure their activities comply with Georgia's legal requirements for reduced taxation.
What are the criteria for IT companies to access the 0% tax rate?
Companies need to focus on software development and IT exports, register for Virtual Zone Status, and maintain proper documentation of their international operations.
6. Bulgaria
Bulgaria is a standout option for those seeking a tax-efficient destination within the EU. With its low living costs and simple tax system, it’s an appealing choice for entrepreneurs and digital professionals alike. The country’s flat tax rates make financial planning straightforward and predictable.
Tax Structure
Bulgaria applies a flat 10% tax rate to both personal and corporate income. This uniform approach ensures clarity and ease in managing taxes.
Investment Income
Bulgaria’s tax policies are particularly appealing for investment income:
| Investment Type | Tax Rate | Notes |
|---|---|---|
| EU Stock Market Trading | 0% | No capital gains tax on profits |
| Property Sales | 10% | Capital gains taxed at 10% |
| Corporate Income | 10% | Flat rate applied to all businesses |
This straightforward system makes it easier to manage investments and business operations.
Setting Up a Business
Foreign entrepreneurs will find Bulgaria’s company registration process accessible and uncomplicated. Combined with the flat 10% corporate tax rate, it’s an attractive option for starting or relocating a business.
Living Costs
Bulgaria’s low cost of living adds another layer of financial advantage, making it easier to balance personal and business expenses.
Frequently Asked Question
Q: How does Bulgaria's tax rate compare with other EU countries?
A: At 10%, Bulgaria offers one of the lowest tax rates in the European Union, making it highly competitive for individuals and businesses.
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7. Hungary
Hungary offers a straightforward tax system with a flat 15% rate applied to most income types, including wages, business earnings, capital gains, dividends, and interest. This competitive rate makes Hungary an appealing option for remote workers in Europe.
Tax Perks for Remote Workers
Hungary provides specific tax breaks to help remote workers manage their expenses. Here's a look at some of the key benefits:
| Benefit Type | Maximum Tax-Free Amount | Notes |
|---|---|---|
| Monthly Flat-rate Support | HUF 29,080 | Covers remote work expenses |
| IT Equipment | Full reimbursement | Must be for work purposes |
| Internet Subscription | Full reimbursement | Applicable for work |
| Housing Costs | Up to HUF 1.8m annually | Available for employees under 35 |
Additional Tax Allowances
Hungary's tax system includes several allowances designed to support specific groups:
- Family Tax Allowance: For those with dependent children.
- First Marriage Allowance: For newlyweds.
- Young People Allowance: For individuals under the age of 25.
- Maternal Support: Enhanced benefits for mothers under 30 or those with four or more children.
Savings Incentives
Hungary encourages long-term savings through reduced tax rates. If savings are withdrawn within three years, a 15% personal income tax (PIT) applies. This reduces to 10% in the fourth or fifth year, and after five years, no PIT is owed on profits.
Housing Support for Expats
Expatriates may qualify for tax-friendly housing support, provided certain conditions are met. This benefit helps lower living costs while ensuring tax compliance, making Hungary an attractive choice for remote professionals.
FAQs
Q: How does Hungary's minimum wage impact tax calculations?
A: In 2025, the minimum wage is set at HUF 290,800, and the flat 15% tax rate applies uniformly.
Q: Why is Hungary's tax system appealing for digital nomads?
A: The flat 15% rate, combined with remote work incentives and tax-free allowances, creates a favourable environment for location-independent professionals.
8. Czech Republic
The Czech Republic offers tax rates and conditions that attract foreign professionals. It provides a mix of competitive tax brackets and straightforward rules for expatriates.
Tax Rates
The country uses a two-tier tax system:
- 15% on annual income up to CZK 1,867,728
- 23% on income above CZK 1,867,728
The lower 15% rate applies to earnings up to roughly 48 times the average monthly salary.
Social Contributions
Employees contribute 6.5% of their gross income towards social security. This deduction supports key benefits while maintaining reasonable take-home pay.
Tax Residency Rules
To be considered a tax resident, one of the following must apply:
| Residency Type | Requirement | Tax Impact |
|---|---|---|
| Permanent Home | Owned or rented with intent to live there permanently | Full tax residency |
| Physical Presence | Staying for 183+ days in a calendar year | Full tax residency |
| Non-resident Status | Staying less than 183 days, employed by a foreign employer | No Czech income tax on employment income |
Exemptions for Foreign Workers
Foreign employees working for companies without a taxable presence in the Czech Republic are exempt from Czech income tax on their employment income, even if they perform their duties within the country.
Tax Obligations for Corporate Roles
Board members and statutory representatives of Czech companies are taxed on income earned within the country, regardless of their physical location. This rule often raises questions about residency and tax obligations.
FAQs
Q: How is dual tax residency handled in the Czech Republic?
A: Double Tax Treaties (DTTs) resolve dual residency cases by considering factors like permanent home, economic connections, and habitual residence.
Q: Does holding a long-term visa automatically make me a tax resident?
A: No, a long-term visa alone does not establish tax residency. You must either have a permanent home or spend 183+ days in the country.
Q: What is the average salary, and how is it taxed?
A: The average annual salary is approximately Kč550,248 (around Kč45,854 monthly) before taxes. This income falls into the 15% tax bracket.
9. Andorra
Andorra stands out as one of Europe’s most appealing tax havens, thanks to its low personal income tax rates and financial perks for residents. Its tax system is designed to support wealth accumulation effectively.
Tax Rates and Structure
Andorra uses a progressive tax system with the following rates:
| Income Bracket (€) | Tax Rate | Example Annual Tax |
|---|---|---|
| 0 – 24,000 | 0% | €0 |
| 24,001 – 40,000 | 5% | Up to €800 |
| Above 40,000 | 10% | Varies |
For example, a professional earning €80,000 annually would pay around €4,800 in Andorran income tax. By comparison, the same individual could face approximately €25,000 in Spain.
Key Benefits
- Capital Gains: No tax on profits from publicly traded stocks or funds
- Interest Income: The first €3,000 of interest income is tax-free
- Corporate Tax: A flat 10% rate, which can drop to 2% in certain cases
- Value-Added Tax (IGI): A low rate of 4.5%
Residency Requirements
To qualify for tax residency, individuals must spend at least 183 days per year in Andorra and establish the country as their main economic base. Some residency programmes require an investment of under €100,000.
Double Taxation Agreements
Andorra has agreements with France, Spain, and Portugal to prevent double taxation. These treaties make it particularly attractive for international professionals.
FAQs
Q: How long does it take to obtain Andorran citizenship?
A: Generally, 20 years of residency are required for full citizenship. However, this is reduced to 10 years for those who complete compulsory education in Andorra or raise children in the country.
Q: What are the minimum physical presence requirements for passive residency?
A: Passive residents need to spend at least 90 days per year in Andorra, a less stringent requirement compared to the 183 days needed for full tax residency.
Q: Are there specific rules for self-employed individuals?
A: Yes. Self-employed applicants for Category J Immigration Authorisation must deposit €15,000 with the Andorran Financial Authority (AFA), offering a straightforward option for entrepreneurs and freelancers.
Next, we’ll explore Monaco’s tax policies and why they continue to attract high-net-worth individuals.
10. Monaco
Monaco, a city-state on the French Riviera, has maintained a zero personal income tax policy for more than 150 years. With a population of just under 39,000, it’s an attractive destination for high-net-worth individuals seeking tax advantages. Like Andorra’s competitive tax rates, Monaco’s zero-tax framework offers an appealing option.
Here’s what this tax-friendly environment includes:
- No personal income tax
- No capital gains tax
- No wealth tax
- No property tax
- No tax on investment income or dividends
However, French nationals living in Monaco are still required to pay French income tax unless they can prove uninterrupted residency in Monaco since before the early 1960s.
Residency Requirements
| Type | Financial Requirement | Criteria |
|---|---|---|
| Self-Sufficient | €500,000–€2M bank deposit | Net worth over €2M or €300,000 annual income |
| Company Formation | €150,000 paid-in capital | Minimum of 50m² office space |
| Both Types | Property purchase or rental | Proof of accommodation |
Banking and Financial Infrastructure
Monaco is known as a hub for private banking, offering advanced wealth management services through its financial institutions.
Living Costs
Living in Monaco comes with a high price tag:
- Studio apartment rental: Starts at €2,800 per month
- Three-bedroom apartment rental: Around €25,000 monthly
- Standard VAT rate: 20%
- Reduced VAT rate: 5.5% on certain items
Corporate Considerations
Businesses generating at least 25% of their revenue outside Monaco are subject to a 25% corporate tax. This often raises questions about the specifics of Monaco residency.
FAQs
Q: How long does it take to obtain Monaco residency?
A: Initially, you’ll be granted a one-year temporary residence permit. After three years, you can apply for an ordinary residence permit, which is valid for another three years.
Q: Can I maintain dual citizenship with Monaco?
A: No, Monaco does not allow dual citizenship.
Tax Rates and Requirements by Country
Here's a look at tax structures and requirements across European destinations for 2025.
Personal Income Tax Rates
This table highlights personal income tax rates in various European countries:
| Country | Personal Income Tax Details |
|---|---|
| Estonia | Flat rate of about 22% (via e‑Residency) |
| Portugal | 20% under the Non‑Habitual Resident (NHR) scheme |
| Malta | Up to 15% for high-net-worth individuals under special programmes |
| Cyprus | Progressive rates ranging from 20% to 35% |
| Georgia | As low as 1% for individual entrepreneurs |
| Bulgaria | Flat rate of 10% |
| Hungary | Flat rate of 15% |
| Andorra | 0% up to a threshold; 10% above, with a €24,000 exemption |
| Monaco | No personal income tax |
Corporate Tax Overview
Corporate tax rates vary widely across Europe. Bulgaria and Hungary offer some of the lowest rates at 10% and 9%, respectively. Cyprus and Malta fall in the mid-range, with Cyprus at 12.5% and Malta effectively at 5% after refunds. Monaco, on the other hand, applies a 25% tax on international revenue. These rates align with personal tax structures, shaping overall tax planning strategies.
Residency Requirements for Tax Benefits
Residency rules play a critical role in determining tax benefits. For instance, Georgia typically requires a stay of about 183 days per year, whereas Estonia's e‑Residency provides digital access to its tax system without requiring physical presence. Since residency criteria differ by country, it's crucial to review local regulations for accurate planning.
Special Tax Regimes
Several countries offer tailored programmes to lower tax burdens, especially for digital professionals. Examples include Estonia's e‑Residency, Portugal's NHR scheme, and Georgia's 1% rate for individual entrepreneurs.
FAQs
Q: Which country has a simple process for gaining tax residency?
A: Estonia's e‑Residency programme is a convenient option for accessing its tax system digitally. Other countries often require physical presence for tax residency.
Q: Are these tax regimes dependable?
A: Most European countries maintain favourable tax policies, but it's essential to monitor any changes due to shifting economic or political conditions.
Q: What's an affordable choice for digital entrepreneurs?
A: Bulgaria offers a flat 10% rate for both personal and corporate income, making it a cost-effective option.
Next Steps and Key Takeaways
If you're planning to relocate, it's crucial to optimise your move for tax efficiency. For UK residents, here are the steps to consider:
Key Pre-Move Actions
-
Get Professional Advice
Speak to a tax adviser to analyse your income, pension, property, and business interests. Their expertise can help you avoid costly mistakes. -
Prepare Essential Documents
Organise key paperwork, such as passports, visas, proof of income, tax certificates, healthcare coverage, and property agreements. Having these ready will smooth your transition. -
Plan Your Residency
Ensure your residency aligns with the 183-day rule, which can impact global income taxes, social security, healthcare access, and financial services.
These preparations will help you navigate the complexities of moving to a new country.
Staying Compliant
Stay informed about tax and legal changes by subscribing to updates, setting alerts, and keeping detailed records. Review your tax status annually to ensure everything remains in order.
FAQs
Q: How long does it take to establish tax residency?
A: Typically, most countries require you to spend at least 183 days in the country to qualify as a tax resident.
Q: What happens to my UK pension if I become a tax resident elsewhere?
A: You can still access your UK pension, but taxation might vary depending on agreements between the UK and your new country. Consult a professional to plan effectively.
Q: Can I keep my UK bank accounts while living abroad?
A: Yes, you can usually maintain your UK accounts. However, you may need to declare them in your new country depending on local tax laws. Some countries have specific rules for reporting foreign accounts.
While tax efficiency is important, don't overlook lifestyle factors like healthcare, quality of life, and infrastructure. Balancing these elements ensures a relocation that supports both your financial and personal goals.