One of the biggest myths in the world is that living in Europe means being taxed to death. It may surprise many people, but some of the countries with the lowest income taxes are in Europe.
Thomas Jefferson said that only two things are certain: death and taxes.
That may have been true in the 18th century, but in 2024, your tax posture is a choice.
Protecting your income and assets from high taxes is a core requisite for wealth generation and creating generational wealth.
Europe, and more specifically, the European Union, offers unparalleled advantages and privileges to its citizens and residents – tax optimization is only one of them.
Apart from the free movement of capital and goods in one of the biggest markets in the world, EU citizens and residents enjoy:
- State-of-the-art healthcare
- Right to access medical procedures
- Top-tier education
- Currency diversification
- Non-dom tax programs
- International banking opportunities
- Advanced privacy protections
- Freedom to live, conduct business, travel, and bank anywhere in any EU member state
This also includes the right to choose which tax system you prefer to live under, and arguably, Europe has some of the best options in the world.
Countries offering the lowest income taxes in Europe
The most prevalent myth in the world today, when talking about taxes, is that Europe has the highest.
Though that may be true for some countries, it is not a truth that applies to all of Europe, including some of the European Union.
Most European countries implement a progressive tax scale, though some do offer very attractive flat tax systems.
It is true, in countries such as Denmark, a personal income tax rate for an HNWI can easily reach 55.9%.
However, by effectively leveraging EU Golden Visas and citizenship programs, it is possible to cut that rate by 75%.
Monaco
Monaco is the jewel in Europe’s crown.
The Principality levies no income taxes at all on its citizens or residents.
Renowned for its ultra-luxurious cosmopolitan life, this tiny Principality of less than a square mile (2.02 km2) offers one of the most attractive lifestyle opportunities to HNW entrepreneurs, investors, and families who seek a tax regime that caters to their needs.
Tax benefits of residency in Monaco include:
- 0% income tax
- 0% capital gains tax
- No dividend taxes
- No wealth tax
Andorra
Along with Moncao, Andorra is another of only six microstates in Europe.
A landlocked mountainous country between Spain and France, Andorra is the sixth-smallest state in Europe but packs a big punch.
Andorra’s approach to taxation is straightforward. It has a progressive tax scale with a maximum tax rate of 10%, which applies to both personal and corporate entities.
Like Monaco, Andorra is not an EU member but must be accessed through one—in this case, via Spain or France.
Although Andorra does have a small private airport, it does not have an international airport or links to Europe’s rail system.
HNW entrepreneurs, investors, and families typically fly into Andorra by private jet or helicopter.
Tax benefits of Andorra:
- 0-10% income tax
- 0 – 10% corporate tax
- No wealth tax
- No dividend tax
- 10% capital gains tax
- Married couples are granted a standard deduction of €40,000
- Businesses earning less than €100,000 during the first three years only pay 5% on the first €50,000 profit earned
Bulgaria
For many reasons, Bulgaria is an EU insider secret, and taxation is at the top of that list.
Among all its EU counterparts, Bulgaria rises to the top with the lowest income taxes in the EU.
A flat rate income tax system that only levies a 10% tax liability on its citizens and residents.
Tax benefits of Bulgaria:
- Flat rate of 10% for income tax
- 10% corporate tax
- Double taxation treaty with 70 countries – including the US and UK
Bosnia and Herzegovina
Although not at the top of the list for most HNW entrepreneurs, investors, and families, Bosnia and Herzegovina does have old-world charm paired with a generous taxation system.
Bosnia is an eastern European country of stunning natural beauty and offers Europe’s lowest taxes.
The country operates on a flat income tax rate of only 10%.
Additionally, Bosnia offers a standard CTR of only 10% as well.
Tax benefits of Bosnia and Herzegovina:
- 10% income tax
- 10% corporate tax
- Dividend taxes of 0-5% [depending on double taxation treaties]
- Capital gains are taxed at 10%
Romania
Old-world Eastern European charm and luxury are also some of the best ways to describe Romania.
Packed with gothic castles, gorgeous mountain ranges, and untouched natural landscapes, even King Charles maintains a royal residence in the Romanian countryside of Transylvania – along with another legendary Count.
However, it is unlikely that King Charles needs to leverage Romania’s very attractive tax code.
Along with Bulgaria, Romania has the EU’s lowest personal income tax rates.
Tax benefits of Romania:
- 10% income tax
- 16% corporate tax
- 8% dividend tax rate
- 10% capital gains tax
- Double taxation treaty with 86 countries – including the US and UK
Gibraltar
A British Overseas Territory of just 2.63 sq mil (6.8 sq km), Gibraltar sits on a narrow isthmus at the southernmost tip of Spain’s Iberian Peninsula.
Though constantly in dispute between Spain and the UK over territorial rights and ownership, there is one thing that no one can dispute – Gibraltar offers a better tax opportunity than either Spain or the UK [now that the UK has terminated its Non-Dom Tax Regime].
Tax benefits of Gibraltar:
- Progressive income tax scale of 10-29% income tax
- 10-12.5% corporate tax
- No capital gains tax
- No dividend tax
- No VAT
Hungary
Hungary’s cosmopolitan capital city, Budapest, is bursting with history, thermal spas, and architectural beauty—as well as incredible opportunities for HNW entrepreneurs, investors, and families.
Hungary has many things to offer citizens and residents, including a high-quality lifestyle with incredible tax optimization.
With one of the lowest income taxes in Europe, all personal income taxes, including dividends and capital gains, are taxed at a flat rate of 15%.
Of particular note to US citizens is that the double taxation treaty between the US and Hungary ended on January 1, 2024. However, a future US administration could resurrect it.
Tax benefits of Hungary:
- 15% flat rate income tax
- 9% corporate tax
- Double taxation treaty with 83 countries – including the UK
- Capital gains and dividends are treated as income
Montenegro
Potentially the biggest European insider secret – Montenegro.
For HNW entrepreneurs, investors, and families seeking a legitimate ground-floor opportunity, Montenegro must be among their Top five considerations.
On course, to become an EU member by 2028, the economy and market—which are already Euro-based—are beginning the paradigm shift from isolation to the single market powerhouse of the EU.
Porto Montenegro, in the Bay of Kotor in Tivat Montenegro, was the first superyacht marina in the world to earn the highly coveted 5 Gold Anchor Platinum status.
A status the country’s tax code should also share, as Montenegro has the lowest income taxes in Europe [among countries that levy an income tax].
Montenegro implements a progressive tax rate of 9-15%, which applies to personal and corporate income.
Tax benefits of Hungary:
- Income tax from 9% to 15%
- Corporate tax from 9% to 15%
- Capital gains tax are considered income
- Dividend tax rate of 9%
- Double taxation treaty with 83 countries – including the UK
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