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Several European countries have attractive tax regimes for Foreign Source Income (FSI) and capital gains, often aimed at attracting foreign investors and high-net-worth individuals. Due to the complicated nature of taxation, it is crucial that you understand the taxation criteria of each country and how it will impact your plan as a whole. Here are some of the notable ones:
 
1. Portugal
 
- Non-Habitual Resident (NHR) Regime: This special tax regime offers significant tax benefits for new residents over a 10-year period. Foreign-source income may be exempt from tax in Portugal if it is subject to tax in the source country, even if not effectively taxed. Some types of foreign income are taxed at reduced rates.
- Capital Gains: Gains from the sale of foreign securities are generally exempt from tax under the NHR regime.
 
2. Malta
 
- Resident Non-Domiciled Regime: Individuals who are resident but not domiciled in Malta are taxed on a remittance basis. Foreign-source income is only taxed if it is remitted to Malta. Capital gains arising outside Malta are not taxed, even if remitted.
- Capital Gains: Exempt if they arise outside Malta.
 
3. Cyprus
 
- Non-Domiciled Tax Regime: Foreign-source income is generally exempt from income tax. Foreign dividends and interest are also exempt from the Special Defense Contribution (SDC).
- Capital Gains: Gains from the disposal of securities (shares, bonds, etc.) are exempt from tax.
 
4. Italy
 
- New Resident Regime: New residents who have not been tax resident in Italy for at least 9 out of the previous 10 years can opt for a flat tax of €100,000 per year on their foreign income, irrespective of the amount. Additional family members can be included for €25,000 per year.
- Capital Gains: Foreign-source capital gains can be covered under the flat tax regime.
 
5. Greece
 
- Non-Dom Regime: Greece offers a similar regime to Italy, where new residents can pay a flat tax of €100,000 per year on their worldwide income.
- Capital Gains: Included in the flat tax regime if the individual opts for it.
 
6. Ireland
 
- Resident Non-Domiciled Regime: Similar to Malta and Cyprus, Ireland taxes foreign-source income on a remittance basis. Foreign capital gains are taxed only if remitted to Ireland.
- Capital Gains: Only taxed if remitted.
 
7. Monaco
 
- General Taxation: Monaco does not impose income tax on individuals. Thus, foreign-source income and capital gains are not subject to taxation, except for French nationals who are subject to French tax laws.
- Capital Gains: Generally exempt from tax.
 
These regimes are attractive for individuals with substantial foreign income and investments, allowing them to minimize their tax liabilities legally. It's essential to consider the specific conditions and requirements of each country's regime, as well as any changes in tax laws, which can occur over time. Consulting with a tax advisor who specializes in international taxation is recommended for personalized advice.
 
Additional European countries with favorable tax regimes for Foreign Source Income (FSI) and capital gains:
 
8. Switzerland
 
- Resident Non-Domiciled Regime: Individuals who move to Switzerland but are not engaged in any local gainful activity may benefit from the lump-sum taxation regime, which is a negotiated fixed tax based on living expenses rather than income or wealth.
- Capital Gains: Generally exempt from tax for private individuals (non-professional traders).
 
9. Luxembourg
 
- Tax Regime: Luxembourg does not have a special regime for foreign-source income, but it offers various incentives and exemptions for specific types of income, including foreign dividends and intellectual property.
- Capital Gains: Gains on movable property (like securities) held for more than six months are generally exempt from tax for individual investors.
 
10. Andorra
 
- Tax Regime: Andorra offers a relatively low flat tax rate on individual income, and foreign-source income is not taxed.
- Capital Gains: Gains are generally exempt from tax.
 
11. Belgium
 
- Tax Regime: Belgium taxes individuals on their worldwide income, but foreign-source income can benefit from tax exemptions or reductions under double tax treaties.
- Capital Gains: Private capital gains are generally exempt from tax unless they are realized through professional activities or involve speculative transactions.
 
12. Gibraltar
 
- Non-Domiciled Tax Regime: Individuals resident in Gibraltar but not domiciled there are taxed on a remittance basis for their foreign-source income.
- Capital Gains: Generally exempt from tax.
 
13. Isle of Man
 
- Tax Regime: The Isle of Man offers favorable tax rates and does not impose capital gains tax. Foreign-source income is taxed, but the overall tax regime is competitive.
- Capital Gains: Exempt from tax.
 
14. Jersey
 
- Tax Regime: Jersey residents are taxed on their worldwide income, but foreign-source income is subject to special tax treatments.
- Capital Gains: Generally exempt from tax.
 
15. Guernsey
 
- Tax Regime: Similar to Jersey, Guernsey residents are taxed on their worldwide income but can benefit from special tax treatments for foreign-source income.
- Capital Gains: Generally exempt from tax.
 
16. San Marino
 
- Tax Regime: San Marino offers a favorable tax regime with no tax on foreign-source income for individuals.
- Capital Gains: Gains are generally exempt from tax.
 
17. Bulgaria
 
- Flat Tax Rate: Bulgaria has a flat personal income tax rate of 10%, one of the lowest in the EU. Foreign-source income is taxed, but the rate is low.
- Capital Gains: Generally taxed at a flat rate of 10%.
 
18. Estonia
 
- Tax Regime: Estonia taxes residents on their worldwide income, but retained and reinvested profits in Estonian companies are not taxed until distributed.
- Capital Gains: Gains are taxed as ordinary income at a flat rate of 20%, but reinvested gains can benefit from deferral.
 
These countries offer various tax incentives and regimes that can be highly beneficial for individuals with significant foreign-source income and capital gains. The specific advantages and conditions vary by country. Working with our experts can help streamline this process, providing valuable insights and tailored strategies to ensure successful outcome.
 

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