Best Top 10 Countries With Low-Tax for Digital Nomads

Many companies are digital today, especially after the 2020 pandemic, which pushed most business operations to operate remotely. People who recognize the benefits of working online and support the digital nomad concept have fueled the trend.

A digital nomad is flexible to live and work anywhere in the world. Since there are countries with no income tax or its minimal, digital nomads prefer to move there and maximize the benefits. Working on the move excites digital nomads to move to a country with low taxes. But low or no taxes aren’t the only motivators that should push you to move to another country as a digital nomad. 

Before becoming a tax resident, it’s essential to check the laws and minimum stay threshold of a country that charges low or no taxes to avoid surprises. You should also check if the laws in the country you want to move to align with your lifestyle preferences. 

So, if you’re a digital nomad considering moving to a different country for tax benefits, this guide is for you. Foundeck in this guide has put together the best top 10 countries with low-tax for digital nomads to guide you. 

Welcome, and let’s get educated together.

Who is a Digital Nomad?

Generally, a digital nomad can live in a different area or country to do their job. They mainly rely on technology to perform their professional duty. As the name (nomad) suggests, this group of people travel for the better part of the year and have no permanent residence in a specific time zone. 

The other part of the term (digital) means the person doesn’t have to be in a specific location to perform their duties. Digital nomads are mostly individuals who are self-employed or employees working as Data Engineers, Developers, Content Creators, or Technology Consultants.   

Where Do Digital Nomads Pay their Taxes?

There’s a common misconception that digital nomads don’t pay taxes, and the same sentiment is echoed on social media, which can be misleading. Yes, they travel a lot, which makes them consider themselves fiscal nomads, but simple mistakes can plunge them into deeper tax problems. 

Moving to a low-tax country means you must deregister from your country’s tax authority. Not having a tax residency certificate from any country or having a house can often result in paying high taxes. Thus, if a digital nomad wants to avoid paying taxes in low-tax countries entirely, consider the following scenarios: 

1. Get a digital nomad visa or any other kind of visa that can allow them to be a tax resident in a low-tax country.
2. Secure a tax residency certificate from the tax authorities in the country you’re living in as a defense against potential tax claims.
3. Establish a home or residence in a country where you go when you’re not traveling.

Best Top 10 Countries with Low-Tax for Digital Nomads 

The countries discussed below have beneficial tax systems and a strong reputation for highly qualified digital nomads. Even after discussing these jurisdictions, the final decision is yours, as each country presents other influencing factors besides the low taxes. These countries include:

1. United Arab Emirates (UAE)

Almost everyone has heard about the tax-free life in Dubai, not to mention digital nomads who love friendly tax environments. As an emirate of the United Arab Emirates, I don’t levy personal income taxes. The country aims to steer its economy away from oil to attract more investors (people and businesses) worldwide, including digital nomads.

Generally, the UAE tops the list of countries with low taxes as they don’t collect income taxes. However, the cost of living can be a deal breaker as it varies significantly in different zones and cities. The lifestyle, rental houses, activities, and entertainment can cost an arm and a leg, putting strain on your wallet, especially for freelancers.    

1a) Income Tax

Although the income tax is 0%, tax residency rules vary depending on the period you stay in the country, which ranges from 90 to 183 consecutive days in a calendar year. Plus, you don’t pay taxes for the following: 

• Wealth
• Capital gains
• Luxury Inheritance
• Interest, or 
• Dividends (UAE tax resident)

1b) Requirements for Tax Dubai Tax Residency

• Tax residency: You become a tax resident in the UAE differently. However, you must spend 183 days in the country to get an international tax residency certificate. A tax residency certificate protects you from paying taxes in other countries. 
• There are no tax levies on personal income tax in the UAE. However, it’s not all merry for freelancers who are subject to paying corporate income tax rates for revenue exceeding AED 1,000,000 (~€250.000).
• There are no tax rates on social contributions in the UAE. 
• Income above AED 375.000 (~€95k) is subject to a corporate income tax rate of 9%, which was introduced in 2023. 
• There’s also no withholding or dividend tax in the UAE.
• There is no free digital nomad visa in the UAE. 

Most people living in Dubai are foreigners, hence the presence of a huge expat community. However, the digital nomad community is smaller. 

2. Albania (AL)

Albania is gradually becoming a household name among digital nomads thanks to its good internet infrastructure and low cost of living. To become a tax resident in Albania, you must live there for over 183 days.

 2a) Income Tax

Self-employed individuals, like small business owners with a turnover below €120,000 in Albania, pay an income tax rate between 0% and 15%. For the first 15 years of a business, the 0% corporate interest rate applies. If you’re drawing dividends, there’s a dividend tax of 8%, and your total earnings attract a 15% tax rate. 

3. Czech Republic 

The Czech Republic, specifically the capital Prague, is a popular tourist destination and digital nomads. As a member of the EU and Schengen Area, residents of any Schengen country don’t have fewer formalities and documentation required to visit the country. The law in the Czech Republic requires that anyone living in the country for over three months must register with the local authorities.

The lifestyle in the Czech Republic is terrific, especially in Prague, which is famous for its party culture and bustling nightlife. It’s one of the most favorable reasons digital nomads worldwide love the City. 

3a) Income Tax

To become a tax resident in the Czech Republic, a digital nomad must spend more than 183 consecutive days in the country in a calendar year. The tax brackets in Czech Republic falls into two brackets:

• An annual tax rate of 15% for the first amount of €82.000.
• Any income that surpasses the above income threshold is taxed at 23%.

All investment income incurs a flat tax rate of 15%, social contributions 29.2%, while self-employed persons and sickness insurance takes 2.1%. Corporate tax is a flat rate of 21%, but different social contributions and lump sum return variations exist. The details to these variations are on the government website. 

4. Bermuda

Bermuda is your perfect destination if what you desire as a digital nomad is a scenic location and a luxurious lifestyle. Although the cost of living in Bermuda is high, you have no taxes to pay. Plus, you receive a $200 customs allowance whenever you enter Bermuda. It’s one of the many reasons more digital nomads with decent earnings are making the country their home. 

4a) Income Tax

All taxes are 0%.

5. Cyprus

Favorable tax rates and exemptions make Cyprus an excellent destination for digital nomads who find the environment suitable for living and working. 

• To attain tax residency status, you must live on the island for twelve consecutive months (1st to December 31st) of the same year.
• Personal income tax rates for residents range from 20 to 35%, while non-residents pay taxes in different categories: The progressive scale begins at 0% for incomes up to €19,500 and 35% for incomes over €60,000.
• Corporate contributions are at 12.5%
• Dividends tax is 0%

6. Georgia (GA)

Georgia sits comfortably between Europe and Asia, providing an enticing prospect for digital nomads looking for a favorable income tax environment. Residents who engage in private entrepreneurship schemes only pay 1% annual tax. Hence, the environment is tax-friendly, allowing remote workers to enjoy their total earnings.

The state of Georgia boasts a scenic Caucasian landscape and the following: 

• A thriving startup community
• A rich history
• Warm hospitality
• Numerous microclimate zones - Mountains, plains, and deserts 
• Vibrant culinary scenes
• Unique historic sites, and 
• Low taxes are the main pulling factors for digital nomads

Whether you’re a tourist, digital nomad, or both, Georgia offers a wealth of experience through its affordable cost of living and all the above benefits. Hence, embracing the nomadic lifestyle while in Georgia is not only inviting but also an enjoyable state to be in. For anyone who needs to enjoy a glass of wine after a long day, Georgia is the home of wine with specific wine-tasting districts and a unique lifestyle. 

6a) Requirements to Become a Tax Resident in Georgia

The requirements for becoming a tax resident in Georgia: 

• To get tax residency, you must spend 183 days in Georgia, but an exemption can apply for High-Net-Worth Individuals who want to become tax residents but spend less time in the state. 
• The personal income tax rate in Georgia is a flat 20%. Georgia applies for a territorial tax regime that exempts foreign income from taxes. Moreover, entrepreneurs have specific tax regimes where they can pay minimal taxes as low as 1%. 
• No levies are imposed on social contributions. 
• The corporate income tax rate is 15% and is only due when profits are distributed. Thus, as long as your money circulates in the company, you’ll pay no taxes. 
• Withholding or dividend tax paid by a Georgian company is 5%.
• The state has no digital nomad visa, but people can stay in Georgia for up to one year. 

Besides the tax benefits of living in Georgia, digital nomads are lucky to share ideas and experiences in thriving digital nomad communities, mainly in Tbilisi. You can be sure never to get bored when in Georgia. 

7. Malta (MA)

Malta is an island in the Mediterranean Sea famous among digital nomads. The beautiful Mediterranean island has magnificent views, a friendly tourist community and residents, fresh seafood, and digital nomads. Recently, Malta changed its tax regulations to favor digital nomads, making it more friendly for them.

7a) Income Tax

Before, Malta’s Nomad Residence Permit holder had to part with progressive income tax rates of up to 35%. Currently, the income tax rate is 10% for authorized work in Malta, and you have to spend six months in the country to become a tax resident.

The social contribution for self-employed nomads is 15%, and for employees and employers, it is 10%. The corporate tax rate is fixed at 35%, and the government refunds 30%. Thus, the actual corporate tax rate is 5%.

7b) Tax Requirements to Become a Tax Resident in Malta 

• Tax residency: Malta generally requires you to stay 183 days in the country to become a tax resident.
• Malta applies progressive personal income tax rates, with the lowest rate being 15% on incomes under € 9.100. Once you make over €60.000, you pay the highest rate, which is 35%. 
• Social contributions for self-employed persons earning €78 weekly are 15%. However, most people choose to form a company and receive payment as directors. When considered an employee, the company and you must pay up to 10% in social contributions. A weekly maximum applies from €52 and €104 weekly.
• Malta’s corporate income tax rate is 35%, and if you pay out a dividend, you claim a refund for 6/7th or 30%. Based on these considerations, the corporate income tax rate is 5%, making Malta the most suitable country for digital nomads due to Europe’s lowest tax rate. 
• There is no withholding or dividend tax in Malta. 
• Malta offers a digital nomad visa if you’re interested. 

Although Malta attracts the international public, it’s less popular than other low-tax countries with extensive digital nomad communities. 

8. Paraguay (PY)

To most digital nomads, Paraguay is the holy grail for setting up taxes for numerous reasons, especially the tax rules. To benefit as a digital nomad from Paraguay’s tax rules and get a tax residency permit, you must stay in the country for at least 120 days. Generally, if you can’t afford to live in Paraguay for 120 days straight, you can apply for a residency certificate from your country of origin. 

8a) Income Tax

In Paraguay, the general income tax rate is 10%. Registering as a director or freelancer in a company makes your social contributions a choice. There’s an additional standard VAT of 10% if your goods and services are provided within the Paraguay territory. The good news for businesses whose customers are based abroad is that they don’t pay VAT. 

8b) Requirements 

• Tax residency: With a residency card in Paraguay, you can apply for a tax number, and once it’s approved, you can become a tax resident. Becoming a tax resident has no strict conditions in Paraguay. 
• The income tax rate is 10%, but a territorial tax regime applies, meaning you only pay taxes on local income. You can avoid income taxes as a digital nomad with the proper structure. 
• Social contributions are optional in Paraguay.
• The corporate income tax rate in Paraguay is 10%.
• There’s a general withholding or dividend tax rate of 10%.
• Paraguay doesn’t offer a digital nomad visa, but its obtaining a residency permit is easy.

Most digital nomads utilize Paraguay’s tax rules by getting a tax residency permit without spending too much time in the country. Due to these tax benefits, more digital nomads are exploring Paraguay.

9. Romania

Digital nomads find Romania an exciting destination due to its tax options. You can become a tax resident in the Balkan country in three ways: by staying there for 183 consecutive days, having a permanent home (rented or self-owned), and having pivotal interests in the country. 

9a) Income Tax

Romania’s income tax is 10% flat. Social insurance contributions and health insurance contributions depend on income. The standard corporate tax rate is 16%, while dividends attract an 8% tax rate.

Romania is located in Eastern Europe and has been underestimated for a long time. However, the country offers a diversified landscape, great internet infrastructure, and, as the icing on the cake, affordable living. 

9b) Requirements

• Tax residency: No requirement to live in the country for 183 days.
• The personal income tax rate is 10%, a fixed rate, like in Bulgaria. 
• The total amount of social contributions is 35%, with the maximum being about €4.100.
• The corporate income tax rate is 16%; Romania offers a specific regime for micro companies that only pay a 1% tax rate on their income. However, you must adhere to other conditions to set up tax residency in Romania. 
• The withholding or dividend tax rate is 8%, but if the total dividends are more than €3.600, an additional 10% social contribution applies.
• Romania has a digital nomad visa and was on the list of Europe’s best digital nomad visas.
• Most Romanian towns have thriving digital nomad communities that invite nomads to visit the country more. 

10. Thailand

Thailand is a hotspot for Southeast Asian digital nomads: Chang Mai, Bangkok, Ko Pha Ngan, Ko Lanta, and Krabi. People who visit these places have great stories about their experiences. Compared to Western countries, these destinations are affordable, meaning you can live like a king or queen on a minimal budget. 

Add a pleasant climate to the mix, and you might have your ideal spot. But what about taxes in Thailand?

10a) Requirements 

• To obtain tax residency in Thailand, you must spend 180 days in the country.
• Thailand applies a progressive Personal income tax rate starting from 5% for those making over €3.800 monthly and can go up to 35% for those earning more than €130.000, but the rates vary between the two. But there’s good news: Thailand applies a territorial tax regime, meaning you only pay taxes on the money earned within the country. Generally, your tax rates will highly depend on your lifestyle. 
• People who don’t work for local employers don’t make social contributions. 
• The corporate income tax rate is 20%
• Withholding or dividend tax rates for a Thai company are 10%, but due to the territorial tax regime, foreign dividends aren’t affected by these rates. 
• The country offers a digital nomad visa, but the requirements are strict. 

With so many popular places to visit in Thailand, digital nomad communities are famous for digital nomads from all over the world.

The Advantages and Disadvantages of Becoming a Digital Nomad

The lifestyle of a digital nomad is an alternative to everyday life, a regular job, and tax relief, leading to a more economical lifestyle. It frees you from the struggles of expensive mortgages, allowing you to shake off the shackles of a busy life and work as you transverse the world. 

Most European countries offer a conducive environment for digital nomads to explore and work under special visas that don’t offer a path to becoming permanent residents of these countries. However, a digital nomad can apply for tax residency in countries offering digital nomad visas after fulfilling all requirements. With that in mind, here are the pros and cons of being a digital nomad.

Frequently Asked Questions

What is digital nomad tax?

Digital nomad tax refers to the income tax considerations digital nomads must consider when working remotely from different countries.

How do you define territorial tax?

Territorial tax is a policy in which countries tax only income earned within their borders. The income digital nomads make in other countries isn’t subject to taxation in their country of origin.

What is progressive tax?

A progressive tax is a tax rate that increases as taxable income increases. The system imposes a lower tax rate on low-income earnings.

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In Summary

Digital nomads are self-employed individuals or freelancers who work on the go in different parts of the world, especially in countries with lower taxes. As a freelancer, you may wonder which of the top 10 countries have low taxes for digital nomads. The above list represents some of them, but it’s not exhaustive, as you can compare many more options online.

Low-tax countries are attractive to digital nomads, as they can travel and experience different cultures and communities while working. Working from these tax-friendly areas eases the tax burden for freelancers, freeing up resources to grow a business or progress professionally.

Some countries attract digital nomads due to low taxes, low cost of living, and amazing scenic views, while others offer a blend of all the favorable conditions. Since the world today is digital, a freelancer can work from anywhere, and it’s up to you to choose what country favors your needs as a digital nomad. Kindly contact one of our Foundeck experts here if you have any questions about the best top 10 countries with low-tax for digital nomads.