Billionaires and millionaires flock to these places to take advantage of tax loopholes that allow them to establish offshore bank accounts and shell corporations, and pay virtually nothing.
By doing so, they avoid the otherwise high tax rates they would pay in their home countries, without renouncing their citizenship.
Recently, the IRS announced plans to go after U.S. citizens holding offshore accounts. Still, that hasn't been a deterrent for a lot of wealthy individuals seeking to escape steep tax implications. Done correctly, offshore banking is completely legal.
And you don't have to have tons of cash in order to seek out the reprieve tax havens offer. Because, in addition to the lenient tax laws, many of these nations are exotic travel destinations that offer outside investors simplified pathways to citizenship.
Take a closer look.
Best known for the scuba diving and its astonishing Barrier Reef, Belize is a tropical paradise in the Caribbean Sea and just the place for anyone seeking discretion. English is the country's native language, though many habitants also speak Spanish. There are two pathways to citizenship: Permanent Residence and the Qualified Retired Person (QRP) program.
Permanent Residence status is applicable if you intend to earn income as an employee. Otherwise, you would be considered a QRP and all you have to do is spend four weeks of the year in Belize, while meeting a minimum yearly retirement income threshold. As a QRP, foreign income is tax-exempt and there's no tax on capital gains or inheritances.
Language: English, Spanish, and Creole
British Virgin Islands
Another Caribbean oasis, The British Virgin Islands (BVI) has long been known for its banking secrecy. BVI's income tax rate is 0% — there's no corporation, capital gains, gift, sales, profit, or inheritance tax. And property owners or real estate investors can become part-time residents, which permits you to stay in the country six months out of the year. There is a nominal property tax of 1.5% of the assessed value per annum.
The Cayman Islands has been on the radar for multinational U.S.-based Fortune 500 companies with offshore subsidiaries for decades. Apple, IBM, and others are just a few on the list. The country has no corporate tax — and no taxes on income, capital gains, profits, or estates, either.
The gorgeous country of Costa Rica attracted 2.52 million tourists last year. This Central American nation is known for its rainforests, pristine beaches, and waterfalls. Corporations pay no income tax on gains from outside the jurisdiction, and no interest, capital gains, or dividend tax.
Population: 4.872 million
Home of the famed Monte Carlo Casino and the Monaco Grand Prix, Monaco is a playground for wealthy jetsetters from around the world. Monaco has no income tax, capital gains, or inheritance taxes.
The Seychelles is comprised of 115 paradise islands off the west coast of Africa. The area is plush with coral reefs, pristine white beaches, luxury resorts, and local culture. There is no income tax, capital gains tax, gift tax, or property tax. To become a permanent resident, the country only requires that you reside in the Seychelles at least five days per year, and that you make a transfer of at least $10,000 per year into your bank account there.
Language: Seychellois Creole, English, and French
Panama has one of the fastest growing economies in Central America. It doesn't share tax treaties with other countries, and is under no obligation to share financial information with any authority. Banking discretion in Panama is among the most secretive. The country has no income, dividend, or capital gains tax.
Population: 3.864 million
Puerto Rico is a United States territory, but it is a Commonwealth government that has its own tax laws. In 2012, the country enacted a law that deems it a tax haven for U.S. citizens living on the island a total of 183 days per year; Act 20 & 22, and section 933 of the uniform tax code allows U.S. citizens to avoid paying taxes on interest, dividends, and capital gains without renouncing citizenship.
Native Language: Spanish and English
Population: 3.548 million