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Today in 10 minutes or less, you’ll learn:

  • 🇦🇪 Dubai Zero Income Tax

  • 🇳🇱 Netherlands Preferential Tax Schemes

  • 🤩 Under-the-Radar Expat Destinations

  • 🤖 Announcing MoneyAbroadGPT: Your Money Coach

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🗺 Save thousands on taxes by moving abroad (Part 2)

🗽 (Friendly) note on dual taxation

Before we begin, I received an email from an Aussie reader last week in response to our Part 1 edition on tax benefits and Portugal:

❝

“Great insights. One thing to note is that certain countries require their citizens to pay tax regardless of which country they live in. And most countries these days have a dual taxation treaty.

You may want to make your readers aware of dual taxation and paying taxes on overseas income if you are a citizen of countries like the US and Australia.

I have to decline a job offer in Dubai because of this problem.”

Our fellow reader raises an excellent point. Let’s break it down.

🇺🇸 American expats

As a US citizen living in Singapore, I have paid taxes to BOTH the US and Singapore tax authorities.

(Fun fact: The US is one of three countries in the world that enforces citizenship-based taxation. Other two are North Korea and Eritrea—great company right?)

Not all countries even have a tax treaty with the US (Singapore doesn’t), and even if they do, it may not prevent all dual taxation. So as an American abroad, you may very likely have to pay taxes in both countries (although you can apply credits and exclusions).

Protip: If you need help filing your US expat taxes, send a message to my personal tax preparer and he’ll reach out to help.

🇦🇺 Australian expats

For Oz, my wife is Australian and our friend have mentioned Australian tax residents have worldwide taxation.

My understanding is that it’s critical to prove to the Australian tax authorities that you are truly overseas and have no plans to come back.

I’m less knowledge about this, so if any Oz experts are reading - give me a shout.

🌎 Other expats

If you’re wrestling with the insanity that’s double taxation, here are some questions that I would ask:

  1. While you’re working abroad, are you considered a tax resident for your home country?

  2. What are the income and investment tax policies for tax non-residents vs residents for your home country?

  3. What is the treatment of foreign-sourced income and investments you make abroad based on your status (non-resident vs resident)?

Do your own research, but find a trusted tax professional if you can. It’ll save you a buttload of time and hassle.

🇦🇪 Dubai — Zero Income Tax

Dubai is aiming to grow from 3.5M people in 2022 to 5.8M people by 2040.

How can it achieve this? By attracting hundreds of thousands of expats of course!

Upside

  • No personal income tax

  • No capital gains tax

  • Tax relief for small businesses. Despite Dubai increasing the corporate tax rate in June 2023, businesses with Revenues of AED 3 million or below are eligible for no corporate income tax before 31 December 2026.

  • Gratuity pay (savings scheme). Not a tax benefit, but foreign workers in the private sector are eligible for an end of service gratuity upon resigning or getting terminated.

    • If you resign after 5 years, you can get up to gratuity pay of 21 days' salary for each year of work following the first five years (maxes out at 2 years worth of wages)

    • Calculator

Compare this to the highest national income tax bracket in the US (37%) and Singapore (22%).

What would you do with another ~20% of your income?

Downside

However, there’s no such thing as a free lunch.

Here’s a few other taxes levied:

  • Rental tax. Renting a property in Dubai adds 5% of annual rent

  • Corporate tax. 9% corporate tax rate (introduced June 2023)

  • Alcohol tax. 50% tax to bring it into the country + 30% if you have a liquor license and buy alcohol for home consumption (suspended for 1-year in 2023)

🇳🇱 Netherlands — Preferential Tax Scheme

15% of the Dutch were born outside of the Netherlands.

Starting in 2019, Netherlands has reduced their preferential tax scheme for expat professionals from 8 years to 5 years.

Upside

  • 30% of salary can be exempted from Dutch income taxes for up to 5 years

  • Avoid wealth tax of your savings and investment assets (except for Dutch real estate & substantial company ownership) by opting to be a non-resident status

  • Workaround for self-employed. Self-employed folks are not eligible for 30%, but you can setup a local entity and employ yourself

Downside

  • Wealth tax of your net assets above a certain threshold (but it may be possible to opt for non-resident status and not trigger this)

  • Reduced unemployment or health care benefits (due to employer not paying premiums on the tax free allowance)

Protip:

❝

My tip / trick is if you have a partner that’s also looking to move don’t have them move with you immediately or they are not eligible for the 30%.

Try to have them get their own 30% ruling / visa so that 1) you’re not risking by putting everything on one person visa wise and you get a huge benefit by both people getting 30% instead of just one

American Expat in Amsterdam

🤩 Under-the-Radar Expat Destinations

Lately, I’ve started meeting people seriously considering moving to the following countries.

I was surprised to uncover tax incentives to attract foreigners:

  • 🇪🇸 Spain — Beckham Law: Pay a flat rate of pay a flat rate of 24% up to the amount of €600,000 (versus 19% to 45%).

  • 🇮🇹 Italy — Special Tax Regime: Starting in 2021, most regions in the country offer a 70% tax cut to the newly registered tax residents.

Some of these tax schemes are changing next year, so don’t expect them to stay the same for much longer.

What I’ve learned is that countries change these policies rapidly. It can be hard to keep up!

💡Takeaways

  1. Uncover tax savings when researching your next living destination

  2. Clarify your current country and home country’s double tax treatment of your income, investment, and estates

  3. Factor tax upside AND downside into your overall financial plan

🤖 MoneyAbroadGPT beta has arrived

Love our writing, but want more personalized answers to your questions?

You’re in luck—instead of desperately trolling our archives, you can now ask MoneyAbroadGPT (beta). Take MoneyAbroadGPT for a test drive and send me your feedback!

🌐 Beyond your borders

🚢 Noah Kagan asks a 76 year old shipping billionaire if it was worth it (link)

🇸🇬 Grab finally logs its first adjusted profit in its history (link)

🇺🇸 Why market timing doesn’t work: S&P 500 is up 14% this year, but just 8 days explain the gains (link)

🤖 Bill Gates write: AI is about to completely change how you use computers (link)

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👉 How I can help

That’s all for today!

Whenever you’re ready, here’s how I can help you:

  1. Work with me 1:1 - Book a coaching session for your next career transition.

  2. Work with my tax team - Get personalized US expat tax help.

  3. Request your dream course - We’re excited to offer online courses in 2024 and we’re taking requests for your hottest topics!

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