When investing globally, the existence of capital gains tax can affect both investment strategies and returns. However, many countries in the world welcome foreign investment. As an expatriate, living or investing in these countries allows you to enjoy various preferential policies, minimize financial losses, and achieve continuous financial growth.
Capital gains tax is a tax on the profits from the sale of assets such as real estate, stocks, and bonds. It is an important factor to consider when choosing an overseas investment destination and planning an overseas investment strategy.
Most overseas investors are reluctant to pay capital gains tax, as its existence not only deters investment but is also detrimental to maximizing capital returns. Therefore, savvy investors choose to invest in jurisdictions with more favorable capital gains tax rates.
Around the world, many countries waive capital gains tax in various forms. These include well-known tax havens like Barbados and the Isle of Man, as well as countries that might surprise many, such as Iran and Egypt.
We have selected countries that are friendly to expatriates and offer a high quality of life for your reference. If you wish to hold stocks and other investments in your personal name rather than through an offshore company, understanding the specifics of these countries with no capital gains tax can help you plan your digital nomad lifestyle.
Table of Contents
Top 9 Global Rankings
9. Switzerland
Switzerland is worth buying for more than just cheese and luxury watches. Due to its progressive tax system, buying a home here is more affordable than most people might think.
Switzerland is the world’s premier wealth management center, boasting world-famous banks and no capital gains tax on securities trading.
In Switzerland, gains from the sale of private property are not taxed by the federal government, while gains from the sale of commercial property are taxed as income by the federal government. However, gains from both types of property are subject to cantonal and municipal taxes.
Additionally, if you make a living from trading stocks or other investments, you will need to pay tax on your earnings, but otherwise, there is no capital gains tax.
Under Switzerland’s progressive tax system, the longer you hold a property, the lower the tax. Cantonal rules apply to all real estate, with tax rates ranging from 25% to 50%. After holding a property for four to five years, you can get a reduction of up to 50% to 70% on the payable tax. For properties sold within the first four to five years, a short-term gains tax of up to 50% may be imposed.
8. Singapore
Singapore has completely abolished capital gains tax, encouraging expatriates from all over the world to invest and promote national development.
Singapore is always on the list of countries that provide strong incentives for entrepreneurs and capital investment.
Singapore has consistently maintained a high level of economic development, attracting foreign capital with its strong financial security and attractive tax incentives. As a measure to attract foreign capital, Singapore does not levy capital gains tax.
Although certain aspects of Singapore’s fiscal policy are gradually tightening for expatriates and new immigrants, its low-tax advantage among the many English-speaking countries in the world cannot be ignored.
7. Cayman Islands
The Cayman Islands not only has no capital gains tax but is also located in the Caribbean Sea, boasting a beautiful natural environment and an extremely high standard of living.
The Cayman Islands is a well-known tax haven and offshore banking center that does not impose capital gains tax on any transactions.
Entities located in the Cayman Islands may be required to pay taxes in other jurisdictions, but the Cayman Islands government does not tax their capital gains.
As a British Overseas Territory, the Cayman Islands offers a high standard of living for foreign investors. Living in the Caribbean region allows you to enjoy various local resources and advantages, including a good business environment and a well-developed tourism infrastructure.
6. Monaco
Monaco is the epitome of wealth. The standard of living and investment environment here are extremely attractive, and there is no capital gains tax. The only exception is for French nationals; French citizens in Monaco must pay personal income tax to the French authorities.
Monaco is one of the world’s most renowned tax havens and has long attracted the super-rich from various countries.
Monaco does not levy capital gains tax, except for French citizens.
The government of Monaco understands the benefits of creating a business environment that attracts foreign investment, and thus does not tax capital gains.
At the same time, Monaco offers many pathways to obtaining residency. For entrepreneurs who have achieved outstanding success in the business world and wish to further optimize their investment strategies, choosing Monaco will definitely not be a disappointment.
5. Belgium
Belgium has a rather strict tax system, but no capital gains tax. This means that even if you don’t have to pay capital gains tax in Belgium, you may still have to pay other basic taxes.
Belgium is a living example of capital flight. A well-known case is that of Gérard Depardieu, one of France’s leading actors, who chose to settle in Belgium to escape France’s high-income tax system. Bernard Arnault, the president of the French luxury giant LVMH, also applied for Belgian nationality to evade the high “wealth tax.”
Belgium is not a completely tax-free country; even without capital gains tax, income tax is required. However, there is no doubt that Belgium’s personal income tax rate is definitely lower than France’s.
It should also be noted that capital gains in Belgium are not 100% tax-free. The decisive factor in whether capital gains are taxable is whether their nature is private asset management or involves speculative intent.
Generally, if capital gains can be considered part of normal private asset management, they will not be taxed. However, the definition of “normal” is relatively subjective and is usually determined on an individual basis based on case law.
For example, if you sell shares shortly after purchasing them, or if there is a large difference between the purchase and sale prices, the transaction activity is likely to be considered as constituting speculative intent and will be subject to a 33% capital gains tax.
Capital gains earned by companies are subject to the normal corporate income tax rate of 25%. It should be noted that only the statutory corporate income tax rate is 25%; other capital gains involving a “substantial participation” will be taxed at a rate of 16.5%. In addition, there are special rules for mergers and demergers of enterprises, losses and shares of trading companies, and capital gains from intellectual property, embedded royalties, and infringement compensation.
Although there are various precautions and exceptions, overall, private capital gains from all stocks in Belgium are tax-free, with the exception of fixed-income securities.
In terms of real estate transactions, gains from the sale of a private residence are also tax-free, provided you have lived in the property for at least one year before the sale. For transactions involving any building other than a private residence, a tax rate of 16.5% is applied if sold within five years of purchase; after five years, no tax is due. For transactions involving undeveloped land, a tax rate of 33% is applied if sold within eight years of holding; after eight years, no tax is due.
Belgium is not exactly a low-tax country; even by European standards, its tax rates are not low. As a European country, its main advantage in attracting expatriates is its zero capital gains tax.
4. Malaysia
Malaysia practices a territorial tax system, which is a great advantage for all expatriates. However, Malaysia imposes a Real Property Gains Tax, and this capital gains tax can only be waived if the property is held for more than 5 years.
Like its southern neighbor Singapore, Malaysia does not tax capital gains on stocks.
Furthermore, Malaysia operates on a territorial tax system rather than a residential one, meaning that income sourced from outside Malaysia is not subject to income tax, including investment income generated offshore, even if the offshore income is eventually remitted to Malaysia.
The Malaysian government implements a de facto capital gains assessment system for real estate, requiring non-residents to hold property for at least five years, or face a 30% withholding tax, known as the Real Property Gains Tax (RPGT). This measure is aimed at cooling down the property resale markets in Kuala Lumpur and Johor Bahru.
3. New Zealand
New Zealand enjoys a reputation as heaven on earth, not only because of its stunning natural scenery but also because it is one of the few truly free economies in the world. In New Zealand, there is no capital gains tax.
According to the well-known American policy research institute, The Heritage Foundation, New Zealand is one of only six “free” economies in the world (which does not include the United States). Relying on its stable and independent economic environment, New Zealand has gradually become a “safe haven” for capital.
New Zealand does not impose a capital gains tax on the sale of stocks or other investments. In fact, New Zealand has a law regarding property resale, under which property purchased specifically for the purpose of resale may be subject to capital gains tax, but this provision is rarely enforced.
2. Belize
Belize has been receiving increasing attention in recent years because it has introduced a series of incentives to attract expatriates to live there.
Not far from the tourist hubs of Cancun and the Yucatan Peninsula, Belize has been an expatriate-friendly haven for decades.
After gaining independence from Britain in 1981, Belize introduced a series of policies to attract wealthy expatriates.
Currently, Belize is competing with other Central American countries to attract expatriates to settle. But considering that Belize is a small, independent, and English-speaking country, its appeal should not be underestimated.
Furthermore, a very important point is that Belize does not impose a capital gains tax on either residents or non-residents.
1. Hong Kong
Hong Kong rightfully takes the top spot. As a hub for investors, bankers, and expatriates, Hong Kong is the world’s freest economy and does not impose any capital gains tax.
Hong Kong is one of the best places to invest in the world. As a Special Administrative Region of China, Hong Kong attracts numerous expatriates, including bankers and professionals from all over the world.
In Hong Kong, the crowds at business entertainment venues after work are more likely to be from Long Island, USA, than from Hainan Island, China.
Hong Kong has always respected capital, and one of its policies is not to impose a capital gains tax. However, shares issued to employees as part of an overall compensation package are an exception—these shares are taxed at Hong Kong’s flat personal income tax rate. This could pose a problem if, as an expatriate, you leave Hong Kong before receiving all your stock proceeds, as you may be required to pay taxes in two countries since Hong Kong has very few double taxation treaties. However, unrestricted stocks and options are not subject to capital gains tax.
For investors, Hong Kong is one of the most important financial markets in the world. The main risk of investing in Hong Kong currently comes from the political environment. But with careful planning, any risk can be mitigated.
Conclusion: How Capital Gains Tax Affects Investment Strategies
By studying different policies around the world, we may find that choice can sometimes be more important than effort. Investing in a country with no capital gains tax can undoubtedly achieve twice the result with half the effort.
The list above is not exhaustive. For example, all British Crown Dependencies and most British Overseas Territories (CDOTs) also do not impose capital gains tax. However, after Brexit, the economic prospects of these regions are still uncertain. And most critically, the reason these regions offer various attractive tax incentives is simply to get a piece of your assets. Therefore, when investing overseas, be sure to formulate an investment strategy based on your own actual situation.
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