Lowest Tax Countries in Europe for Expats

Europe is often associated with high taxes, but the reality is much more nuanced. While Western European countries like France, Germany, and the Nordic nations have high tax burdens, Eastern Europe and certain special regimes offer some of the world's most competitive tax rates. EU membership also provides free movement benefits, making it possible to live in a low-tax country while accessing the entire European market.

When comparing headline personal income tax rates across Europe, significant differences emerge.

For entrepreneurs and business owners, corporate tax rates are equally important. Hungary leads with 9%, followed by Ireland at 12.5% (15% for large MNEs), Cyprus at 12.5%, and Bulgaria and Georgia at 10-15%. Estonia's unique system of 0% on retained profits makes it ideal for reinvesting businesses. The key insight is that combining low personal tax (for your salary) with low corporate tax (for business profits) in the same country maximizes savings. Bulgaria (10%/10%) and Hungary (15%/9%) offer this combination.

Several European countries compete aggressively for wealthy expats with special tax regimes:

1. Cyprus Non-Dom: 0% tax on dividends, interest, and rental income for 17 years. Plus 50% employment income exemption.
2. Malta Global Residence: 15% flat tax on remitted foreign income (min 15k EUR/year).
3. Italy Flat Tax: 100,000 EUR lump sum on worldwide income for new residents.
4. Greece Non-Dom: 100,000 EUR flat tax on foreign income (plus 20k per family member).
5. Spain Beckham Law: 24% flat rate on Spanish income up to 600k EUR for 6 years.
6. Portugal NHR 2.0: 20% flat rate for qualifying scientific/innovation roles.
7. Netherlands 30% Ruling: Tax-free allowance of 27% of salary for 5 years.

Each regime targets different profiles ??the best choice depends on your income type and level.

Headline income tax rates tell only part of the story. The total tax burden includes social security contributions, VAT, property taxes, and mandatory insurance. For example, Romania has 10% income tax but 35% social contributions for employees. France has a 45% top rate but 45% employer social contributions on top. When calculating total cost, also consider: cost of living adjustments, available deductions, tax-free allowances, and double tax treaty benefits. A 10% tax rate in Bulgaria with 34 cost of living index may leave you better off than 0% in Monaco with 180 cost of living index.