The more money an individual has, the more he/she desires. It is said that “money saved is money earned”. Many times, taxes take up a big chunk of a person’s income and give it to the government. Even though taxes are a major moral and ethical responsibility of every citizen towards their country, there is nothing wrong with strategizing to save taxes. It is important to note that tax evasion by improper disclosure or other means is criminal, but tax saving is a strategic job performed by professionals.
An individual may not be able to completely avoid paying income tax but there are legal ways through which, he/she can reduce the amount of tax payable on his/her account, including by getting a second citizenship. Here are some ways on how to not pay income tax or how to reduce the taxable amount due legally.
There are several countries in the world where the government does not levy income tax on its residents. In such countries like The Bahamas, The Cayman Islands, Monaco etc, there is no tax planning required. These countries run majorly on income from the tourism industry. One way to legally avoid tax is to get a second citizenship by investment in these countries and source income within these countries. This will only work if the resident country does not tax their worldwide income. This is one of the easiest ways to legally avoid paying taxes. In this context, find out about the Beckham law in Spain, which has made the country a tax haven for foreign workers and entrepreneurs.
Turning into a perpetual traveler basically means not being a tax resident of any country by moving around to different countries every year and saving taxes on global income. This is one of the legal ways of not paying income tax due in any country and to travel across the globe while doing that. This is the most suitable option for people who love traveling and have an interest in exploring income opportunities on an international level.
These days, getting a second citizenship by investment in different countries is a very popular option. By getting a second citizenship in a country that only taxes local income or does not levy income tax at all, an individual can legally avoid paying federal income tax in that particular country where he/she is seeking second citizenship.
Sourcing income from countries like Switzerland or Malta that are known as tax havens worldwide is another way how a person can legally avoid paying federal income tax in these countries as they do not levy taxes on worldwide income and do not charge non-residents. However, it is important to understand that this does not omit the need to file tax in the country where the residential status is valid.
There are various expenditures that an individual can make which can be considered as deductions for taxation purposes. These expenditures are then deducted from the income before deciding the slab for the income tax rate. They are totally legal in nature and are of the nature of donations or contributions to NGOs working in a particular domain that will indirectly contribute to the progress of the country. This feature of a tax deduction is usually found in developing nations. Tax deductions vary for every country.
Government and Corporate Bonds
Investments in specific government and corporate bonds are also tax-deductible. These are the ones that are pre-approved by the government of a particular country and need to be checked before making investments. They are different in different countries. The purpose of providing such deductions is to encourage investment and boost the economy.
Business and real-estate investments
In countries that support local manufacturing and self-dependence for economic growth, investing in start-ups or entrepreneurial ventures is also considered under tax deduction for calculation of taxable income. Re-investing capital gains in the same year into real estate in the same country is also an exemption in countries. This is to encourage investment for infrastructure development in under-developed nations.
Very often, the common people in any country are not aware of these deductions and tax-saving strategies. However, there are professionals who have experience in the field. They keep a track of updates as the government taxation policies keep changing. It is important to consult them before making strategies on how to not pay federal income tax.
Through these 7 ways, any individual can legally avoid paying federal income tax or at least reduce the amount payable as taxes in different countries. Before planning a strategy on how to not pay income tax, discuss the option of second citizenship by investment with us. It is not only beneficial for tax saving but has various other benefits and many countries are now coming up with this option for the benefit of global acceptance.
Contact us to book an appointment to discuss your options for second citizenship by investment today!