Comparison of Tax Systems between European Countries: which is best for digital nomads?
With the growing number of digital nomads, the choice of country of temporary residence has become a crucial factor in optimizing tax benefits. This article analyzes the tax systems of several European countries, based on relevant legal provisions and considering, in a subtle way, the factors that influence the choice of destination of these professionals.
1. Portugal
Tax System:
NHR (Non-Habitual Resident Regime): Offers reduced rates for income from foreign sources.
Income Tax (IRS): Progressive, with rates ranging from 14.5% to 48%.
Tax Benefits: Tax exemption on dividends, interest, and royalties from foreign sources for non-habitual residents.
Quality of Life: Portugal, with its hospitality and mild climate, offers a pleasant environment that can make the stay of digital nomads more comfortable and welcoming.
NOTE: the NHR was replaced by the Tax Incentive for Scientific Research and Innovation, I commented more about this change in this article.
2. Estonia
Tax System:
Corporate Tax: 20% on distributed profits.
Digital Residency: Allows digital nomads to run online businesses with ease.
Tax Benefits: tax exemption on reinvested profits until distribution.
Innovative Environment:
Estonia's innovation and digitalization provide a modern and flexible environment that is attractive to digital nomads looking for efficiency and technology.
3. Croatia
Tax System:
Income Tax: Progressive, ranging from 20% to 30%.
Digital Nomad Exemption: Introduction of a specific visa for digital nomads with tax exemption on income from foreign sources.
Tax Benefits: Incentives for microentrepreneurs.
Culture and Community:
The rich cultural heritage and sense of community in Croatia can make the experience of digital nomads more engaging and satisfying.
4. Spain
Tax System:
Income Tax (IRPF): Progressive, from 19% to 47%.
Impatriate Regime (Beckham Law): Flat rate of 24% for incomes up to €600,000 for new residents.
Tax Benefits: Deductions for investments in R&D and startups.
Social and Cultural Life:
Spain's vibrant social and cultural life offers a dynamism that can be quite appealing to digital nomads.
5. Italy
Tax System:
Income Tax: Progressive, with rates from 23% to 43%.
Impatriate Workers Regime: Professionals who move to Italy may qualify for a 70% reduction in the taxable base of income generated in the country, for up to five years. In certain regions of southern Italy, this reduction can be as high as 90%.
Tax Benefits: Exemptions for investments in economically disadvantaged areas.
History and Tradition: Italy's welcoming culture and rich history provide an inspiring and engaging environment for digital nomads.
Conclusion
Each European country offers a unique set of tax benefits that can be advantageous for digital nomads. In addition to legal and tax aspects, elements such as hospitality, modernity, and cultural life are important factors in choosing the destination, providing a more enriching and satisfying experience for digital nomads.
If you are interested in hiring professional legal services related to international tax consulting, we are a firm specializing in the subject and we can assist you, just contact us by email: contato@trpuppioadvocacia.com.br, or through WhatsApp.
Comments