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February 3, 2013

Counties Around with World With No Personal Income Tax - US Expat Tax Planning

US Entrepreneur expats are always asking us,  Which countries in the can I locate my business that have no personal income tax.  For a list of the fifteen countries CLICK HERE. If you set up your business in one of these countries and use the US foreign earned income exclusion along with the foreign housing deduction you can make in excess of $110,000 or more and not pay any income tax AT ALL on your business earnings.

For a list of the tax rates in various countries in the world go to this wikipedia link for a great table.

As a US citizen or green card holder you must report your worldwide income  on your US tax return no matter where you live in the world.  If you live in a country that has taxes, you can claim a credit for those taxes as a direct offset against the your US tax on the same income. However, if you earnings are from your own labors it is possible to earn the amounts set forth above and pay no taxes on your US tax return (or anywhere else) at all.  This is one of the greatest tax breaks around. If you spouse also works, he or she can also claim the foreign earned income exclusion against their earnings.

If you are self employed, you may have to pay US self employment tax (social security and medicare) on your earnings, if you live in a country with no social security agreement with the US. However, if you structure your offshore business correctly using a foreign corporation, it is even possible to avoid having to pay those amounts.

We can help you set up your business abroad for the optimum tax savings fully complying with all US tax laws.  If you need help email us at or leave a message on skype at dondnelson.

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