Choosing a Home Base in a Foreign Country

For expats looking to set up a “home” base overseas—and therefore avoid the need to live out of a suitcase or backpack—we’ve listed the top thirty-three tax-advantaged countries in the world below. Acquiring a new residency in a foreign country is also a must for anyone seeking to spend more than about 30 days back in the USA in any one year period. Note: “residency” is essentially legal permission to reside within a country's borders beyond that of a short-term tourist.

Where Can I Live Free of Foreign Taxes?

While these thirty-three tax-haven foreign countries are excellent locations for tax purposes, some are more suited than others for American expats' entry for legal residency. 

When choosing a tax-advantaged country, there are several essential considerations:

1. A country with rich and diverse locations;


2. Excellent technology infrastructure, including fast, dependable internet;


3. Time zones that allow for accessible communication or fast commutes back to the United States (for work, vacation, etc.);

4. Established expat base;


5. Low operating costs;


6. A country that grants you residency status easier; and


7. Avoiding a substantial investment to obtain residency (e.g., a legal residence permit in Monaco requires depositing approximately half a million dollars in a Monaco bank).

What is the difference between “Tax-Friendly” and “Tax-Free”?

1. Tax-Friendly: No foreign income tax on wages and income coming from outside of the country—which is excellent for remote-working expats (note: any income coming from within the country could be taxable);


2. Tax-Free: No foreign income tax on wages and income coming from inside or outside the country—even better for remote-working expats, as they can also work for local clients in the country (but check the local work requirements first).
If you are looking to set up a ‘home base’ in a foreign country, choosing which country to live in is critical to your tax-free strategy. 

To become a true tax-free expat, you cannot just move from one high-tax country to another high-tax country. 

For example, suppose you were to move to Mexico and make it your full-time home. In that case, you’d could end up owing progressive Mexican Federal and Mexican state income tax rates that go as high as 33% in total (no Bueno!). 

If you enjoy spending time in Mexico, France, Spain, or other countries that are not tax-free, the first tax-free option is to become a perpetual traveler abroad and then spend part of the year living there. 

The second option is to become a resident in a tax-friendly or tax-free country—paying $0 taxes—and then taking one or more extended vacations to Mexico (or France, Spain, etc.). Arranged properly, you’ll be traveling to a high-tax vacation country as a tax-free tourist with a lot more money in your pocket! 

Our general advice to our clients is to ‘start easy.’ This includes considering the most popular nearby ‘tax-friendly’ locations. 

Securing a close-by foreign ‘home’ base allows you to be more organized and be within easy reach of the US. Please consult with us regarding your specific foreign country requirements (and tax situation), as residency and visa programs change frequently. 

So, the next question is – where in the world is the best place to set up legal residency in a tax-favored country? 

The most popular nearby tax-friendly ‘residency’ countries include:
•Panama; •Costa Rica; •Bahamas; •Guatemala; and •Belize.

And remember, once you've set up a foreign ‘home base’, you can always travel for part of the year. Tango lessons in Argentina?