Taxes

EU tax haven countries in 2025

For businesses seeking to optimize revenue, understanding tax regulations is paramount.In Europe, certain countries have notably lower tax rates. This article explores the top countries with low taxes in Europe, the types of businesses that can benefit from these low tax environments, and the key tax incentives available in these regions.

Table of content

What are tax haven countries?

A tax haven is a country or jurisdiction that is willing to offer foreign companies and individuals the most favorable taxation for them. It is important to know that not all tax haven countries are completely tax-free. Most of them set lower rates compared to tax rates in other countries. In addition, they often set higher import and customs duties, which are used to compensate for losses in tax revenue. Sometimes tax haven countries charge a fee for registration of a new company, an annual renewal fee, or license fees.

Companies and individuals in tax haven countries benefit from tax savings. This benefit can reach several tens of percent compared to the amount of taxes levied in their country of residence or citizenship.

Tax optimization in tax haven countries is legal, it does not imply tax evasion or other violations of tax laws.

Common features of tax haven countries

Low or zero personal income tax

In tax haven countries, there is an opportunity to pay personal tax at a low rate or even not pay the personal tax at all.

Favorable corporate tax structures

The absence or low fixed rates of corporate income tax make such jurisdictions very attractive to companies from other countries.

Financial secrecy

EU tax havens have minimum requirements for disclosure of information about the owner of companies and bank accounts. This gives companies the opportunity to protect the personal data of clients, beneficiaries and their own commercial secrets.

Minimum reporting

Compared to other countries, the registration procedure for a company is simplified, and the requirements for documentation and reporting are minimal.

Access to international markets or financial services.

Companies in tax haven countries gain access to international financial markets, banking services, investment or financial instruments.

Top tax haven countries in Europe

There are about 40 tax haven countries in the world today. Here is the list of tax haven countries and their information which are the most attractive European countries from the point of view of taxation. For convenience, the information has been summarized in a table.

Country	Personal income tax	Corporate income tax	Capital gains tax	Wealth tax	Key benefits
Monaco	None	None	None	None	Luxury lifestyle, stability , financial hub, connectivity
Luxembourg	Progressive	15% —17%,	Progressive, 0–42%	0,5%	Financial transparency, secrecy in matters of government and justice
Jersey	1% - 8% and above	None	None	None	Developed economy, financial sector stability
Liechtenstein	1% - 8% and above	12,5%	0%	4 %	Lower salaries and social security make
Malta	Progressive rates, ranging from 0% to 35%	0%	15% - 35 %	None	Malta an attractive option for business owners hiring locals

Let's take a closer look at each country. It's worth mentioning right away that the list of countries that are tax havens is unofficial and the countries are not listed in order of tax attractiveness. Situations may vary, so each of the tax haven countries may be the best option for a particular company or person.

Monaco

The Principality of Monaco is especially popular as a tax haven among the super-rich from all over the world. There is no income tax at all for residents of any country, with the exception of French citizens.

The French pay taxes in Monaco in accordance with the French tax system at 19.6%, even if they have a residence permit.

Personal income tax

Corporate income tax

Capital gains tax

All foreigners who become citizens of the principality enjoy tax benefits in full, even if they do not work in Monaco. There is no corporate income tax in the principality, and no taxes on dividends paid by local companies.

In addition, Monaco is famous for its high level of confidentiality regarding any information about its citizens and companies. So, if confidentiality is a top priority for a company, it is worth considering the principality as a tax haven country. Of course, to all this we should add a high standard of living, stability and the opportunity to live in the heart of Europe.

Wealth tax

19,6 %

VAT

The rate is up to 33.33% for companies whose profits are generated outside the country.

Luxembourg

The organization for Economic Co-operation and Development (OCED) stated in its final report of 15 March 2024, during the phase 4 evaluation of Luxembourg, that 90% of all companies registered in Luxembourg are foreign-owned. This speaks to the exceptionally favorable investment climate of the Grand Duchy.

The country has the highest GDP per capita in the world. It is a highly developed industrial country that positions itself on the world market as a reliable innovative partner. Luxembourg is located in the very center of Europe and is closely connected with almost all European countries. Despite its small size, the Grand Duchy makes a major contribution to the EU economy. Traditionally, Luxembourg is considered one of the main banking and financial centers of Europe. In addition, the state actively supports start-ups.

Tax features for Luxembourg

Personal income tax

progressive income tax rates, 0% — 42%. The zero-rate tax is paid by those whose income does not exceed 12,438 euros. To calculate the tax above this amount, a scale of 22 steps is used, the maximum tax amount of 42% is levied on citizens whose income exceeds 220,788 euros.

Corporate income tax

progressive income tax rates, from 15% to 17%. The minimum rate applies to companies with an income of less than €175,000, and the maximum rate applies to companies with an income of more than €200,001.

Capital gains tax

progressive income tax rates, from 0% to 45.78%

Wealth tax

0,5 % (0,05% for part of the wealth exceeding EUR 500 million)

VAT

standard rate is 17%. But there are exceptions.

On 11 June 2024, in his address to the nation, the Prime Minister of Luxembourg announced a reduction in the corporate tax rate from 17% to 16% from 1 January 2025.

food, water, medicine, books and newspapers.

cleaning services, hairdressing, minor repairs of bicycles, shoes and clothes, electricity, natural gas, etc.

14%

some types of wine, solid mineral fuel, detergents and cleaning products, securities and credit management.

Jersey

The island of Jersey is part of the Channel Islands. Although it is located off the coast of France, it is officially considered a possession of the British Crown, but is not a part of the UK. Jersey has complete political and financial autonomy. Until 1928, the income tax rate was only 2.5%, but later it was increased. 40% of Jersey's economy is international legal and financial services. Investors are attracted by the high standard of living, stability, the right to visa-free entry to the UK, access to British education, and, of course, low taxes.

Tax features for Jersey

Personal income tax

20% on amounts up to GBP 1,250,000 and 1% on all income above this amount.

Corporate income tax

0%, but there are rare exceptions. A 10% rate applies to companies that provide financial services. A 20% rate applies to utility companies that provide telephone services, gas and electricity supply, are engaged in oil supplies, real estate rental and/or land exploitation. Large retailers also belong to this group.

VAT

0%, but there is a GST (Goods and Services Tax), which is much lower than the average European VAT. All goods and services can be divided into 3 categories, on which the tax amount depends.

Capital gains tax

Wealth tax

goods for export, medicines and international service

standard rating, which includes most goods and services

There are exemptions: services and goods that are not taxed for government reasons or because they are difficult to tax: insurance, financial services, postal services, tuition fees, and supplies by charities.

Liechtenstein

Although Liechtenstein is a small state, 20% of its economy is in the banking sector. Large investors from all over the world place their assets in the banks of the Principality since the banking sector in Liechtenstein is traditionally considered one of the most reliable.

In addition, Liechtenstein has a well-developed industry. The country ranks among the first in the world in terms of gross product per capita. Another feature of the Principality is that it is not a member of the European Union, and this has both its pros and cons. The pros include the fact that tax and banking legislation is not subject to pressure from European government institutions. The cons include the fact that resident companies cannot use the concessions and benefits established by the EU.

Tax features for Liechtenstein

Personal income tax

From 1% to 8% depending on the income and marital status of the taxpayer. This is the so-called national tax. It is usually supplemented by a communal tax, the amount of which is set by local authorities. As a result, the general tax rate of Personal income tax is from 2.5% to 22.4%.

Corporate income tax

The standard rate is 12.5%. The tax is calculated on the net profit of companies, the assessment basis being determined for each tax year. Dividends or income from foreign real estate are not taken into account. The minimum income tax is CHF 1,800 per year, and is levied on companies whose balance sheet has not exceeded CHF 500,000 over three financial years.

VAT

A standard rate of 8.1%. Reduced rate of 2.6% applies to companies that supply food, medicine, books, newspapers and magazines. Activities in the field of lodging/accommodation are taxed at a rate of 3.7%. Services in the field of health care, education, social security, insurance, banking are not subject to VAT.

Capital gains tax - 0%

Capital gains from the sale of real estate are subject to a separately assessed real estate gains tax of up to 24%.

Wealth tax - 4%

on real estate and immovable property.

Malta

The island in the mediterranean sea is considered not only a great holiday location but also a tax haven. Without any wealth and inheritance tax, low effective tax rates because of the refund systems and great personal tax regulations, many people find Malta a good choice to lower their tax expenses. As a benefit, most people in Malta speak English. The banking and Financial services on the island are well-developed and very reliable.

Tax features for Malta

Corporate income tax

0%, VAT is charged instead.

Capital gains tax

15% to 35%. This tax in Malta is levied on securities and related instruments and intellectual property. Capital gains from the sale of real estate are subject to Property Transfer Tax or PTT at a rate of 8% instead of Capital gains tax.

VAT

35% for all companies. Exceptions may include shipping and oil companies.

One of the features of Malta's taxation system is its wealth tax, which is set at 0%.

Using tax free places in Europe is a perfectly legitimate strategy to reduce tax liabilities. And while the low tax countries in Europe will likely become more information-sharing with other countries in the future, they will still have a relatively high level of freedom to shape their own tax systems for a long time to come.