Depending on your freelance skills of choice, there’s a good chance they allow you to travel the world and work wherever you please. So what’s left to do? Find the best place for you to go!
I’ve researched the 4 top countries for freelancers and digital nomads based on local income tax, cost of living, location, and other unexpected benefits. #1 might not be what you expect…
The 4 Top Freelancing Countries
Georgia – Gem Of The Caucasus
|Continent||Intersection of Europe and Asia|
|Currency||Georgian Lari (₾)|
|Tax Rate For Freelancers||As low as 0% (1% should be expected)|
|Capital Gains Tax Rate||0%|
|Cost of Living||169th globally ($540~/month)|
When most people hear Georgia, they tend to associate it with the US state. However, the Georgia I’m talking about is sat in the picturesque Caucasus region, to the north-east of Turkey and a little south of Russia. It’s a small and mountainous country, and has a whole lot to offer, from its beautiful landscapes to its delicious food (and wine!).
Access to the country as a freelancer is a breeze in most cases. Georgia is very inviting to outsiders and allows citizens of 95 countries to enter the country on a tourist visa and stay for up to 1 whole year. Even better, you can simply leave the country and re-enter and the visa will restart! This makes it an extremely attractive destination for freelancers and digital nomads who may struggle with entry requirements elsewhere.
Setting yourself up as a freelancer is especially easy here – Georgia has repeatedly ranked highly on The World Bank’s Doing Business list. In 2021 it came 7th overall, and 2nd-highest for the “Starting a business” category. Minimal bureaucracy is something that Georgians are particularly good at – in fact, all of the initial business setup for a sole trader is possible with just your passport.
Perhaps best of all is the incredibly low tax rate. If you’re self-employed you can register for so-called “Small Business Status” (SBS), which allows you to pay just 1% tax if your business activity falls under a relevant category. Fortunately, it’s quite inclusive – we’ve written more about it in our why freelance in Georgia (country) article. You’ll qualify for full tax residency after being in the country for 183 consecutive days, although you can already register your SBS and start paying your minimal taxes before then. Just be sure to check how compatible this is with your previous country of tax residency before pulling the trigger.
Overall, Georgia is an extremely affordable country – it’s estimated you can get by on roughly $500/month. However, with $1,000+ in your pocket you’ll be able to enjoy a good standard of living with a nice apartment, the ability to eat out frequently, and a good chunk of disposable income. Once you get above $1,500, you live very comfortably indeed, even in the capital city Tbilisi.
UAE (Dubai) – Sandy (Tax) Haven in the Middle East
|Continent||Asia (Middle East)|
|Currency||UAE dirham (د.إ)|
|Tax Rate For Freelancers||As low as 0%|
|Capital Gains Tax Rate||0%|
|Cost of Living||92nd globally ($1500~/month)|
The United Arab Emirates is one of very few countries with 0% income tax for individuals, making it an extremely attractive proposition for freelancers and digital nomads. Nestled in the Middle East, you’ll be blessed with practically year-round good weather, access to beautiful beaches, luxury living, and an overall great hub to travel from.
Note that as of 2022, corporate tax rates in the UAE have been announced to increase to 9% for those earning above AED375,000 ($102,000). However, this isn’t set to go live until June 2023, and will only affect income over that amount. Those registered in so-called UAE “free zones” and not conducting business with mainland UAE should still remain exempt from any changes (which should include most freelancers), but you should consult your individual case with a local accountant first.
Although it’s not the capital, Dubai is currently the preferred destination for freelancers within the UAE. In fact, roughly 85% of Dubai’s inhabitants are expatriates, with the majority stemming from Asia. This also makes English the unofficial most-spoken language in Dubai, which is a situation you’ll seldom find yourself in while traveling – and makes socializing a lot easier!
If you’re planning to stay in the UAE for more than 90 days, you’ll need to sort a longer-term method of remaining in the country. There are a few ways of doing this, ranging from a one-year virtual working programme to a full freelance visa. Keep in mind that getting this visa and the associated business license isn’t cheap – you’ll likely need to cough up a few thousand USD for the ability to move here!
In Dubai, you should expect living costs from $2000 and up. Although living cost estimates show $1500, the UAE isn’t a cheap country and your own income should somewhat mirror this. After all, there’s not much point in paying 0% taxes if your monthly expenditures completely wipe these savings back out! One of the preconditions for the virtual working programme is a monthly minimum income of $5000, which should give you an idea of what the government expends to keep you comfortable (with an extra financial safety net).
It’s worth noting that living here won’t be for everyone. You have to contend with extreme heat during a lot of the year, which can lead to a lot of time spent indoors in air-conditioned buildings. If you love spending time in the great outdoors (not just a desert) or are averse to sweltering heat, there are better countries to freelance from.
Keep in mind that the UAE is officially classed as a tax haven. Living there and taking advantage of the favourable tax system could come with consequences down the line, depending on your nationality. For instance, some countries may reject funding or grants to sole traders who relocated to a tax haven in the past.
Montenegro – Mountain Hub of Europe
|Tax Rate For Freelancers||From 9% to 11%|
|Capital Gains Tax Rate||From 9%|
|Cost of Living||113th globally ($700~/month)|
At just 9%, Montenegro offers the lowest income tax rate in Europe. Although it’s not in the EU, it’s currently going through the negotiation phase and its accession to the Union looks possible by 2025. It’s bordering on Croatia, Serbia, Albania, Bosnia and Herzegovina, and Kosovo, while its coastal border is on the Adriatic sea, right opposite Italy. This makes it an ideal hub for travelling around Europe, with incredible local landscapes (Montenegro literally means “Black Mountain”), and a pleasant Mediterranean climate.
To become a tax resident in Montenegro you need to get a residence permit and spend 183 days in a given calendar year there. Without the residence permit it’s technically not legal to work while you’re there. However, citizens of many countries (including the EU, US, and UK) can enter Montenegro for up to 90 days visa-free with just a passport – EU citizens can also enter for 30 days with a government ID card. This can be a great way to check it out before committing to a longer-term stay.
Although you can find luxury around Montenegro, you can also expect very affordable living costs, estimated to start at around $700 monthly. You could find a nice 2-bedroom flat on the coast near Podgorica for $400, or go to Kotor and see your rent skyrocket alongside your standards. Food and bills are also generally extremely low.
English isn’t hugely widely spoken outside of the main tourist areas. In fact, there are 5 official languages in the country: Montenegrin, Bosnian, Serbian, Croatian, and Albanian. This can make it a little more difficult to get by if you don’t speak any of the above, but there are plenty of expats spread across the cities to help you find a local network.
Besides the low 9% income tax rate, there’s a matching 9% capital gains tax rate. This is great if you’re an investor in assets such as equities or cryptocurrencies alongside your regular freelance activities.
Czech Republic – Unique Flat Tax for Freelancers
|Continent||Europe (in the EU)|
|Tax Rate For Freelancers||Monthly flat tax of $270~ possible (otherwise 15%)|
|Capital Gains Tax Rate||Same as income tax (not compatible with flat tax)|
|Cost of Living||63rd globally ($1000~/month)|
The Czech Republic is the only EU country on this list. If you’re already an EU citizen, this will make it a walk in the park for you to move there. If not, don’t be discouraged, but note that it will be a little more difficult for you, involving getting a long-term visa and trade license (known as the “Živnostenský list”).
One of the more unique features for “individual entrepreneurs” coming to the Czech Republic is its flat tax (“paušální daně”) introduced in January 2021. Under this programme you pay 5,994 CZK (roughly 270 USD) every month, regardless of your income (up to 1 million CZK/46,000 USD annually). If you successfully opt-in to this, you’ll no longer need to file your annual tax return or additional reports to the social and health insurance authorities. In terms of streamlining your freelance admin, it’s pretty amazing. There are some preconditions to being accepted to the programme, but it’s generally fairly simple. Note that it’s only possible to apply for it until the 10th January every year for the given calendar year.
Besides the flat tax programme, there’s a very favorable 15% tax rate available if you earn under 1,701,168 CZK (roughly 79,000 USD). Any of your earnings above this level are taxed at 23% (with the rest remaining at 15%).
As for where to live, Prague is the #1 option. Here you’ll find a huge expat community, great nightlife and events to keep you busy, and an overall beautiful and historical city to spend your time in. English is also quite widely spoken (at least in Prague and the larger cities), and the large expat community means you’ll quite easily find a network of English-speakers.
You can also expect to get by on roughly $1000/month, making it a very affordable place to live and work from. Rent, at least in more touristic places like Prague, will swallow the bulk of your outgoings, while food and transportation are highly affordable. If you’re a big traveller, you’ll also appreciate the affordable flights all across Europe and further afield.
What Steps Should You Take Before Freelancing Abroad?
While some of the countries above may seem like enticing propositions, there are a few things you should do before jumping on a flight.
- If you’re already a tax resident in a different country, consult with a local accountant. This will involve looking into what leaving will entail for you, such as how to properly end your current tax residency, checking double-taxation agreements, etc.
- Consult with a trusted accountant (preferably with an expat focus) in the country you’re going to. They should advise you on how to attain the new tax residency, local business structures, and generally what’s best for you.
- Check that the country (and specifically city where you’ll want to live) has what you need. Internet speeds, quality coworking spaces, and access to things like local healthcare will vary from place to place.
- Ensure you have access to banking. Although some of the countries listed above will give you easy access to local banking (i.e. Georgia has some great banks for freelancers to choose from), you won’t necessarily have easy access to banking everywhere. If local banking is hard to come by, I recommend you sign up to an all-digital platform like Revolut, Wise, or Payoneer, depending on what’s available to you.
- Research the local rental/accommodation market – good accommodation isn’t always as easy to come by as you might read online! Also do a little digging on the cost of potential short-term backups (like Airbnb or Booking.com stays) in case you need a temporary place while you search.
FAQs – Top Countries for Freelancers and Sole Proprietors
Montenegro has the lowest taxes for freelancers in Europe – income tax ranges from as low as 9% to 11%. Keep in mind that it currently isn’t in the European Union, although the country is currently undergoing negotiations and looks likely to join the EU by 2025.
If you’re specifically after the country in the EU with the lowest taxes, it’s Bulgaria, at just 10% income tax.
This depends on the country you choose to visit. Some of our 4 best countries for freelancers offer entry under a tourist visa or even temporary visa-free regimes for citizens from certain countries. However, some other countries have strict visa policies for freelancers who want to enter and work while there.
With 0% income tax, Dubai is possibly the best country for freelancers’ tax. It also offers a 0% tax rate capital gains, making it a great place for both working and investing. Keep in mind that it’s officially classed as a tax haven.
If you prefer somewhere closer to Europe without a tax haven status, my personal top country for freelancing is Georgia. As a freelancer you can get a tax rate as low as 1%, while capital gains here are also taxed at 0%. It’s also highly affordable compared to Dubai, while offering beautiful nature and extremely simplified administrative proceedings.