Guest Post by Andrew Henderson
As I sit here in my summer home in sunny, coastal Montenegro, I can’t help but think about the Belgrade-Tivat corridor connecting Montenegro’s coast and Serbia’s capital. But the impressive infrastructure itself is not what’s on my mind.
It’s the area.
After more than a decade of world travel, I’ve come to the conclusion that Eastern Europe must be one of the greatest tax advantage lifestyle corridors in the world. It has only been in the past six years of my expat journey that I have dug in and dedicated my time to evaluating Eastern Europe and its appeal to people who are looking to have it all: a way to legally reduce their taxes, a low-cost lifestyle, and the familiarity of home and the western world that cannot be found in other popular nomad destinations like Southeast Asia.
Eastern Europe checks all of those boxes.
That is not to say that I don’t enjoy being in Southeast Asia. I am geographically polyamorous. Tax benefits or not, I don’t want to spend all of my time in one place. A couple of years ago, I introduced a concept called the trifecta in which you split your time throughout the year between three different places. For me, this works because I love Asia, I love Europe and I am getting back into Latin America and setting something up there.
I don’t want to be in the same place all of the time.
But most folks aren’t like that. The majority of people don’t want to spend all of their time traveling. They want to keep things in one place, or at least in one part of the world because it is a pain to fly from Mexico to Montenegro to Malaysia on a regular basis.
So, if you pressed me to pick just one part of the world to live in, if I could only choose one, it would be Eastern Europe. It is a great destination. Here are my top six reasons why you should consider it too.
When many people first go overseas, they don’t want any exposure to winter. I understand the sentiment; I have been living the nomad life for a long time and I have seen very few winters. But what you want when you begin your nomad journey can change, and I have found that most folks want to experience the seasons more than they thought they would when they left home.
Eastern Europe gives you the seasons, from hot summers at the beach to the chill of autumn and from the deep cold of winter to the rebirth of spring.
I look forward to my visits to Montenegro and other parts of Eastern Europe, in part, because they offer the refreshing feeling of change that comes with the seasons. Plus, I get the chance to break out my sweaters! If, on occasion, you crave a little diversity in your weather as I do, you can find it here in Eastern Europe.
Eastern Europe offers variety in more than just the weather, too. I talk to a lot of nomads who are looking for a place that delivers more than sand and sea. They certainly want access to the beach, but they enjoy the mountains too.
They want geographic diversification.
You can find this in Eastern Europe, as well. Countries like Georgia and Montenegro have the seaside and the skiing. In the US, California is loudly touted as the best of both worlds because you can ski in the morning and surf in the afternoon. But you don’t have to put up with the high cost of living and the painfully high taxes in California to get the best of both worlds. Eastern Europe has the same kind of variety for less.
Chile is well-known for its California-like geographic diversity, too; but unlike Eastern Europe, Chile is far away from many of the places that people want to visit. Eastern Europe gives you geographic diversification without geographic isolation.
I spend a lot of time helping individuals and families determine what it is that they want from an international life, and one thing that I have found common among most people is that they want a variety of experiences. This is one reason that they look for variety in the weather and the geography, too.
They want options.
And not only does Eastern Europe offer a wide variety of activities in the area but you are also a hop and a skip away from just about anything.
If Eastern Europe doesn’t feel enough like home to you, you can easily balance it out with a little trip to London. I like to pop in and out of London every once in a while for the endless shopping, amazing bistros and brasseries, and the modern decor that doesn’t exist much outside of the anglosphere. It’s nice to check in and regain your sanity for a moment.
And if your Eastern European base is feeling too much like home and you want to change things up a bit, you’re a short flight from Northern Africa, the Middle East, and dozens of other countries in Europe that can offer up an array of experiences, from the tourist activities in Egypt to island living in the Mediterranean, and from the amenities of the big city to the tranquility of small towns.
Eastern Europe is full of countries with relatively friendly tax systems. Many have territorial tax systems where you only pay on your local source income. (Note: You do have to be careful with these systems when determining what is local source and what is foreign source income if you’re working on your own business while in the country.) Most of them also have simplified tax codes and no controlled foreign corporation rules.
Best of all, Eastern Europe consistently has some of the lowest tax rates:
And Macedonian corporations pay 0% on undistributed profits like in Estonia. Most people don’t know about Macedonia’s corporate tax benefits because most of the talk is about Estonia, but even Georgia’s new tax code is based on the Estonian model. That doesn’t mean you should automatically go set your corporation up in Georgia or Macedonia, but it is a good indication of the region’s tax-friendly attitude.
Because I like to travel around, I don’t have to pay taxes anywhere. I’ve gone to a lot of measures that most people won’t to structure my tax experience so that I can have that benefit. However, if you don’t want to be a perpetual traveler and want to live in a place like Montenegro full-time, you can do so and still enjoy incredibly low taxes thanks to a combination of a simplified tax code and low rates.
But even this requires some planning. It is easy to get confused with the different terms, requirements, and systems if you try to do this on your own. When it comes to combining taxes with an international lifestyle, making your own plans can be a very bad idea. We’re here to help because this stuff does get complicated.
That said, you can save yourself a lot of money without having to travel constantly. In some cases, you can even pay zero. The good news is that you don’t have to move to Vanuatu and live in the sweltering heat in the middle of the ocean to get the benefits of low-tax living. Wherever you go in Eastern Europe, you get low tax rates at the doorstep of Europe.
I love Asia. I have a house in Asia! But most people who do the nomad thing just deadhead it to Chiang Mai and end up burning out. Why? There’s too much Chiang Mai. It’s a sugar high. And you can’t really balance out Chiang Mai with a trip to Singapore because it doesn’t feel like where you’re from, either. That’s not necessarily bad, but it feels different and you don’t feel completely heard there.
Acknowledging that you want a taste of home every once in a while is invaluable. And with destinations like Eastern Europe, you don’t have to go all the way home to get it.
Eastern Europe has more of the western mindset that many nomads begin to miss after they have been traveling for a time. The culture is just different enough to be interesting, but similar enough to give you the common ground so often needed to connect with the local community.
And even though everyone talks about hiring in the Philippines, I’m hiring in Eastern Europe – from Serbia to Macedonia to my fan-favorite, Armenia. You can hire great talent in this region of the world. And, if you want to be close to the people you are working with, Eastern Europe is a great place to be.
I think a lot of people underestimate the cultural differences between employers in places like China or the Philippines versus the West. Though Eastern Europe is not entirely in the West, there is still a European mentality that allows for greater connection and improved communication that can be crucial for your business.
Residence requirements are often much lower throughout Eastern Europe than in Asia, largely because Europe, in general, is much more open to immigration. While I love some of the Asian residence programs like the Malaysian MM2H, you have more options to gain residence in Eastern Europe.
For example, you can qualify for residence by starting a business in the country, buying some real estate, or investing in bonds or local institutions. While some people, especially those who are just getting started, may not like the idea of investing a large chunk of money in a foreign bank (and in a foreign currency) just to get a residency, this is a common practice for residence programs throughout Europe.
And Eastern Europe’s programs are often a fraction of the price.
For, example, in Georgia, you can invest a mere $100,000 and get a real estate residence. That money can go toward your own place or toward a rental property. In the rest of Europe, the cheapest program in comparison is $250,000 for a residence permit in Greece.
Disclaimer: Eastern Europe is not as friendly in handing out second citizenships to long-term residents due to heightened nationalism. Even Greece refuses to grant citizenship to anyone but ethnic Greeks. Normally, these countries do not have outlandish bureaucracy, but if they don’t want you, you’ll suddenly run into more of it.
For example, a large number of Turks received residence permits in Montenegro this year. Not long after, the government decided to cancel all residence permits. This was seen as a precautionary step on the government’s part to keep the Turks from eventually gaining citizenship. Something like that wouldn’t really happen in a country like the UK.
If you’re planning on getting citizenship, there are ways to do so; but just living there won’t necessarily be enough.
Eastern Europe truly is one of the greatest tax advantage lifestyle corridors in the world. It offers up variety on all fronts, from a never-ending supply of things to do to the ever-changing seasons, and from the beautiful sea sides to the snow-covered mountains.
It’s favorable tax and immigration laws make it easy to set up a residence and enjoy a low-cost, low-tax lifestyle close to some of the most desirable travel locations in the world. And, more than other popular nomad destinations, Eastern Europe’s familiar culture means it will quickly begin to feel like home and that you have found where you belong.