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It's not only Europeans that want to live and work in the above countries. I've come across a lot of US expats moving to Europe for both the climate (e.g. to avoid the hurricane season of the Caribbean), as well as to experience some of the rich culture.

In terms of low taxes, Andorra and Monaco are probably the top two countries. Andorra doesn't levy any taxes at all, and whereas Monaco does levy a limited inheritance tax and business profits tax, for most people neither of these will impact significantly.

Many of the other European jurisdictions are 'low tax' as opposed to 'no tax'. So the Isle of Man can levy higher rate tax at 18% (and for the very wealthy they have capped an individuals income tax liability at £100,000), Malta will tax you at 15% provided you get classed as a permanent resident, Cyprus will tax you at 20-30% and the Channel Islands will tax you at 20%.

Many of the other European countries offer incentives such as only taxing local source income and overseas income if it's actually brought into the country ( e.g. Ireland or the UK).

Other countries such as Gibraltar and Switzerland will levy taxes at pretty high rates ( e.g. 30-40%) but will offer a restriction on the amount of income that they actually subject to tax, provided you qualify under one of the special immigrant schemes (e.g. the Category 2 or High Net Worth Individual scheme for Gibraltar or the fiscal deal for Switzerland). There are therefore plenty of opportunities to reduce any local taxes you suffer.

You'll also find that some of the key European jurisdictions such as Cyprus, Malta and the UK will have a large amount of double tax treaties with other countries, which can be useful for reducing tax on any dividends that you may receive.

You should also bear in mind that whilst the Caribbean tax havens generally have lower taxes, many of these Caribbean countries are effectively developing countries. This is one of the reasons why they can afford to have reduced revenue (i.e. low or no taxes). Now, for many these are one of the key attractions of becoming a tax exile and the thought of living in a sunny, remote paradise near the sea is the ultimate dream. However there are also some people who whilst wanting to get away from the stress of their home country would prefer some 'home comforts'. In this case, the European alternatives may be ideal because practically all of them offer a good standard of living, particularly when compared to the Caribbean jurisdictions.

Cyprus can also be useful as a country of 'intermediary residence', as a teleworker could gain Cypriot residence and then work overseas. Income from employment services provided abroad to a non-resident employer would not be charged to Cypriot income tax. Ireland could also be used in a similar capacity as Irish tax legislation does not tax Irish residents' working overseas income earned (even if they bring that into the Ireland).

As well as a low tax environment, telecommuters also look to a sound telecommunications infrastructure and good financial services. The Isle of Man is an overall sound choice on both counts. It offers island wide broadband with a good reliability of service. It's growing a base for locating e-commerce business and for example is installing wireless internet areas at a number of key locations around the Island (such as the airport, port etc).

My personal favourite if you can afford it, is Monaco. Well known as a tax haven of the rich and famous it's probably the top European tax-free jurisdiction. It's located at the heart of Europe, and is very close to Spain, France, Italy and the UK. It also has cable and broadband internet so you'll be able to keep in touch with colleagues daily.

It's a pretty cosmopolitan environment, and is a very safe place to live, with CCTV covering the entire principality. The downside is the high cost of living and high property prices. To live a comfortable life you'll need to be a millionaire to live there, as you're looking at £500K for even entry-level properties.

If your budget can't match this, you should consider Andorra. Similar to Monaco it's a nil tax area and has high-speed internet access with very good private banking facilities. Its also considerably cheaper, and you could be looking at £200,000 for a two-bedroom apartment. If you like skiing, another plus point is that Andorra is in the Pyrenees and offers excellent winter sports.

Switzerland offers the opportunity of a low tax environment as well as excellent internet access, with good dsl and cable broadband coverage, as well as wireless broadband services. As you'd expect there are no shortage of banking services.

You'd need to get yourself a fiscal deal, which effectively means talking to the local canton where you fancy moving to. They will then look at your circumstances and let you know whether you qualify and if so on what basis. The fiscal deal usually operates by restricting your income to a reduced amount and will also include a residence permit allowing you to live in Switzerland.

The Channel Islands are popular with UK expats who want to escape UK taxes, but don't want to move to far from home ( Isle of Man is popular for the same reason). As well as offering reduced taxes they are also establishing themselves as a good home for offshore e-commerce operations.

Lee J Hadnum is a rarity among tax advisers having both legal & chartered accountancy qualifications. After qualifying as a prize winner in the Institute of Chartered Accountants entrance exams, he went on to become a Chartered Tax Adviser.

He previously ran his own his own tax consulting firm, and has written a number of tax books as well as editing the popular tax planning website www.wealthprotectionreport.co.uk.

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