Topics Covered Hide
- 1 Considering the personal income tax
- 2 Understanding the corporate tax
- 3 Other taxes worth some attention
- 4 Residency in Vanuatu by investment explained
- 5 Residency in Vanuatu by banking made easy
- 6 Citizenship in Vanuatu by naturalization in small details
- 7 Citizenship in Vanuatu by investment – Is it worth it?
- 8 Conclusion
Vanuatu is a small country in the Pacific Ocean, far from civilization and famous for its unique natural beauty. It makes an incredible holiday destination with its stunning landscapes, amazing culture, and great climate. But then, there is something else that makes it popular… Its citizenship by investment program.
Despite being tiny, Vanuatu is a great destination for those who like traveling. The capital city – Port Vila – is the most significant attraction. The country is also famous among wealthy individuals for being a tax haven, so the demand for its citizenship program skyrocketed over the past few decades.
Those interested in getting a second passport will inevitably consider Vanuatu as well. It is easy to tell why. First, you can travel to more than 130 countries without having to get a visa upfront. Plus, the process is super simple and quick.
Apart from all these, there is another reason wherefore so many people consider moving to Vanuatu these days. The stunning country is also able to provide financial freedom in terms of taxation – it is one of the last authentic tax havens left out there.
Moving to Vanuatu does not necessarily mean that you can reduce your taxes. It does not mean that you can pay less in tax. Instead, it means you are very likely to pay nothing. But then, there are a few things you should know before moving to Vanuatu.
Considering the personal income tax
This is one of those taxes that no one wants to pay. You do not even actually pay it – instead, it is deducted from your wages before you even get paid. It is that money that you never get to see, and unfortunately, it is quite high in most countries.
Vanuatu stands out in the crowd because it has successfully cleared this tax out. Sure, there is a type of tax that may affect your income – the so-called rental tax, but other than that, no one will charge you anything in terms of income tax.
The rental tax only applies to those with rental revenue. Practically, if you own at least a property in Vanuatu and you rent it out, you will be taxed on that income. Other than that, nothing gets taxed, whether you make money from pensions, dividends, or a basic salary.
This is one of the main reasons wherefore so many individuals – especially entrepreneurs and investors – consider moving to Vanuatu. The country also has a citizenship by investment program, which makes things even easier.
What happens then? You invest in the country, and you become a citizen. Not only do you get to save more money, but you also end up living in one of the most beautiful countries in the world. Plus, it has an interesting location as well.
While not very close to its neighbors, Vanuatu has ties with Australia, Japan, China, and the USA.
Since there is no personal income tax, the government will not even bother about you. There will be no need to come up with yearly personal tax returns either – after all, it would be a tedious process and a waste of time.
Understanding the corporate tax
Now, assuming you are interested in moving to Vanuatu for business purposes. You are not planning to get employed, but start a business and work on it. What is the corporate tax in Vanuatu, then? Unlike most expectations, it is nothing.
Indeed, Vanuatu will not charge you any corporate tax. It makes no difference what type of company you run. It could be a local one, but you might as well go internationally. You will not have to pay tax in Vanuatu at all.
With these thoughts in mind, it is easy to realize why many companies relocate to Vanuatu.
Any company registered in Vanuatu as an offshore business will be tax exempt – simple as that. The banking system is just as attractive, so incorporating a company there or moving your current business is ideal – get a bank account, too, and you are all set.
The lack of corporate taxes means you can easily safeguard your assets and increase your profits. Based on what you might pay in your current country, you could end up increasing your business profits by over 20%.
Although the income is not charged, there is a different tax that you may have to pay. It is not aimed at the government, though. Instead, this is a way to safeguard the future of local citizens, so the government has implemented it with the people in mind.
This fee goes to the National Provident Fund from Vanuatu. No matter what you pay your people, the tax will not exceed 6% of their wages – in other words, you may pay different taxes for different workers, depending on their wages.
Again, the money does not go to the government, but towards the people’s pension funds and social security accounts. With these thoughts in mind, this fee is not necessarily a tax, as the government has nothing to do with it.
Now, as a business owner, you will also need to cover the stamp duty – it does not apply to all businesses, though. This stamp duty is set at 2%, regardless of what you do. Compared to similar taxes in other countries, it is insignificant.
Now, since there is not too much economy in Vanuatu, many goods must be imported. Many of them are taxed, while others are not. In the worst possible cases, such taxes may go up to 50%. However, if you do need to cover them, they will rarely exceed 15%, so the deal is still good.
Other taxes worth some attention
The VAT should also be considered if you think about moving to Vanuatu. As a general rule of thumb, this tax is set at 12.5% for most goods – similar to what you can find in New Zealand. After all, Vanuatu implemented this tax under pressure from both New Zealand and Australia.
You will pay 0% in VAT if you export goods, offer global transportation services, domestic exchange to foreigners, aid in sector services, or offer services to local institutions. There are a few other fields that will make you tax exempt, but these are the main ones to consider.
VAT is paid yearly.
Then, you also have the property tax. You will pay 12.5% of your income if you have a property in Vanuatu and you rent it out. You will pay income tax twice a year, though. The good news is you will pay 0% if you make less than 200,000 VUV.
Stamp duty on property transactions is also paid – just 1%.
Counting all these things and the extra income you may have, moving to Vanuatu makes perfect sense. In fact, Vanuatu has been an attractive jurisdiction for foreigners for decades – things used to be even better back in the day, when Vanuatu was ideal to hide money.
While there is a bit of pressure to implement more taxes, Vanuatu is still a great tax haven.
So, you are interested in moving to Vanuatu now. What options do you have?
You can go for residency, but you can also go for citizenship. For each of these plans, there are two different options. In some cases, you might be able to skip the residency and go straight for citizenship. Here is everything you have to know.
Residency in Vanuatu by investment explained
When moving to Vanuatu and hunting residency, making an investment is probably the most straightforward way to get it. There are more countries offering residency by investment – including many in Europe, so you might be used to the concept already.
Residency by investment has always been popular in Vanuatu, and it came with a simple number – five million VUV. When you think about it, it sounds like a fortune. However, an American dollar is more than 110 VUV. In other words, five million VUV would cost you just under $45.000.
Given the fact that currencies fluctuate, there might be small differences, but you get the point.
These days, the tax has been increased – you will need to invest double than that, 10 million VUV.
With this number in mind, Vanuatu offers one of the cheapest residency by investment programs in the world. However, it is worth noting that the residency will be given for a year only. The good news is you can renew it every year, with one condition.
Your investment or land ownership must be continuous or local authorities will not renew the residency. Keep your money in the country, and you can do it again and again with no issues at all.
Your investment comes with some rules as well. There are certain things you can invest in. For instance, you could buy property in Vanuatu – one or more places. You can also invest in agricultural projects, but they need to be quite big.
The process is similar to what you can get in other countries, but Vanuatu offers a bonus – this is the gate to reaching citizenship, which brings in even more benefits in the long run. The good news is your investment can be profitable overtime, as Vanuatu is a solid exporter of tropical fruits.
Another less known fact is that paying a government fee will allow you to apply for residency by investment for up to 10 years. In other words, you do not have to renew it every year, but pay extra and forget about the stress for a decade.
Residency in Vanuatu by banking made easy
There is nothing to worry about if you do not feel like making an investment in real estate or agriculture. Vanuatu offers different opportunities as well. While they can be considered investments, the truth is you can take this venture even further.
Sometimes, making an investment is not ideal. Perhaps you do not feel confident about it, or maybe you do not have the money. You can also get residency by proving that you have a different income from another source.
In other words, you can prove a stable income – a pension makes a pretty good example. Local authorities do not want to look after you or become a burden, so they want to ensure you have enough money to live in Vanuatu.
Your monthly income coming to Vanuatu should be 250,000 VUV per month. To help you get an idea, this is less than $2,500 a month, so it is quite doable. The residency will be given for a year if you choose this path.
Now, how do you prove that you have a stable income? You need to get in touch with a local bank and actually get a bank certification. The deposit must be made monthly. If you bring your partner over or you are married, this amount must be doubled.
Compared to some other countries, this income requirement is not the lowest – for example, there are many countries in South America providing cheaper options. But then, it is still doable, especially if you have a solid pension or you run a business abroad.
Another good news about moving to Vanuatu with this option is the lack of income tax.
Now, these are the two ways to get residency in Vanuatu. Once you have it, moving to Vanuatu becomes nothing but a formality. At that point, most people start hunting for passports. Again, there are two different options here.
Citizenship in Vanuatu by naturalization in small details
If you have been naturalized before, you know how the process works. It is the same in every country out there. You are required to spend a particular amount of time there, then make an application. Basically, you need to prove that you have adapted to the local lifestyle and culture.
Vanuatu makes no exception either. Getting citizenship in Vanuatu by naturalization is the cheap option. It will not cost you too much, but the bad news is it is time-consuming, so you will waste quite a lot of time with it.
Now, to get citizenship by naturalization, you will need to spend 10 years on the actual residency. You can then apply for citizenship or just keep renewing residency – totally up to you. The good news is the process is simple and straightforward.
Since there are no major taxes to deal with, you might as well move in there. Pay everything upfront, and you will make your money back later on by saving on taxes – simple as that. If you have considered naturalization procedures before, you probably know already that most countries have requirements.
You will have to spend a certain amount of time in there. Well, here comes some more good news – Vanuatu does not have such requirements. You do not need to live there full time in order to be naturalized.
Even after you get the citizenship, there are no such requirements. You will not lose your citizenship just because you choose to live somewhere else. The only way to lose it is to commit a crime and get sentenced to at least ten years in prison.
In terms of dual citizenship, it was not allowed in Vanuatu. There has been no official news about being allowed now. But over the past years, the residents getting the citizenship did not have to renounce their current citizenships, so it is most likely doable now.
Citizenship in Vanuatu by investment – Is it worth it?
Moving to Vanuatu and getting citizenship does not have to be a time-consuming process. You do not always need to wait 10 years in order to get citizenship and a passport. There is a quicker way, and that implies making an investment in the country – just like getting residency.
Citizenship by investment used to be a thing of the past, but it was removed by the government. Later on, things changed to 180 degrees, and the program was reintroduced as a direct consequence of an unfortunate event.
Vanuatu was hit by a serious storm in 2015. Many of the islands were completely destroyed. Surprisingly enough, only 11 people died, but hundreds were injured throughout the storm. Plus, the local infrastructure was severely affected, so Vanuatu turned into ruins.
In order to boost the economy, the government made a few changes – one of them covers the citizenship by investment program. The citizenship is given as an honorary act to those who brought significant money to the country – a six figure sum donated to the government.
Ever since it was introduced, the program had to be changed a little. It was a quick move, so it was not thoroughly planned in small details. Therefore, it was abused by certain citizens – many of them coming from China.
The scandal made it to the offshore press and mentioned a government worker selling citizenships. The worker targeted Chinese investors, and prices varied widely, but they went up to $300,000. The government wanted to ensure the process was transparent, so the scandal ruined it.
More myths came out during those times. Some websites claim that you can no longer gain citizenship by investment. Instead, you need to consider moving to Vanuatu, getting the residency, and applying for citizenship 10 years later. However, this is incorrect.
Vanuatu has its own development support program that still takes massive donations in exchange of citizenship. By 2018, Vanuatu went one step ahead of other similar jurisdictions by allowing cryptocurrency payments as well.
The bad news is the new program based on digital coins is not fully applied. There are still a few things to change in order to make it viable. These days, with the growing popularity of digital money, the government is likely to make it official anytime now.
Now, to get citizenship, you will need to make an application and a donation. The process is intuitive, and there are no issues whatsoever. Altogether, it takes about 45 days to get everything done, assuming you have all the papers ready.
Waiting 45 days for the passport makes Vanuatu an extremely attractive option – this is faster than even the emergency programs available in other countries. In the attempt to reduce paperwork and make the process faster, Vanuatu has also moved all of its application procedures over the Internet.
Now, getting citizenship by investment in Vanuatu might seem easy, but the actual investment is not new at all. You will need to invest about $200,000. The good news is the passport will give you lots of travel opportunities – including most European countries and even Russia.
These days, Vanuatu is probably the only country offering such a citizenship program that provides visa free travel to Russia, so it is definitely ahead of its competition. Considering the tedious process of getting a visa for Russia, this is a serious advantage.
This investment covers the actual donation – $130,000, about $40,000 in fees for due diligence, and around $30,000 in fees for the agency. It is more expensive compared to some countries in the Caribbean, but it is definitely more advantageous.
At the end of the day, it is up to you to determine which program is better for you. Think about taxes, investments, cost of living, the potential to start a business, and other considerations before making a final decision.
Again, you will not have to renounce your current citizenship to be a citizen of Vanuatu.
As a short final conclusion, Vanuatu is definitely worth some attention, whether you are after a tax haven, a quiet and nice place to live without paying big taxes, or just a business environment. These days, Vanuatu is the most appreciated tax haven out there, and it is totally off the grid.
Believe it or not, most people have no clue where Vanuatu is on the map. It is not the most popular country in the world, but at the same time, it is one of the world's best-kept secrets. As if all these were not enough, moving to Vanuatu has never been easier.