When we assist clients with obtaining residence permits in Europe, one of the most frequent questions we hear is: "How much tax will I have to pay? I'll be receiving income from abroad — won't I be taxed twice?"
This is an absolutely legitimate question. And the answer, unfortunately, is not as straightforward as one might wish. Tax legislation is changing, international agreements are being renegotiated, and what worked a year ago may lead to unpleasant surprises today.
In this article, we break down the essentials: how tax residency works, what is happening with double taxation treaties, and how to build a strategy to avoid overpaying.
Tax Residency: Where It All Begins
Before discussing taxes, it is crucial to determine whether you will become a tax resident of the country you are moving to.
In most European countries, the criterion is simple: if you stay within the territory of a state for more than 183 days in a calendar year, you automatically become a tax resident. This means you are required to declare your worldwide income — including income from abroad, such as rental income, dividends, or business profits.
However, there are nuances. For example, France has broader criteria: you may be considered a resident even if you spend fewer than 183 days there, provided that your family lives in France, you carry out professional activities in the country, or your centre of economic interests is located in France.
Similarly, in the Netherlands, they consider not only the number of days but also the presence of your centre of vital interests.
What Changes with Resident Status?
Once you become a tax resident of a European country, you are obligated to:
1. File a tax return annually
2. Declare all income from any source worldwide
3. Pay taxes on that income at local rates
And here lies the main risk: your income could be taxed twice — first in the source country, then in Europe (as your country of residence).
Double Taxation Treaties: Where They Stand Now
In August 2023, certain provisions of double taxation agreements with 38 countries deemed "unfriendly" were suspended. This list includes virtually all European Union member states.
The Multilateral Instrument (MLI), which was intended to simplify the application of tax treaties, entered into force for a number of countries on 1 January 2026, and for France, Greece, Malta, Spain, Hungary, and certain others already on 1 January 2025. However, it does not abolish the treaties but merely adjusts specific provisions.
What This Means for an Ordinary Resident Permit Holder
In short, automatic tax credits are largely gone. In most cases, you will have to pay tax in the source country and additionally in your country of residence if the local rate is higher. Offsetting the tax paid in the source country is often not possible.
But not all is hopeless. Some countries (for example, Hungary, Poland, Romania) do still credit source-country tax to soften the blow. Others, like France or the Netherlands, are less accommodating — professional assistance is essential there.
Special Tax Regimes for New Residents
The good news is that many European countries, understanding that high taxes deter newcomers, have created special preferential regimes for new residents. In 2026, these programmes are particularly relevant.
Greece: Fixed Tax on Foreign Income
Greece offers a unique regime: you pay a fixed €100,000 per year on all your foreign income, regardless of its amount. If you wish to include your family in the programme, you pay an additional €20,000 per person. Foreign pension income is taxed at just 7 percent. However, you must spend at least 183 days per year in the country. Citizenship is possible after 7 years.
Italy: Flat Tax for Affluent Individuals
Italy's programme works similarly: a fixed tax of €200,000 per year on foreign income. For each dependent, an additional €25,000 is required. You also need to reside 183 days per year. As of 1 January 2026, the amount has been increased — previously it was €100,000, then €200,000, and now for new applicants it is €200,000. The trend is clear: demand is rising, and prices are increasing.
Cyprus: Best for Passive Income
In Cyprus, dividends and interest are entirely tax‑free. This makes the island particularly attractive for investors. The physical presence requirement is flexible: you can choose either the classic 183 days or just 60 days provided certain conditions are met. Citizenship can be applied for after 8 years.
Malta: Remittance Basis
In Malta, tax is only payable on income that you actually remit to the country. What remains abroad is not taxed. The minimum effective rate is 15 percent. Family members are already included in the overall tax plan. Citizenship is available after 5–7 years.
Portugal: New Regime for Professionals
In 2024, Portugal launched a new regime for returnees. It offers a flat 20 percent rate on income from work performed in Portugal for professionals in certain high‑value sectors and an exemption from tax on most foreign income. However, pensions from abroad may unfortunately be taxed at rates up to 53 percent — important for those planning to relocate for retirement.
Spain: Regime for Highly Qualified Professionals
Spain's special regime allows highly qualified professionals to be taxed as non‑residents for six years. That is, only income obtained in Spain is taxable. The programme remains popular among high‑level professionals.
Important Caution
All these programmes share common limitations:
- They are temporary. The preferential period may last from 4 to 15 years. When the term ends, you become an ordinary tax resident with all the attendant consequences.
- They often do not cover local income. If you start earning income in the host country, that income may be taxed at ordinary rates.
- Rules can change quickly. Italy's example — raising the entry threshold twice in just a few years — clearly shows that tax regimes are not permanent.
How to Avoid Paying Twice: Practical Advice
Based on our experience, here are several strategies that help clients minimise their tax burden.
1. Determine Your Tax Status Accurately
Before planning anything, clarify which country's tax resident you will become. In your first year, you may not yet reach the 183‑day threshold — in that case, the obligation to pay taxes in Europe may not arise. But you must keep track of border‑crossing days.
2. Study the Specific Treaty with Your Country
Although the suspension of double taxation agreements with many states is in place, the treaties formally continue to exist. In each specific case, you need to see which provisions are effective and which are not. For example, with Germany a unique situation has arisen: the treaty formally applies, but in practice, German domestic rules are used, leading to double withholding.
3. Consider Special Tax Regimes
If your income level allows, fixed‑tax programmes in Greece, Italy, or Cyprus may be more advantageous than standard taxation. But calculations must be done individually, taking into account the structure of your income.
4. Plan Your Income Structure
It is important to understand which income will come from abroad and which will arise within the country. Tax regimes often treat these categories differently. For example, if your main income is dividends from foreign companies, Cyprus with its zero rate looks more attractive than France with its progressive scale.
5. Do Not Attempt to Hide Income
This is the most dangerous path. European tax authorities actively exchange information within the framework of automatic exchange. Sooner or later, data about your foreign accounts will reach tax inspectors. Penalties for undeclared income can be enormous — even leading to criminal liability.
6. Consult with Professionals
Tax planning for an international move is not an area where you can rely on advice from acquaintances or information from the internet. Too many variables are involved: your specific status, the country, the source of income, family situation, property ownership. A mistake can cost tens of thousands of euros.
Property Taxes: A Separate Story
If you buy a home in Europe, be prepared for annual property taxes. They vary widely:
- France: the tax depends on the region and the size of the property. The residential tax on the main home has been abolished, but it remains for second residences.
- Spain: the annual tax depends on the cadastral value and the municipality.
- Italy: the tax is levied only on second homes (the primary residence is exempt).
- Switzerland: additionally, a wealth tax is levied on total assets.
If you rent out property, that income must also be declared. In some countries, special regimes with expense deductions exist for this purpose.
Taxes Are Not Scary If You Know the Rules
Obtaining a residence permit in Europe opens up enormous opportunities: freedom of movement, access to education and healthcare, the ability to live in a comfortable climate. But along with this come tax obligations.
The key takeaway from all of the above is this: you cannot simply move and forget about taxes. Your foreign income will not disappear, European tax authorities will not disappear, and double taxation treaties are currently not working as they once did.
But that is no reason to abandon your relocation. It is a reason to approach the matter systematically:
1. Accurately determine your tax status
2. Study the special regimes in your chosen country
3. Calculate the tax burden on all types of your income
4. Build a transparent structure that minimises risks
In our practice, we have encountered a wide range of situations — from clients who overpaid hundreds of thousands of euros due to poorly structured arrangements to those who, thanks to careful planning, paid far less than they otherwise would have.
The tax system of the EU is complex, but it is predictable. It is possible — and necessary — to navigate it. The main thing is not to go in blindly and not to rely on "maybe." In tax matters, "maybe" usually does not work.
If you're planning to obtain a residence permit, invest in a country's economy, or purchase foreign real estate, we invite you to a consultation with our company. During a personal online meeting, we'll discuss your questions in detail and create a step-by-step action plan for you.
This is an absolutely legitimate question. And the answer, unfortunately, is not as straightforward as one might wish. Tax legislation is changing, international agreements are being renegotiated, and what worked a year ago may lead to unpleasant surprises today.
In this article, we break down the essentials: how tax residency works, what is happening with double taxation treaties, and how to build a strategy to avoid overpaying.
Tax Residency: Where It All Begins
Before discussing taxes, it is crucial to determine whether you will become a tax resident of the country you are moving to.
In most European countries, the criterion is simple: if you stay within the territory of a state for more than 183 days in a calendar year, you automatically become a tax resident. This means you are required to declare your worldwide income — including income from abroad, such as rental income, dividends, or business profits.
However, there are nuances. For example, France has broader criteria: you may be considered a resident even if you spend fewer than 183 days there, provided that your family lives in France, you carry out professional activities in the country, or your centre of economic interests is located in France.
Similarly, in the Netherlands, they consider not only the number of days but also the presence of your centre of vital interests.
What Changes with Resident Status?
Once you become a tax resident of a European country, you are obligated to:
1. File a tax return annually
2. Declare all income from any source worldwide
3. Pay taxes on that income at local rates
And here lies the main risk: your income could be taxed twice — first in the source country, then in Europe (as your country of residence).
Double Taxation Treaties: Where They Stand Now
In August 2023, certain provisions of double taxation agreements with 38 countries deemed "unfriendly" were suspended. This list includes virtually all European Union member states.
The Multilateral Instrument (MLI), which was intended to simplify the application of tax treaties, entered into force for a number of countries on 1 January 2026, and for France, Greece, Malta, Spain, Hungary, and certain others already on 1 January 2025. However, it does not abolish the treaties but merely adjusts specific provisions.
What This Means for an Ordinary Resident Permit Holder
In short, automatic tax credits are largely gone. In most cases, you will have to pay tax in the source country and additionally in your country of residence if the local rate is higher. Offsetting the tax paid in the source country is often not possible.
But not all is hopeless. Some countries (for example, Hungary, Poland, Romania) do still credit source-country tax to soften the blow. Others, like France or the Netherlands, are less accommodating — professional assistance is essential there.
Special Tax Regimes for New Residents
The good news is that many European countries, understanding that high taxes deter newcomers, have created special preferential regimes for new residents. In 2026, these programmes are particularly relevant.
Greece: Fixed Tax on Foreign Income
Greece offers a unique regime: you pay a fixed €100,000 per year on all your foreign income, regardless of its amount. If you wish to include your family in the programme, you pay an additional €20,000 per person. Foreign pension income is taxed at just 7 percent. However, you must spend at least 183 days per year in the country. Citizenship is possible after 7 years.
Italy: Flat Tax for Affluent Individuals
Italy's programme works similarly: a fixed tax of €200,000 per year on foreign income. For each dependent, an additional €25,000 is required. You also need to reside 183 days per year. As of 1 January 2026, the amount has been increased — previously it was €100,000, then €200,000, and now for new applicants it is €200,000. The trend is clear: demand is rising, and prices are increasing.
Cyprus: Best for Passive Income
In Cyprus, dividends and interest are entirely tax‑free. This makes the island particularly attractive for investors. The physical presence requirement is flexible: you can choose either the classic 183 days or just 60 days provided certain conditions are met. Citizenship can be applied for after 8 years.
Malta: Remittance Basis
In Malta, tax is only payable on income that you actually remit to the country. What remains abroad is not taxed. The minimum effective rate is 15 percent. Family members are already included in the overall tax plan. Citizenship is available after 5–7 years.
Portugal: New Regime for Professionals
In 2024, Portugal launched a new regime for returnees. It offers a flat 20 percent rate on income from work performed in Portugal for professionals in certain high‑value sectors and an exemption from tax on most foreign income. However, pensions from abroad may unfortunately be taxed at rates up to 53 percent — important for those planning to relocate for retirement.
Spain: Regime for Highly Qualified Professionals
Spain's special regime allows highly qualified professionals to be taxed as non‑residents for six years. That is, only income obtained in Spain is taxable. The programme remains popular among high‑level professionals.
Important Caution
All these programmes share common limitations:
- They are temporary. The preferential period may last from 4 to 15 years. When the term ends, you become an ordinary tax resident with all the attendant consequences.
- They often do not cover local income. If you start earning income in the host country, that income may be taxed at ordinary rates.
- Rules can change quickly. Italy's example — raising the entry threshold twice in just a few years — clearly shows that tax regimes are not permanent.
How to Avoid Paying Twice: Practical Advice
Based on our experience, here are several strategies that help clients minimise their tax burden.
1. Determine Your Tax Status Accurately
Before planning anything, clarify which country's tax resident you will become. In your first year, you may not yet reach the 183‑day threshold — in that case, the obligation to pay taxes in Europe may not arise. But you must keep track of border‑crossing days.
2. Study the Specific Treaty with Your Country
Although the suspension of double taxation agreements with many states is in place, the treaties formally continue to exist. In each specific case, you need to see which provisions are effective and which are not. For example, with Germany a unique situation has arisen: the treaty formally applies, but in practice, German domestic rules are used, leading to double withholding.
3. Consider Special Tax Regimes
If your income level allows, fixed‑tax programmes in Greece, Italy, or Cyprus may be more advantageous than standard taxation. But calculations must be done individually, taking into account the structure of your income.
4. Plan Your Income Structure
It is important to understand which income will come from abroad and which will arise within the country. Tax regimes often treat these categories differently. For example, if your main income is dividends from foreign companies, Cyprus with its zero rate looks more attractive than France with its progressive scale.
5. Do Not Attempt to Hide Income
This is the most dangerous path. European tax authorities actively exchange information within the framework of automatic exchange. Sooner or later, data about your foreign accounts will reach tax inspectors. Penalties for undeclared income can be enormous — even leading to criminal liability.
6. Consult with Professionals
Tax planning for an international move is not an area where you can rely on advice from acquaintances or information from the internet. Too many variables are involved: your specific status, the country, the source of income, family situation, property ownership. A mistake can cost tens of thousands of euros.
Property Taxes: A Separate Story
If you buy a home in Europe, be prepared for annual property taxes. They vary widely:
- France: the tax depends on the region and the size of the property. The residential tax on the main home has been abolished, but it remains for second residences.
- Spain: the annual tax depends on the cadastral value and the municipality.
- Italy: the tax is levied only on second homes (the primary residence is exempt).
- Switzerland: additionally, a wealth tax is levied on total assets.
If you rent out property, that income must also be declared. In some countries, special regimes with expense deductions exist for this purpose.
Taxes Are Not Scary If You Know the Rules
Obtaining a residence permit in Europe opens up enormous opportunities: freedom of movement, access to education and healthcare, the ability to live in a comfortable climate. But along with this come tax obligations.
The key takeaway from all of the above is this: you cannot simply move and forget about taxes. Your foreign income will not disappear, European tax authorities will not disappear, and double taxation treaties are currently not working as they once did.
But that is no reason to abandon your relocation. It is a reason to approach the matter systematically:
1. Accurately determine your tax status
2. Study the special regimes in your chosen country
3. Calculate the tax burden on all types of your income
4. Build a transparent structure that minimises risks
In our practice, we have encountered a wide range of situations — from clients who overpaid hundreds of thousands of euros due to poorly structured arrangements to those who, thanks to careful planning, paid far less than they otherwise would have.
The tax system of the EU is complex, but it is predictable. It is possible — and necessary — to navigate it. The main thing is not to go in blindly and not to rely on "maybe." In tax matters, "maybe" usually does not work.
If you're planning to obtain a residence permit, invest in a country's economy, or purchase foreign real estate, we invite you to a consultation with our company. During a personal online meeting, we'll discuss your questions in detail and create a step-by-step action plan for you.