Tax Regimes for Expats in 2025 — EU vs Latin America

When moving abroad, one of the most important questions for expats is taxation. The level of taxes directly affects quality of life, capital preservation, and the overall attractiveness of a country for doing business. In 2025, the tax systems of the European Union and Latin America remain very different: Europe prioritizes social protection and high rates, while Latin America offers flexibility and territorial taxation. Let’s compare these two regions and see which model may work best for IT entrepreneurs, investors, and professionals planning relocation.

In most EU countries, income taxes are based on progressive scales, meaning the higher your income, the more you pay. In Western Europe, top personal income tax rates can reach 45–50%, and on top of that, there are mandatory social contributions covering healthcare, pensions, and education.

Germany and France are known for some of the highest tax burdens, but in exchange, expats gain access to a strong social system. Portugal and Spain, however, stand out with special tax regimes for foreigners — Portugal’s Non-Habitual Resident (NHR) program and Spain’s Beckham Law — allowing eligible expats to pay as little as 10–20% on certain income categories. This makes parts of Europe more attractive for relocation compared to the standard model of high taxation.

In contrast, many Latin American countries apply the territorial taxation principle, meaning only income earned within the country is taxed, while foreign income is exempt.

Panama, Paraguay, and Uruguay are examples where expats can legally reside, operate local businesses, and still avoid taxes on income from abroad. Chile offers a transitional system: new residents can remain exempt from taxes on foreign income for the first three years. Mexico, on the other hand, applies a progressive tax scale up to 35%, but also provides incentives for investors and business owners.

In short, Europe offers reliability, infrastructure, and strong social protection, but at the cost of higher taxes. Latin America provides tax-friendly regimes and opportunities for optimization, though with less stability and weaker institutional frameworks.

• European Union: higher tax rates, strong social benefits, selective expat tax incentives.
• Latin America: territorial taxation, reduced or no tax on foreign income, more flexibility but less legal predictability.

The choice depends on priorities: Europe suits those who value social protection and long-term EU residency, while Latin America is ideal for those seeking to minimize their tax burden and protect capital.

For expats, taxes are not just numbers — they are part of a long-term relocation strategy. In the EU, you pay more but enjoy comprehensive social benefits. In Latin America, you can minimize taxes and keep more of your income, though with fewer guarantees of stability.

At Visa Dan, we help you choose not only the right residency program but also the best tax environment for your goals — from startup visas to repatriation and second passports.

Visa Dan is an international company with a strong legal team and experience in assisting more than 1,000 clients.
We offer:

• Individual selection of solutions and strategies for obtaining a residence permit.
• Complete transparency and support at every stage.
• A strong team in Europe: lawyers, translators, operators, notaries.
• Support until you receive your ID card, as well as assistance with renewal and integration in the country.

The Visa Dan team will help you navigate this journey from start to finish. Get personalized advice and start your new life in 2025!