15 Countries With The Most Complicated Taxes

In this article, we look at countries with some of the most complicated taxes in the world, where they are and what, precisely, makes them so difficult to deal with. 

We start off in the Americas before moving on to Europe and Asia, while also examining how different regions differ.

As you’ll see, many of these countries add insult to injury by making their taxes both complicated and expensive, and they tend to have cumbersome bureaucracies too. 

Tax can be unnecessarily convoluted at the best of times, but these countries go out of their way to make things as painfully complicated as possible. So, to finish up, we look at some alternative jurisdictions which offer significantly less cost and hassle. 

Countries With Complicated Taxes: The Americas

Our journey through the world’s most frustrating and confusing taxes starts in the Americas, a region which includes four of the world’s largest economies, three of which are on our list. 

And you can probably guess where we’re starting. 

United States

Explaining the US tax system to other nationalities invariably results in the same response, “Wait, what?”

So it makes sense that we start with the country with the most confusing tax system in the world. 

Much of the confusion stems from the fact that America taxes its citizens wherever they go, something which baffles foreigners no end. This draconian system can also apply to green card holders, even if they are no longer resident in the US. 

Citizens and long-term residents alike may also be subject to a whopping exit tax, whereby the IRS treats all your assets as though you have already sold them off, and taxes you accordingly. 

And then there’s FATCA, the US’s unilateral tax reporting initiative, which proves so burdensome to foreign banks that many opt simply not to take on US clients, as it’s simply not worth the hassle. 

Mexico

South of the border, the tax confusion continues, and while Mexico’s taxman doesn’t stalk its citizens across the world like the IRS does, its equivalent SAT can be every bit as tenacious on home soil.  

This can be a problem since Mexico’s tax rules take some getting used to. 

Before you can do anything in Mexico, you first need to apply for a tax ID, known as an RFC number (Registro Federal de Contribuyentes).

While the process is gradually improving, you may still need to jump through a few hoops at the beginning, which may include an in-person meeting.

At the same time, Mexico insists on a standardised electronic invoicing format called CFDI (Comprobante Fiscal Digital por Internet), which is mandatory for tax purposes.  

Brazil

Despite being one of the world’s largest economies and a founding member of the BRICS countries, Brazil’s tax system remains as bewildering as ever. 

As with the majority of Latin countries, Brazil’s system suffers from a byzantine bureaucracy and political polarisation. The nation’s tax laws are plagued by constant surface-level changes, but politicians are reluctant to fix the underlying structure. 

As a result, Brazil continues to present a triple-threat of federal, state, and municipal taxes, with variable rates and rules to create a dizzying system with thousands of different standards and 60+ taxes on the books. 

The need for reform is obvious, yet the political dangers are equally so. Think of it like a giant game of Jenga; one wrong move and the whole thing collapses, and no political party wants to be the one that pulls out the wrong piece.

Countries With Complicated Taxes: Europe

Europe is another interesting case since it offers some of the best and worst tax systems found anywhere in the world, often directly bordering one another. 

As a general rule, the older, founding members of the EU have higher taxes, while newer EU countries are more business-friendly. 

Another key trend is that northern and central European countries tend to have the highest taxes, while Mediterranean countries have the most exhausting bureaucracies. 

Germany

German efficiency is a myth. Any foreigner who has ever dealt with their bureaucracy knows this all too well. 

Despite being Europe’s largest economy and one of the third largest globally, doing business in Germany is a complex cluster headache of high taxes, red tape, cumbersome regulations, outdated rules and overzealous, joyless officials.  

The majority of Germans agree this is an issue, though they also support raising taxes even more for high earners, so it’s far from ideal for HNWIs.

Poland

Directly next door to Germany, we have Poland, a country which seems to have drawn inspiration from Microsoft by adopting a Windows Update approach to tax reform. 

The Polish Deal was meant to be a landmark policy, reforming Poland’s tax system while invoking the historical clout of Franklin D Roosevelt to lend the name extra political gravitas. 

Alas, the reforms were rushed to market, and so the government was forced to fix it with subsequent amendments, each time resulting in a fresh cascade of confusion. 

It’s the kind of thing we might expect whenever a new version of Windows is launched, but not when we’re talking about companies, workers and their respective income tax rates. 

Add to this a mandatory split payment system (MPP), which splits payments across two separate bank accounts, with one account solely for VAT, and the system becomes more confusing still.

The MPP system, though equal parts confusing and controversial, will remain in place until 2028 at least. 

Any wonder, then, that the Tax Complexity Index, a project run by Paderborn University in Germany, currently ranks Poland as having the most complicated tax system in Europe. 

The Netherlands

The Netherlands is a fantastic country for many reasons, it’s safe, it’s clean, and the people are extremely friendly. 

But it’s the last place in the world you want to move to if you hate mayonnaise and high taxes, because the Dutch seem to have an unhealthy obsession with both. 

Not only are Dutch taxes extremely high, they’re also unnecessarily complicated thanks to the Netherlands’ notorious box system. 

In box one, we have your wages or business income, which is taxed at progressive rates of up to 49.5%. Believe it or not, this is actually an improvement on previous levels. 

In box two, we have dividend income, whereby income and capital gains from interests in either Dutch or foreign-owned companies are taxed at rates of up to 31%. 

If the veins on the sides of your head are starting to throb already that’s understandable, but we haven’t even gotten to the best box yet. 

Box three is the wealth tax box, which imposes a 36% tax on assumed returns on investments. And we all know the phrase about what happens when you assume. 

In this instance, though, the Dutch taxman assumes on our behalf, so even if your investments lose money, you still get taxed. 

As it stands, the Dutch Supreme Court has ruled this system “discriminatory” and so the government must now amend the rule. The only problem is that those changes aren’t expected to come into effect until 2028. 

Belgium

Next to the Netherlands, we have Belgium with a progressive system at rates of up to 50%. 

While some countries disproportionately tax the rich, the Belgian system simply assumes that everybody is rich and taxes them accordingly, even single workers on minimum wage. 

Plus, like other countries on this list, it levies state, regional and municipal taxes, which adds additional layers of complexity to what is already a rather heavy-handed system. 

France

And so we get to France, another founding EU country with notoriously high taxes. 

France is the second-largest economy in Europe and the seventh-largest in the world. It’s also home to some of the world’s largest corporations and, ironically, the OECD. Yet its tax system is medieval, shockingly so. 

Want to talk about bureaucracy? The French literally invented the word, and you will need to learn far more French words than that to engage with it. 

Expect long wait times, mountains of paperwork and taxes on your taxes. 

The worst offender here is the CEHR (Contribution Exceptionnelle sur les Hauts Revenus), or Exceptional High Income Contribution in English. It’s an additional tax of up to 4% on high-net-worth individuals.

France’s progressive system already levies a 45% tax on its highest earners, but with the CEHR, that rate can go as high as 48%. 

Spain

Next to sunny Spain, whose warm weather and stunning beaches are certainly far more inviting than its bamboozling tax system. 

Spain combines a slow-moving and multi-layered bureaucracy with an equally befuddling system of national and regional taxes, which means the rate of income tax you pay will vary depending on which region of the country you live in. 

Spain splits its income tax collection 50/50 between state and region. The central government in Madrid collects its tax directly, while each region collects its own independently. 

The sum of both rates (state tax + regional tax = full amount) will therefore become the full rate of income tax that you pay. 

There are 17 autonomous regions in Spain (not counting the territories of Ceuta and Melilla), and each of them has its own rate of income tax.

The Catalan region, for example, pays some of the highest rates, so if you live in Barcelona, you’ll pay more income tax than if you lived in Madrid.

For high earners, the rates can range from 47% to 50%.

Foreigners do get some reprieve, at least, in the form of the Special Expatriate Tax Regime, better known by its media nickname the Beckham Law.

This provides exemptions on foreign-sourced income for a maximum of six years. During the same period, you then pay a flat tax of 24% on all Spanish-sourced income up to an annual amount of €600,000. 

Italy

Italy combines many of the worst aspects of northern Europe (high taxes) with classic Mediterranean issues like regional complexity and jaded, ponderous bureaucracies. 

Its progressive tax system, meanwhile, punishes low and high earners alike. Those at the very bottom lose just under a quarter of their income to taxes, while anyone earning more than €50,000 gets hit with a rate of 43%. 

There is also a secondary regional income tax levied on top, which varies from region to region. The more affluent areas of Italy charge higher rates up to 3.3% on top of the 43% maximum national progressive rate for higher earners. 

For business owners, the story is much the same, with two layers of taxes, firstly a corporate tax (IRES) rate of 24%, plus a second regional tax (IRAP) which again can vary by region, as well as by industry, generally around 3.9%. 

Add to this a confusing payroll tax system plus hefty fees for non-compliance or late filings, and you can see why Italian tax causes so many headaches. 

One silver lining, however, is that Italy offers a couple of interesting flat tax initiatives targeting individuals at the opposite ends of the financial spectrum. 

The first is its 7% flat tax for retirees who move to specific regions in the south of the country. 

Though whenever you hear people refer to Italy’s flat tax, they’re generally referring to the HNWI flat tax regime, which offers an annual flat rate €200,000 on all foreign-sourced income for a period of up to 15 years.

Greece

Greece suffers from many of the same issues that its Mediterranean counterparts do, with confusing rules and a slow-moving, multi-layered bureaucracy, compounded by a steep language barrier.

So far, all the countries we’ve looked at have used the same familiar Latin alphabet. Sure, the Greeks may have invented the word, but their alphabet is strikingly different to what most westerners are used to. 

Greek taxes are already quite complicated and subject to regular changes. One of the most controversial was the Solidarity Tax, which ranged from 2.2% up to a whopping 10% for incomes over €220,000, which was levied on top of the standard rate of income tax. 

This tax was abolished in 2022, though the standard progressive income tax remains high, with anyone earning over €40,000 annually subject to a tax rate of 44%. 

Another hot-button topic is the Greek government’s digital reporting platform, myDATA, which was meant to make reporting easier, but, well, you can guess where this is going. 

On the one side, we have buggy software, fiddly UX and a challenging learning curve, resulting in a nation full of confused business owners, on the other side, the threat of penalties for non-compliance. For foreigners, those issues are understandably worsened. 

As with Italy, however, one positive is Greece’s flat tax regime for HNWIs however, in this case, the rate is at a more competitive €100,000 rather than Italy’s €200,000 value. 

Countries With Complicated Taxes: Asia

As we move further east, things become more complex, especially for those from the west, as language, culture, and customs become gradually less familiar. 

Like Europe, Asia features some of the best and worst countries for taxes, often situated right next to one another.

We start, however, with a part of the world which has bridged east and west for millennia.

Türkiye

Turkey, or Türkiye to use its official name, is positioned at the very edge of Europe and is the last country on our list to use the Latin alphabet. 

The nation is an amalgam of east and west, combined with its own cultural uniqueness, and the Turkish bureaucracy reflects this.

Expect the same types of frustrations as its Mediterranean neighbours in Europe, combined with additional layers of idiosyncratic rules and bureaucratic riddles. 

As with previous entries, it has a steep progressive tax system, with rates of 40% on the highest earners, which is far from ideal. 

The main challenge for foreigners, however, is keeping up to date with an ever-changing set of tax rules in an unfamiliar language, or face penalties for non-compliance.

It’s a pity too, because there is also a lot to like about Turkey, the country, the culture, the delicious food, not to mention plenty of lucrative investment and real estate deals to be had. 

Which is good since a $400,000 investment is what the Turkish government are currently asking for their citizenship by investment programme. (Read about some of the best citizenship by investment programmes.)

India

History recalls that Alexander of Macedon’s relentless march across Asia ground to a halt in India, as his troops, defeated, drained and dejected, refused to go another step further.

No mention of India’s famous bureaucracy, but the effect on foreigners and locals alike is generally the same. 

India has one of the largest bureaucracies on the planet, much of it still rooted in antiquated colonial practices. Its tax system, meanwhile, remains mired in complexity with national and state taxes combined with a bewildering array of municipal taxes. 

India’s progressive system taxes higher earners at 30% which is notably lower than most of the countries on this list, but every bit as complicated.

The biggest issue with Indian taxes is clarity, the rules change, and nobody is 100% sure what they are. It’s common for a company to believe they are compliant, only to find itself arguing with the authorities.  

India certainly has transformed itself in recent years but the country desperately needs to reform its bureaucracy and tax system if it wishes to become more competitive, especially against the next country on our list. 

China

China has a progressive tax system with the highest band of income taxed at 40% (note: does not apply to Macau and Hong Kong). 

Of all the countries on this list though, China is a unique case, in that it has a vibrant market economy, albeit under the strict control of the ruling Chinese Communist Party. 

Say what you will about the CCP, at least they keep things centralised. So, at least you don’t have the same confusing state and regional taxes as in Italy and Spain. 

What you have instead, though, is deep state penetration into every aspect of society in general, and finances in particular. You might think you’re compliant, but the state might disagree – and who do you think is going to win that particular argument? 

Add to this variable VAT rates from 6 to 13% and the need to file taxes in some cases on a monthly basis, and you can see why China’s taxes cause so many headaches for citizens and foreigners alike. 

Japan

So next we come to Japan, the Land of the Rising Sun. 

It’s also the land of Lost In Translation – and that’s before we start talking about its bureaucracy.  

Meticulous attention to detail in one’s work is a cornerstone of Japanese culture. It permeates everything from its manufacturing industry to its prominence in martial arts. 

Unfortunately, it also results in an army of black belt bureaucrats. And as a foreigner, you will be made to feel it more, as any expat living in Japan will be more than happy to tell you. 

This, after all, is a country which taxes you just to leave the country. In fact, they’ve just approved a bill that will triple the exit tax on tourists to $19 per person. 

That’s if you want to leave. If you want to stay, it’s even higher. Japan has a 10% inhabitant tax, which goes to the region you live in. 

As for income tax, the top band is taxed at 45%, making Japan one of the highest tax countries outside of Europe. Put that together and you’re looking at a rate of as much as 55% of your income. 

All for the privilege of living in a country where everything, from banking to starting a business to properly managing social insurance for employees, becomes a prolonged and overly-complicated nightmare. 

Tax-Efficient Alternatives

As you can see, big government, bureaucracy and high taxes tend to go together. 

It’s worth noting that all the countries on this list are major economies, consisting of two rival superpowers, three BRICS and eight EU member states. 

If there’s a lesson to be learned, it’s that larger countries often leverage their economic clout to demand more while smaller nations learn to compete by being more tax-efficient and business-friendly. 

As we pointed out already, these countries are often quite close by, which is why HNWIs often deploy geoarbitrage strategies, taking advantage of the cost differential between high-tax and low-tax countries. 

So, with that in mind, let’s revisit the regions we covered earlier, but this time with some more tax-efficient alternatives. 

Panama

Linking North and South America, Panama is one of the world’s largest financial hubs. 

With an economy tied to the US dollar, it’s a popular destination for retirees and investors alike. 

Panama offers many benefits for those looking for an alternative jurisdiction in the Americas. To start, it has a territorial tax system, whereby foreign income remains untaxed. Local source income, meanwhile, is taxed at rates of up to 25%. 

As one of the world’s main financial hubs, it’s also strong in terms of ease of doing business and banking. 

Andorra

Located high in the Pyrenees between Spain and France, the principality of Andorra is one of Europe’s lesser-known low-tax jurisdictions.

VAT is low, or non-existent in some cases, income under €24,000 is untaxed, while the highest band of income is taxed at just 10%. The corporate tax level is also 10%.  

Compared this with their Catalan cousins in Barcelona, who pay some of the highest taxes in Spain, or nearby France, both burdened with income tax in the high forties.  

Andorra is the model of a low-tax jurisdiction, though our next option does one better, because instead of being low-tax, it’s no tax. 

Monaco

Glamorous Monaco attracts the wealthy for one primary reason – zero income tax. 

Compare that with neighbouring France, where residents have to pay 45% or more in taxes. 

Like Andorra, Monaco is not in the EU but does use the euro as currency. It also enjoys much of the same travel freedoms through its arrangements with France. 

If you want a taste of the Riviera lifestyle, while paying zero taxes, Monaco is a no-brainer. 

Malta

Big things come in small packages – and the tiny Mediterranean island of Malta packs some serious tax savings for residents. 

Its Global Residence Program (GRP) applies a 15% flat tax on foreign-sourced income, though only if remitted to Malta. Local-sourced income, meanwhile, is taxed at 35%.

So if most of your income is derived from abroad, the GRP regime could be hugely beneficial.

The popular Malta Permanent Residence Programme (MPRP), meanwhile, offers a real estate investment path to EU residency starting at €375,000. 

UAE

Year-on-year, the UAE’s reputation grows as the premier destination for global investors, including prominent CEOs and billionaires.

Full disclosure: we’re slightly biased on this point, but with good reason. 

Millionaire Migrant’s main office is located in Dubai, where there’s no personal income tax, no wealth, inheritance, property or capital gains taxes, just a corporate tax rate of 9%. 

So if your main goal is tax reduction, Dubai’s a no-brainer.  

The UAE’s golden visa programme grants residency to you and your family for five or ten years. 

With prices starting at $272,300 USD for the five-year real estate investment option, this option is not for everyone, but for wealthy global investors, Dubai remains the “gold standard” for tax-free living. 

Singapore

Admittedly, we’re somewhat biased towards Dubai, since our main HQ is located there. 

Your needs may differ, however, particularly if your ultimate goal is to do more business in Asia. 

Given its business-friendly government, robust banking and low taxes, Singapore makes sense as a base of operations in Asia. 

As a rule, Singapore does not tax foreign-sourced income, while local income is subject to progressive taxes, which max out at 24% for HNWIs. 

Countries With The Most Complicated Taxes: Takeaways

• The rest of the world remains incredulous at America’s antiquated tax system.
• Except for economies like Japan, most of the highest tax countries are in Europe.
• Larger economies tend to have higher taxes and corresponding levels of bureaucracy.
• Since they cannot compete industrially, smaller nations tend to have lower taxes and be more business-friendly.
• Attempts to reform taxation bring political risk and are often fraught with technical and administrative problems 
• It is entirely possible and completely legal to pay zero income tax by moving to the right jurisdiction.

Countries With The Most Complicated Taxes: Conclusion

There is a reason why so many wealthy individuals are moving to places like Singapore and Dubai. 

In a single word – taxes. 

As you’ve seen, it’s not even about just the money, it’s about the bewildering complexity and the convoluted hoops some countries insist on making you jump through to be compliant. 

Some countries, it seems, want to make compliance as difficult as possible and make you pay through the nose for the privilege. 

Even countries which recognise the need for reform are reluctant to do so, as it’s considered politically risky. Better to kick that can down the road and let the opposition deal with it. 

Those governments that do forge ahead are seldom prepared for the outcome, like the botched Polish Deal, or Greece’s buggy software or the equally befuddling system in Mexico. 

The result is that businesses, small and large, are being unnecessarily penalised. 

It doesn’t have to be this way. In fact, many wealthy individuals and entrepreneurs have already decided that enough is enough and moved to more competitive countries instead. 

Big government is slowly waking up to that fact, and so, if enough people migrate, they might finally realise the pressing need for serious tax reform. But, since we’re talking about bureaucracies, that could take an eternity. 

In the meantime, however, you can reduce your taxes considerably by moving to a jurisdiction with little or no personal income tax whatsoever. Talk to us today and discover how. 

Countries With The Most Complicated Taxes: FAQs

Which region has the highest taxes? 

The highest levels of personal income tax are concentrated in central Europe and Scandinavia.

Do all European countries have high taxes?

No, Europe is also home to several low-tax countries like Hungary, Bulgaria, Estonia, Andorra, Malta, Gibraltar and Switzerland.

Monaco, meanwhile, which has zero personal income tax for residents. 

Which countries have the highest taxes?

The majority of high taxes are in the EU, and the list includes Germany, Austria, the Netherlands, Belgium, France, Spain, Denmark, and the Republic of Ireland.

The US, Canada and Britain are also considered high tax countries, as are South Korea and Japan. 

Which countries have no income tax? 

While some countries tax their citizens up to half their income in taxes, other countries have no income tax whatsoever. The list of no-income tax countries includes:

• United Arab Emirates
• Monaco
• British Virgin Islands
• Cayman Islands
• St Kitts and Nevis
• Antigua and Barbuda

The UAE is particularly popular with our clients, as are the last two countries on our list.

Saint Kitts and Nevis was the first county in the world to offer citizenship by investment, alongside tax-free living. Antigua and Barbuda soon followed suit. 

What does territorial taxation mean?

Territorial taxation is a type of tax system where a country opts to exclude foreign income from its tax base. In other words, territorial tax countries only charge taxes on locally-sourced income, making them hugely beneficial for tax planning purposes.