Taxation in some European countries on domestic and worldwide income differs significantly. Tax on worldwide income may be minimal or zero. There may be no taxes on gifts, dividends, rental income, etc. There are significant tax benefits for businesses here in the form of refunds of the lion’s share of taxes paid. Of course, such a system of taxation is not valid everywhere in Europe, and countries which use it are called tax havens. These now include Cyprus and Malta. Residents here pay taxes only on income that they brought into the country or received on its territory.

If a tax resident receives income within Cyprus or Malta, he has to pay quite high taxes at domestic rates. For example, in Cyprus, the income tax on income within the country (or on funds introduced into its territory) is 20-35% depending on the income.

If, however, the resident received income outside Cyprus or Malta, it will not be taxed if this foreign income is not introduced into their territory.