Tax Incentives for Expatriates and Digital Nomads in Cabo Verde
Cabo Verde, an archipelago nation off the coast of West Africa, has emerged as a promising destination for expatriates and digital nomads seeking a favorable tax environment. The government has implemented a range of tax breaks and incentives specifically tailored to attract skilled professionals and remote workers to the country.
Eligibility Criteria
To qualify for these tax breaks, individuals must meet the following criteria:
- Expatriates: Expatriates are defined as individuals who are not citizens of Cabo Verde but have established residency in the country. Residency is typically granted to those who have lived in Cabo Verde for at least 183 days in a calendar year.
- Digital Nomads: Digital nomads are individuals who work remotely for clients outside of Cabo Verde. They must demonstrate that their income is primarily derived from foreign sources and that they have a stable internet connection to perform their work.
Types of Tax Breaks
Expatriates and digital nomads in Cabo Verde can benefit from the following tax breaks:
- Tax Exemption on Foreign Income: Foreign-sourced income earned by expatriates and digital nomads is exempt from personal income tax in Cabo Verde. This exemption applies to all types of foreign income, including salaries, dividends, and rental income.
- Reduced Tax Rates on Local Income: Expatriates and digital nomads who earn income from local sources, such as employment or business activities, are subject to a reduced tax rate of 15%. This rate is significantly lower than the standard personal income tax rate of 25%.
- Tax Deductions for Housing and Education: Expatriates and digital nomads can deduct certain expenses related to housing and education from their taxable income. These deductions include rent, mortgage payments, and tuition fees for children attending schools in Cabo Verde.
Application Process
To claim these tax breaks, expatriates and digital nomads must apply to the Cabo Verdean tax authorities. The application process involves submitting the following documents:
- Proof of residency (e.g., residence permit)
- Proof of foreign income (e.g., bank statements, employment contracts)
- Proof of local income (e.g., employment contracts, business registration)
- Documentation supporting housing and education expenses
Legal Framework
The tax breaks for expatriates and digital nomads in Cabo Verde are established under the following legal instruments:
- Tax Code of Cabo Verde (Law No. 76/VIII/2021): This law outlines the general tax framework, including the tax exemptions and reduced rates for expatriates and digital nomads.
- Decree-Law No. 11/2022: This decree-law provides specific regulations for the application of tax breaks for expatriates and digital nomads.
Rationale and Objectives
The Cabo Verdean government has implemented these tax incentives to attract skilled professionals and remote workers to the country. By offering favorable tax treatment, the government aims to:
- Promote economic growth by attracting foreign investment and expertise
- Create a more competitive business environment for local companies
- Enhance the country's reputation as a hub for international talent and innovation
Conclusion
Cabo Verde offers a compelling tax environment for expatriates and digital nomads. The country's tax breaks, combined with its beautiful beaches, vibrant culture, and stable political climate, make it an attractive destination for those seeking a rewarding and tax-efficient lifestyle.
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