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Singapore: taxes for expats and how to become a tax resident

In the context of political and economic instability in Europe, many of our clients ask us for tax-friendly destinations outside the European Union, and Singapore is one of the favorites for businessmen and young entrepreneurs. 

This ultra-modern city-state boasts a high standard of living, an unrivaled healthcare and education system, and of course a solvent banking system that makes it one of the largest financial centers in Asia. 

Even if you don’t want to live in Singapore all year round, it is a good place to obtain a second residency or establish your family office or holding for doing business. 

Why do people move to Singapore?

Despite not being a zero-tax country, Singapore has taxes below the OECD average and legislation that is very attractive to foreign investment.

Singapore’s considerable wealth has been built on its status as a stable, open, legally secure, technologically advanced, and low-tax economy.

For example, inheritances, dividends, investment income, and capital gains are not taxed.

But let’s look at its tax system in more detail. 

What taxes are paid in Singapore?

In Singapore, taxes are paid on:

  • Corporations
  • Personal Income Tax
  • Non-Resident Income
  • Real Estate

In addition, no tax is payable on:

  • Inheritance
  • Donations
  • Wealth
  • Dividends
  • Capital gains

However, there has been a recent discussion of a tax increase for high-net-worth individuals with income in Singapore and assets in Singapore.

Personal Income Tax

Singapore’s personal income tax is very attractive, much more so than corporate income tax.

As a result, the country has attracted many entrepreneurial expatriates and millionaires who choose to shift their individual taxation there either to manage their private banking portfolio or to run their international businesses.

Because, like many other countries in Asia, Singapore is a territorially taxed country: tax is only payable on income earned or generated in Singapore, so foreign-source income is not taxed.

As there is no international tax transparency or CFC rules, it is, therefore, possible to live with a very low tax rate for offshore holding companies.

On the other hand, income earned in Singapore is taxed at progressive rates of 0% to 22%, the highest rate being for income earned in excess of 214,880 euros. 

Corporate Income Tax

The corporate tax rate in Singapore is 17%, but there are also a number of exemptions: 

  • The first EUR 67,150 you earn is exempt from tax for the first three years after incorporating your company in Singapore. 
  • Income earned above EUR 67,150, but below EUR 201,450, is taxed at half the normal rate for those first three years. 
  • No withholding tax is levied on dividends distributed abroad. 
  • Many successful entrepreneurs set up their holdings in Singapore not only because of the taxes but also because of the access to large wealth managers and the solvent financial system. 

How to obtain your tax residency in Singapore?

A foreigner changing their residency to Singapore is considered a Singapore tax resident if one of two conditions is met:

  • In the calendar year preceding the year of his tax residency, he was physically present in Singapore or was employed in Singapore (other than as a director of a company) for 183 days or more.
  • You are ordinarily a resident of Singapore.

To the Singapore tax authorities (IRAS), an individual who is not an employee is ordinarily resident in Singapore if he meets a qualitative test: 

  • Be an investor in Singapore with an SPR (Singapore permanent residence). 
  • Be a permanent resident in Singapore. And in the case of out-of-country travel, the absence must be temporary and fully understandable to IRAS. 

How can I live in Singapore as an expatriate?

Singapore Permanent Residency (SPR) will allow you to live in this futuristic city-state and benefit from its taxes.

It can take a couple of years to obtain this permanent residence. There are several ways to obtain it, these ways will consist on:

Singapore EntrePass (or Entrepreneur Residency)

Singapore EntrePass is more difficult to obtain now than it used to be in the past. The EntrePass program is a business visa made for international entrepreneurs, innovators, and experienced investors. It is not a program for young entrepreneurs.

To be eligible for this residency, you have to pass an acceptance by the Singaporean authority and incorporate a company in Singapore.

Singapore Employment Pass (or Business Residency)

The Singapore Employment Pass allows you to work in Singapore. To qualify, you must earn at least $4,500 per month working in a managerial, executive, or specialist position in Singapore.

If you wish, you can set up your own company in Singapore and hire yourself as a director. However, it is not cheap to set up a company in Singapore. Singapore companies have to pay a tax of up to 17% on their worldwide revenue.

This permit lasts for two years and can be renewed for a further three years.

Investment Residency

Another option is the Singapore Global Investor Programme. This program allows you to obtain permanent residency in Singapore by investing at least EUR 1,678,750 in a start-up company, an existing company, or an approved fund (listed on the best banks in the world and in a strong financial system).

How to take the first step?

Relocating your residency and part of your wealth to Singapore can be a great option to protect and diversify your assets in uncertain times.

Relocate&Save has helped a considerable number of entrepreneurs and high-net-worth individuals to obtain Singapore residency in recent years. Our presence and contacts in Singapore make us an ideal partner for this arduous task.

So, if you have any questions and would like us to help you with the process, please write to us at [email protected] or via the contact form.

Picture of Andreu Capmajó
Andreu Capmajó

Tax director

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