Five of the best tax havens in the world

The casino in MonacoYou might wince at the amount you pay in tax each year. But imagine how much multi-millionaires have to pay, even with the government reducing the top income tax band from 50p to 45p in the pound.

Except of course, that the super rich can avoid huge tax bills by taking up residency in a "tax haven" such as Monaco or Jersey. Here, we look at five of their favourites.

What is a tax haven?
A tax haven is a state or territory where certain taxes are levied at a low rate or not at all.

Nowadays, most have similar tax advantages to offer to high-net-worth individuals, while there are only generally modest differences in the durations individuals are allowed to stay in each location per year, or the amount of money they have to bring to qualify for residency.

It is estimated that at least a quarter of the world's wealth is sheltered from tax in havens of this kind.

Residents of Monaco, situated on the Mediterranean coast of France, generally pay 0% income tax.

You have to be very rich to afford to live there, though, with even a fairly modest two-bedroom apartment coming with a price tag of about €2 million (£1.7 million).

In Andorra, income tax is usually 0%. However, residents are required to make social security contributions of up to 9%.

The mountainous state is nevertheless likely to appeal to rich individuals who enjoy skiing and can pick up a three-bedroom ski chalet for about £2.7 million.

Income tax rates in Switzerland range from 0% to 13%, depending on where in the country you live and how much time you spend there per year.

In 2010, Switzerland had the highest wealth per adult (financial and non-financial assets) of any country in the world, so no wonder a three to four bedroom house in Geneva will set you back about £2 million.

For those who take up residency on the Channel Islands of Jersey or Guernsey, income tax is charged at a flat rate of 20%, while few other taxes apply.

The advantage of these islands for wealthy Britons is their proximity to the UK. It is also cheaper to buy a property on one of these islands than in most of the other tax havens around the world, with a small, three-bedroom house costing in the region of £300,000 to £500,000.

The Bahamas
With their glorious beaches, the islands of the Bahamas are bound to appeal to many of the world's high rollers - especially as income tax is at 0%.

However, they are particularly popular with rich Americans, attracted by their proximity to Florida.

When it comes to property prices, the ranges is huge. But you can pick up a three to four bedroom house for about $1 million (£630,000).

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Five of the best tax havens in the world

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