When deciding on countries to retire tax free with a UK Stocks and Shares ISA can be a great way to maximise your investment returns. While ISAs are tax free in the UK, most other countries do not recognise them as tax free, meaning you could face dividend or capital gains taxes in your new country of residence. I’ve compiled a list of the best countries to retire tax free.
If you plan to retire and withdraw from your ISA, choosing the right country can significantly impact your after-tax income. In this article, I will rank and reviews the best countries for tax-efficient ISA withdrawals, helping you find the ideal location to retire and enjoy your investments.
(This isn’t financial advice. Tax laws change—always consult a cross-border tax specialist.)
Key Factors to Consider When Choosing a Retirement Destination for ISA Withdrawals
UK ISAs are tax-free in Britain, but other countries may tax dividends, capital gains, or even your ISA’s existence. The key is picking a nation that either:
When ranking these countries, I have considered:
- Tax on foreign dividends – Does the country tax ISA dividend withdrawals?
- Tax on capital gains – Will you be taxed if you sell ISA investments?
- Double Taxation Agreements (DTAs) – Does the country have a favourable tax treaty with the UK?
- Ease of financial access – Are there any restrictions on receiving UK funds?
- Cost of living and lifestyle – Is it a good place to retire overall?
Why Your ISA Works Better Abroad (If You Choose Wisely)
- Doesn’t tax foreign investment income (hello, Panama!).
- Has a “territorial” tax system (they only tax what you earn locally).
- Offers special retiree programs with great tax breaks.
Top 5 Countries to Retire Tax for Low Tax with a UK ISA
1. United Arab Emirates (UAE) – Best for Zero Tax
✅ No personal income tax – ISA withdrawals are 100% tax-free
✅ No dividend tax, capital gains tax, or wealth tax
✅ No need to delay remitting funds
❌ Cost of living can be high in Dubai and Abu Dhabi
Catch: High living costs in Dubai/Abu Dhabi (≈£3.5k/month).
If you want a completely tax-free environment for retirement (or prior), the UAE is unbeatable. The country does not tax personal income, meaning your ISA dividends and withdrawals remain tax-free. It also has no wealth tax or capital gains tax, making it ideal for retirees who want to sell ISA investments without tax consequences.
2. Portugal (Under the ITS Scheme) – 10 Years of Tax Benefits
✅ No tax on foreign dividends The Investment Tax Scheme (ITS) exempts most foreign income, including ISA dividends, for 10 years.
✅ No capital gains tax on foreign stocks
✅ Low cost of living compared to Western Europe
❌ NHR was phased out in 2024 but the ITS scheme is now in place
Catch: After 10 years, capital gains may be taxed at 28% unless reinvested.
Portugal’s Non-Habitual Resident (NHR) scheme has historically been one of the best options for tax-efficient retirement. Under this scheme, most foreign income—including ISA dividends—WAS tax free for 10 years. However, changes in 2024 may affect new applicants.
There is now a new Tax scheme in effect since 2024 onwards as of the time of writing.
- Tax Benefits of the ITS scheme: The Investment Tax Scheme (ITS) exempts most foreign income, including ISA dividends, for 10 years.
- ISA Withdrawals: Tax-free if structured properly.
- Catch: After 10 years, capital gains may be taxed at 28% unless reinvested
Portugal: ITS vs. NHR (Previous Scheme)
| Feature | Investment Tax Scheme (ITS) | Non-Habitual Resident (NHR) |
|---|---|---|
| Tax-free foreign income | Yes, for 10 years | Yes, for 10 years |
| Capital gains tax | 28% after 10 years unless reinvested | 0% on foreign capital gains |
| Availability | New applicants post-2024 | Phasing out from 2024 |
| Residency requirement | Yes, must live in Portugal (184 days) | Yes, must live in Portugal |
3. Malta – Tax-Free if Not Remitted Immediately
✅ No tax on foreign dividends unless remitted: Foreign income is only taxed if remitted to Malta in the same year.
✅ No capital gains tax on overseas investments
✅ Warm climate, English-speaking environment
❌ Dividends are taxed if transferred to a Maltese account
Malta offers a remittance based tax system, meaning your ISA dividends are tax-free if you don’t bring them into the country in the same year. This makes it a strong option if you use an offshore account and stagger withdrawals strategically.
More Info: Malta Residency Guide
4. Cyprus – Zero Tax on Foreign Dividends for Non-Doms
✅ Tax deal: Non-doms pay 0% tax on dividends and 12% on capital gains after €19,500 exempt for the first 17 years under non-domiciled status.
✅ No wealth tax, low cost of living
✅ ISA withdrawals: Structure as capital gains to slash taxes.
✅ No tax on capital gains (except real estate)
❌ ISA withdrawals may still count as taxable remittances
Cyprus offers non-domiciled tax status, which exempts foreign dividends from tax for 17 years. However, ISA withdrawals could still be taxable if transferred directly into Cyprus. Using an offshore account can help reduce tax liability.
5. Hong Kong & Singapore – No Dividend or Capital Gains Tax
✅ No tax on foreign dividends or capital gains
✅ Strong financial infrastructure for managing UK investments
❌ Higher cost of living than other options
Both Hong Kong and Singapore offer tax-free ISA withdrawals since they don’t tax foreign dividends or capital gains. However, the cost of living can be higher than in places like Portugal.
Bonus Countries
Panama: Zero Tax on Foreign Investments
Tax deal: Panama only taxes income earned within Panama. Your ISA? Untouched.
- Pensionado visa: Requires proof of £900/month income (ISA withdrawals count!).
- Cost of living: £1,500/month in Panama City, including ocean-view rentals.
Best for: Beach lovers who want simplicity in retirement (and year-round summer).
Panama Pensionado visa.
Malta: The Mediterranean Tax Haven
Tax deal: Malta taxes only income brought into the country. Leave your ISA gains offshore? Tax-free.
- Residency: Rent or buy property (minimum €10k/year rent or €275k purchase).
- ISA withdrawals: Keep them in a UK account—no Maltese tax.
- Perk: English-speaking, top-tier healthcare.
Best for: Retirees who want EU stability without the cold.
Malta residency guide.
Malaysia: Asia’s Budget Paradise
Tax deal: Under the MM2H visa, foreign income (like ISA withdrawals) is tax-free if not remitted to Malaysia in the same year.
- Cost of living: £1,800/month in Penang for a luxury apartment, meals out, and maid service.
- Catch: Must renew your visa every 5-15 years.
Best for: Adventurous retirees craving tropical vibes on a budget.
MM2H program details.
Worst Countries for ISA Withdrawals (High Taxes)
Some countries have high foreign dividend taxes, making them less favorable for ISA withdrawals:
- USA – ISA is not tax-free, dividends taxed at up to 37%
- France, Spain, Germany – Dividends taxed at up to 30% (Spain, taxes worldwide income (ISA dividends taxed at 19-28%).
- Canada – Dividends taxed at 15%-25%
- Australia – Dividends taxed at up to 47%
If you plan to move to any of these countries, consider selling your ISA investments before relocating or restructuring your investments to reduce tax exposure.
Best Strategies to Minimise Tax on ISA Withdrawals Abroad
- Use an Offshore Account – Keeping ISA dividends in an offshore account can help avoid taxation in remittance-based countries like Malta, and Cyprus.
- Leverage Double Tax Agreements (DTAs) – Countries like Portugal and Malta have favorable DTAs with the UK that can reduce tax liability.
- Consider Selling Before Moving – If you move to a high-tax country, selling your ISA investments before relocating can lock in tax-free gains under UK rules.
Next steps:
- Consult a cross-border tax advisor (try Sovereign Group).
- Test-drive your target country for 3 months.
- Keep your ISA provider updated on your tax residency.
Conclusion: Which Countries to Retire Tax Free for ISA Withdrawals?
| Rank | Country | Dividend Tax | Capital Gains Tax | Best For |
|---|---|---|---|---|
| 1 | UAE | 0% | 0% | 100% tax-free income |
| 2 | Portugal (ITS) | 0% (for 10 years) | 0% (for 10 years, then 28%) | 10 years of tax-free withdrawals in Europe |
| 3 | Malta | 0% (if not remitted) | 0% | Strategic tax planning |
| 4 | Cyprus | 0% (for non-doms) | 0% | 17 years of tax benefits |
| 5 | Hong Kong/Singapore | 0% | 0% | Strong financial hubs |
The best countries to retire tax free depends on your personal needs—if you want zero tax without restrictions, the UAE is best. If you prefer Europe, Portugal (ITS) or Malta are great options.
If you’re planning your retirement for somewhere abroad, remember to take the right precautions and consult a tax advisor to structure your withdrawals efficiently.
Check out the other articles I wrote on tax
Disclaimer: this is not tax advice, please seek a professional when making important investing decisions
