Countries That Don't Tax Foreign Income: The 2026 Territorial List

Most countries tax their residents on worldwide income. Move to France, Spain or Canada and your dividends from London, your rent from Berlin and your consulting fees from New York all go on the local return, with credits for tax paid elsewhere.

A smaller group of countries does something different. They tax income that arises inside their borders and leave income from abroad alone, fully or in large part. That is what "territorial taxation" means, and it is the reason these countries keep appearing on relocation shortlists.

The difficulty is that "territorial" has become a marketing word. Some countries are territorial for every kind of income. Some are territorial only for individuals, not companies. Some exempt foreign income only for a few years. Some tax it the moment you bring it into the country. And several have changed the rules in the last two years. Sorted by what the law actually says in September 2026, taken from the tax authorities' own texts, the picture is more varied than the lists suggest. For a longer German-language ranking, steueratlas.info, the network's reference source for country tax regimes, keeps a list of territorial tax countries.

Three questions before any list

Before looking at countries, it helps to ask the same three questions of each one.

Which foreign income? Wages for work done abroad, business profits, dividends, interest, rent and capital gains can all be treated differently. A country can be territorial for salaries and still tax foreign dividends.

For whom, and for how long? Some rules apply to every resident. Others apply to foreigners only, or only during the first years of residence.

Does bringing the money in change anything? In a pure territorial system, it does not. In a remittance system, foreign income is taxed when you transfer it into the country, which is a very different thing.

Territorial in the full sense

Hong Kong

Hong Kong's tax charge is built on source. The Inland Revenue Department's guide to profits tax states that businesses carrying on a trade in Hong Kong are chargeable on profits "arising in or derived from Hong Kong", that there is no distinction between residents and non-residents, and that "a resident may therefore derive profits from abroad without suffering tax". The practical question in Hong Kong is not residence but where the profits arise, and that is a question of facts about where the business is really carried on.

There is one carve-out for groups. Since 1 January 2023, Hong Kong's foreign-sourced income exemption regime taxes certain foreign dividends, interest, IP income and disposal gains that are received in Hong Kong by a member of a multinational group, unless the entity meets exceptions such as the economic substance requirement. It is aimed at group companies, not at individuals living on their own foreign investments.

Georgia

Georgia's Tax Code defines a resident's gross income broadly, as income "from a source located in and outside Georgia" (Article 100). The exemption comes in Article 82: among the types of income of natural persons exempt from income tax is "income (including gain) received by a resident natural person, which does not belong to Georgian source income" (Tax Code of Georgia, consolidated English text). For individuals, that makes Georgia territorial across income types, including gains. Companies are taxed under a different regime. The Brief's Georgia assessment covers residence and daily life.

Panama

Panama is the country most people have in mind when they say territorial. The 2026 change to its foreign-income rules is aimed elsewhere. In May 2026 the National Assembly approved the economic substance law, and the Ministry of Economy and Finance describes it as applying to "entidades de grupos multinacionales domiciliadas en Panamá" that obtain certain passive income from abroad (MEF announcement). It was enacted as Law 526 of 2026. Entities that cannot show economic substance in Panama pay a 15 percent final rate on that income, effective from fiscal period 2027. Individuals are not within that scope. The Brief explained the bill behind it in Panama Bill 641, and steueratlas.info holds the Panama country file.

Costa Rica

Costa Rica's income tax law of 1988 (Ley 7092) is territorial. In 2023, to get off the EU list of non-cooperative jurisdictions, Costa Rica passed Ley 10.381 (published in La Gaceta No. 180 on 2 October 2023). According to the Finance Ministry's own implementation presentation, it brings foreign-source passive income (dividends, interest, royalties, capital gains and property income) into the tax net when it is obtained by an entity belonging to a multinational group that does not qualify under the substance rules. A resident individual receiving foreign passive income directly is outside that scope under the law as it stands.

That may not last. On 22 September 2026 the Finance Ministry filed bill No. 25.796 in the Legislative Assembly. According to the ministry's announcement, it would bring foreign interest, dividends, royalties, rents and capital gains obtained by residents of Costa Rica into the tax system, and it would apply to individuals, companies, trusts, investment funds and other resident structures, even where they carry on no business. The bill sets a general rate of 15 percent, with a credit for equivalent tax paid or withheld abroad.

It is a bill, not law. It still has to pass the Legislative Assembly, and its final wording may change on the way. But it makes Costa Rica the territorial country to re-check most often: anyone relying on its territorial treatment of foreign investment income should follow the bill's progress before making a decision that depends on it.

Territorial for most income, with an exception

Singapore

Singapore is often called territorial, and for individuals the description is close. The tax authority's page on income received from overseas says that, generally, overseas income received in Singapore, including income paid into a Singapore bank account, is not taxable. The exceptions matter: overseas income is taxable if received through a partnership in Singapore, if overseas employment is incidental to a Singapore job, if an overseas business is incidental to a Singapore trade, if you work in Singapore for a foreign employer, or if you are employed overseas on behalf of the Singapore Government. The Singapore country page covers the rest.

Uruguay

Uruguay answers the question "does Uruguay tax foreign income?" with a qualified yes, and 2026 made the qualification more important. Article 6 of the income tax title (T.O. 2023, Título 7) taxes Uruguayan-source income and, in addition, foreign capital income and capital gains. The tax authority summarises the 2026 change: since 1 January 2026, investment income and rental income obtained abroad, and gains on financial assets and property abroad, are all taxed. The general rate on that foreign capital income is 12 percent. Foreign wages and foreign business income are not on the list, so Uruguay remains territorial for active income.

For new residents there is a way to defer the charge. Under article 24-Bis, someone who becomes tax resident from 1 January 2026 can opt to be taxed as a non-resident on that foreign capital income for the year of arrival and the ten following years, if they meet one of three conditions: a real estate investment above 12.5 million indexed units (UI), investment of at least 625,000 UI a year in qualifying productive or innovation funds, or physical presence of more than 183 days in each tax year. In every case the person must not have been tax resident in Uruguay in the two preceding tax years. After that period, a reduced rate of half the normal rate can apply for five more years under further conditions. The Brief's Uruguay tax reform piece walks through the transition, and steueratlas.info keeps the full Uruguay file.

Territorial for a while

Chile

Chile taxes residents on worldwide income. The exception is for newcomers. The tax service's own guidance states that a foreigner with domicile or residence in Chile is, during the first three years, taxed only on income from Chilean sources. After that, the foreigner has the same obligations as any other resident, which means worldwide taxation.

So the honest answer to "does Chile tax foreign income?" is: not for the first three years if you are a foreigner, yes after that. That makes Chile a very different proposition from Panama or Georgia. A three-year window can be valuable for a planned project or a sale, but it is not a long-term home for foreign investment income. The Chile country page has the wider picture.

Remittance, not territorial

Thailand

Thailand is regularly listed as territorial. It is not. The Revenue Department's personal income tax overview states that a resident, meaning a person in Thailand for more than 180 days in a calendar year, "is liable to pay tax on income from sources in Thailand as well as on the portion of income from foreign sources that is brought into Thailand". A non-resident is taxed only on Thai-source income.

That is a remittance basis. Foreign income you leave abroad is outside Thai tax, but foreign income you transfer to Thailand to live on is inside it. Anyone planning to live on foreign income in Thailand therefore needs to know the rules in force at the moment the money moves, not the rules in force when it was earned.

What no territorial country can do for you

A territorial residence solves one problem: the tax your new country charges on your foreign income. It does not solve three others.

Your citizenship may follow you. The United States taxes its citizens regardless of where they live. The IRS says so plainly: US citizens and resident aliens abroad are "subject to tax on worldwide income from all sources" (IRS, U.S. citizens and resident aliens abroad). A move to Panama or Georgia does not change that for an American.

Your old country may not let go. If you keep a home, a family or a business in the country you left, its tax authority may still treat you as resident. Territorial treatment in the new country is worthless if you are still taxed on worldwide income in the old one. The way out is evidence, which is the subject of the paper trail that saves you.

The source of the income may tax it anyway. Territorial countries do not tax foreign income. The country where the income arises often does, through withholding tax on dividends and interest or tax on local rent. Without a tax treaty, some of that withholding cannot be reduced.

The 2026 territorial list at a glance

The pattern across the list is clear enough. Pure territorial treatment survives mainly for active income and for individuals, while governments increasingly reach for passive income held through companies (Panama, Costa Rica, Hong Kong) or held directly (Uruguay, and in Costa Rica's new bill). If your wealth is mostly portfolio income, the question to ask of any "territorial" country is not whether it is territorial, but what it does with dividends and gains, for whom, and for how long.

Work with Sebastian

If you are comparing territorial countries and want to know how your own mix of salary, business income, dividends and gains would be treated in each, and what your current country will still claim, book a consultation.