The nerd glossary.

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183-day rule 183-Tage-Regel Residency

The famous rule of thumb that you become tax resident after 183 days somewhere – and the most misunderstood number in this glossary. Many countries use it as one test among several, and treaties use it mainly for employment income; a home or your centre of vital interests can make you resident long before day 183. Count your days with our day tracker anyway.See also: Habitual abode, Centre of vital interests, Tie-breaker rule

60-day rule (Cyprus) Residency

Cyprus lets you become tax resident with only 60 days a year if you tick every box: no more than 183 days in any other single country, no tax residency elsewhere, a permanent home in Cyprus and a business, job or directorship there. Built for people who move around a lot. Details on our Cyprus page.See also: 183-day rule, Non-dom, Tax residency

A

A1 certificate A1-Bescheinigung Compliance

An EU form confirming which country’s social security system covers you when you work in more than one EU/EEA country or Switzerland. Without it, two countries may ask for contributions on the same income.See also: Social security agreement

Abmeldung (deregistration) Abmeldung Residency

Deregistering your address with the German registration office when you move abroad, due within two weeks of moving out. Essential paperwork, but not a magic tax switch: keep a home available in Germany and you can stay fully tax resident anyway. Step by step in Leaving Germany.See also: Wohnsitz, Exit tax, Tax residency

Advance lump sum on funds Vorabpauschale Investing

German tax on a notional yearly return of accumulating investment funds, charged each January, so reinvesting ETFs don’t defer tax completely. What you pay now is credited when you sell.See also: Flat tax on capital income (Germany), Capital gains tax

Anti-money laundering (AML) Geldwäscheprävention Banking

Rules that make banks, company formation agents, lawyers and others verify their clients and report suspicious transactions. The EU is centralizing supervision in its new AML Authority (AMLA), with a single rulebook applying from July 2027. AML is why your bank asks so many questions.See also: Know your customer (KYC), Source of funds, Politically exposed person (PEP)

Anti-Tax Avoidance Directive (ATAD) Anti-Steuervermeidungsrichtlinie Compliance

EU directive (2016/1164) that forces every member state to adopt minimum anti-abuse rules: CFC rules, an interest deduction cap, exit taxation, a general anti-abuse rule and rules on hybrid mismatches. It’s why exit taxes and CFC rules look increasingly alike across the EU.See also: Controlled foreign company (CFC) rules, Exit tax, General anti-abuse rule (GAAR)

Apostille Compliance

A certificate under the 1961 Hague Convention that makes a public document, such as a birth certificate or certificate of incorporation, valid in other member countries without further legalization. You’ll collect a few when you set up abroad.See also: Certified copy, Certificate of good standing

Arm’s length principle Fremdvergleichsgrundsatz Tax

Deals between related parties – you and your company, or two group companies – must be priced as if strangers had negotiated them. If not, the tax office adjusts the price, and the profit, for you.See also: Transfer pricing, Hidden profit distribution

Articles of association Satzung / Gesellschaftsvertrag Company

A company’s rulebook: purpose, share classes, how directors are appointed and how decisions are made. Filed at formation; banks often want a certified copy.See also: Share capital, Certified copy

Asset protection Vermögensschutz Investing

Legally structuring wealth so it’s shielded from future creditors, lawsuits or political risk, e.g. with companies, foundations, trusts or diversification across countries. Done early and honestly, it’s prudent; done after a claim arises, courts can unwind it. More on our protect your wealth page.See also: Foundation, Trust, Flag theory

Automatic exchange of information (AEOI) Automatischer Informationsaustausch Compliance

The umbrella term for systems in which tax authorities swap data without being asked: CRS for financial accounts, FATCA for US persons, the DAC directives within the EU. Short version: assume your home tax office knows about your foreign account.See also: Common Reporting Standard (CRS), FATCA, DAC8

B

Base erosion and profit shifting (BEPS) Compliance

The OECD/G20 project (15 actions, final reports in 2015) against multinationals shifting profits to low-tax places. It brought country-by-country reporting, stricter transfer pricing, the nexus approach for IP boxes, the MLI and, later, Pillar Two.See also: Pillar Two, Multilateral Instrument (MLI), Transfer pricing

Beckham law Residency

Spain’s special regime for people moving there: for the year of arrival plus five years you’re taxed like a non-resident, at 24% flat on Spanish employment and qualifying business income up to €600,000 (47% above), with most foreign income left out – as of 2026. You must not have been Spanish resident in the previous five years; since 2023 remote workers and certain entrepreneurs qualify too.See also: IFICI (Portugal), Flat tax for new residents (Italy), Lump-sum taxation

Beneficial ownership information (BOI) report Compliance

A US filing under the Corporate Transparency Act that names the people who own and control a company. Since a FinCEN rule in March 2025, companies formed in the US and US persons are exempt; only foreign companies registered to do business in the US still file (as of 2026). The rules have flip-flopped before, so check the current state.See also: Form 5472, Ultimate beneficial owner (UBO), Limited liability company (LLC)

Board minutes Company

Written records of directors’ decisions. Boring, but key evidence of where a company is really managed: minutes saying “meeting held in Limassol” won’t help if every decision was actually made on a laptop in Munich.See also: Place of effective management, Substance

Branch Zweigniederlassung Company

A registered outpost of a foreign company in another country, not a separate legal entity. Its profits are usually taxed where the branch is, as a permanent establishment.See also: Permanent establishment, Subsidiary

C

C corporation Company

The standard US corporation: taxed at 21% federal corporate tax (as of 2026) plus any state tax, with dividends taxed again at shareholder level. The default for venture-backed startups, rarely the right choice for a solo founder abroad.See also: Limited liability company (LLC), Corporate income tax (CIT)

Cantillon effect Investing

Named after 18th-century economist Richard Cantillon: newly created money doesn’t reach everyone at once. Those closest to the source – banks, governments, asset owners – spend it before prices rise, while wage earners get it last. A nerd favourite for explaining why asset prices and inequality tend to rise together. More in our Cantillon article.See also: Asset protection, Wealth tax

Capital gains tax Steuer auf Veräußerungsgewinne Investing

Tax on the profit from selling assets such as shares, property or crypto. Rates, exemptions and holding periods vary wildly: some countries tax gains like income, some use a flat rate, and some leave private gains alone entirely.See also: Holding period, Exit tax, Wealth tax

Central management and control Company

The common-law test (used in the UK, Malta, Cyprus and elsewhere) for where a company is resident: where its board actually makes the strategic decisions. A close cousin of the place of effective management.See also: Place of effective management, Board minutes, Substance

Centre of vital interests Mittelpunkt der Lebensinteressen Residency

The country your personal and economic ties are closest to: family, home, work, business, social life, assets. It’s the second step of the treaty tie-breaker – and the reason a spouse and kids staying behind can keep you resident where you thought you’d left.See also: Tie-breaker rule, Permanent home, Habitual abode

Certificate of good standing Company

A document from the company register confirming that a company exists and is up to date with its filings and fees. Banks and business partners often ask for a recent one.See also: Apostille, Registered agent

Certified copy Beglaubigte Kopie Banking

A copy of a document, usually a passport or proof of address, confirmed as true by a lawyer, notary or other authorized person. Banks and corporate service providers love them, sometimes with an apostille on top.See also: Apostille, Know your customer (KYC), Proof of address

Citizenship by descent Staatsangehörigkeit durch Abstammung Citizenship

Claiming a nationality through parents, grandparents or sometimes earlier ancestors. Ireland, Italy, Poland and Hungary are classic examples, though several countries have tightened the rules – Italy did so in 2025. Often the cheapest second passport there is: you pay mainly in archive research.See also: Dual citizenship, Naturalisation

Citizenship by investment (CBI) Staatsbürgerschaft durch Investition Citizenship

A passport in exchange for a donation or investment, offered mainly by Caribbean and a few Pacific states. Under growing EU and US pressure, and the EU’s top court ruled Malta’s scheme incompatible with EU law in 2025. Not to be confused with a golden visa, which gives residence, not citizenship.See also: Golden visa, Dual citizenship

Citizenship-based taxation Citizenship

Taxing citizens on their worldwide income wherever they live. The United States is the prominent example: move to Dubai as an American and you still file with the IRS. Almost everyone else taxes by residence instead.See also: Worldwide income, Expatriation tax (US), FATCA

Common Reporting Standard (CRS) Gemeinsamer Meldestandard Banking

The OECD standard under which banks, brokers and some insurers report accounts of foreign tax residents to their local tax authority, which forwards the data to the holder’s country of residence. More than 100 jurisdictions take part (as of 2026); the US doesn’t, it has FATCA. For tax purposes, bank secrecy is over.See also: FATCA, Automatic exchange of information (AEOI), Tax identification number (TIN)

Company service provider (CSP) Company

A licensed firm that forms and administers companies: registered office, filings, sometimes directors, accounting and bank introductions. The kind of partner we work with in most jurisdictions – see partners.See also: Registered agent, Nominee director, Registered office

Controlled foreign company (CFC) rules Hinzurechnungsbesteuerung Tax

Rules that let your home country tax the passive, low-taxed income of a foreign company you control as if you had earned it yourself. Germany applies them to passive income taxed below 15% (as of 2026), and ATAD requires them EU-wide. The main reason “just open a company in Dubai” doesn’t work while you still live in Germany.See also: Passive income, Substance, Anti-Tax Avoidance Directive (ATAD)

Corporate income tax (CIT) Körperschaftsteuer Tax

Tax on a company’s profits. Among our countries it ranges from 0% on retained profits (Estonia) to 35% on paper (Malta, before refunds), as of 2026. Compare them with the tax calculator.See also: Effective tax rate, Distribution tax, Dividend

Correspondent bank Banking

A bank that processes payments for another bank, especially in foreign currencies. If a small offshore bank loses its US dollar correspondent, your dollar transfers stop – so it’s worth asking who they use.See also: De-risking, SEPA

Country-by-country reporting Compliance

Large multinational groups (consolidated revenue of €750 million or more) report revenue, profit, taxes and staff per country to tax authorities, and in the EU publicly too. Not your problem unless your startup grows very, very fast.See also: Base erosion and profit shifting (BEPS), Pillar Two

Crypto-Asset Reporting Framework (CARF) Compliance

The OECD’s CRS for crypto: exchanges and brokers report users’ transactions to tax authorities, which swap the data internationally. The EU implements it through DAC8, with data collection from 2026.See also: DAC8, Common Reporting Standard (CRS)

D

D7 visa Residency

Portugal’s “passive income” visa for people living on pensions, rent, dividends or other stable income above a threshold linked to the Portuguese minimum wage. Popular with retirees and investors. See Portugal.See also: D8 visa, Golden visa, IFICI (Portugal)

D8 visa Residency

Portugal’s digital nomad visa for remote workers and freelancers earning at least four times the Portuguese minimum wage from abroad (as of 2026). Available as a temporary stay visa or as a residence visa.See also: Digital nomad visa, D7 visa, IFICI (Portugal)

DAC6 Compliance

EU rule requiring intermediaries – or you, if there’s no adviser – to report cross-border arrangements that show certain “hallmarks” of aggressive tax planning. Plenty of ordinary structures never trigger it, but advisers have to check.See also: DAC7, DAC8, Anti-Tax Avoidance Directive (ATAD)

DAC7 Compliance

EU rule, in force since 2023, that makes digital platforms (marketplaces, rental and gig platforms) report their sellers’ income to tax authorities. Selling on a platform is now as visible as a payslip.See also: DAC6, DAC8, Automatic exchange of information (AEOI)

DAC8 Compliance

EU directive extending automatic information exchange to crypto assets, based on the OECD’s CARF. Crypto service providers collect data from 1 January 2026; the first exchanges between countries follow in 2027.See also: Crypto-Asset Reporting Framework (CARF), Common Reporting Standard (CRS), DAC6

De-risking Banking

When banks close or refuse accounts for whole categories of clients – certain countries, industries or structures – because compliance costs more than the business earns. Nothing personal, still painful: keep a backup account.See also: Electronic money institution (EMI), Know your customer (KYC), Correspondent bank

Deposit protection Einlagensicherung Banking

A statutory guarantee that repays bank deposits if the bank fails: €100,000 per depositor per bank in the EU (as of 2026). Money held at an EMI is safeguarded (kept separate from the firm’s own funds) instead, which is not the same thing.See also: Electronic money institution (EMI), IBAN

Digital nomad visa Digitales Nomadenvisum Residency

A residence permit for remote workers earning above a set income from employers or clients abroad – Portugal’s D8, Malta’s Nomad Residence Permit, Estonia, Spain, the UAE and many more. A visa is not a tax status: stay long enough and you may become tax resident.See also: D8 visa, Tax residency, Residence permit

Disregarded entity Company

US tax term for an entity that’s ignored for federal income tax, such as a single-member LLC by default. Its profit counts as the owner’s, so the LLC itself pays no US income tax; for a foreign owner, the real question is how the home country sees it. More in The US LLC for Europeans.See also: Limited liability company (LLC), Pass-through taxation, Form 5472

Distribution tax Tax

Tax charged when a company pays out profits rather than when it earns them. Estonia is the classic example: 0% on retained profits, 22% on distributions (22/78 of the net amount), as of 2026. Latvia and Georgia use similar models.See also: Estonian tax model, Dividend, Withholding tax

Dividend Dividende / Gewinnausschüttung Investing

A payout of company profits to shareholders. Often taxed twice – once as company profit, again in the shareholder’s hands – unless a participation exemption, a treaty or a special regime removes a layer.See also: Withholding tax, Participation exemption, Distribution tax

Domicile Residency

In common-law countries, your permanent legal “homeland” – usually acquired from your father at birth and hard to change. It’s not the same as residence: you can live in Malta for decades and stay domiciled elsewhere.See also: Non-dom, Remittance basis

Double tax treaty (DTT) Doppelbesteuerungsabkommen (DBA) Tax

A bilateral agreement deciding which of two countries may tax which income, and how the other avoids taxing it twice. Most follow the OECD model convention; Germany alone has close to 100 of them.See also: Tie-breaker rule, Exemption method, Tax credit method

Double taxation Doppelbesteuerung Tax

The same income taxed by two countries, for example once where you live and once where it’s earned. Treaties and domestic credit rules exist to prevent it – but only if you claim them.See also: Double tax treaty (DTT), Tax credit method, Exemption method

Dual citizenship Doppelte Staatsbürgerschaft Citizenship

Holding two or more nationalities at once. Some countries forbid it, many allow it, and Germany generally accepts it since 27 June 2024. More passports mean more options – and sometimes more duties, like military service or US-style taxation.See also: Naturalisation, Citizenship by descent, Citizenship-based taxation

E

e-Residency Company

Estonia’s digital ID for non-residents that lets you found and run an Estonian company online. It gives you no right to live in Estonia and no tax residency: run the company from your kitchen in Berlin and it may well be taxable in Germany. See Estonia.See also: Estonian tax model, OÜ, Place of effective management

Economic substance regulations (ESR) Compliance

Laws introduced by low- or no-tax jurisdictions such as Cayman, the BVI and Bermuda under EU and OECD pressure, requiring companies in certain activities to have real staff, premises and decision-making locally. The UAE dropped its ESR for periods from 2023 on, once corporate tax arrived.See also: Substance, EU list of non-cooperative jurisdictions, Tax haven

Effective tax rate Effektiver Steuersatz Tax

The tax you actually pay divided by your profit or income, after refunds, credits and exemptions. The number that really matters: Malta’s 35% headline shrinks to about 5% for foreign shareholders.See also: Corporate income tax (CIT), Malta tax refund system, Pillar Two

Effectively connected income (ECI) Tax

Income connected with a US trade or business – the kind a foreign owner of a US LLC typically pays US income tax on. Usually absent if there’s no US office, staff or dependent agent.See also: Limited liability company (LLC), Disregarded entity, Permanent establishment

Electronic money institution (EMI) E-Geld-Institut Banking

A licensed payment company that issues IBANs and cards but isn’t a bank. Client money is safeguarded rather than covered by deposit protection. Fast onboarding for new companies – and occasionally fast offboarding too.See also: Deposit protection, IBAN, De-risking

Employer identification number (EIN) Company

The US federal tax number for companies, issued by the IRS. Your LLC needs one to open a bank account and to file Form 5472.See also: Limited liability company (LLC), Form 5472

Enhanced due diligence (EDD) Verstärkte Sorgfaltspflichten Banking

Extra checks banks run on higher-risk clients, such as PEPs, complex structures or links to high-risk countries: more documents, proof of source of wealth and senior sign-off.See also: Know your customer (KYC), Politically exposed person (PEP), Source of wealth

Estonian tax model Tax

Estonia doesn’t tax company profits when they’re earned, only when they leave the company. €100k profit reinvested: €0 tax. Paid out in full: €22k tax, €78k dividend (22% as of 2026). Great for founders who reinvest. See Estonia.See also: Distribution tax, OÜ, e-Residency

EU list of non-cooperative jurisdictions EU-Liste nicht kooperativer Steuergebiete Compliance

The EU’s “tax blacklist” of countries that fall short on transparency, fair taxation or BEPS standards, updated twice a year. Payments to listed countries can trigger defensive measures like extra withholding tax or denied deductions. Check the current list, not a blog post from last year – our blacklist article explains how.See also: FATF grey list, Tax Haven Defence Act (Germany), Tax haven

Exemption method Freistellungsmethode Tax

A treaty method to avoid double taxation: your country of residence exempts foreign income that the other country may tax – usually with a progression clause attached.See also: Progression clause, Tax credit method, Double tax treaty (DTT)

Exit tax Wegzugsbesteuerung Tax

Tax on unrealized gains when you move abroad, as if you had sold your assets on departure. Germany’s version (§ 6 AStG) covers company shareholdings of 1% or more if you were fully tax liable for at least 7 of the last 12 years; on application it can be paid in seven annual instalments (as of 2026). Numbers in German exit tax explained.See also: Anti-Tax Avoidance Directive (ATAD), Extended limited tax liability, Step-up

Expatriation tax (US) Citizenship

A tax on unrealized gains when US citizens or long-term green card holders give up their status and count as “covered expatriates” – based on net worth, past tax bills or missing compliance. The exit tax on your passport.See also: Citizenship-based taxation, Exit tax

Extended limited tax liability Erweitert beschränkte Steuerpflicht Tax

A German rule (§ 2 AStG) for German citizens who move to a low-tax country but keep substantial economic interests in Germany. For ten years after leaving, Germany taxes more than the usual German-source income. It applies if you were fully tax liable in Germany for at least five of the last ten years.See also: Exit tax, Limited tax liability, Tax haven

F

FATCA Banking

The US Foreign Account Tax Compliance Act (2010) makes foreign banks report accounts of US persons to the IRS. It’s why many banks politely decline Americans, and why you sign a W-8BEN when opening a brokerage account.See also: Common Reporting Standard (CRS), W-8BEN, Citizenship-based taxation

FATF grey list Graue Liste der FATF Compliance

The Financial Action Task Force’s list of “jurisdictions under increased monitoring” for anti-money-laundering weaknesses, updated after each of its three plenary meetings a year. Being listed means more questions from banks, not a ban; the black list (“call for action”) is the serious one.See also: Anti-money laundering (AML), EU list of non-cooperative jurisdictions, Enhanced due diligence (EDD)

Flag theory Flaggentheorie Residency

The idea, popularized by Harry Schultz and W.G. Hill, of spreading your life across countries: passport here, residence there, company, bank and assets elsewhere, each where it serves you best. Still a useful mental model – today with a lot more paperwork.See also: Perpetual traveller (PT), Dual citizenship, Asset protection

Flat tax Tax

One income tax rate for everyone, e.g. 10% in Romania or 22% in Estonia (as of 2026). Also used loosely for fixed-amount regimes like Italy’s.See also: Progressive tax, Lump-sum taxation, Personal income tax (PIT)

Flat tax for new residents (Italy) Residency

Italy lets wealthy newcomers pay a fixed annual amount on all their foreign income instead of regular tax, for up to 15 years, with a smaller amount per family member. The price has been raised since its 2017 launch at €100,000, so check the current figure. A separate 7% regime targets pensioners moving to small southern towns.See also: Lump-sum taxation, Beckham law, Greek non-dom regime

Flat tax on capital income (Germany) Abgeltungsteuer Investing

Germany’s 25% flat tax on private investment income such as interest, dividends and capital gains, plus the 5.5% solidarity surcharge on top (and church tax, if applicable) – 26.375% all in, as of 2026. Banks usually withhold it for you.See also: Capital gains tax, Partial income method, Solidarity surcharge

Form 5472 Compliance

An IRS information return that foreign-owned US companies, including single-member LLCs, file with a pro forma Form 1120 to report transactions with their owner. No tax due – but the penalty for missing it starts at $25,000 (as of 2026). The most expensive form most LLC owners have never heard of.See also: Limited liability company (LLC), Disregarded entity, Employer identification number (EIN)

Foundation Stiftung Company

A legal entity without owners that holds assets for a purpose or for beneficiaries. Private foundations in Liechtenstein, Austria or Panama are classic tools for succession and asset protection; how the founder’s and beneficiaries’ home countries tax them makes or breaks the plan. See Liechtenstein.See also: Trust, Asset protection, Inheritance tax

Free zone Freihandelszone Company

A special economic area – the UAE has dozens – with its own authority, licences, 100% foreign ownership and often customs and tax perks. A UAE qualifying free zone person can pay 0% corporate tax on qualifying income (as of 2026). See Dubai.See also: FZE and FZCO, Qualifying free zone person (QFZP), Substance

FZE and FZCO Company

UAE free zone company types. Traditionally an FZE (Free Zone Establishment) has a single shareholder and an FZCO (Free Zone Company) several, though some free zones now use one label for both. Either way: a limited-liability company licensed by its free zone authority.See also: Free zone, Qualifying free zone person (QFZP)

G

General anti-abuse rule (GAAR) Missbrauch von Gestaltungsmöglichkeiten (§ 42 AO) Compliance

A catch-all rule letting tax authorities ignore arrangements whose main purpose is a tax advantage without real economic sense. Every EU country has one thanks to ATAD. The legal test for “too clever by half”.See also: Anti-Tax Avoidance Directive (ATAD), Principal purpose test (PPT), Substance

Gift tax Schenkungsteuer Investing

Tax on lifetime gifts, usually aligned with inheritance tax so nobody dodges the latter by giving everything away the week before. Germany grants allowances per donor and recipient that renew every ten years.See also: Inheritance tax, Wealth tax

Global Residence Programme (Malta) Residency

Malta’s special tax status for non-EU nationals: 15% flat on foreign income remitted to Malta, with a minimum tax of €15,000 a year (as of 2026). You also need qualifying property and health insurance. See Malta.See also: Remittance basis, Non-dom, Lump-sum taxation

GmbH Company

The standard limited-liability company in Germany, Austria and Switzerland. In Germany: minimum share capital €25,000, and profits taxed at roughly 30% (15% corporate tax plus solidarity surcharge plus municipal trade tax), as of 2026. Its budget sibling is the UG.See also: UG (haftungsbeschränkt), Trade tax, Ltd

Golden visa Goldenes Visum Residency

A residence permit in exchange for an investment – funds, a business, property or donations, depending on the country. Portugal no longer accepts real estate, Spain closed its programme in 2025, the UAE offers ten years. Residence, not citizenship, and not automatically tax residency.See also: Citizenship by investment (CBI), D7 visa, Residence permit

Greek non-dom regime Residency

Greece lets new residents pay a flat €100,000 a year on all foreign income for up to 15 years (plus €20,000 per family member added), if they invest at least €500,000 in Greece – as of 2026.See also: Flat tax for new residents (Italy), Lump-sum taxation, Non-dom

H

Habitual abode Gewöhnlicher Aufenthalt Residency

Where you actually spend your time. Germany treats a stay of more than six months as a habitual abode (§ 9 AO), ignoring short breaks – a way into full tax liability even without a home. In treaties, it’s the third step of the tie-breaker.See also: 183-day rule, Wohnsitz, Tie-breaker rule

Hidden profit distribution Verdeckte Gewinnausschüttung (vGA) Tax

A benefit a company gives its shareholder outside a formal dividend – an inflated salary, a free car, a cheap loan. The tax office reclassifies it as a dividend and adds it back to company profit. Pay yourself at arm’s length.See also: Arm’s length principle, Dividend

Holding company Holdinggesellschaft Company

A company whose main job is owning shares in other companies. Thanks to participation exemptions, dividends and exit gains can flow up largely tax-free and be reinvested – handy for founders planning a sale or running several ventures.See also: Participation exemption, Parent-Subsidiary Directive, Substance

Holding period Spekulationsfrist Investing

The time you must hold an asset before a sale becomes tax-free or cheaper. In Germany, private gains on crypto and other non-securities assets are tax-free after one year, on property after ten (as of 2026).See also: Capital gains tax, Flat tax on capital income (Germany)

I

IBAN Banking

International Bank Account Number. The first two letters show the country of the account – which is why a Lithuanian IBAN can raise eyebrows, even though EU rules ban “IBAN discrimination” for euro payments.See also: SEPA, Electronic money institution (EMI)

IFICI (Portugal) Residency

Portugal’s “NHR 2.0”: newcomers in qualifying science, tech, startup and similar roles pay 20% flat on qualifying Portuguese employment and business income for 10 years, with most foreign income exempt (as of 2026). You must not have been Portuguese resident in the previous five years.See also: Non-habitual resident (NHR), D8 visa, Beckham law

Inheritance tax Erbschaftsteuer Investing

Tax on assets passed on at death, levied on the estate or on the heirs depending on the country. Cyprus, Estonia and the UAE have none; Germany keeps its claim for at least five years after a German citizen emigrates.See also: Gift tax, Wealth tax, Foundation

Interest limitation rule Zinsschranke Tax

Caps deductible net interest expense at 30% of EBITDA, usually with a €3 million safe harbour (Germany included). An ATAD rule against loading companies with debt to shift profit.See also: Anti-Tax Avoidance Directive (ATAD), Base erosion and profit shifting (BEPS)

IP box Patentbox / Lizenzbox Tax

A reduced tax rate on income from qualifying intellectual property such as patents or software. Under the OECD’s nexus approach it only rewards IP you actually developed yourself. Cyprus and Malta both have one.See also: Base erosion and profit shifting (BEPS), Substance

K

Know your customer (KYC) Banking

The identity checks a bank or service provider runs before and during a relationship: passport, proof of address, business description, ownership chart. Keep a tidy “KYC pack” ready and everything goes faster.See also: Anti-money laundering (AML), Source of funds, Ultimate beneficial owner (UBO)

L

Letterbox company Briefkastenfirma Company

A company with an address but no real activity, staff or management. Legal to form, useless for tax planning: tax authorities look through it, banks avoid it, and CFC and anti-abuse rules are waiting.See also: Substance, Place of effective management, General anti-abuse rule (GAAR)

Limited liability company (LLC) Company

US company type combining limited liability with flexible taxation. A single-member LLC owned by a non-resident is a disregarded entity: no US income tax at company level, while the owner’s home country often taxes the profit. Delaware’s annual LLC tax is $300 (as of 2026). See Delaware.See also: Disregarded entity, Form 5472, Registered agent

Limited liability partnership (LLP) Company

A partnership whose members have limited liability – the UK version is the best known. For tax it’s transparent: each member is taxed on their share where they live. Popular with non-UK founders, less so with some banks and home tax offices.See also: Pass-through taxation, Ltd

Limited tax liability Beschränkte Steuerpflicht Tax

Taxation of non-residents on income from sources in the country only, such as German rental income or a German pension after you’ve moved away.See also: Extended limited tax liability, Tax residency, Withholding tax

Ltd Company

Private company limited by shares, the standard company in the UK, Malta, Cyprus, Ireland and many other common-law countries. UK corporation tax is 19% on profits up to £50,000 and 25% above £250,000, with marginal relief in between (as of 2026).See also: GmbH, Limited liability partnership (LLP), Corporate income tax (CIT)

Lump-sum taxation Pauschalbesteuerung Residency

Tax based on a fixed amount or your living expenses instead of your actual income. Switzerland’s version is for foreigners who don’t work there, and several cantons, including Zurich, have abolished it. Italy and Greece charge fixed annual sums on foreign income.See also: Flat tax for new residents (Italy), Greek non-dom regime, Global Residence Programme (Malta)

M

Malta tax refund system Tax

Malta charges 35% corporate tax but refunds 6/7 of it to shareholders when trading profits are distributed, for an effective rate of about 5% (as of 2026). Passive income and some other profits get smaller refunds. See Malta.See also: Effective tax rate, Holding company, Dividend

Micro-company (Romania) Tax

Romania’s small-business regime: 1% tax on turnover instead of 16% on profit, for revenue up to €100,000 (as of 2026). The rules change often, so check every year. See Romania.See also: Corporate income tax (CIT), Flat tax

Multilateral Instrument (MLI) Compliance

An OECD convention that updates hundreds of tax treaties in one go with BEPS measures, most importantly the principal purpose test.See also: Principal purpose test (PPT), Double tax treaty (DTT), Base erosion and profit shifting (BEPS)

Mutual agreement procedure (MAP) Verständigungsverfahren Tax

A treaty procedure in which two countries’ tax authorities negotiate to resolve double taxation, and the last resort of the tie-breaker. Slow, but it exists.See also: Double tax treaty (DTT), Tie-breaker rule

N

Naturalisation Einbürgerung Citizenship

Getting citizenship by living somewhere long enough and meeting conditions such as language, income and a clean record. Germany’s standard wait is five years (as of 2026); elsewhere it ranges from a few years to more than a decade.See also: Dual citizenship, Citizenship by descent, Permanent residence

Nominee director Company

Someone who acts as director on paper, for a fee, while someone else calls the shots. Mostly counterproductive today: if you really make all the decisions, your company is managed – and possibly taxed – where you are.See also: Place of effective management, Substance, Nominee shareholder

Nominee shareholder Company

Someone holding shares on behalf of the real owner. Beneficial ownership registers and bank KYC reveal the real owner anyway, so the privacy benefit is small.See also: Ultimate beneficial owner (UBO), Nominee director, Transparency register

Non-dom Residency

Short for “non-domiciled resident”: someone living in a country without being domiciled there, often with special tax treatment. Cyprus exempts non-doms from its defence contribution on dividends and interest for 17 years; Malta taxes them on the remittance basis. The UK abolished its non-dom regime in April 2025.See also: Domicile, Remittance basis, Special Defence Contribution (SDC)

Non-habitual resident (NHR) Residency

Portugal’s famous old regime with ten years of low or zero tax for newcomers. Closed to new applicants and replaced by IFICI; people already in it keep it until their ten years are up.See also: IFICI (Portugal), D7 visa

O

Offshore company Company

A company in a jurisdiction where it does no local business, often a low-tax one. The word has an image problem; what matters today is substance and where the company is managed, not the palm trees.See also: Letterbox company, Substance, Tax haven

One-Stop Shop (OSS) Tax

The EU VAT One-Stop Shop: sell goods or digital services to consumers in other EU countries and declare the foreign VAT in one quarterly return at home instead of registering everywhere. Foreign VAT applies once your cross-border B2C sales exceed €10,000 a year EU-wide.See also: VAT, Reverse charge, VAT ID

OÜ Company

Osaühing, the Estonian private limited company and every e-resident’s favourite. Formed online, minimum share capital just €0.01 (as of 2026), taxed under the Estonian model.See also: Estonian tax model, e-Residency, Share capital

P

Parent-Subsidiary Directive Mutter-Tochter-Richtlinie Tax

EU directive that removes withholding tax on dividends between EU parent and subsidiary companies (minimum 10% holding) and prevents double taxation at parent level – with an anti-abuse clause attached.See also: Withholding tax, Participation exemption, Holding company

Partial income method Teileinkünfteverfahren Investing

German rule for income from shares held as business assets and for gains on selling substantial holdings (1% or more): 60% is taxed at your personal rate, 40% is tax-free. The exit tax uses it too.See also: Flat tax on capital income (Germany), Exit tax

Participation exemption Schachtelprivileg (§ 8b KStG) Tax

Tax exemption for dividends and sale gains a company receives from its subsidiaries. In Germany, 95% of such income is tax-free for corporations (dividends need at least 10% ownership), leaving roughly 1.5% effective tax (as of 2026). The engine room of every holding structure.See also: Holding company, Dividend, Parent-Subsidiary Directive

Pass-through taxation Transparente Besteuerung Tax

The entity itself isn’t taxed; its profit is attributed to the owners, who pay tax on it. US LLCs, UK LLPs and German partnerships work this way. Beware: countries don’t always agree on whether a foreign entity is transparent.See also: Disregarded entity, Limited liability partnership (LLP), Limited liability company (LLC)

Passive income Passive Einkünfte Tax

Income from investments, interest, royalties or rent rather than active business. Many rules treat it more harshly: CFC rules, smaller Malta refunds, stricter substance tests.See also: Controlled foreign company (CFC) rules, Substance

Permanent establishment Betriebsstätte Tax

A fixed place of business, or a dependent agent, through which a company operates in another country – which may then tax the profit attributable to it. A home office the founder uses regularly can be enough: the classic trap for remote founders.See also: Place of effective management, Branch, Substance

Permanent home Ständige Wohnstätte Residency

The first test of the treaty tie-breaker: a dwelling continuously available to you, owned or rented. Have one in only one country, and that’s usually where you’re resident for treaty purposes.See also: Tie-breaker rule, Wohnsitz, Centre of vital interests

Permanent residence Daueraufenthalt Residency

An unlimited right to live in a country, typically after five years of legal residence in the EU or via investment in some countries. Often the stepping stone to naturalisation.See also: Naturalisation, Residence permit, Golden visa

Perpetual traveller (PT) Residency

Someone who moves between countries without staying long enough to become tax resident anywhere. Legal in theory, messy in practice: banks want a tax residence, and ties you keep somewhere may keep you resident there. Read our PT guide.See also: Flag theory, Tax residency, 183-day rule

Personal income tax (PIT) Einkommensteuer Tax

Tax on individuals’ income from work, business, investments and more. It ranges from none in the UAE to progressive systems topping out at 45–48% in parts of Western Europe (as of 2026).See also: Flat tax, Progressive tax, Worldwide income

Pillar Two Globale Mindeststeuer Compliance

The OECD/G20 global minimum tax: groups with consolidated revenue of €750 million or more must pay at least 15% effective tax in every country, or a top-up tax is collected elsewhere. Irrelevant for small and mid-sized businesses – but one reason several low-tax countries raised their rates.See also: Base erosion and profit shifting (BEPS), Effective tax rate, Country-by-country reporting

Place of effective management Ort der Geschäftsleitung Company

Where a company’s key management and commercial decisions are actually made. Run your “Cypriot” company from your desk in Hamburg and Germany may treat it as German-resident and tax it in full. More in Foreign company, German director.See also: Substance, Central management and control, Permanent establishment

Politically exposed person (PEP) Politisch exponierte Person Banking

Someone with a prominent public function, plus close family and associates. Banks must apply enhanced due diligence – being a PEP isn’t a problem, just more paperwork.See also: Enhanced due diligence (EDD), Anti-money laundering (AML)

Principal purpose test (PPT) Compliance

An anti-abuse clause in modern tax treaties: benefits are denied if getting them was one of the principal purposes of an arrangement. The end of treaty shopping via letterbox companies.See also: Multilateral Instrument (MLI), General anti-abuse rule (GAAR), Treaty shopping

Progression clause Progressionsvorbehalt Tax

Tax-exempt foreign income still counts when your rate on the remaining income is set. Earn €50k abroad (exempt) and €30k at home, and the €30k is taxed at the rate for €80k.See also: Exemption method, Progressive tax

Progressive tax Tax

Tax rates that rise with income, e.g. 0–35% in Malta and Cyprus (as of 2026). The opposite of a flat tax.See also: Flat tax, Personal income tax (PIT), Progression clause

Proof of address Adressnachweis Banking

A recent document showing your name and home address – utility bill, bank statement, tax letter. Trivial at home, surprisingly hard in your first months abroad, so get one early.See also: Know your customer (KYC), Certified copy

Q

Qualifying free zone person (QFZP) Tax

A UAE free zone company that meets the conditions – adequate substance, qualifying income, transfer pricing compliance, audited accounts, no election into standard tax – and can therefore pay 0% corporate tax on qualifying income instead of 9% (as of 2026).See also: Free zone, FZE and FZCO, Substance

R

Registered agent Company

A person or firm with a physical address in the state, e.g. Delaware, who receives official mail and legal papers for your company. Required for every US LLC and corporation.See also: Limited liability company (LLC), Registered office, Company service provider (CSP)

Registered office Satzungssitz Company

A company’s official legal address in the company register. It shows where the company was formed, not where it’s managed – an address is not substance.See also: Place of effective management, Substance, Registered agent

Remittance basis Tax

Taxing foreign income only when it’s brought (remitted) into the country. Malta applies it to non-domiciled residents: foreign income kept abroad stays untaxed there, and foreign capital gains are generally not taxed even if remitted (as of 2026).See also: Non-dom, Global Residence Programme (Malta), Territorial taxation

Residence permit Aufenthaltstitel Residency

Permission to live in a country beyond visa-free stays. Immigration and tax are separate worlds: a permit doesn’t make you tax resident on its own, and EU citizens can be tax resident in another EU country without one.See also: Tax residency, Golden visa, Digital nomad visa

Reverse charge Reverse-Charge-Verfahren Tax

For many cross-border B2B services in the EU, the customer rather than the supplier accounts for the VAT. The supplier invoices without VAT and notes “reverse charge”; both sides need valid VAT IDs.See also: VAT, VAT ID, One-Stop Shop (OSS)

S

Schengen 90/180 rule Residency

Non-EU citizens without a residence permit may stay in the Schengen area for 90 days in any rolling 180-day period. A visa rule, not a tax rule – but the counting is just as unforgiving.See also: Residence permit, Digital nomad visa, 183-day rule

SEPA Banking

The Single Euro Payments Area: euro transfers across the EU and several neighbouring countries at domestic cost, identified by IBAN.See also: IBAN, Electronic money institution (EMI)

Share capital Stammkapital Company

The capital shareholders commit to a company. Minimums range from €0.01 for an Estonian OÜ to €25,000 for a German GmbH (as of 2026).See also: GmbH, OÜ, UG (haftungsbeschränkt)

Social security agreement Sozialversicherungsabkommen Compliance

A treaty that decides which country’s pension, health and other contributions apply and lets insurance periods count across borders. Within the EU a regulation does the job; elsewhere bilateral agreements fill the gaps – or don’t.See also: A1 certificate

Solidarity surcharge Solidaritätszuschlag Tax

Germany’s 5.5% surcharge on income and corporate tax. Gone for most employees since 2021, it still applies to corporate tax, flat-taxed capital income and high incomes (as of 2026).See also: Flat tax on capital income (Germany), GmbH

Source of funds Mittelherkunft Banking

Where the specific money for a deposit or transaction comes from: salary, a company sale, a dividend. Banks want documents such as contracts or statements.See also: Source of wealth, Know your customer (KYC), Anti-money laundering (AML)

Source of wealth Vermögensherkunft Banking

How you built your overall wealth over time – career, company sale, inheritance, investments. Banks want a plausible story with evidence, so keep a folder.See also: Source of funds, Enhanced due diligence (EDD)

Special Defence Contribution (SDC) Tax

A Cypriot tax on dividends, interest and rental income of residents who are domiciled in Cyprus. Non-doms don’t pay it – for 17 years, which is what makes Cyprus popular with dividend-living founders.See also: Non-dom, 60-day rule (Cyprus), Domicile

Statutory audit Pflichtprüfung Company

A mandatory external audit of annual accounts. Required for practically all companies in Malta and Cyprus, and for UAE free zone companies claiming the 0% rate; small UK and German companies are exempt.See also: Qualifying free zone person (QFZP), Substance

Step-up Investing

Resetting an asset’s tax base to its market value, so earlier gains aren’t taxed again. Some countries grant it when you move in; Germany does so for shares if the country you left charged a comparable exit tax.See also: Exit tax, Capital gains tax

Subsidiary Tochtergesellschaft Company

A separate company controlled by another one, its parent. Unlike a branch, it’s its own legal entity and usually tax resident in its own country.See also: Branch, Holding company, Parent-Subsidiary Directive

Substance Substanz Company

Real economic presence where your company claims to be: office, staff, local directors who actually decide, activity. Without it, CFC rules, permanent establishment rules or place-of-management tests pull profits back to where you really are.See also: Place of effective management, Economic substance regulations (ESR), Controlled foreign company (CFC) rules

T

Tax avoidance vs tax evasion Steuervermeidung vs. Steuerhinterziehung Tax

Avoidance means legally arranging your affairs to pay less tax – choosing where to live and which entity to use. Evasion means lying, hiding or not declaring, and it’s a crime. We only do the first one.See also: General anti-abuse rule (GAAR), Common Reporting Standard (CRS)

Tax credit method Anrechnungsmethode Tax

A method to avoid double taxation: your country of residence taxes the foreign income but credits the foreign tax already paid, usually capped at its own tax on that income.See also: Exemption method, Double taxation, Double tax treaty (DTT)

Tax haven Steueroase Compliance

A loose term for a jurisdiction with low or no taxes and, traditionally, secrecy. Thanks to CRS and substance rules the secrecy part is mostly gone; the low-tax part remains, along with blacklists and defensive measures from other countries.See also: EU list of non-cooperative jurisdictions, Tax Haven Defence Act (Germany), Common Reporting Standard (CRS)

Tax Haven Defence Act (Germany) Steueroasen-Abwehrgesetz (StAbwG) Compliance

A German law in force since 2021 that makes business with countries on the EU blacklist expensive: denied deductions, extra withholding tax, tougher CFC rules and more reporting.See also: EU list of non-cooperative jurisdictions, Controlled foreign company (CFC) rules, Withholding tax

Tax identification number (TIN) Steuer-Identifikationsnummer Compliance

Your tax number in a country. Under CRS, banks ask for the TIN of every country where you’re tax resident – and “none” is not a great answer.See also: Common Reporting Standard (CRS), Tax residency certificate

Tax residency Unbeschränkte Steuerpflicht Residency

The status that lets a country tax you, usually on your worldwide income. Each country has its own tests – home, days, centre of life, sometimes citizenship – so you can be resident in two countries at once, or rarely in none. A residence permit alone doesn’t create it, and deregistering alone doesn’t end it.See also: 183-day rule, Tie-breaker rule, Tax residency certificate

Tax residency certificate Ansässigkeitsbescheinigung Residency

An official confirmation from a tax authority that you, or your company, are resident there for tax purposes. Needed to claim treaty benefits and useful to show your old country that you really left. Malta, Cyprus and the UAE issue them on application.See also: Tax residency, Double tax treaty (DTT)

Territorial taxation Territorialitätsprinzip Tax

Only income from sources inside the country is taxed; foreign income is left alone. Panama, Paraguay, Costa Rica and Hong Kong work roughly this way, while Malta and Cyprus get close for non-doms by other routes.See also: Worldwide income, Remittance basis, Non-dom

Tie-breaker rule Residency

The treaty rule that decides where you’re resident if two countries both claim you: permanent home first, then centre of vital interests, habitual abode, nationality and finally agreement between the tax authorities. Each step only counts if the one before is undecided.See also: Permanent home, Centre of vital interests, Habitual abode

Trade tax Gewerbesteuer Tax

German municipal tax on business profits, set by each town: roughly 7% to 17% on top of corporate tax (as of 2026). Freelancers in the liberal professions are exempt, and property-holding companies can often reduce it.See also: GmbH, Corporate income tax (CIT)

Transfer pricing Verrechnungspreise Tax

The prices related companies charge each other for goods, services, loans or IP. They must follow the arm’s length principle and be documented – otherwise shifting profit to the low-tax entity would be far too easy.See also: Arm’s length principle, Base erosion and profit shifting (BEPS), Hidden profit distribution

Transparency register Transparenzregister Compliance

A national register of companies’ beneficial owners, required throughout the EU. After a 2022 ruling by the EU’s top court, public access was restricted in many countries, but authorities, banks and those with a legitimate interest can still look.See also: Ultimate beneficial owner (UBO), Nominee shareholder

Treaty shopping Compliance

Routing income through a company in a third country just to use its tax treaty. Largely shut down by the principal purpose test and limitation-on-benefits clauses.See also: Principal purpose test (PPT), Multilateral Instrument (MLI), Substance

Trust Company

A common-law arrangement in which a trustee holds assets for beneficiaries under the settlor’s rules. Not a legal entity, and treated very differently by civil-law countries like Germany, where it can trigger surprising tax.See also: Foundation, Asset protection

U

UG (haftungsbeschränkt) Company

The German “mini-GmbH” you can found with €1 of share capital. It must set aside a quarter of each year’s profit until it can convert into a full GmbH; taxes are the same.See also: GmbH, Share capital

Ultimate beneficial owner (UBO) Wirtschaftlich Berechtigter Banking

The natural person who ultimately owns or controls a company, typically with more than 25%. Banks, registers and service providers all want to know who it is – nominee arrangements don’t change that.See also: Transparency register, Know your customer (KYC), Nominee shareholder

V

VAT Umsatzsteuer / Mehrwertsteuer Tax

Value added tax, charged at each stage of the supply chain: businesses reclaim the VAT they pay, so the burden lands on the final consumer. Standard rates among our countries range from 5% (UAE) to 24% (Estonia), as of 2026.See also: Reverse charge, One-Stop Shop (OSS), VAT ID

VAT ID Umsatzsteuer-Identifikationsnummer (USt-IdNr.) Tax

An EU VAT identification number, starting with the country code (DE, MT, CY…). You need it for intra-EU B2B trade and the reverse charge; check your customers’ numbers in the EU’s VIES database.See also: Reverse charge, VAT

W

W-8BEN Banking

The US tax form on which non-US individuals confirm their foreign status to banks and brokers, often to claim a reduced treaty rate on US dividends. Companies use the W-8BEN-E.See also: FATCA, Withholding tax

Wealth tax Vermögensteuer Investing

An annual tax on net worth rather than income. Rare in Europe: Switzerland, Spain and Norway levy one, France taxes property wealth, and Liechtenstein taxes a notional return on assets. Germany hasn’t collected its wealth tax since 1997.See also: Inheritance tax, Capital gains tax

Withholding tax Quellensteuer Tax

Tax deducted at source by the payer, e.g. on dividends, interest or royalties paid abroad, often reduced by treaties or EU directives. Malta, Cyprus and the UAE charge none on dividends to non-residents; Portugal’s default is 25% (as of 2026).See also: Double tax treaty (DTT), Parent-Subsidiary Directive, Dividend

Wohnsitz Wohnsitz (§ 8 AO) Residency

German tax concept (§ 8 AO): you have a Wohnsitz where you keep a dwelling under circumstances suggesting you’ll keep and use it. It needn’t be your main or registered home – a flat kept “just in case” can leave you fully taxable in Germany.See also: Abmeldung (deregistration), Habitual abode, Permanent home

Worldwide income Welteinkommensprinzip Tax

The principle that residents are taxed on all their income, wherever it’s earned. Most countries, Germany included, work this way, with treaties to prevent double tax.See also: Territorial taxation, Tax residency, Citizenship-based taxation

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