Many Hong Kong residents elect to move abroad upon retirement or the end of their work contract. The most popular destinations have been USA, Canada, Australia and the UK. All of these countries, to varying degrees, have been effected by the credit crisis and either have or will raise taxes to levels that many think are confiscatory.

Sovereign recently conducted a survey of world property prices and found that they had fallen dramatically in most onshore countries but had actually risen in some of the offshore centres. The reason isn't hard to understand. As onshore countries increase their taxes a higher proportion of their rich residents move away to escape them. So where is it possible to live tax free? Here are some options with the applicable criteria to get in.

For British persons one of the most popular places is Monaco which has a reputation as being the home of choice for the fabulously wealthy. It is. But the entry criteria don't require you to be a millionaire. A one year residency will be issued as long as you can show that you have purchased or taken a lease on a suitable property and have sufficient means to support yourself. The latter requirement is normally met by depositing €400,000 in a bank and have the bank produce a statement saying that you have sufficient money to live in Monaco for the duration of your permit. The one year permit can be renewed twice. You can then apply for a 3 year permit and have that renewed once and then can apply for a 10 year permit and citizenship. There are no personal taxes whatsoever in Monaco. Living costs are high but it is ideally situated to get away to the South of France, Switzerland and Italy. It is necessary to spend at least 90 days in Monaco in order for legal residency to be maintained. In the past famous individuals have been caught out by this. Michael Schumacher left Germany and took up residency in Monaco but didn't spend sufficient time there. As a result he reverted back to his German tax residency with disastrous tax consequences. Beware of the minimum stay requirement. There are services available which go into your apartment/house and switch on the lights, make telephone calls and generally make it appear as though you are there. That appears to be tax evasion and isn't recommended.

Another popular destination is Gibraltar. A British colony on the Southern tip of Spain. It is just 2 square miles but has a fabulous climate and within 10 minutes you can drive across the airport, yes traffic stops when a plane has to land, and the border into Spain. Gibraltar has created a special category 2 residency permit which allows the holder to pay tax only on the first £70,000 of their income subject to a minimum annual tax payment of £20,000. At current rates this works out as a maximum annual tax of £25,880. To qualify you must have approved accommodation available for your use throughout the tax year –you can rent or buy- and must prove a net worth of €2 million. There is minimum stay requirement and many choose to maintain residence in Gibraltar but actually live across the border in Spain – particularly in the rather fabulous environment of Sotogrande. They just hope that the Spanish authorities don't realise that they are actually living in Spain. If you did actually stay in Gibraltar for 5 years then you would be qualified to apply for a UK passport.

Malta, a beautiful island in the Mediterranean Sea, offers a low tax option. Only income actually remitted to Malta is taxable. Residents must remit a minimum of €14,000 income plus a further €2,300 for each dependent family member. This income is taxed at 15% so the minimum tax bill per annum is €4,200 for the head of the household and an additional €345 for each dependent family member. To qualify you must prove you have an annual income of €25,000 or capital of €350,400. You must either purchase a house valued at €116,430 or a flat of at least €69,900 or lease a property for a minimum of €4,200 per annum. As with Gibraltar no minimum stay is required to maintain residency.

Andorra is a small principality in the Pyrenees between France and Spain. It has no personal income tax. You must reside in Andorra for 6 months of the year to maintain residency which can be obtained if you purchase a property, have an income of €30,000 per annum and deposit an amount with the central government of €24,000 per head of household and an additional €6,000 per dependent.

The Bahamas, Cayman Islands and Turks & Caicos Islands all offer a relatively straight forward process by which you can become a resident and none of these places charge any income tax. In the Turks & Caicos Islands residency can be obtained by investing US$500,000 in a business or home in Providenciales (the largest and most attractive of the islands) or a much more modest US$125,000 in the other islands. No minimum stay is required to maintain residency. TCI have been particularly popular with wealthy Canadian investors in recent years.

The UK, despite recent changes, still allows those who are not domiciled in the UK to live there virtually tax free. If you are resident in the UK but not domiciled there then UK tax is only payable on UK source income and foreign income, but not capital, remitted to the UK. "Non doms" who have been resident in the UK for 7 out of the last 9 years become taxable on their worldwide income unless they specifically elect to be taxed on a remittance basis only and pay an annual levy of £30,000 for that privilege. The rules under which the remittance system operate have become extremely complicated but with care it is still possible to remit capital only to fund your living costs in the UK and therefore not pay much tax or indeed any tax.

In the past it was possible to be a "perpetual traveller" i.e. someone who travels so much that they do not spend sufficient time in any one country to establish a tax residency anywhere. Most countries are becoming increasingly intolerant of such arrangements and try and establish with which place a person has the closest connect and make them liable to tax there. The above jurisdictions offer a solution which allows someone to base themselves in that country and then travel with reduced fear of falling foul of the tax rules of another country. Those resident in Hong Kong who are used to lower levels of taxation might prefer not to rush headlong into a high tax country and be faced with massively increased tax bills. The above may offer a convenient solution.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.