Taxes in Vanuatu: why the passport does not free you from home-country taxes

Taxes in Vanuatu: in brief

In brief: there are no direct taxes on individuals’ income and capital in Vanuatu; the main taxes are indirect: VAT at 15% and rental tax at 12.5%. Tax residence is determined by where you live under the rules of the country where you live, so a Vanuatu passport gives mobility, while a tax effect appears only when you change your country of residence.

Taxes and licences in Vanuatu are managed by the Department of Customs and Inland Revenue. It administers VAT, rental tax, excise, customs duties and business licences. A Vanuatu citizen does not file an income tax return, and there is no citizenship tax and no annual passport payments. How to obtain citizenship and what it costs is covered in Vanuatu citizenship by investment.

Which taxes exist in Vanuatu

In brief: Vanuatu’s tax system is built on consumption and fees: VAT, rental tax, excise, customs duties and licence fees. Individuals’ income, capital gains and inheritance are not taxed.

Since 1 January 2020 Vanuatu has applied the Tax Administration Act No. 37 of 2018. It introduced tax identification numbers (TINs), uniform accounting rules, late penalties and registration of tax agents. Turnover tax on professional and business services was abolished from the same date, and for commercial banks the licence fee is calculated as 5% of turnover.

For a citizen who does not live in Vanuatu or do business there, these taxes hardly arise: VAT is paid on purchases on the islands, rental tax only when letting housing, and a licence only when doing business.

VAT at 15%: what is taxed and what is exempt

In brief: VAT was introduced in 1998 at 12.5%, and in 2018 the rate was raised to 15%. The tax is included in the price of most goods and services and charged on imports, while financial services and education at accredited institutions are exempt.

VAT is charged by registered taxpayers: companies and sole traders carrying on taxable activity. The registration threshold is VT 4 million of turnover; below it, registration is voluntary. The tax works on a credit basis: a business deducts VAT paid to suppliers, and the final burden falls on the end buyer.

Some supplies are zero-rated: they count as taxable, but no tax is charged on them. Exempt supplies, such as financial services, are not subject to VAT at all. For an individual this means a simple rule: 15% VAT is already included in the price of purchases in Vanuatu, and there is no separate reporting on it.

Tax on property and rent

In brief: Vanuatu’s tax service taxes rental income. Long-term residential rent is taxed at 12.5% of gross rent, the first VT 200,000 of an individual’s income is exempt, and commercial and short-term rent is subject to VAT. Local charges and land lease terms are checked for the specific property.

Rental tax is paid on the full rent, and expenses cannot be deducted. Returns are filed twice a year: for 1 December to 31 May by 28 June, and for 1 June to 30 November by 28 December. If the landlord is registered for VAT or their commercial rental income exceeds the VT 4 million threshold, VAT is charged instead of rental tax. Records are kept for at least 5 years.

Foreigners hold land in Vanuatu on long-term leases, not in ownership: under the Constitution land belongs to its customary owners. Lease deals and letting are planned with these rules in mind, and there is no need to buy property for citizenship under the investment programme. How the option of investing in an approved project’s property works is covered in DSP or the CIIP fund.

A company in Vanuatu: licence, TIN and VAT

In brief: any business in Vanuatu obtains a licence under the Business Licence Act and a TIN. With turnover above VT 4 million, a company registers for VAT, and if it lets housing, it reports rental tax.

• Business licence. Needed by any person or company carrying on activity for profit. Banks, trust and investment companies, law firms and designated agents need additional permits from the relevant authorities.
• TIN. A tax number is issued to VAT and rental taxpayers and business licence holders, as well as on registering a vehicle and obtaining a driving licence.
• Changes of details. The tax office is notified of changed contacts within 21 days, and of leaving Vanuatu permanently at least 14 days in advance.
• Records. Transaction records are kept for at least 5 years after the end of the tax period.

For a business owner outside Vanuatu something else matters more: the taxes on their company’s profit are set by the country where the company is registered and managed, and for tax residents of some countries, such as Russia, also by controlled foreign company rules. These rules are covered in CFC rules and currency control with Vanuatu citizenship. Registration, a licence and an account are handled by the service a company and account in Vanuatu.

The passport and tax residence

In brief: citizenship and tax residence are not linked. A person becomes tax resident where they live, under that country’s rules, while a Vanuatu passport changes only the right to enter and reside.

If a Russian citizen, for example, gets a Vanuatu passport and continues to live in Russia for more than 183 days in 12 months, they remain a Russian tax resident with all the duties. If they move to another country, that country sets the tax rules: number of days, place of residence, centre of business interests. A Vanuatu passport helps a move, because it widens the list of countries for travel and provides a basis for residence permits, but tax status is changed by actually moving. Details in tax residence and the Vanuatu passport.

Home-country taxes with a Vanuatu passport: Russia as an example

In brief: a Russian tax resident pays personal income tax on all income, including foreign income, on a progressive scale of 13-22%, declares foreign income and notifies the tax service of foreign accounts and companies. A Vanuatu passport does not change these duties. Tax residents of other countries should check the equivalent rules at home.

A person is a Russian tax resident if they were in Russia for at least 183 days in 12 consecutive months. Since 2025 residents pay personal income tax on a scale: 13% on income up to RUB 2.4 million a year, 15% up to 5 million, 18% up to 20 million, 20% up to 50 million and 22% above. A resident declares foreign income on form 3-NDFL by 30 April of the following year. A non-resident pays personal income tax only on income from Russian sources, as a rule at 30%.

• Foreign accounts. A currency resident notifies the tax service of opening an account abroad and reports cash flows annually. A citizen who is outside Russia for more than 183 days a year is released from some of these duties.
• Foreign companies. A stake in a foreign company and controlled foreign companies require notifications to the tax service, and CFC profit is accounted for under the Tax Code.
• Second citizenship. Notification of the Interior Ministry within 60 days. Missing the deadline carries a fine of RUB 500 to 1,000 under Article 19.8.3 of the Code of Administrative Offences, and failing to notify up to RUB 200,000 under Article 330.2 of the Criminal Code.

There is no double tax treaty between Russia and Vanuatu, but for an individual this rarely matters: Vanuatu does not tax personal income. All duties to Russian authorities are collected in Vanuatu citizenship for Russian citizens.

Tax information exchange and bank accounts

In brief: Vanuatu takes part in international tax information exchange. The International Tax Cooperation Act No. 7 of 2016 provides for automatic exchange of account information with countries with which Vanuatu has an agreement, and the competent authority sits within the Department of Customs and Inland Revenue.

When opening an account, banks ask for the client’s tax residence and the tax number of the country of residence, and account data is reported by residence, not by citizenship. Besides automatic exchange, Vanuatu has agreements on exchange of tax information on request, for example with Australia, France and Finland. So a Vanuatu passport does not hide accounts: it changes the client’s document, but not their tax residence.

A lawful tax benefit is built on changing where you live and reporting correctly, not on hiding accounts. How confidentiality of the status and information exchange work is covered in confidentiality of Vanuatu citizenship and CRS.

When Vanuatu’s tax system has an effect

In brief: the tax effect goes to those who change their country of residence and establish tax residence in a country with a suitable regime. For those who stay where they live now, the passport gives mobility and a route to residence permits, but no tax savings.

• Moving abroad. An entrepreneur moves to a country with no income tax or a suitable regime and ceases to be tax resident at home. A Vanuatu passport makes travel and opening accounts easier.
• A family with assets in several countries. Vanuatu has no inheritance tax, but an inheritance is taxed under the rules of the country where the heirs live and the assets are located, so the transfer of capital is planned for all countries at once.
• Living in Vanuatu. A citizen who actually lives in Vanuatu pays no income tax, but pays VAT on purchases and rental tax if they let housing.
• Staying at home. Taxes and reporting remain in full, and the passport works as a travel document and a basis for residence in Europe.

How citizenship passes to children and what happens to assets on inheritance is described in inheritance and Vanuatu citizenship, and an example of a family with assets in several countries is shown in case: inheritance and zero taxes. If the family is considering life on the islands, the conditions are collected in moving to Vanuatu.

Taxes when moving to Europe on a residence permit

In brief: with a Vanuatu passport, the way to live in Europe is through residence in Greece or Hungary. If the family spends more than 183 days a year in the country of residence, it becomes tax resident there, and taxes are planned before the move.

A Vanuatu passport has had no visa-free entry to the Schengen area since 4 February 2023, so the route to Europe goes through residence: Greek residence under the Golden Visa programme with a property threshold from €250,000 to €800,000, or Hungary’s programme with a 10-year permit. The residence permit itself does not make you tax resident if you live in another country, but moving there permanently changes your tax status under the rules of the country of residence.

So the order of steps is: a Vanuatu passport in 2-3 months, choosing the country of residence, calculating taxes in the future country of residence, and only then moving. Conditions for Vanuatu citizens are on Greek residence for Vanuatu citizens.

How BRIDGES takes taxes into account when arranging citizenship

In brief: before filing we work out where the applicant will be tax resident, which home-country notifications are needed after the passport and how the citizenship payment fits with reporting on foreign accounts.

• Source of funds. We prepare documents on the origin of capital for the FIU check so that they match the applicant’s tax reporting.
• The payment account. We choose the bank and take any home-country notification of a foreign account into account in advance.
• Duties after the passport. Home-country notifications, such as Russia’s 60-day Interior Ministry notice, and reporting on accounts and companies.
• Relocation. Combining a Vanuatu passport with residence in Europe or a move to another country.

What a zero tax gives in practice and where its limits are is covered in the analysis zero tax in practice. The cost of citizenship for your family is shown by the cost calculator. We help you relocate quickly, reliably and lawfully.