Low tax country according to German foreign tax law, it is a country that has a low tax level compared to the international average. In this context, only income taxes are usually taken into account, and here mostly only tax rates.
According to German foreign tax law, taxation is low if the income is not taxed with at least 25% income taxes and the low tax rate is not based on the low level of income or on compensation with losses from other types of income. If shareholders based in the Federal Republic of Germany establish an intermediate company in a low-tax country, according to the Foreign Tax Act, an Additional taxation. The passive income after deduction of foreign taxes is added to the shareholders.
Some European small states and territories as well as some developing countries are pronounced low-tax countries. They are often referred to as tax havens, such as Andorra, Bahrain, Gibraltar, Jamaica, Cayman Islands, Liechtenstein, Monaco and Tonga.