Relocation intelligence

🇱🇰 Moving to Sri Lanka: tax, residency and cost of living

Progressive income tax (APIT/PAYE) with rates from 6% to 36%, a tax-free allowance of LKR 1.8 million per year and worldwide taxation for residents. Employees contribute 8% to the EPF.

Thinking of moving to Sri Lanka? Here is the tax, residency, property and quality-of-life picture in plain numbers, with sources.

Key facts

Top income tax
36%
Corporate tax
30%
Capital gains
10%
Wealth tax
No
Inheritance tax
No
Cost of living index
30
Safety
7/10
Internet quality
6/10
Visa-free destinations
39
Foreigners can own property
Yes
Residency in
6 months
Citizenship in
5 years

Taxes

APIT/PAYE 2025/26 applies rates of 6% to 36% after a tax-free allowance of LKR 1.8 million. Residents are taxed on worldwide income. No wealth or inheritance tax; investment gains at 10%; VAT 18%.

Residency and visas

Residence runs through the Resident Guest Scheme (from USD 250,000 deposit or investment) or a Dream Home visa for over-55s. Full citizenship by naturalisation is difficult and takes years.

Property ownership

Foreigners can own condominium apartments outright but not freehold land; houses and land require leases up to 99 years or a local company structure.

Cost of living and quality of life

Tropical climate, beaches, tea highlands and a low cost base, but expect economic uncertainty, currency risk and variable infrastructure outside the cities.

Passport and mobility

The passport is weak (around 39 destinations visa-free or visa-on-arrival), but Sri Lanka itself is well connected via Colombo airport.

Why people move to Sri Lanka

  • Very low cost of living

    Sri Lanka is tropical and exceptionally affordable: rent, food and services are far below Western European levels, letting a modest income stretch a long way.

  • Generous tax-free allowance and low entry rate

    The first LKR 1.8 million is tax-free and above that the rate starts at only 6%, so lower and middle incomes pay little net tax.

Honest trade-offs

  • Inwoners van Sri Lanka betalen belasting over hun wereldwijde inkomen en het hoogste tarief loopt op tot 36%, dus buitenlands inkomen is niet vrijgesteld.
  • Buitenlanders mogen geen grond in volle eigendom (freehold) kopen; alleen appartementen of een erfpacht tot 99 jaar zijn toegestaan.
  • Het Sri Lankaanse paspoort geeft toegang tot slechts 39 bestemmingen en staat rond plaats 93 in de Henley Passport Index 2026.
  • Sri Lanka ging in 2022 in default op zijn buitenlandse schuld en kende zware inflatie, waardoor de roepie in korte tijd fors in waarde daalde.

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Sources

Other destinations

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