Where to relocate to not pay capital gains tax and live cheap

[Revoltec]

The only problem with this is that︈ if I get questioned by the Estonian tax agency, the only way out would be︉ to prove to them that I have my residency in another country, simply saying 'I︊ dont live here' will not work, because I know how the questioning goes. And I︋ cannot point to Sweden, so that would mean I would just need to find another︌ country where I have my residence.

 

[JustAnotherNomad]

That's not correct. They're not Sweden. They don't care about your relaionship to some other‌ country. They only care about your relation to their country.
But please get it checked‍ and don't just trust me. You can send an official inquiy to the tax authorities.⁠
Or maybe get some asistance from a lawyer.

Or just move to the Balkans...

Here is the thread I had in mind:
https://www.offshorecorptalk.com/th...n-europe-specifically-estonia-thoughts.31012/

 

[Revoltec]

I have now finally gotten the answer from the "Ministry of⁣ health" in Slovakia. Turns out as this is not considered a tax but called "social⁢ health contribution" or something like that so therefore it is not a question to be︀ answered by the Slovakian Tax agency. Here comes the answer:

"Whether said income will also︁ be subject to contributions to the health insurance depends on how the income will be︂ taxed. If the said income is not subject to tax, the said income will not︃ be subject to health insurance levies either.

During the annual settlement of the health insurance︄ (RZ), the health insurance company is based on the submitted tax returns (DP) of the︅ insured. The data from the filed tax return is reported to the health insurance company︆ in accordance with § 29b par. 11 of Act no. 580/2004 Coll. Financial Administration of︇ the Slovak Republic."

I find this quite remarkable. Therefore, no capital gains tax on stock︈ you hold for more than 1 year in Slovakia.

In the end, Estonia still tax worldwide income︎ and the only way to prove to the tax agency that you didn't live in️ Estonia would be to show another address in another country. It is always your duty‌ to prove things, so I find this option risky. Your thread also seem to be‍ about companies and not individuals?

 

[JustAnotherNomad]

No, I meant individuals. You should be able to have an apartment in Estonia, but‌ if you don't live there full time (nomadic lifestyle for example), you may be able‍ to not be considered tax resident even under domestic law. But please check this with⁠ a tax lawyer, or ideally try to get an advance ruling from the tax authorities.⁤

 

[JonnyStekkino]

Bahrain

 

[Cloudbanck]

Other idea, how how about register that you live in a country that is so‌ chaotic, that the government there doesn't really keep track of residents, and doesn't answer if‍ authorities from other countries try to contact them. And streets have no names and numbers.⁠ Also is not considered a tax haven, but still there is no such thing as⁤ a personal tax return and no capital gains tax. Most people from Sweden that live⁣ in such countries are NGO-workers, and embassy/international institution staff.

And then you can travel wherever⁢ you want, (just dont become a tax resident in a high tax country).

I have︀ lived in such countries for a long time, I like it a lot, but it︁ is not for everyone.

 

[JohnnyDoe]

Cloudbanck said:
Other idea, how how about register that you live in a country that is so chaotic, that the government there doesn't really keep track of residents, and doesn't answer if authorities from other countries try to contact them. And streets have no names and numbers. Also is not considered a tax haven, but still there is no such thing as a personal tax return and no capital gains tax. Most people from Sweden that live in such countries are NGO-workers, and embassy/international institution staff.

And then you can travel wherever you want, (just dont become a tax resident in a high tax country).

I have lived in such countries for a long time, I like it a lot, but it is not for everyone.
Click to expand...

Can you list some of these countries?

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[JustAnotherNomad]

Enforcement of the tax code is generally low in a lot of less developed countries.‌ There are many countries that even have an OK tax treaty network where the corporate‍ tax rate is quite high, but they don't really check what you're doing. Heck, probably⁠ even the Balkans would fit that description.
But at a couple million in annual profit,⁤ why choose a setup where you have to rely on weak enforcement? What if they⁣ come after you one day after all? It's not like 100k where you can just⁢ claim all your private expenses as business expenses to lower your tax rate.
If he's︀ fine with living in Dubai and cutting ties with Sweden, it's probably a very clean︁ solution.

 

[Cloudbanck]

Large parts of‌ Sub-saharan Africa is like this. And yeah balkans have some of these aspects. Asia used‍ to be , but less now.

Agreed that a︄ Gulf country is a cleaner solution. But you dont entirely rely on weak enforcement, the︅ capital gains tax for individuals typically legally is zero, and some of these countries have︆ territorial tax in law, and all have it de facto. Another thing is that these︇ countries can only go after you when you are physically there, and if you have︈ money things can typically be arranged.

 

[scooterguy]

SEA is still like this.

* Thailand︀ doesn't tax foreign capital gains, and getting a medium-term visa there is cheap and easy.︁
* Cambodia is a mess and has no CRS.
* Myanmar (non-CRS) is an even︂ bigger mess, with an ongoing civil war.
* Laos (also non-CRS) barely has a tax︃ agency, and taxes are extremely low anyway, such as a 2% capital gains tax. They︄ also have a very short 3-year statute of limitations, and very lax fines (30% of︅ the tax due as a fine on the first offence, 60% on the second offence).︆

 

[backpacker]

With these countries you rely on weak enforcement. Plus, they⁢ have an almost non-existent network of DTT. Not exactly a forward looking strategy.

 

[Revoltec]

But DTT‍ is not needed as long as that country is your center of life for more⁠ than 6 months? (Depending on your origin country's tax laws of course)

 

[Cloudbanck]

Yeah DTT is mostly irrelevant.‍
And as to lax enforcement, you are relying on the country remaining messed up. And⁠ if it gets less messed up you will usually get ample warnings ahead, like property⁤ rights and rule of law improving, and real estate values shooting up.

To take a⁣ concrete example of how things work in practice, got a friend living long term in⁢ an African country and working remotely for a European company. Naively he went to the︀ local tax office to declare his foreign income and the guys at the tax office︁ looked at him like he was crazy. After long discussions (no clear law or rules)︂ it was agreed he would pay 10%, which obviously went straight to the personal pockets︃ of the guys at the local tax office.
Then after 5 years of paying 10%︄ the local tax office contacted him with some bulls**t excuse saying he hadn't paid enough︅ and owed them about 15,000 EUR. He managed to negotiate it down to 150 EUR,︆ and after that he stopped saying he had a foreign income and hasn't had any︇ issues.

 

[scooterguy]

Weak enforcement‍ will remain, these countries operate in a completely different way than Western ones.

But even⁠ if you follow all rules, you only pay 2% capital gains tax in Laos, for⁤ example, so tax rules are still favorable.

 

[backpacker]

It largely depends on your activities. For most people in this⁠ forum, a DTT is seemingly (and understandably) very important.
These "wise" words I heard all too often Just to see the same "wise" people crying⁣ when their house of cards collapsed.

Why not look for the correct setup right from⁢ the start?

 

[Cloudbanck]

There is⁠ often no correct set up in these countries. Or well, the "correct" set up is⁤ to be part of the ruling family or clan, then you are above the law,⁣ and dont pay any tax, and can forbid competitors to compete with you, even have⁢ the police arrest competitors and give their assets to you.

As an example look at︀ Tunisia under Ben Ali before the revolution. They had on paper super high taxes, restrictions︁ and import duties, making business practically impossible to do by the book, but then you︂ could with a little facility payment get rid of all that. But the government kept︃ a file on all businesses - and whenever some business owner did something the government︄ - or more specifically the Trabelsi family - didnt like, then suddenly the full formal︅ rules were used against that business owner.

 

[scooterguy]

I agree⁠ with doing the correct setup from the start, that's why those countries have lots of⁤ the advantages of a correct setup:
* Low to non-existent taxes
* Low to non-existent⁣ fines
* Weak enforcement of those low to non-existent taxes and fines

You can do⁢ a correct setup in Germany and not only pay more tax but still get screwed︀ with hefty fines for an error in your tax declaration many years ago. That can︁ never happen in Laos, and if it happens it will be much cheaper: taxes are︂ lower, fines are lower, and enforcement is weaker.

Of course, those countries have other issues:︃ bad hospitals, serious enforcement for other 'crimes' such as criticizing those in power, etc., but︄ for certain types of businesses and for investment income they work pretty well.

 

[backpacker]

Initially, you mentioned Thailand, Cambodia, Myanmar, and Laos.
Not only︃ do Cambodia and Laos tax foreign-sourced income, but these countries are also more expensive than︄ Thailand (from a value perspective).
Myanmar: Somebody must have serious issues if he or she︅ devoutly wants to live there.
So we are left with Thailand.

If you are longing︆ for zero taxes (on foreign-sourced passive income), an affordable cost of living, a fun lifestyle,︇ and an at least semi-functional immigration system, there are currently only two places in SE-Asia︈ that can offer that: the Philippines and Thailand.

 

[scooterguy]

I agree that Thailand and the Philippines︀ overall provide the best value, both in terms of proper structures and quality of life.︁

However, again, Laos has only a 2% capital gains tax, so it can be a︂ solid option for OP (assuming you want to abide by these laws no one in︃ the whole country cares about, and where fines are laughable). Furthermore, you don't need to︄ live there full time, just arrange your affairs so that you have your center of︅ interests there, pay your 2% tax, and then don't become a tax resident anywhere else︆ (e.g., you can spend most of your time between Thailand and Laos, with summer trips︇ to your home country).

Cambodia only taxes employment income, so, no, foreign income is not︈ taxed, unless it's a salary.

Myanmar: I agree that it's the weakest option in SEA︉ but can work for those who want a more chaotic country with extremely weak enforcement︊ of tax rules (I understand that after a few posts we changed the discussion to︋ "proper structuring that doesn't rely on weak enforcement", but it's a great option for the︌ original intent. Yangon is also a vibrant city, and barring current political instability and some︍ weak infrastructure, is very livable and feels way less 'westernized' than the other SEA capitals.︎

 

[cryptofriendly]

Taiwan and Malaysia also don't tax foreign︀ income. But yeah, a bit less fun. Though Langkawi isn't a bad option, if one︁ wants to enjoy tax-free products in Malaysia, and being on a beautiful island just a︂ few km from Thailand. Malaysian 90 days free visa is a good thing, though I︃ am still trying to find a way for longer stay without MMSH or Labuan options.︄ Coz without that, one can't even open a bank account anymore. And Taiwan.....having lived and︅ worked there for a year - not really my thing. I'd take Lao over that,︆ with the $500 business visa option, might retire in that sweet little Phongsali with that.︇