Non Tax Resident in Spain or France with low substance offshore Company

[cyprustoomuch]

Hello,

Spain and France dont consider you tax resident if you have no permanent home, so if somebody would just rent a house for 5 months he wouldnt be considered a tax resident.

Now lets assume that person is working on a daily basis from his airbnb in spain in his online business which is formed under a low substance offshore Company.

Will spain or france make make any problems if that person just stays for 5 months and leaves the country afterwards?


Which other countries in Europe can you recommend for perpetual travellers?

Regards

 

[Sols]

cyprustoomuch said:
Spain and France dont consider you tax resident if you have no permanent home, so if somebody would just rent a house for 5 months he wouldnt be considered a tax resident.
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That is not correct.

cyprustoomuch said:
Now lets assume that person is working on a daily basis from his airbnb in spain in his online business which is formed under a low substance offshore Company.
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That person is probably tax resident in Spain.

cyprustoomuch said:
Will spain or france make make any problems if that person just stays for 5 months and leaves the country afterwards?
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Will? Maybe.
Can? Yes.

cyprustoomuch said:
Which other countries in Europe can you recommend for perpetual travellers?
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None. Forget about PT, at least if you plan to stay in Europe and/or want to have access to banking.

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This is the probably the answer to your question.

 

[Konstanz]

You must have some tax residence country with substance. Were you stay at least 6 months in case you stay 5 months in Spain/France.
If you stay most of your time in Spain or France, so you are resident in that country

 

[cyprustoomuch]

I have a tax residency in Cyprus where I also stayed for the past 2 years completely but somehow want to use the 60-90 Day minimum there and spend more time travelling in other EU countries without exceeding there any duration above 5 months.

Is there a chance to do so in southern european countries with this setup?

To make it simple

90 days cyprus with a permanently available house, 4 months spain, 4 months france

Would this work without triggering any tax residency there?

 

[Konstanz]

cyprustoomuch said:
I have a tax residency in Cyprus where I also stayed for the past 2 years completely but somehow want to use the 60-90 Day minimum there and spend more time travelling in other EU countries without exceeding there any duration above 5 months.

Is there a chance to do so in southern european countries with this setup?

To make it simple

90 days cyprus with a permanently available house, 4 months spain, 4 months france

Would this work without triggering any tax residency there?
Click to expand...

Why you need 4months france , 4 months spain? Not too much hassle?

 

[cyprustoomuch]

Just trying to enjoy life and see some new places for a longer time than just 2 weeks of vacation, cyprus can get boring actually when you spend there too much time.

We have a car packed with all our basic stuff and can just travel around europe a bit

 

[Konstanz]

cyprustoomuch said:
Just trying to enjoy life and see some new places for a longer time than just 2 weeks of vacation, cyprus can get boring actually when you spend there too much time.

We have a car packed with all our basic stuff and can just travel around europe a bit
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This can work if you stay some time in Cyprus as well

 

[pixbix]

How can they know you stayed 4 months in Portugal or France, and the others 8 in Romania and not in Spain ?

 

[Sols]

cyprustoomuch said:
I have a tax residency in Cyprus where I also stayed for the past 2 years completely but somehow want to use the 60-90 Day minimum there and spend more time travelling in other EU countries without exceeding there any duration above 5 months.
Click to expand...

The Cyprus 60-day program is contingent on you not being tax resident anywhere else at the same time.

cyprustoomuch said:
Is there a chance to do so in southern european countries with this setup?
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Stick to countries with looser controls and checks, which in the southern European region could be for example Montenegro, Croatia, Albania.

cyprustoomuch said:
90 days cyprus with a permanently available house, 4 months spain, 4 months france

Would this work without triggering any tax residency there?
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You're very focused on number of days, when it's just one of many things used to determine tax residence.

For example, you can spend zero days per year in Spain and still be considered tax resident in some situations.

Reality is you might fly under the radar and be totally fine, but don't confuse that with your setup being stable. It might crumble if either tax authority for whatever reasons looks more closely at you.

pixbix said:
How can they know you stayed 4 months in Portugal or France, and the others 8 in Romania and not in Spain ?
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Reverse burden of proof. If a country thinks you're tax resident, they will send you an invoice which is due and payable immediately. It's up to you to fight back and prove you're not tax resident.

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This is the probably the answer to your question.

 

[pixbix]

Sols said:
Reverse burden of proof. If a country thinks you're tax resident, they will send you an invoice which is due and payable immediately. It's up to you to fight back and prove you're not tax resident.
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According to EU court of Law, they need to prove you was a tax resident

 

[Sols]

pixbix said:
According to EU court of Law, they need to prove you was a tax resident
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That means they can't just make things up. A claim that a person is tax resident has to be based on some substantial evidence (such as the person having spent 5.5 months on Spanish territory and maybe some documents to indicate the person has economic center in Spain). But in many cases, once they have enough evidence, the burden of proof is shifted and you're presumed guilty until you prove your innocence.

A lot of people win against tax authorities in court. Most people don't fight, though, and either pay or work out a deal.

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This is the probably the answer to your question.

 

[cyprustoomuch]

Sols said:
The Cyprus 60-day program is contingent on you not being tax resident anywhere else at the same time.


Stick to countries with looser controls and checks, which in the southern European region could be for example Montenegro, Croatia, Albania.


You're very focused on number of days, when it's just one of many things used to determine tax residence.

For example, you can spend zero days per year in Spain and still be considered tax resident in some situations.

Reality is you might fly under the radar and be totally fine, but don't confuse that with your setup being stable. It might crumble if either tax authority for whatever reasons looks more closely at you.


Reverse burden of proof. If a country thinks you're tax resident, they will send you an invoice which is due and payable immediately. It's up to you to fight back and prove you're not tax resident.
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Thanks for your reply. Please stick to my special case. There is a full year permanent house in Cyprus in which I have already spend 4 months this year.

Then there is a limited rental contract for 4-5 months in Spain for example. After that I am leaving the country again and the residence ends, meanwhile the cypriot continues.

No family, no kids, no other ties related to spain. Please share your honest opinion. Do you really believe this limited residency triggers a tax liability in Spain, Portugal or France?

All countries which are very famous for second residencies of rich people.

 

[Sols]

cyprustoomuch said:
No family, no kids, no other ties related to spain. Please share your honest opinion. Do you really believe this limited residency triggers a tax liability in Spain, Portugal or France?
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I have seen it happen in Spain and France. I have also seen it not happen.

Why are you so hung up on duration?

Just look at the French definition for example. Residents of France It doesn't even mention number of days.

The Spanish law does have a 183-day rule but it's only one possible way to become tax resident. Another is by having Spain as your main base or centre of economic/vital interests. So unless another country is your centre of economic interest, Spain might be.

cyprustoomuch said:
All countries which are very famous for second residencies of rich people.
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Absolutely, people who spend a few weeks a year in either country and have lawyers helping them make proper arrangements. People with clear centres of economic interest somewhere else. People who don't really do any work while they're in Spain and France.

And then there are examples like Shakira and Lionel Messi where things maybe didn't go so well.

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This is the probably the answer to your question.

 

[pixbix]

Try to use cash to fly as low as possible while in Spain.Or use an "anonymous" crypt card where required to pay by card. Change them from time to time. A payonner card for example. Ask a friend/girlfriend to borrow you one for example.

I think you are afraid they might know you lived in Spain for 6 months because when you rent you need to register your rental contract. If you are spanish why don't you try to go to those countries where you can avoid taxes for a few years , like Chile, Argentina, or whatever the name are?

 

[cyprustoomuch]

Sols said:
The Spanish law does have a 183-day rule but it's only one possible way to become tax resident. Another is by having Spain as your main base or centre of economic/vital interests. So unless another country is your centre of economic interest, Spain might be.
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Are you trying to say that a 4 month residency in spain, that is directly afterwards interrupted without any further available property should lead to a center of someones personal life?

Explain me please where the center of interests should come from, because leaving the country and quitting the residency sounds more like a case for the exit taxation and not for the center of main interests. In the end it will come down to cyprus, france and spain fighting with each other who should get the right to tax since they all have treaties with each other. I dont see any other country being successful than the one country where someone also spend 4 months but maintained a permanently available residency during the entire year, not like in the others.

I do see the point that working from spain may change the situation. Does anyone has first hand experience about this?

 

[Mike Forman]

cyprustoomuch said:
Are you trying to say that a 4 month residency in spain, that is directly afterwards interrupted without any further available property should lead to a center of someones personal life?

Explain me please where the center of interests should come from, because leaving the country and quitting the residency sounds more like a case for the exit taxation and not for the center of main interests. In the end it will come down to cyprus, france and spain fighting with each other who should get the right to tax since they all have treaties with each other. I dont see any other country being successful than the one country where someone also spend 4 months but maintained a permanently available residency during the entire year, not like in the others.

I do see the point that working from spain may change the situation. Does anyone has first hand experience about this?
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You are looking at taxation by each country from a wrong perspective, these three countries will not "fight" against each other to proof you have to pay tax in their jurisdiction and not the other country, they don't care about other countries. All three if they believe they have the right to claim tax, they will and at that point DTA comes into place. All three can make the same claim and reverse burden of proof is to you.

Sometimes they are right, sometimes they are wrong. If they believe they have a reason to tax you and it's worth it for them to go after you, they will proceed and send you the tax claim, which you can appeal in writing by proving proof.

At that point if they believe your proof is sufficient they will accept it, but very often they won't if they already started investigating you.

In any of the cases it is best to have an international tax lawyer at hand in each jurisdiction, anything said here on the forum can share ideas, experiences and opinions, but every situation is different.

EU countries exchange all information they have with each other, either automatically or on request, just as they can easily block your assets in EU until the matter is resolved in court. EU countries will easily assist with this, this is were the EU is an union.

Within the EU you can freely travel, so it is more difficult for them as well as for you to proof where you reside unless you have a permanent establishment and are already a tax resident and obtain your income from working/living there.

It would be interesting to hear if anyone managed to be a perpetual traveler in EU and managed not to pay tax anywhere.

In my opinion it is best to have one place you are a tax resident in EU or just stay out of the EU most of the time and live in countries that don't chase/enforce aggressively taxation on worldwide income (keep your income out of this country) or even better live in a country that doesn't tax foreign income.

 

[jafo]

Sols said:
want to have access to banking.
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This is key! Obviously, those who are homeless, and we have plenty of those now, don't have a permanent home.

Sols said:
they will send you an invoice
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To what address?
What am I missing here?

cyprustoomuch said:
Hello,

Spain and France dont consider you tax resident if you have no permanent home, so if somebody would just rent a house for 5 months he wouldnt be considered a tax resident.

Now lets assume that person is working on a daily basis from his airbnb in spain in his online business which is formed under a low substance offshore Company.

Will spain or france make make any problems if that person just stays for 5 months and leaves the country afterwards?


Which other countries in Europe can you recommend for perpetual travellers?

Regards
Click to expand...

How will France or Spain find out you are there?
Are you planning to walk into Hacienda and confront them?
Are you like Shakira, Messi, CR7, or Neymar who are in the public eye?

What am I missing here?

Last edited: Jun 11, 2023

 

[Sols]

cyprustoomuch said:
Are you trying to say that a 4 month residency in spain, that is directly afterwards interrupted without any further available property should lead to a center of someones personal life?
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No, I'm not saying it should. But I'm saying it could (and has in some similar cases).

cyprustoomuch said:
Explain me please where the center of interests should come from, because leaving the country and quitting the residency sounds more like a case for the exit taxation and not for the center of main interests.
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Say you spend four months in Spain working there and for some reason the Hacienda catches wind of you (which is the biggest unknown, the main source of uncertainty). You just spent 1/3 of the year in Spain doing work. They could use that as basis to consider you taxable in Spain because you haven't proven to them that you have a center of economic interests somewhere else. How would they know about France and Portugal and Cyprus and everywhere else you've possibly become tax resident? They don't know and they don't (initially) care.

Shoot first, ask questions later. That's how the Spanish tax authority works. The Portuguese one is a lot less aggressive. Know your enemy and pick your battles.

cyprustoomuch said:
In the end it will come down to cyprus, france and spain fighting with each other who should get the right to tax since they all have treaties with each other.
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Or they could just all three call you tax resident and let you sort out the mess. As long as they have a good enough basis for doing so.

It costs them almost nothing to gather enough evidence to make a tax claim on you. It costs you much more in time and money to defend yourself, especially if you have to invoke multiple tax treaties to figure out how much (if anything) you owe where.

cyprustoomuch said:
I dont see any other country being successful than the one country where someone also spend 4 months but maintained a permanently available residency during the entire year, not like in the others.
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On what basis do you not see it?

cyprustoomuch said:
I do see the point that working from spain may change the situation. Does anyone has first hand experience about this?
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Yes. I am aware of at least one case where someone stayed in Spain less than the majority of a year and still ended up tax resident because of strong economic ties to Spain. I am also aware of people who have done similar things and faced no repercussions.

jafo said:
To what address?
What am I missing here?
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To whichever address (physical or digital) that they can find. I have seen tax authorities contact people via social media, contact forms on people's company websites, calling/emailing customer service of a company the person owns/controls, and lots of other methods. They can get really creative. Sharks smelling blood in the water.

Mike Forman said:
It would be interesting to hear if anyone managed to be a perpetual traveler in EU and managed not to pay tax anywhere.
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There are some people doing it. But I think people who hear about them, easily confuse not getting caught/flying under the radar with something being compliant and able to hold up if questioned.

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This is the probably the answer to your question.

 

[jafo]

Sols said:
To whichever address (physical or digital) that they can find. I have seen tax authorities contact people via social media, contact forms on people's company websites, calling/emailing customer service of a company the person owns/controls, and lots of other methods. They can get really creative. Sharks smelling blood in the water.
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rof/% Good to know! I don't have social media. At least not in my real name. My business websites do NOT identify me by name. I don't take walk-in/cold-call customers AT ALL even if they called through our websites! I use special emails (e.g. 33mail-type catchall with unlimited aliases) when booking/staying in hotels, the phone number I use for non-business is a special one from a very poor African country just for miscellaneous/non-business etc. The addresses I fill in on hotels, restaurants forms etc. I generate from
Random Home Address Generator

I think we should ALL have a hermetically sealed OPSEC! 😎

 

[Mike Forman]

Should be DTT instead DTT

jafo said:
rof/% Good to know! I don't have social media. At least not in my real name. My business websites do NOT identify me by name. I don't take walk-in/cold-call customers AT ALL even if they called through our websites! I use special emails (e.g. 33mail-type catchall with unlimited aliases) when booking/staying in hotels, the phone number I use for non-business is a special one from a very poor African country just for miscellaneous/non-business etc. The addresses I fill in on hotels, restaurants forms etc. I generate from
Random Home Address Generator

I think we should ALL have a hermetically sealed OPSEC! 😎
Click to expand...

It is recommended to use the above approach to avoid spam and leave less traces, especially if you don't want them to find out where you stayed and pay in cash or an unknown card. On the other hand hotel bookings are not something I believe tax authorities can have access to and sometimes having bookings in your name can be helpful to proof you were not in the country tax authorities claim you were. Same counts for credit card spending etc.

Definitely don't post anything public or on social media, this is the first thing tax authorities will check if they got track on you and use in their tax claim.

Company registers even not directly publicly accessible get sometimes publicly posted by the ICIJ offshore leaks and suddenly your name becomes the first hit in Google with all addresses and related companies.

In my previous post DTA should be DTT, these are different things.