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2 months UK, 5 months UAE, 5 months Indo - Tax Residency?

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Luxxxtino

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Jun 4, 2020
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Hi all,

I'm a UK citizen (non-resident for 3 years, cut most ties) operating a US SMLLC with no US ECI or business in UAE/Indonesia

Trying to figure out what my tax residency would be for the following travel plans (my ideal rotation for next couple of years):

2 months in UK (90 months needed for tax residency)
5 months in Dubai (183 days needed for tax residency without Ejari (would be staying at friend's place))
5 months in Indonesia (183 days needed for tax residency)

Would I be tax resident nowhere? Would HMRC claim de-facto residency by virtue of my citizenship?

Particularly concerned with the UAE tax authorities' stance on this as appears to be a grey area (5 months without Ejari).

Thanks!
 
You won't to give up your UK citizens to be make sure they don't come‌ after you. Anyway, you want to start collecting as many bills proving you a traveling‍ and out of the UK as possible.

Every bill counts. I'm certain they will try⁠ to come after you anyway.
 
The problem is that if you run a company from those countries, you still create‌ a PE in all of them. Now, we all agree that UAE and Indo both‍ won't bother too much and probably won't find you. But you don't want to pay⁠ in UK, hence you need to check the tax treaties of UK

https://www.gov.uk/government/collections/tax-treaties
Do yourself⁤ the favour and read and understand them. Like for Indonesia, your domicile is

(a) he⁣ shall be deemed to be a resident of the Contracting State in which he
has a permanent home available to him; if he has a permanent home available
to him⁢ in both Contracting States, he shall be deemed to be a resident of the
Contracting State with which his personal and economic relations are closer
(centre of vital interests);
(b) if the Contracting State in which he has his centre of vital interests cannot
be determined, or if he has not a permanent home available to him in either
Contracting State, he shall be deemed to be a resident of the Contracting State
in which︀ he has an habitual abode;
(c) if he has an habitual abode in both Contracting︁ States or in neither of
them, the competent authorities of the Contracting States shall settle︂ the
question by mutual agreement.

Go through the whole tready and you will see what︃ is needed. You may have to get an apartment or a girlfriend in the place︄ you want to be tax resident. Collecting invoices is a general lawyers advice, I personally︅ am unsure how much it helps as they generally look at the whole picture and︆ what you do and where you live. Having 1000 invoices pre day from UAE is︇ less than having a girlfriend and kid in Indonesia without any invoice.

The UK citizenship︈ does not change anything. If you want to be safe, you can apply for a︉ tax ruling with HMRC etc. Otherwise, you just ensure that you won't get in troubles︊ in UK and hope UAE and Indo won't tax you.
 
I am aware, hence why I said I've been non-res for 3 years (first⁠ 2 years need to be 45 days due to more ties) such that I can⁤ now spend 90 days in the UK

Working on alternative passports but for now I'm stuck with just the UK︁ one (unfortunately ineligible for Irish)
 
In practice as long as you dont use any UK bank/EMI etc and only use‌ your UAE bank you should be ok and nobody will ask questions.

If HMRC comes‍ asking just tell them some bs that you work in UAE for little money so⁠ they go away.

Overall try to lay low.
 
Yep all⁠ UK banking cancelled long time ago, annoyingly had decent money flowing through my old UK⁤ LTD CT returns so HMRC have an idea of me earning a decent amount, but⁣ nothing I can do about that now

100% man I agree with you, nothing I can do about my parents︀ still living there though or the work tie (>3 hours of work for >40 days)︁ so those 2 ties are there for good, hence max 90 days in UK for︂ me
 
'too stressful, I decided to close it all down as I value my health much more⁠ now'
 
Your non resident SMLLC, what's the director's address? Your UK address? I think that would‌ trigger UK tax residency. From my understanding and research it's nowadays impossible to live without‍ tax residency.
 
And address on file has nothing to do⁠ with tax residency.
And your understand is wrong. Op might be UK non tax resident⁤ due to the automatic tests.
There's is no such thing a mandatory tax residence (for⁣ all citizenships).
In many countries you have to qualify for tax residency by staying long⁢ enough, and if you don't then you are not tax resident, no matter how much︀ you'd want to be.
 
Yeah, and among western high tax countries, the UK is one of the⁣ absolutely easiest to leave with clearest rules on how to stop being a tax resident.⁢

I categorise this as follows from hardest to easiest to leave:

1. Full on taxation︀ by citizenship - US
2. Quasi/Partial taxation by citizenship - Norway, Hungary
3. Not clear︁ and aggressively enforced rules for center of vital interest, habitual abode, economic interests, plus anti︂ tax haven rules - Spain, Italy
4. Days test plus domicile rule, meaning you must︃ show that you have a permanent home abroad, and aggressive enforcement - Australia
5. Significant︄ ties plus minor ties which are not clearly defined. So besides not having a home,︅ family, business, one must also cut stuff like gym subscription, car, health insurance, bank accounts,︆ golf club subscription, local doctor, and to be on the safe side create such ties︇ in a foreign country. Netherlands and I think Germany, Canada
6. Significant ties which are︈ clearly defined. No business, property or immediate family. - Sweden, Denmark, Finland
7. Just days︉ tests. - UK, Ireland, Estonia

So if you are a citizen of the US, Hungary︊ or Australia, and Norway for the first three years after leaving, you cant be a︋ tax resident of nowhere.
(Hungary doesnt really enforce it very much, and for Australia you︌ technically dont have to be a tax resident in the foreign country but you have︍ to reside there permanently which makes it hard to avoid becoming a tax resident)

But for all other citizenships, yes you can be a tax resident nowhere - it is︎ really not that difficult, just dont meet the criteria for tax residency in any one️ country. And note that you can be an official resident without being a tax resident‌ in quite a few places.
 
Yes. But this⁠ is for personal taxes only. Your company may still get taxed where you have a⁤ PE. In most Western countries 183 days in already is way more than enough to⁣ have a PE with your company.

I personally would be very careful with this kind⁢ of setup.
 
Yes, as mentioned 183 days is already way more than enough to form‌ a PE. It can be with as little as 30 days in come countries. 2‍ months does not rule anything out. Especially, OP is talking about 2 months per year.⁠ Not just 2 months. It is a big difference as you can see in the⁤ HMRC internal manual

https://www.gov.uk/hmrc-internal-manuals/international-manual/intm264435

https://www.gov.uk/hmrc-internal-manuals/international-manual/intm264430

I can only reiterate. What you are talking about is only for personal︍ tax. The rules for corporate tax are different.
 
agreed.

OP states it himself
"or the work tie (>3 hours of work for >40 days)⁢ so those 2 ties are there for good, hence max 90 days in UK for︀ me" which is gonna be complicating things. Its not like just chillin at the fams︁ home for a while.
 
Interesting! They second link states the need for a permanent location thought, so depending on OP's⁢ situation it might not so easily be a PE if he's not working from the︀ same location.

And, if he is working for his own one man US LLC with︁ no other connection to the UK, I would personally think there is a very minuscule︂ chance that HMRC would ever be aware of this company or the potential PE.
 
Yeah, I wouldn't push it though, you can't count on⁢ tax agencies to follow their own rules, or what you think is a sensible interpretation︀ of the rules. I wouldn't stay 2 months in the UK if I had a︁ foreign business, especially not if I was a UK citizen and a previous tax resident︂ of the UK.

Another issue here is what personal tax residency to put in the︃ annual reporting to the IRS for the US LLC. Either UAE or Indonesia I guess︄ - you cant put that you arent a tax resident anywhere. Im not sure about︅ Indonesia, but for the UAE you can use your Emirates id as TIN, even though︆ the UAE technically doesnt issue personal TINs.
And from the US perspective, it isnt really︇ their problem if you are a tax resident of the UAE or just a resident.︈ The UAE might get the information from the US, and if so they will probably︉ do nothing, but who knows really.
 
to fully cut ties with UK, in some cases, you have to spend less than‌ 15 days in a year in the UK, read very carefully the rules
 
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