of the country where you were born/have assets/relatives
Don't worry, taxes and death are our only certainties.
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Can I insist on paying a tax as a tourist?
- Thread starter JamesDonkey
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Don't worry, taxes and death are our only certainties.
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The United Kingdom of Great Britain and Northern Ireland
This is how it works: flowchart for UK Statutory Residence Test
This is what the tax man says about it
This is the law, signed by The Queen that a judge will use if it ends up in court.
What @JohnnyDoe describes is true in some places. It is not true in others. It is often incorrect to write "never" or "always", "everywhere" or "nowhere" when it comes to international matters.
Sorry, I just felt it's important to deal with the "one︁ size fits" all myths when it comes to international issues like this.
This is how it works: flowchart for UK Statutory Residence Test
This is what the tax man says about it
This is the law, signed by The Queen that a judge will use if it ends up in court.
What @JohnnyDoe describes is true in some places. It is not true in others. It is often incorrect to write "never" or "always", "everywhere" or "nowhere" when it comes to international matters.
Sorry, I just felt it's important to deal with the "one︁ size fits" all myths when it comes to international issues like this.
The “statutory test” is nothing else than an expansion of the UN principles.
Good luck with HMRC if you believe to be able to trick it. They will come after you anywhere in the world, if you are worth the effort.
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@JohnnyDoe ”“ Your #1 Source for Guidance in Different Offshore Fields
This is simply not true.
Here an example:
„Liability for income tax
A person’s liability to Austrian tax is determined by residence status. A person has unlimited liability to taxation (is a “tax resident”) if that person’s residence (that is, any home readily available for the resident’s use) or habitual place of abode (which is automatically given from the start once the︀ stay exceeds six months but possibly also earlier) is in Austria. The general rule is︁ that such a person is assessable on worldwide income.
If neither of these conditions is︂ fulfilled, the person has only limited liability to taxation (is a “nonresident”) in Austria, in︃ other words, is generally assessable only on income derived directly or indirectly from sources in︄ Austria.“
src: Austria
So, say you are Austrian but leave Austria permanently and don’t have︅ any income from Austria. Now you move to Barbados on the digital nomad visa.
src: Explore 12 Month Barbados Welcome Stamp - Visit Barbados
Well, at this point you are non-resident of Austria and you will not become tax resident︇ of Barbados. You don’t have any tax residency, easy as that.
Of course this setup︈ doesn’t work with all citizenships (e.g US, Australia, NZ require you to have a new︉ residency) but if you are from most of the European countries it is very doable.︊
Here an example:
„Liability for income tax
A person’s liability to Austrian tax is determined by residence status. A person has unlimited liability to taxation (is a “tax resident”) if that person’s residence (that is, any home readily available for the resident’s use) or habitual place of abode (which is automatically given from the start once the︀ stay exceeds six months but possibly also earlier) is in Austria. The general rule is︁ that such a person is assessable on worldwide income.
If neither of these conditions is︂ fulfilled, the person has only limited liability to taxation (is a “nonresident”) in Austria, in︃ other words, is generally assessable only on income derived directly or indirectly from sources in︄ Austria.“
src: Austria
So, say you are Austrian but leave Austria permanently and don’t have︅ any income from Austria. Now you move to Barbados on the digital nomad visa.
- You will not be liable to pay Barbados Income Tax and therefore will not be subject︆ to any double taxation
src: Explore 12 Month Barbados Welcome Stamp - Visit Barbados
Well, at this point you are non-resident of Austria and you will not become tax resident︇ of Barbados. You don’t have any tax residency, easy as that.
Of course this setup︈ doesn’t work with all citizenships (e.g US, Australia, NZ require you to have a new︉ residency) but if you are from most of the European countries it is very doable.︊
So you think you can legally be not resident anywhere? Good luck.
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@JohnnyDoe ”“ Your #1 Source for Guidance in Different Offshore Fields
Well, you are making very strong claims without providing any sort of evidence. How do you back up your statements?
I just showed you one of many examples how this could work and I’ve discussed setups like this with tax consultants from multiple jurisdictions so I am quite confident that this actually works.
Maybe being American slightly clouds your judgement? How much experience do you actually have with tax authorities in Europe?
I just showed you one of many examples how this could work and I’ve discussed setups like this with tax consultants from multiple jurisdictions so I am quite confident that this actually works.
Maybe being American slightly clouds your judgement? How much experience do you actually have with tax authorities in Europe?
It is entirely possible to be completely tax non-resident and legally not be liable for tax anywhere in the world. It is, however, grossly impractical to do nowadays, which is why it's generally considered wise to establish provable tax residence somewhere. If residence in a zero-tax jurisdiction is within your reach, that can be a great complement to an otherwise nomadic lifestyle.
The reason you'd want provable tax residence is so that you can satisfy source of wealth checks that banks and financial institutions are increasingly performing. Failure to convince a bank that your money is clean will lead to account closures and applications being︀ denied. That's just the reality of the world we're in today. Things were different back︁ when being a Perpetual Traveler was the cool new thing.
It seems Mr. Donkey has︂ figured this out, but is looking for a shortcut: live a nomadic lifestyle but be︃ able to show tax filings somewhere.
The answer to that specific question is a resounding︄ maybe. It depends on country. Good luck on your hunt to find one. However,︅ tax departments are usually divorced from immigration departments, so you don't necessarily have to worry︆ about immigration status. Getting a tax ID is usually and intentionally one of the easiest︇ things a foreigner can do. Although sometimes you will be asked for proof of residence,︈ local employment agreement, or similar.
What this doesn't solve for is proof of tax residence.︉ It's one thing to pay taxes. It's a wholly different story to get tax residence︊ certificate. So the tax authority will gladly take your money, but they are far less︋ likely to give you a receipt and confirmation of tax residence.
As compliance is only︌ going to get more detailed, expect banks to begin asking for certificates of tax residence.︍ Not from everyone, not all the time. But the risk will be there, especially for︎ anyone who deviates from the norm.
The reason you'd want provable tax residence is so that you can satisfy source of wealth checks that banks and financial institutions are increasingly performing. Failure to convince a bank that your money is clean will lead to account closures and applications being︀ denied. That's just the reality of the world we're in today. Things were different back︁ when being a Perpetual Traveler was the cool new thing.
It seems Mr. Donkey has︂ figured this out, but is looking for a shortcut: live a nomadic lifestyle but be︃ able to show tax filings somewhere.
The answer to that specific question is a resounding︄ maybe. It depends on country. Good luck on your hunt to find one. However,︅ tax departments are usually divorced from immigration departments, so you don't necessarily have to worry︆ about immigration status. Getting a tax ID is usually and intentionally one of the easiest︇ things a foreigner can do. Although sometimes you will be asked for proof of residence,︈ local employment agreement, or similar.
What this doesn't solve for is proof of tax residence.︉ It's one thing to pay taxes. It's a wholly different story to get tax residence︊ certificate. So the tax authority will gladly take your money, but they are far less︋ likely to give you a receipt and confirmation of tax residence.
As compliance is only︌ going to get more detailed, expect banks to begin asking for certificates of tax residence.︍ Not from everyone, not all the time. But the risk will be there, especially for︎ anyone who deviates from the norm.
Urban legend. Sorry to ruin your dreams but it is not legally possible.
I'm Swiss + Italian (and other countries) citizen, resident in the Bahamas, pay flat tax in Italy and other taxes in another country. I've spent enough money on lawyers and accountants to know what can and what cannot be done.
Unfortunately I had experience with tax authorities (personal taxation) of 5 European countries + UK.
The PT urban legend was trendy in the late ”˜90s, early ”˜00s, but it is now well debunked.
Of course all this applies if you have a decent amount of taxable assets. If you are talking of evading 5-low 6 figures taxes then unless you are particularly unlucky or stupid you can follow the PT/nomadic lifestyle and live happily without taxes (simply because nobody cares about you).
Last edited: Mar 1, 2022
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@JohnnyDoe ”“ Your #1 Source for Guidance in Different Offshore Fields
However it might be️ difficult to be tax resident somewhere if you're a nomad (eg travel too much) and spend the time in countries that have a 183 rule for tax residency. But it can be very beneficial to have a residence address and tax number there, even you don't fulfil the criteria for being tax resident.
Banks will generally ask for a tax number and where you are tax resident. However I've never had any bank (or anyone else) actually ask for a tax residence certificate. Those are also generally hard to get (depending on the country), even when you qualify for one.
Banks will generally ask for a tax number and where you are tax resident. However I've never had any bank (or anyone else) actually ask for a tax residence certificate. Those are also generally hard to get (depending on the country), even when you qualify for one.
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