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Cross-checked tax residency

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BarleyMalt

BarleyMalt

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Mar 21, 2023
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Hey,

A friend of my family told me he managed to move to a new country, tell his old place of residency that he was not a tax resident there anymore, and then get his new place of residency to consider that he was still a tax resident in his previous country. Is it really possible?
 
Yes it is. This can be‌ worked out via cross country communication or number of days spent etc.

btw I don't‍ see an issue as you can be tax resident in more than one country even.⁠ So being tax resident in old country and new country is possible.

You can see⁤ in a CRS Self Certification form page 5 below. You can enter 3 or even⁣ more tax residencies for yourself.

https://www.oecd.org/tax/automatic-...-assistance/CRS_INDIVIDUAL_Self-Cert_Form.pdf
P.S Hope I understood your question correctly conf/(%.
 
OP meant the opposite I think: being a tax resident in neither country.

so the‌ answer (theoretically) is no (a.k.a. myth of the PT)
 
I think what OP meant was if it's possible to have both countries believe you don't‌ live there and thus pay no tax. And the answer is obviously that it depends‍ on the facts and not on what you have someone believe.

Why is that a myth?
 
I've heard about this theory‌ however how about the case presented above? There is no general ledger of tax residency,‍ hence reconciliation has to be done by each country to know where you're legally liable.⁠ If your home country doesn't do it it, then - what?

Just for the record,⁤ a friend living in Malta told me that the same happened to him, he doesn't⁣ pay any taxes because the local tax office refuses to take his declaration.
 
Depending on your citizenship/previous residency, you can end up in a situation where you're not‌ tax resident in any country - though this is not how I understood OP's post.‍
 
Of course, in practice, you can end up in the situation OP describes. But when‌ an EMI/Bank will ask you for your tax residency certificate and you tell them you‍ have no tax residency it is likely that they won't accept this as an answer.⁠ They will most likely fall back on your citizenship to determine your tax residency and⁤ exchange information with your country. Again for small amounts and with EMI/banks with loose controls⁣ it might work for a while but for serious amounts of money and serious institutions⁢ you are going to run into problems. All countries will want a piece of the︀ cake.
 
I have never ever heard of a bank or EMI asking for tax residency certificates.‌ Utility bills, yes. And you could tell them you're tax resident in Paraguay and give‍ a utility bill from Paraguay (for example). As long as you don't claim treaty benefits,⁠ I don't see how that could be an issue.
And so what if they (incorrectly)⁤ report something back to your country of citizenship? If you're not a tax resident there,⁣ they can go pound sand.
One should still absolutely have utility bills etc. for compliance,⁢ but you don't suddenly become liable for tax in your country of citizenship if you︀ don't have new tax residency, that's an urban legend perpetuated by people who have no︁ idea how taxes work. There are some countries that require you to take up a︂ new tax residency for them to "let you go" - but that's specific to those︃ countries, it's not a general rule or anything.
 
Yes, sorry if the post was confusing : tell country A that you live in‌ country B now and have country B think that you're a tax resident in country‍ A (or country C!).

I agree that banking could be an issue, however using EMIs⁠ or non-resident accounts in third countries should be easy enough.
 
What are you going to do when a bank/EMI launches source of funds/AML check? (Non‌ resident accounts are considered high risk, so it can happen any time)
 
Country A may be fine with⁠ you declaring you don't live in country A anymore. Depends on the country if they⁤ want to see proof you actually live in country B.
If they want to see⁣ prove, they may require a tax residency certificate, or simply a utility bill. It really⁢ depends on the country.
If country A doesn't want to see proof of new residency,︀ then just declaring this should be easy enough as far as country A is concerned.︁

As for country B, why would you have to tell them anything? Sure, you could︂ also officially move there and then tell them you changed your mind and moved back︃ to country A (or to country C), but then you'd be back to the question︄ above. I don't really see the point in this? If you're officially resident in country︅ B, then they'd probably ask for tax returns. And then you'd have to explain why︆ you're not paying any. So then you have even proof of tax fraud on paper.︇

In the end, it might work, but probably wouldn't, and if it did, the risk︈ of being charged with tax fraud would be very high.
If you want to commit︉ tax fraud, there are certainly less risky ways to do it (but please don't).

Not really, because they'd all︋ ask for your tax residency/utility bill etc., and there is still some remaining risk that︌ they'd report it to wherever you're really living.
 
As long as you don't register yourself with local authorities they won't have a trace‌ of you, well in most cases.
Many countries in the EU want to get your‍ local tax number in order to open a bank account or even rent a property.⁠
 
It is very unlikely that you are getting away with paying no tax at all.‌ If you do so, it might be for a while. But sooner or later the‍ taxman catches up with you and than it wont be fun. (Depending on the amount⁠ it could be jail). Better find a place to register your tax residence and do⁤ everything legally, nice and clean. No tax residence means no TIN (taxidentification number), no TIN....⁣ no bankaccount. At least not in EU. Even most EMI`s want a TIN. Actually i⁢ can not think of one that dont want one if they supply an IBAN.
 
And in my countries they give them out to non-residents as well: ex. Portugal, Spain
 
I know Denmark will not accept a “perpetual traveller”,‌ and they will claim that you are on a “roundtrip”.

And I assume if this‍ is how it is in Denmark, that its most likely the same in many developed⁠ countries.

Not to speak of how impossible/hard it is to bank and live without having⁤ an official residence somewhere.
 
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