Digital nomad tax

[fshore]

Very few banks will insist that you are tax resident somewhere. They will want an‌ address and a tax number, but will not ask for a tax residency certificate.
If your previous country does not require you to be tax resident elsewhere then its little‍ point in getting a new tax residency.

 

[KJK]

Because that is what GrumpyMess already pointed out several times. You⁠ can give up residency but you still have some ties to your home country -⁤ whether strong ones (family, job, children) or weak ones (even citizenship can be considered when⁣ defining you "center of vital interests").

So if you give up your original residency, you⁢ should be able to get a tax residency somewhere else - which in most cases︀ means staying 183+ days per year there.
Being a "digital nomad" or whatever you call︁ it is sure sexy but I'm not sure it works well. What you described wouldn't︂ be accepted in Finland - if you are Finnish, you end your residency and then︃ travel the world for 3 years, if you come back, you will be considered resident︄ of Finland again - not just for the current year but also for the past︅ 3 years. Even when you had no address in Finland and you didn't live there,︆ you still were a tax resident there.

 

[negon]

Are you sure about that? So I'm glad⁣ I don't live in Finland this is odd and sounds a little bit strange.

 

[Tax Cow]

According to law, 183-day rule for residency applies but for practical implementation purpose, every EU‌ member state relies first and foremost on residency (residency termination) applications. It's hard to accurately‍ track someone's location without a court order all throughout the year.

If you leave Finland⁠ for any longer period, you will most likely have an obligation to file a form⁤ to determine your tax residency during those 3 years of absence. If you do not⁣ file this or forget to do so, you are still a resident in Finland by⁢ default. In the form, they normally ask questions about whether you will retain your main︀ home in Finalnd, whether you have any underage children stay in Finland during your absence︁ etc. Basically they want to still keep you a tax resident by having you confirm︂ some residency indica via a signed document. Nobody wants to see a milking cow leave︃ for other pastures.

 

[Mencjusz]

It seems nobody has mentioned the double tax agreements. If country A (host) has no‌ agreement with country B (home) then you might need to pay the income tax difference‍ between A and B. For example, country A has income tax 19%, while your home⁠ country B has income tax 25%. Officially, you should pay the tax difference (6%) no⁤ matter your residency status.

As mentioned by others, whatever you apply, you will need to⁣ provide a utility bill and/or bank statement from your resident country. Further, some brokers might⁢ not accept your current country of living, others might not accept frequent changes in residency.︀

I have been a nomad for past 7 years, it's not that easy with the︁ official crap.

 

[GrumpyMess]

What countries did you chose for your residency during this time?

 

[Mencjusz]

Trinidad, Poland, Taiwan, Iraq.

 

[busdriver]

Many banks now, at account opening, will ask you for your tax ID. I am‌ not sure if it'a good idea if you give your old one. I am also‍ not sure if you could lie or if they check at some point. You could⁠ become tax resident where you have to pay no (or little) tax or where they⁤ would not bother if you don't declare or pay if you never set foot in⁣ that country (again). I read the Philippines is not taxing foreigners on offshore income. Are⁢ there other countries that would do the same or where you can get away with︀ things 😉 ?

 

[StuartG]

Thailand will give you tax residency and not tax money earned outside Thailand, provided it‌ is is not remitted to Thailand. Also, a pleasant place to live with excellent internet‍ (except during thunderstorms)

 

[Nyep]

Sorta kinda. You are‍ still not allowed to WORK without a work permit in Thailand. Work permits are only⁠ given to people working for Thai registered companies. If you ignore that specific labor law, and work in Thailand anyway, then you are still exposed to the tax laws. If⁤ you get compensated directly for your work (=salary), then by law you need to pay⁣ tax in Thailand regardless of remittance.

Note that none of this is actively being enforced⁢ in Thailand at the moment. If you work online then you are relatively safe at︀ the moment, but it can easily change.

Anyway, the excerpt you were referring to is︁ regarding dividends. Dividend income received abroad is only taxed (and requires reporting) if it︂ was remitted to Thailand within the same calendar year in which it was received. So︃ if you do decide to try it out, make sure to structure it so you︄ do not actually "work" and receive a salary. You just receive dividends from a business︅ that you own, but not directly operate, and you never remit in the same calendar︆ year.

The Philippines make it a lot simpler, but that's a different topic for a︇ different day.

 

[busdriver]

A friend was able to get a PH tax number with some help. I think‌ getting a work permit is not very difficult in the Philippines. But why would you‍ actually need one? What do you plan to work there? How would any authorities find⁠ out you are working? Digital nomads sit in cafes with a laptop. Many civil servants⁤ would not even consider that working anyway 😉 .
PH also allow money to flow in⁣ to your PH bank account.
Tax-wise, I think
1) you need get rid of your⁢ old status (stop being tax resident in Europe for example)
2) get a tax ID︀ somewhere (needed to open bank accounts and such)
3) renew your passport every now and︁ than to be able to keep traveling (at your embassy)
4) maybe create a company︂ in HK or Estonia or elsewhere
The first step is where many have problems; all︃ else is relatively easy nowadays.

 

[UniversalMan]

Hi,
I have gone all over the thread and also most of the forum posts‌ and still have a question :

1. I got rid of Tax resident status in‍ my home country(Non EU,Non US) , also got no wife,kids,bank account or apartment there
2. under tourst visa, I spent most of my time in the last 4 years In⁠ EU plus few other countries , less than 183 days a year in each country⁤
3. I have physical bank accounts in the eu where I trasnfer funds from eu⁣ EMis under my offshore comapny , in my banks when they asked where do I⁢ pay taxes, I told my citizenship country and they didn't ask for proof

from what︀ amount in my bank accounts , bank can ask for proof of tax paying ,︁ over 100,000eur? 500,000eur? 1M eur ?
what happens if I fail to provide such document︂ as I am not obliged for taxes in my citizenship country? do they block my︃ money or just close my account and let me withdraw it?
can the eu country︄ where my bank is located and in the account about 100k Eur decide I am︅ a tax resident and tax my income?
can my citizenship country decide to want to︆ tax me if I don't have any tax residency in other country?

If I apply︇ for panamian friendly nations residency, do I have to be there over 183 days a︈ year for the tax certificate and do I even need it?

 

[Tax Cow]

There is a‍ clear legal concept for this scenario defined in CRS/AEOI, called Stateless Persons. On contrary, an⁠ entity is never stateless. If an entity fails to fulfill residency requirements through PE rules⁤ or other laws in any country, it is resident where it is incorporated.

Every bank⁣ may have their own risk-based approach to Stateless Persons but the CRS/AEOI model gives clear⁢ guidelines. Some banks are refusing stateless persons altogether and there's nothing illegal about such approach︀ either.

Unless the bank has their own risk-based approach, they generally default to following:

1. Ask the client to provide sufficient evidence of stateless status (bank statements for last 12︁ months from their own records may suffice)
2. If they cannot provide plausible evidence of︂ stateless status, proceed to close the account

If you tell your bank you are tax︃ resident in a country where you renounced your tax residency, you are shooting yourself in︄ the foot. If the tax office receives this claim, they will happily treat you as︅ such. Start by showing your bank the form of tax residency renunciation and provide sufficient︆ proof of frequent travel.

 

[busdriver]

I know many (but probably not yet all) banks ask for tax ID at account‌ opening. I am not sure, but I think the do already or might later update‍ records at some point if they did not ask for tax ID in the first⁠ place.

So I would be wondering what tax ID a stateless person would provide. If⁤ there is a way to get a (full-fledged*) tax ID, it would probably also work⁣ to be stateless.

If you are stateless, who would be providing your passport? I can⁢ imagine countries will (at some point) start saying the country of citizenship would be the︀ tax residence if no other can be proven. So even if that concept works now,︁ it might not in the long run. Having something that works now is already better︂ than nothing ;-)

* are there different types of tax ID?

 

[UniversalMan]

I have read︆ about Stateless Persons but this isn't my case as I have a citizenship,nationality and passport︇ from my country of origin and I travel with that passport,
I just havn't lived︈ there for the past 4 years and with the countries laws and with consulting with︉ lawers I am not a resident anymore and not obliged to pay taxes to this︊ country.

I provide my tax numebr in my citizenship country in these cases.

 

[Tax Cow]

Tax ID number is not a mandatory field in CRS protocol. It's optional, and optional‌ it should be on a sign-up form in every bank. I'm aware not all banks‍ have adequate web front-ends.

In general, I do agree that today, having a "soft residency"⁠ or home base somewhere would be beneficial for digital nomads. Not all banks will care⁤ about stateless persons as it's only a tiny percentage of potential customer base. As more⁣ and more banks turn stateless persons away, the honey pot of untapped client base will⁢ grow. Due to market forces, this should eventually result in a few banks re-considering their︀ position. Or we might even see a few purpose-built banking solutions for digital nomads.

@busdriver You don't have to worry about passport. No country has legal authority to take away︁ anyone's citizenship by birth rights. This means they will continue to issue you your passport︂ as long as you ask for it, until you die. No matter where you live︃ or pay your taxes. Doing the opposite would be a serious breach of international law.︄

 

[busdriver]

@xzars - “This means they will continue to issue you your passport as long as‌ you ask for it, until you die” - I would expect that, but heard from‍ a US citizenships living in EU that she had to file or pay (I don’t⁠ remember) her taxes in order to get a new passport from the US embassy. This⁤ might only have been a story of course. One never knows if what people say⁣ is true because they have no clue or want themselves interesting 😉

@xzars - “Tax ID⁢ number is not a mandatory field in CRS protocol” - interesting thought, not sure what︀ would happen if one would not provide the tax ID. I feel it’s at least︁ very helpful to provide it when applying for a new account. Also when opening a︂ business bank account for an entity, the directors and/or shareholders tax ID is asked by︃ some big banks, EG in HK. I’d actually expect the tax ID being mandatory now︄ (see Common Reporting Standard - Wikipedia )

@xzars - “we might even see a few︅ purpose-built banking solutions for digital nomads” - we actually do see that in online banks,︆ such as N26, Revolut or Neat

@UniversalMan "I provide my tax numebr in my︇ citizenship country in these cases." - You may want to check because I might be︈ wrong, but banks do or will report your account balance and some other information once︉ a year to the country of that tax number. Than the country might, at some︊ point, ask for tax on your (world) income. If you renounced your tax residence with︋ your country of residentship, this might also be against the TnC of the bank and︌ they might freeze accounts because the might smell money laundering or because the simply have︍ a good reason to keep it for some time and make you leave them without︎ they having to cancel your account themselves. You actually provided a tax ID that became️ invalid or even was already invalid when you provided it. So you are a lier‌ for the bank, at least not a good person 😉 . Your country of residence would‍ know about your assets and might declare your renouncification as invalid and ask you you⁠ to pay tax ... I don't say it will happen, but chances would be higher.⁤

I did not check if the Philippines would officially tax ones world income with 0%⁣ if from abroad. But if they do, one would have taxed it (at 0%) which⁢ is at least better than not taxing it.

 

[fshore]

I think you︆ confuse stateless with non resident. Very few people are stateless but some are not tax︇ resident anywhere.
About the question, there's are specific threshold on amounts in the account where︈ the banks must do further due diligence, I believe its $1M.

 

[Tax Cow]

@busdriver N26, Revolut, TW... I'm not sure they are qualified as digital nomad banks. In‌ my context, they only qualify if they clearly state in their FAQ that they accept‍ a 'tax resident of nowhere', i.e. persons who split their time in between multiple countries.⁠

In regards to Tax ID, many CRS member states do not have it to begin⁤ with. I don't see how it could be mandatory at this point.

@fshore you're right,⁣ the terminology varies per implementation guides and official documents. I'm mixing them up. With that⁢ said, you may expect most banks treating 'stateless persons' and 'tax resident of nowhere' similarly,︀ if not identically in regards to CRS AEOI.

 

[fshore]

However as︀ a person without any tax residency its normally very easy to just use your previous︁ address and tax number, while a stateless person doesn't have a passport and can't open︂ an account at all.