Martin Everson said:
Typically most countries consider you resident if you spend more than 180 days in any tax year in the country. Some countries it can be as low as 90 days. In fact in certain countries if you enter the country and tick the wrong box they can consider you tax resident from day one. What people consider a digital nomad is a gray area. Yes you can bounce from country to country and lets say spend no more than 180 days before moving on. While working you will be considered a non-resident but still expected to pay tax on money earned in the country. However you will need to change all your records including banking details to reflect your move each time you move and it can be a pain. Hence banking needs to be considered very carefully or you could end up having CRS data sent to multiple countries in a single year of moving around. You really need to plan on taking up residency in a territorial tax or tax free country and then hop around without tax worries. I know of people who have residency visa's for Dubai but spend a lot of time working outside. Likewise Andorra is a good option for residency and you do not have to spend much time there either. So is Gibraltar, if you are wealthy enough to obtain a Category 2 residency you do not need to spend any time there at all really and just pay a flat yearly fixed amount and you are free to move around ;-)
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Yes that seems like a very gray area that can turn black pretty soon. I found a blog of some Swiss tax lawyer:
Analysis of the Common Reporting Standard Loopholes
I think he actually enjoys telling people why nothing can work at all...
This is a common situation:
- you are a citizen born in some Western country (Europe, UK, Canada...)
- you get your residency permit in some country you mentioned (UAE, Andorra, Gibraltar...)
- you won't be spending 180 days in that country so they won't issue you any tax domicile certificate
And I think this is the problem which that Swiss lawyer (above) explains. Also here it is noted:
Tax residency in Andorra and tax domicile
QUESTION 1: When you get a new residency and you have an old bank account in your home country, should you tell the bank about that change or not?
I think both options can backfire.
a) You DON'T tell old bank about the change - tax office will use it against you because you didn't report the change you are still resident.
b) You DO tell old bank about the change - bank will have to report you to your new country. That foreign country doesn't care at all but actually your home country could. Because the chain of reporting is: bank reports nonresident accounts (of both citizens and non-citizens) to the LOCAL tax office -> local tax office processed the reports and sends them to individual tax offices of many countries -> country of your new residency recieved the report and doesn't care at all. But the local tax office has this information stored and knows you are their citizen who on paper escaped into a different country. Now it's up to you to prove it isn't just on paper.
QUESTION 2: What do you have to do to stop being considered tax resident in your country?
It seems to me to be almost impossible in many countries. Some countries like Finland and Poland even directly say it is not possible.
I can imagine many angles that the local tax office can take:
- parents in your home country? Your center of viral interest is there, bad luck!
- own an apartment that you are renting to someone else? You have a habitual above there, bad luck!
- you own a car and you are tracked on some cameras or tolls? We found you, bad luck!
- you keep bank accounts in your home country and the bank thinks you're a resident? Then you are a resident, bad luck!
For me the problem with all these perpetual travellers and digital nomads is that it is extremely difficult to prove ties to some other country which are stronger than ties to your home country.
When you have kids or a wife or a local business, then it's basically impossible. But even when you're single, location independent and you take appropriate actions, it still seems very dangerous.
Okay - you break ties with your home country and get a paper residency somewhere. In practice you claim not to be a resident anywhere. Is that legal and possible?
