Tax residency living on a boat
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If you're out on international waters, can prove it, have no strong ties to any one country (or at least not one with aggressive tax laws), and are not a citizen of a country that taxes based on citizenship... If you do all that, then this may in fact be one way to enjoy true non-taxation as a natural person.
I'm unsure if you would have to be outside of just territorial waters or if you have to be outside of EEZs as well. Probably best to be outside of EEZ unless or until you can find proper legal guidance saying otherwise.
Happy sailing!
I'm unsure if you would have to be outside of just territorial waters or if you have to be outside of EEZs as well. Probably best to be outside of EEZ unless or until you can find proper legal guidance saying otherwise.
Happy sailing!
This is a perpetual traveller by definition, you can google it. However, tax authorities in many countries are challenging that concept if their citizens or previous residents cannot prove that they have a new habitual abode or centre of vital interests somewhere else, especially if the source of income is still in those countries.
Yeah, if I was a citizen or had been a long time resident of a tax hell country, I would establish residency* in a placed like Paraguay, some Pacific or Caribbean island, or some Sub-Saharan African country, and then sail around.
The same goes for travelling around the world.
*Residency would be enough for most tax hell countries, but for some︀ it might be a good idea to also get tax residency.
The same goes for travelling around the world.
*Residency would be enough for most tax hell countries, but for some︀ it might be a good idea to also get tax residency.
Provided that you sever all economic ties to Canada and have no immediate family (partner/spouse, children) or residential real estate in the country, it shouldn't be an issue. The CRA is quite reasonable.
However, it may be wise nonetheless to establish a residence on land in a tax friendly country, at least for the first couple of years after leaving Canada.
In any case, it's always best to clear these things with a local︀ and duly licensed tax advisor or lawyer.
However, it may be wise nonetheless to establish a residence on land in a tax friendly country, at least for the first couple of years after leaving Canada.
In any case, it's always best to clear these things with a local︀ and duly licensed tax advisor or lawyer.
I would rather rely on a tax treaty of a low tax country than on absence of any treaty which leaves open the way to any domestic legislation to seize you based on potentially exotic principles which may attract you for the most stupid reasons.
Oh, it's way better to be completely out of the tax net of a tax hell country. If you have to rely on tax treaties, it means a high tax country still claims you as tax resident, that's no bueno. Then you are still in the claws of bureaucrats from that country, which is what one wants to avoid.
Applying a tax treaty can be a long and complicated process, open to interpretation, and we all know that tax hell country bureaucrats can come up with the craziest interpretations in the tax payer's dis-favour. You just want to avoid that hassle alltogether.
And if you are worried about domestic legislation of some low tax banana republic, well, just dont have︀ your assets there, and dont bank there. Like, you get residency in Paraguay, but you︁ dont need to open a bank account there.
Applying a tax treaty can be a long and complicated process, open to interpretation, and we all know that tax hell country bureaucrats can come up with the craziest interpretations in the tax payer's dis-favour. You just want to avoid that hassle alltogether.
And if you are worried about domestic legislation of some low tax banana republic, well, just dont have︀ your assets there, and dont bank there. Like, you get residency in Paraguay, but you︁ dont need to open a bank account there.
To determine where he might be tax resident you must look at the tax laws for the countries that might have a claim on him (previous residency, where the boat is spending time etc) and determine if he fulfills criteria to be tax resident in those countries.
Yeah, exactly. Each country applies its own rules, there are (thankfully) no global rules for determining tax residency.
Say you are an Australian citizen having lived in Australia long term before starting this boat adventure, then with current rules, the domicile test would apply, meaning you would still have your domicile in Australia︀ and be an Australian tax resident while travelling the world on a boat (even if︁ you never set foot in Australia the rest of your life). However, with the new︂ Australian rules, coming in next year I think, you would no longer be an Australian︃ tax resident after being out of Australia for 3 years (and not visiting for more︄ than 45 days each year).
And if you have been a resident in Norway for︅ a long time before starting the boat trip, you are still a tax resident to︆ Norway for three calendar years after moving out. And unlike Australia, this is regardless of︇ what you do and where you live abroad - boat trip or just living in︈ any other country.
Beside the US, the countries of Australia and Norway are I think︉ the most difficult western countries for the boat trip scenario. For the other western countries︊ it is usually enough to cut ties / not have centre of vital or economic︋ interest there, and to a varying degree establish residency somewhere outside the country. In many︌ cases it is enough to just fill in a webform and enter an address abroad︍ - in other cases more work is needed.
And finally we have if any country︎ the boat visits may consider you as tax resident. This is much less of a️ problem than the country of previous residence I think, but sure, if you are high profile and the boat stays like 8 months in Marbella, Spain may want a big chunk of your money!
Say you are an Australian citizen having lived in Australia long term before starting this boat adventure, then with current rules, the domicile test would apply, meaning you would still have your domicile in Australia︀ and be an Australian tax resident while travelling the world on a boat (even if︁ you never set foot in Australia the rest of your life). However, with the new︂ Australian rules, coming in next year I think, you would no longer be an Australian︃ tax resident after being out of Australia for 3 years (and not visiting for more︄ than 45 days each year).
And if you have been a resident in Norway for︅ a long time before starting the boat trip, you are still a tax resident to︆ Norway for three calendar years after moving out. And unlike Australia, this is regardless of︇ what you do and where you live abroad - boat trip or just living in︈ any other country.
Beside the US, the countries of Australia and Norway are I think︉ the most difficult western countries for the boat trip scenario. For the other western countries︊ it is usually enough to cut ties / not have centre of vital or economic︋ interest there, and to a varying degree establish residency somewhere outside the country. In many︌ cases it is enough to just fill in a webform and enter an address abroad︍ - in other cases more work is needed.
And finally we have if any country︎ the boat visits may consider you as tax resident. This is much less of a️ problem than the country of previous residence I think, but sure, if you are high profile and the boat stays like 8 months in Marbella, Spain may want a big chunk of your money!
With all︂ due respect but your reasoning is inconsistent in my opinion. You go on a boat︃ to avoid taxation from any country. This is in my opinion impossible from a legal︄ standpoint, for the simple reason that ultimately a tax residence is required.
Having to choose︅ one, better to choose one with treaties which allows you to avoid incidental double residence.︆
Without a treaty you can end up having 2 or 3 or 4 countries claiming︇ your tax residence and no legal possibility to ensure that only one will prevail.
Having to choose︅ one, better to choose one with treaties which allows you to avoid incidental double residence.︆
Without a treaty you can end up having 2 or 3 or 4 countries claiming︇ your tax residence and no legal possibility to ensure that only one will prevail.
This is a weird but recurring misconception that you have to have a tax residency somewhere, as if there was a global government with global laws that checked every human on earth and assigned a tax residency in unclear cases.
There is no such global government, a tax residency is not required, ultimately or not, and there are tons of people that have no tax residency anywhere.
As to legality, each︀ country applies its own laws, each have a list of tax residents, with criteria to︁ be on or off the list. So when you say from a legal standpoint, you︂ have to specify which country you mean. There is as mentioned - thankfully not yet︃ - any global government.
OECD has a model double tax treaty that has a tie︄ breaker clause on where to assign tax residency if everything else is unclear. This is︅ a) just a suggestion for bilateral agreements between sovereign states, b) comes into play only︆ when two countries claim the same person as a tax resident (assuming the two countries︇ followed the OECD model agreement in their DTA), c) is absolutely in no way some︈ sort of evidence that every human on earth needs to have a tax residency.
Then if you are doing the boat trip or perpetual traveler thing, it is advisable to︉ establish a residency somewhere - not necessarily tax residency - but that's a different matter.︊
There is no such global government, a tax residency is not required, ultimately or not, and there are tons of people that have no tax residency anywhere.
As to legality, each︀ country applies its own laws, each have a list of tax residents, with criteria to︁ be on or off the list. So when you say from a legal standpoint, you︂ have to specify which country you mean. There is as mentioned - thankfully not yet︃ - any global government.
OECD has a model double tax treaty that has a tie︄ breaker clause on where to assign tax residency if everything else is unclear. This is︅ a) just a suggestion for bilateral agreements between sovereign states, b) comes into play only︆ when two countries claim the same person as a tax resident (assuming the two countries︇ followed the OECD model agreement in their DTA), c) is absolutely in no way some︈ sort of evidence that every human on earth needs to have a tax residency.
Then if you are doing the boat trip or perpetual traveler thing, it is advisable to︉ establish a residency somewhere - not necessarily tax residency - but that's a different matter.︊
https://taxsummaries.pwc.com/finland/individual/residence
https://taxsummaries.pwc.com/norway/individual/residence
There aren't a lot︃ of countries like this, but there are a few that make exiting harder than just︄ physically leaving.
https://taxsummaries.pwc.com/norway/individual/residence
There aren't a lot︃ of countries like this, but there are a few that make exiting harder than just︄ physically leaving.
Yeah, and the trend is that it is getting increasingly difficult to leave tax hell countries. (But Finland shouldnt be on this list btw, it's easy to leave and show no essential connections.)
Anyway, regardless of how difficult it is to leave a particular country's tax net, the point stands that each individual country applies its own laws, you are either a tax resident or not - and there is no global law assigning tax residencies.
Anyway, regardless of how difficult it is to leave a particular country's tax net, the point stands that each individual country applies its own laws, you are either a tax resident or not - and there is no global law assigning tax residencies.
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