What are options for tax residency as a digital nomad that never spends more than 3 months in a country?

[JustAnotherNomad]

DaveFischer said:
I can tell that JustAnotherNomad has a strong preference for countries with a good reputation. I can imagine why after having lived in some third world countries, where the government is basically the worst organized crime organisation of the country. However, one advantage that poor countries do have is that they seem very bad at enforcing their own tax regulation
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My preference is only about what the client sees and in regards to tax treaties. None of my clients would accept doing business with a company from Belize or Panama.
Otherwise I completely agree. Move to Bolivia, Nicaragua or some other country where taxes may even be high in theory, but enforcement is weak. But be prepared that banking may become even more difficult.

 

[Clip]

DaveFischer said:
Hong Kong also has quite a complex enforced auditing I heard.
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Just create another company elsewhere, like US LLC, Singapore, Estonia or anywhere where you can banking.

HK Tax office only bothers you if you have a local salary or you get paid in HKD from a local company.

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Expat in Hong Kong - There are two ways to conquer and enslave a nation. One is by the sword. The other is by debt. - John Adams

 

[JustAnotherNomad]

@GiGoGo How much is residency in Hong Kong in practice? If you don't want to live there.

 

[Clip]

Get an small office, hire a secretary and put yourself a salary (30k HKD per month don't pay taxes) then apply for the business / entrepreneur visa that is renewed every year

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Expat in Hong Kong - There are two ways to conquer and enslave a nation. One is by the sword. The other is by debt. - John Adams

 

[JustAnotherNomad]

If it's a local salary, why wouldn't I pay taxes on that? Because it's so low?
What about the apartment thing? Any cheap options?

 

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JustAnotherNomad said:
Because it's so low?
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Yes, bellow 360k HKD per year you pay 0. I would increase the salary a little more to pay some tax, looks good when renewing the visa and showing to other tax authorities.

JustAnotherNomad said:
What about the apartment thing? Any cheap options?
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With the current situation, you can live in a 4 star hotel for 1200 USD /month

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Expat in Hong Kong - There are two ways to conquer and enslave a nation. One is by the sword. The other is by debt. - John Adams

 

[JustAnotherNomad]

GiGoGo said:
Yes, bellow 360k HKD per year you pay 0. I would increase the salary a little more to pay some tax, looks good when renewing the visa and showing to other tax authorities.
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Sounds great! How much for the office?

GiGoGo said:
With the current situation, you can live in a 4 star hotel for 1200 USD /month
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I don't want to live there though, I'm a nomad. I just want to have official residency there.

 

[polonieth]

Interesting thread, I am in a similar position, UK taxpayer, but looking to relocate to pay less tax, run a UK ltd as a 50% partner.

 

[Neilbali]

you can become a tax resident of cyprus after you spend 90 day there. so that could be an ideal place to travel. i spent some time in Paphos, i really love the coworking space there called Hugge Space. great guys running it, they were planning to do some kind of package for digital nomads. I would suggest talking to them.

 

[Untangle]

Andorra, Sark island....
Rent a company instead of setting one up yourself (Netherlands, UK, Ireland...). Google it man...
As a non director and non shareholder you will get 100% of the income less VAT, less the management fee, which is less than 100 euros per months.
Pay 0 to 10% max income tax
You will do well

Thanks me later

 

[JustAnotherNomad]

Neilbali said:
you can become a tax resident of cyprus after you spend 90 day there. so that could be an ideal place to travel.
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After 60 days actually. But not by traveling there obviously, you'd have to properly establish yourself there. But it isn't the whole story, you might still have to pay taxes in another country. It's more complicated than “Spend 2 months in Cyprus and never pay taxes again”, obviously.

 

[JustAnotherNomad]

Untangle said:
Andorra, Sark island....
Rent a company instead of setting one up yourself (Netherlands, UK, Ireland...). Google it man...
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Does anybody know how they do this formally? Say you share the company with 100 other people. 99% of the money that comes in is paid out, so the company has almost no capital. Now 1 of the 100 people has a liability claim or didn't pay some invoice. Or is involved in illegal activities, such as selling drugs. How does the provider make sure this person can't bankrupt the company?
Who signs the contracts? I would assume the freelancer can't sign documents on behalf of the rented company.
How do they make sure they can't be charged with assisting in tax evasion? Would they request a tax residency certificate?
I have been thinking about offering a similar service, but after talking to some lawyers, I quickly realized what a liability headache this would be. As the director of the company, you'd be liable for whatever happens. Maybe that's their secret? They just use nominee directors from some third world countries?

Maybe @Martin Everson or @Sols have an idea how this stuff works under the hood?

 

[Untangle]

JustAnotherNomad said:
Does anybody know how they do this formally? Say you share the company with 100 other people. 99% of the money that comes in is paid out, so the company has almost no capital. Now 1 of the 100 people has a liability claim or didn't pay some invoice. Or is involved in illegal activities, such as selling drugs. How does the provider make sure this person can't bankrupt the company?
Who signs the contracts? I would assume the freelancer can't sign documents on behalf of the rented company.
How do they make sure they can't be charged with assisting in tax evasion? Would they request a tax residency certificate?
I have been thinking about offering a similar service, but after talking to some lawyers, I quickly realized what a liability headache this would be. As the director of the company, you'd be liable for whatever happens. Maybe that's their secret? They just use nominee directors from some third world countries?

Maybe @Martin Everson or @Sols have an idea how this stuff works under the hood?
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Yeah good questions.
I know I approached one of this company and they answered a lot of questions I had, but this is a good point you are making.
Personally this is not for tax evasion purposes, just for secondary personal income without the hassle of having to set up a company.
Anyway, that income (primary or secondary) should be declared in your country of residence (Being a tax haven or not)

 

[smartchoice]

JustAnotherNomad said:
Does anybody know how they do this formally? Say you share the company with 100 other people. 99% of the money that comes in is paid out, so the company has almost no capital. Now 1 of the 100 people has a liability claim or didn't pay some invoice. Or is involved in illegal activities, such as selling drugs. How does the provider make sure this person can't bankrupt the company?
Who signs the contracts? I would assume the freelancer can't sign documents on behalf of the rented company.
How do they make sure they can't be charged with assisting in tax evasion? Would they request a tax residency certificate?
I have been thinking about offering a similar service, but after talking to some lawyers, I quickly realized what a liability headache this would be. As the director of the company, you'd be liable for whatever happens. Maybe that's their secret? They just use nominee directors from some third world countries?

Maybe @Martin Everson or @Sols have an idea how this stuff works under the hood?
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By renting a company, you enter into a partnership with Rented Company, in which Rented Company acts as a commission agent that takes care of payments and paperwork so you can focus completely on your work and customers. This set up it's not for everybody, it works well with freelancers, digital nomads, especially single person. Also after you create an invoice, it undergoes the verification process. Only after the invoice has been approved by the company department, you can send it to your client. For more info about the process, you can check the discussion in the forum about rentacompany or Estonia e residency, but of course, the income received like a salary or annual dividends should need to be declared in your country of residence -tax haven or not.

 

[JustAnotherNomad]

That's what I thought. Because they can't pay you a dividend since you're not a shareholder. They also can't pay you a salary because then they'd have to withhold payroll taxes, social security contributions and so on.

So they are basically just like PayPal. Or Fiverr - the only difference being that Fiverr probably doesn't bill under its own name?
So you don't get liability protection either, which is what people usually set up a company for. All it does is hide from the other party where you are living on paper.
So what exactly is the benefit? I recall @dziter mentioning he was freelancing through some platform that requires all freelancers to bill as a company. I guess for such a case it could make your life easier as you can still effectively be a sole trader for tax purposes and still bill under the name of a company.
But I fail to see any other benefits?

 

[Clip]

JustAnotherNomad said:
Sounds great! How much for the office?
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Usually 3000-5000 HKD for a coworking space that you can receive mail under your name. Gov subsidies half of it
https://www.sie.gov.hk/en/coworkingspace.page

JustAnotherNomad said:
I don't want to live there though, I'm a nomad. I just want to have official residency there.
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I have a friend that can short that out, PM if you are really interested

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Expat in Hong Kong - There are two ways to conquer and enslave a nation. One is by the sword. The other is by debt. - John Adams

 

[bibing]

GiGoGo said:
Get an small office, hire a secretary and put yourself a salary (30k HKD per month don't pay taxes) then apply for the business / entrepreneur visa that is renewed every year
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Do you have any experience about it?
I thought you needed to show a business plan and invest a considerable amount to get a residency visa in HK

 

[JustAnotherNomad]

Moulaga said:
does it sound like company renting concept ?
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Difficult to say without knowing all the details...

 

[Neilbali]

JustAnotherNomad said:
After 60 days actually. But not by traveling there obviously, you'd have to properly establish yourself there. But it isn't the whole story, you might still have to pay taxes in another country. It's more complicated than “Spend 2 months in Cyprus and never pay taxes again”, obviously.
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Naturally you have to make sure that you dont spend more than 180 days in a calendar year in any one country otherwise you will also be resident there. but i think the person asking the question knows that. I met quite a few people in Cyprus who get their tax residency, then travel in South East Asia for 9 months of the year.

 

[JustAnotherNomad]

Neilbali said:
Naturally you have to make sure that you dont spend more than 180 days in a calendar year in any one country otherwise you will also be resident there.
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It can be much less than 180 days, as I've explained here over and over again.