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When does fiscal residency start/end?

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sriracha

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Aug 25, 2022
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#1
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My friend Wilhelm has investments in the stock market. He is from Germany, but lives now in Estonia and is a fiscal resident of Estonia.

Wilhelm plans on cashing out on his stocks in about 5 years, and for that he would like to move to Singapore or similar country, just for the time to cash out without paying tax on his gains, then move to Germany and buy real estate.

Is this a correct plan of action:

- on December 27th, 2029, he would go to town hall in Tallinn and declare that he is moving to Singapore, and also he would leave his rented apartment
- on December 28th (the following day) he would take a plane to Singapore
- he would use the next couple of weeks to find an apartment and register his residency with Singapore
- when all his Singapore papers are done, he would then register with the German consulate in Singapore and declare that he is now a resident of Singapore, so let's say around Jan 20th, 2030
- he would cash then out on his stocks and legally pay zero tax
- after 183 days in Singapore, he would then go back to Germany, not becoming a German fiscal resident for 2030 since he would have spent < 183 days in Germany, and buy an apartment with his legal SOF from Singapore.


Is this how you do it?
 
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#2
Estonia has very clear rules for tax residency, and doesnt make it difficult to leave the tax net. From emta.ee:
"a natural person is a resident of Estonia if at least one of the following requirements is met:

  • the person’s place of residence is in Estonia;
  • the person is staying in Estonia for at least 183 days over the course of a period of 12 consecutive calendar months;
  • the person is an Estonian diplomat who is in foreign service."
And place of residence is described as:

"To determine a person’s place of residence, it is important that the place of residence would be permanent and lasting, i.e. it must be apparent that the person has made preparations or efforts for making the place of residence permanently available for himself or herself all the time, not acquired for the purpose of short-term dwelling (a holiday trip, a business trip, a study trip, training courses, etc.). Possession of property (as well as an immovable) in Estonia itself does not make a person a resident for the purposes of the Income Tax Act."

So Wilhelm just need to have Singapore as his permanent place of residence, and not be in Estonia more than 183 days over a 12 month period. It is very straight forward, enough to just de-register and leave Estonia really. Then he can sell the stocks the next day. Can be anytime, doesnt have to be around year end.

Im assuming here that the starting point is that Wilhelm is out of the German tax net. Thats much harder to get out of than Estonia's - got to cut all ties, even minor ties, like having a car, bank accounts etc in Germany. And got to watch out not to get into the German tax net again - that can happen even if staying less than 183 days in Germany.
 
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#4
sriracha said:
My friend Wilhelm has investments in the stock market. He is from Germany, but lives now in Estonia and is a fiscal resident of Estonia.

Wilhelm plans on cashing out on his stocks in about 5 years, and for that he would like to move to Singapore or similar country, just for the time to cash out without paying tax on his gains, then move to Germany and buy real estate.

Is this a correct plan of action:

- on December 27th, 2029, he would go to town hall in Tallinn and declare that he is moving to Singapore, and also he would leave his rented apartment
- on December 28th (the following day) he would take a plane to Singapore
- he would use the next couple of weeks to find an apartment and register his residency with Singapore
- when all his Singapore papers are done, he would then register with the German consulate in Singapore and declare that he is now a resident of Singapore, so let's say around Jan 20th, 2030
- he would cash then out on his stocks and legally pay zero tax
- after 183 days in Singapore, he would then go back to Germany, not becoming a German fiscal resident for 2030 since he would have spent < 183 days in Germany, and buy an apartment with his legal SOF from Singapore.


Is this how you do it?
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its not straightforward nor easy to register in singapore, its not like they take every joe like the eu countries.
Unless he can fund his own company with lets say 10M and pay himself a decent directors salary 50k/monthly or so, or getting a job for a year, the chances of just getting residency in Singapore are slim and none, and slim is out of town.

Why would he have a "legal sof from singapore"? Theres no transfer of value indicated to Singaporean brokers/banks.

Its too far out, a lot will and does happen from 2025 to 2030. Maybe Singapore is blacklisted by then or full blown capital controls have been enacted.
 
#5
JackAlabama said:
Unless he can fund his own company with lets say 10M and pay himself a decent directors salary 50k/monthly or so, or getting a job for a year
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Aren’t these numbers just pulled out of thin air? I’m guessing you can get in as long as you can show solid proof that you can support yourself. I highly doubt the average expat living in Singapore is making $50,000 a month.
 
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#7
If you get a job in Singapore you can usually get in - there are multiple type of job residence permits with categories for nannies/domestic workers to well paid professionals.
And then if you have a venture capital backed startup you can also get in.
But I dont see a category for persons of independent means, except the Global Investor Programme, but the criteria there is like to run a business with at least 200M SGD turnover and invest 10M SGD in SIngapore.
 
#8
Houdini said:
Aren’t these numbers just pulled out of thin air? I’m guessing you can get in as long as you can show solid proof that you can support yourself. I highly doubt the average expat living in Singapore is making $50,000 a month.
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Nope, have you seen who applies for singapore? There are a lot of family offices waiting to get approved, with 9 digits.
its not 2019 any more.
 
#9
Cloudbanck said:
If you get a job in Singapore you can usually get in - there are multiple type of job residence permits with categories for nannies/domestic workers to well paid professionals.
And then if you have a venture capital backed startup you can also get in.
But I dont see a category for persons of independent means, except the Global Investor Programme, but the criteria there is like to run a business with at least 200M SGD turnover and invest 10M SGD in SIngapore.
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thats why because they dont publish all the details ;). But its becoming apparent once you start looking around.
You dont need venture funds, in theory, you can run your own company and employ yourself (at a salary of like 5k or smth) - but again, due to singapores success, its more complex than it looks like.
 
#10
Houdini said:
Aren’t these numbers just pulled out of thin air? I’m guessing you can get in as long as you can show solid proof that you can support yourself. I highly doubt the average expat living in Singapore is making $50,000 a month.
Click to expand...
you know how pyramid systems work? You could get pr easily in 2010, 10y before that even citizenship for non-chinese was doable, but today 9 digits do not guarantee it.
Singapore is like the top insta model. They can choose between 1000s of ultra rich dudes, all throwing their alpha signals around like rowdy dogs but for most to no avail.
 
#11
But why take so much about Singapore?

It is very apparent that the place got filled after China broke the rules in Hong Kong. Now, rents are insane.

But he just needs a country without taxes on capital gains. Even Switzerland would do the job.

And then, there are also countries which won't tax the unrealised capital gains from before moving there.

I think the main part is only escaping Estonia. And if their tax law has such loophole, then it is their own problem when he takes advantage of it.
 
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#12
Sorry! Not easy to get Singapore residence these days. Fast? Forget it! It is not at all easy to get a Sing bank or brokerage account either.
The last time a client of mine tried a tactic similar to the strategy here, the Sing bank wanted proof & full documentation of source of funds dating back over 125 years. Crazy stuff designed to keep people like you out! Plus, German tax authorities (like the American IRS) might disregard all such strategies and surprise you with tax claims as if you have never left Germany. I regard low-profile to the point of invisibility as the best strategy. This might involve using straw men or entities created by yourself.
 
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#13
daniels27 said:
But why take so much about Singapore?

It is very apparent that the place got filled after China broke the rules in Hong Kong. Now, rents are insane.

But he just needs a country without taxes on capital gains. Even Switzerland would do the job.

And then, there are also countries which won't tax the unrealised capital gains from before moving there.

I think the main part is only escaping Estonia. And if their tax law has such loophole, then it is their own problem when he takes advantage of it.
Click to expand...
he ditch singapore and use another country, and it looks much better.
 
#14
JackAlabama said:
he ditch singapore and use another country, and it looks much better.
Click to expand...
Singapore has always been ditched. It was just a badly chosen example that got too much attention. He made it quite clear in his first post:

sriracha said:
he would like to move to Singapore or similar country,
Click to expand...

There are enough places that he can go easily. Singapore was just famous because of the Facebook guy.
 
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