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0% plan and coming back from tax haven after 10 years
- Thread starter zzzzzz
- Start date
All this talk of treaty protection and winning in court? The tax officer isn't spending his own money to prosecute you, so he doesn't care. They can make it much more expensive to fight than to just pay the tax, even if you have "treaty protection". An added bonus is that the law firm will have to pay tax on the legal fees you're paying.
In my dispute, the lawyer told me it would be cheaper to just pay the requested amount. He was quite sure he could win, but for the amount he indicated that his fees would be the same if not more, with it being dragged out for years.
In my dispute, the lawyer told me it would be cheaper to just pay the requested amount. He was quite sure he could win, but for the amount he indicated that his fees would be the same if not more, with it being dragged out for years.
Works in some countries.
Know wealthy Kenyans living in Kenya whilst being tax resident in Dubai lol.
Totally, it is only really a problem if you want to spend significant time in a western high tax country. Most of the world - even if they on paper have worldwide taxation with some sort of criteria for being tax resident - operates with de facto territorial taxation.
In Subsaharan Africa, typically almost half of government income comes from import and export duties, and the rest is tax on large companies, and on tangible stuff like property and small businesses that have a premise, and a bit of VAT and income tax on the formal sector. And then you have a large informal sector, and no such thing as a personal tax return, and absolutely no de facto taxation on anything outside the country.
Was just talking to a friend with a formal job in a subsaharan African country with on paper worldwide taxation. So I was asking, doesnt it suck to pay so much tax. He was like "oh yeah, but I only take the minimum salary here to get residence, and the rest is paid in Mauritius, and I dont live in Mauritius so there is no tax there."
I think that there is some confusion with the 183 days.
Staying 183 in one specific country, can make you strongly a tax resident of that country, with the proper actions
Staying 182 days or less in one country, doesn't guarantee that you will not be considered a tax resident there. Because theoretically you can spend 18 days in 20 different countries each, in that case YOU MUST BE CONSIDERED A TAX RESIDENT SOMEWHERE
In few words:
>= 183 in country A -> can guarantee you a tax residency in country A
<= 183 in country B -> cannot guarantee you a non tax residency in country B, if you haven't stayed >=183 in another country
Given the above, any solution that doesn't include a >=183 days stay in one specific country, cannot guarantee the desired tax outcome and it will be under risk
Staying 183 in one specific country, can make you strongly a tax resident of that country, with the proper actions
Staying 182 days or less in one country, doesn't guarantee that you will not be considered a tax resident there. Because theoretically you can spend 18 days in 20 different countries each, in that case YOU MUST BE CONSIDERED A TAX RESIDENT SOMEWHERE
In few words:
>= 183 in country A -> can guarantee you a tax residency in country A
<= 183 in country B -> cannot guarantee you a non tax residency in country B, if you haven't stayed >=183 in another country
Given the above, any solution that doesn't include a >=183 days stay in one specific country, cannot guarantee the desired tax outcome and it will be under risk
I am sure it works in Kenya and probably a bunch of other countries but this stuff stopped working in high tax EU countries a while ago. You can probably get away with it the first year, maybe even the 2nd but at some point you will get in trouble.
you can even get in trouble with a tax certificate that proves you spend 183 days elsewhere. High tax countries go happily after you using the ambiguous "center of life" and "vital interest" statements that you will find in their tax codes. In Belgium for example you will be considered a tax resident if you have kids going to a Belgian school, does not matter if you spend 250 days in another country with a tax certificate to prove it.
the tax man has unlimited resources and time
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Exactly, personal center of life is most important thing. If your wife remains in home country - 99% you will get taxed back home. Also having livable and accessible real estate in home country will probably lead to being taxed back home
About real estate, yeah, Montenegrin football player Mirko Vucinic got hit hard by this. He owned a house in Italy and then went to live and play football in the UAE, but because of this house, the italian authorities treated him as an Italian tax resident and requested their share of his UAE salary plus penalties. Their "pizzo" basically. I think at the end they gave him a suspended prison sentence and confiscated all his assets in Italy.
Real estate depends on the country though. In the UK and Ireland you can own real estate without becoming a tax resident. In Scandinavia you can have real estate for pure investment purposes that you have never lived in, and possibly some cottage "sommarstuga" not usable for year round use.
My observation is that tax offices are known to be more stricter with their own citizens than foreigners living as permanent residents. The only way of standing up is to show a trc under dtt. Then the procedure of determining a tax residency is 100% clear. Until that you can have a residency in 10 countries simultaneously and still be tax resident of nowhere. You don't even need Dubai.
If you have a permanent home in UAE and live there for 183+ days and not have a permanent home in a country of your citizenship it's a 100% protection since dtt covers that case. It clearly states that the first test is permanent home. If you pass you're ok. In a case you can't get a trc you have nothing to show to your home country tax office and then they can claim you as having a centre of vital interests or any other bs, you can't argue with them. It's for this reason I don't understand why people choose UAE but not Cyprus. You can have a residency there as EU citizen without spending even a day. Without trc they are the same.
If you have a permanent home in UAE and live there for 183+ days and not have a permanent home in a country of your citizenship it's a 100% protection since dtt covers that case. It clearly states that the first test is permanent home. If you pass you're ok. In a case you can't get a trc you have nothing to show to your home country tax office and then they can claim you as having a centre of vital interests or any other bs, you can't argue with them. It's for this reason I don't understand why people choose UAE but not Cyprus. You can have a residency there as EU citizen without spending even a day. Without trc they are the same.
There are cases where no country will claim your tax residency because you do not qualify as a tax resident based on domestic law. And how else can a country claim your tax residence than following its own laws?
How about someone residing within one year based on a visa (and operating a tax-transparent structure):
- 120 days in Georgia (Sakartvelo) - territorial tax, need to spend 183 days for tax residency
- 120 days in South Ossetia - worldwide tax, need to spend 183 days for tax residency (internationally part of Georgia, but de facto not controlled by Georgia)
- 125 days in Abkhazia - worldwide tax, need to spend 183 days for tax residency (internationally part of Georgia, but de facto not controlled by Georgia)
From some other perspectives, it's like perpetually travelling within Georgia.
PS! Abkhazia is luring in foreign capital with great promises - full exemption from paying income and property taxes for 25 years (if you invest a sufficient amount)
Last time I checked they offered 18% interest on dollar deposits.
https://jam-news.net/tax-incentives-in-abkhazia/
Why do you need DTA if you're already tax non-resident in country of citizenship and tax resident in UAE? DTA is used if you're double tax resident and countries have to decide which one will tax you.
In my first post it says:
Socio-economic residential ties are cut in country of citizenship, no permanent address, tax non-resident status
Socio-economic residential ties are in UAE including permanent home (rented/owned), permanent address, driving license...tax resident status
So the only question that remains is 183 day rule:
1. Staying under 183 days in country of citizenship? YES
2. How long should you stay in UAE? If you rent/own home you're tax resident after 90 days, otherwise after 183 days.
Hypothetical scenario:
a. UAE 94 days, country of citizenship 182 days, other countries 89 days?
b. UAE 183 days, country of citizenship 182 days?
c. ?
How long can you stay in country of citizenship and still have tax non-resident status?
It varies depending on the specific situation, whether it involves a few days each week or a continuous period of 2-3 months during the summer. Generally, a duration of 90 days straight, such as summer vacation June to August, is acceptable.
Does this home country has "center of life" or "vital interest" in their tax code? This is vital because if they have there is nothing that will stop them to use it against you even if you stay less then 183 days in your home country. People have been considered tax resident for far less then 182 days, there is no set rule for number of days, if they think they have a case, they will use it. You keep repeating this magical 183 days rule that is down the bottom of the criteria that high tax countries use to decide if you are tax resident or not. Don't believe me, go to a an international tax advisor, I spend the money for advise and that is what he told me.
Exactly what I was talking about
I highly doubt UAE will issue you a trc under a tax treaty if you spend there less than 183 days. Thus you don't even need to spend there 90 days either, without dtt and trc only local laws matter.
In general, to be safe:
- Cut all ties with your home country, sell apartment, cancel all contracts
- No family in your home country (Wife, kids)
- Spend a maximum of 70-90 days per year in your home country, for example during the summer. You can't be there for example 3 days a week, all year around.
- Choose a new home base
- Make sure to have an apartment/house that you own or rent
Make sure to save evidence, keep a log of your travels, utilities, spendings. Make sure to have everything in check.
During the initial 5 years, the burden is on you to demonstrate that you are not residing in your home country.
Its important to remember that most people will fly under the radar and never have any issues, most people never hear anything from the tax-agency. But you never know.
- Cut all ties with your home country, sell apartment, cancel all contracts
- No family in your home country (Wife, kids)
- Spend a maximum of 70-90 days per year in your home country, for example during the summer. You can't be there for example 3 days a week, all year around.
- Choose a new home base
- Make sure to have an apartment/house that you own or rent
Make sure to save evidence, keep a log of your travels, utilities, spendings. Make sure to have everything in check.
During the initial 5 years, the burden is on you to demonstrate that you are not residing in your home country.
Its important to remember that most people will fly under the radar and never have any issues, most people never hear anything from the tax-agency. But you never know.
Yes, that's always recommended.
Still not 100% sure what type of passenger name record (PNR) data the tax agencies have access to though, and for how long the data is stored due to GDPR.
https://www.consilium.europa.eu/en/policies/fight-against-terrorism/passenger-name-record/
Depends on the country, Belgium fore example takes 5 years, if you return within 5 years they could tax you on that income. best is to talk with a tax expert of your home country
I think until now that data is only accessible for (serious) criminal cases but who knows if that will change some day.
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