2 months UK, 5 months UAE, 5 months Indo - Tax Residency?

[Luxxxtino]

Hi all,

I'm a UK citizen (non-resident for 3 years, cut most ties) operating a US SMLLC with no US ECI or business in UAE/Indonesia

Trying to figure out what my tax residency would be for the following travel plans (my ideal rotation for next couple of years):

2 months in UK (90 months needed for tax residency)
5 months in Dubai (183 days needed for tax residency without Ejari (would be staying at friend's place))
5 months in Indonesia (183 days needed for tax residency)

Would I be tax resident nowhere? Would HMRC claim de-facto residency by virtue of my citizenship?

Particularly concerned with the UAE tax authorities' stance on this as appears to be a grey area (5 months without Ejari).

Thanks!

 

[EliasIT]

You won't to give up your UK citizens to be make sure they don't come after you. Anyway, you want to start collecting as many bills proving you a traveling and out of the UK as possible.

Every bill counts. I'm certain they will try to come after you anyway.

 

[daniels27]

The problem is that if you run a company from those countries, you still create a PE in all of them. Now, we all agree that UAE and Indo both won't bother too much and probably won't find you. But you don't want to pay in UK, hence you need to check the tax treaties of UK

https://www.gov.uk/government/collections/tax-treaties
Do yourself the favour and read and understand them. Like for Indonesia, your domicile is

(a) he shall be deemed to be a resident of the Contracting State in which he
has a permanent home available to him; if he has a permanent home available
to him in both Contracting States, he shall be deemed to be a resident of the
Contracting State with which his personal and economic relations are closer
(centre of vital interests);
(b) if the Contracting State in which he has his centre of vital interests cannot
be determined, or if he has not a permanent home available to him in either
Contracting State, he shall be deemed to be a resident of the Contracting State
in which he has an habitual abode;
(c) if he has an habitual abode in both Contracting States or in neither of
them, the competent authorities of the Contracting States shall settle the
question by mutual agreement.

Go through the whole tready and you will see what is needed. You may have to get an apartment or a girlfriend in the place you want to be tax resident. Collecting invoices is a general lawyers advice, I personally am unsure how much it helps as they generally look at the whole picture and what you do and where you live. Having 1000 invoices pre day from UAE is less than having a girlfriend and kid in Indonesia without any invoice.

The UK citizenship does not change anything. If you want to be safe, you can apply for a tax ruling with HMRC etc. Otherwise, you just ensure that you won't get in troubles in UK and hope UAE and Indo won't tax you.

 

[Xshore]

The problem is that if you run a company from those countries, you still create a PE in all of them. Now, we all agree that UAE and Indo both won't bother too much and probably won't find you. But you don't want to pay in UK, hence you need to check the tax treaties of UK

https://www.gov.uk/government/collections/tax-treaties
Do yourself the favour and read and understand them. Like for Indonesia, your domicile is

(a) he shall be deemed to be a resident of the Contracting State in which he
has a permanent home available to him; if he has a permanent home available
to him in both Contracting States, he shall be deemed to be a resident of the
Contracting State with which his personal and economic relations are closer
(centre of vital interests);
(b) if the Contracting State in which he has his centre of vital interests cannot
be determined, or if he has not a permanent home available to him in either
Contracting State, he shall be deemed to be a resident of the Contracting State
in which he has an habitual abode;
(c) if he has an habitual abode in both Contracting States or in neither of
them, the competent authorities of the Contracting States shall settle the
question by mutual agreement.

Go through the whole tready and you will see what is needed. You may have to get an apartment or a girlfriend in the place you want to be tax resident. Collecting invoices is a general lawyers advice, I personally am unsure how much it helps as they generally look at the whole picture and what you do and where you live. Having 1000 invoices pre day from UAE is less than having a girlfriend and kid in Indonesia without any invoice.

The UK tax treaties are only relevant if he is tax resident in the UK. If he's not tax resident due to the automatic tests then it's not an issue.
Check if UK tax resident here:
https://www.tax.service.gov.uk/guid...e-status/outcome/non-resident-sufficient-ties

 

[ShillGates]

seems to me the op doesnt understand the tax law when it comes to the uk
please follow this first, its not just about days
https://assets.kpmg.com/content/dam/kpmg/pdf/2016/01/statutory-residence-test-flowchart.pdf

 

[Luxxxtino]

seems to me the op doesnt understand the tax law when it comes to the uk
please follow this first, its not just about days
https://assets.kpmg.com/content/dam/kpmg/pdf/2016/01/statutory-residence-test-flowchart.pdf

I am aware, hence why I said I've been non-res for 3 years (first 2 years need to be 45 days due to more ties) such that I can now spend 90 days in the UK

You won't to give up your UK citizens to be make sure they don't come after you. Anyway, you want to start collecting as many bills proving you a traveling and out of the UK as possible.

Every bill counts. I'm certain they will try to come after you anyway.

Working on alternative passports but for now I'm stuck with just the UK one (unfortunately ineligible for Irish)

 

[TheCryptoAnt]

In practice as long as you dont use any UK bank/EMI etc and only use your UAE bank you should be ok and nobody will ask questions.

If HMRC comes asking just tell them some bs that you work in UAE for little money so they go away.

Overall try to lay low.

 

[wellington]

Hi all,

I'm a UK citizen (non-resident for 3 years, cut most ties) operating a US SMLLC with no US ECI or business in UAE/Indonesia

Trying to figure out what my tax residency would be for the following travel plans (my ideal rotation for next couple of years):

2 months in UK (90 months needed for tax residency)
5 months in Dubai (183 days needed for tax residency without Ejari (would be staying at friend's place))
5 months in Indonesia (183 days needed for tax residency)

Would I be tax resident nowhere? Would HMRC claim de-facto residency by virtue of my citizenship?

Particularly concerned with the UAE tax authorities' stance on this as appears to be a grey area (5 months without Ejari).

Thanks!

If you still have ties to the UK they still can shaft you it depends on the type of ties

 

[Luxxxtino]

In practice as long as you dont use any UK bank/EMI etc and only use your UAE bank you should be ok and nobody will ask questions.

If HMRC comes asking just tell them some bs that you work in UAE for little money so they go away.

Overall try to lay low.

Yep all UK banking cancelled long time ago, annoyingly had decent money flowing through my old UK LTD CT returns so HMRC have an idea of me earning a decent amount, but nothing I can do about that now

If you still have ties to the UK they still can shaft you it depends on the type of ties

100% man I agree with you, nothing I can do about my parents still living there though or the work tie (>3 hours of work for >40 days) so those 2 ties are there for good, hence max 90 days in UK for me

 

[TheCryptoAnt]

Yep all UK banking cancelled long time ago, annoyingly had decent money flowing through my old UK LTD CT returns so HMRC have an idea of me earning a decent amount, but nothing I can do about that now

'too stressful, I decided to close it all down as I value my health much more now'

 

[10101]

Your non resident SMLLC, what's the director's address? Your UK address? I think that would trigger UK tax residency. From my understanding and research it's nowadays impossible to live without tax residency.

 

[Xshore]

Your non resident SMLLC, what's the director's address? Your UK address? I think that would trigger UK tax residency. From my understanding and research it's nowadays impossible to live without tax residency.

And address on file has nothing to do with tax residency.
And your understand is wrong. Op might be UK non tax resident due to the automatic tests.
There's is no such thing a mandatory tax residence (for all citizenships).
In many countries you have to qualify for tax residency by staying long enough, and if you don't then you are not tax resident, no matter how much you'd want to be.

 

[Cloudbanck]

And address on file has nothing to do with tax residency.
And your understand is wrong. Op might be UK non tax resident due to the automatic tests.
There's is no such thing a mandatory tax residence (for all citizenships).
In many countries you have to qualify for tax residency by staying long enough, and if you don't then you are not tax resident, no matter how much you'd want to be.

Yeah, and among western high tax countries, the UK is one of the absolutely easiest to leave with clearest rules on how to stop being a tax resident.

I categorise this as follows from hardest to easiest to leave:

1. Full on taxation by citizenship - US
2. Quasi/Partial taxation by citizenship - Norway, Hungary
3. Not clear and aggressively enforced rules for center of vital interest, habitual abode, economic interests, plus anti tax haven rules - Spain, Italy
4. Days test plus domicile rule, meaning you must show that you have a permanent home abroad, and aggressive enforcement - Australia
5. Significant ties plus minor ties which are not clearly defined. So besides not having a home, family, business, one must also cut stuff like gym subscription, car, health insurance, bank accounts, golf club subscription, local doctor, and to be on the safe side create such ties in a foreign country. Netherlands and I think Germany, Canada
6. Significant ties which are clearly defined. No business, property or immediate family. - Sweden, Denmark, Finland
7. Just days tests. - UK, Ireland, Estonia

So if you are a citizen of the US, Hungary or Australia, and Norway for the first three years after leaving, you cant be a tax resident of nowhere.
(Hungary doesnt really enforce it very much, and for Australia you technically dont have to be a tax resident in the foreign country but you have to reside there permanently which makes it hard to avoid becoming a tax resident)

But for all other citizenships, yes you can be a tax resident nowhere - it is really not that difficult, just dont meet the criteria for tax residency in any one country. And note that you can be an official resident without being a tax resident in quite a few places.

 

[daniels27]

The UK tax treaties are only relevant if he is tax resident in the UK. If he's not tax resident due to the automatic tests then it's not an issue.
Check if UK tax resident here:
https://www.tax.service.gov.uk/guid...e-status/outcome/non-resident-sufficient-ties

Yes. But this is for personal taxes only. Your company may still get taxed where you have a PE. In most Western countries 183 days in already is way more than enough to have a PE with your company.

I personally would be very careful with this kind of setup.

 

[Xshore]

Yes. But this is for personal taxes only. Your company may still get taxed where you have a PE. In most Western countries 183 days in already is way more than enough to have a PE with your company.

I personally would be very careful with this kind of setup.

However OP said he will only be 2 months in the UK.

 

[daniels27]

However OP said he will only be 2 months in the UK.

Yes, as mentioned 183 days is already way more than enough to form a PE. It can be with as little as 30 days in come countries. 2 months does not rule anything out. Especially, OP is talking about 2 months per year. Not just 2 months. It is a big difference as you can see in the HMRC internal manual

https://www.gov.uk/hmrc-internal-manuals/international-manual/intm264435

Francine, a French national with an English partner, joins a French company on a permanent contract which permits her to spend a fixed three-month period each year working in the UK.

Under such an arrangement, Francine’s presence would meet the permanence test for a fixed place of business permanent establishment because the cumulative time she is anticipated to spend in the UK over the coming few years is significant and her presence in the UK is fixed and so not random or sporadic. Whether a PE would be created would depend on the wider facts and circumstances.

https://www.gov.uk/hmrc-internal-manuals/international-manual/intm264430

A PE can be deemed to exist only if the place of business has a certain degree of permanency, i.e. if it is not of a purely temporary nature. In looking at permanency the commentary says permanent establishments have not been considered to exist in situations where a business has been carried on in a country through a fixed place of business that has been maintained for less then 6 months (contrast with Article 5(3) which definitively states a 12 month duration for a building site or construction or installation project, see INTM264800).

One exception to the six month yardstick has been where the activities were of a recurrent nature; in such cases, each period of time during which the place is used needs to be considered in combination with the number of times during which that place is used (which may extend over a period of years).

I can only reiterate. What you are talking about is only for personal tax. The rules for corporate tax are different.

 

[JackAlabama]

Yes, as mentioned 183 days is already way more than enough to form a PE. It can be with as little as 30 days in come countries. 2 months does not rule anything out. Especially, OP is talking about 2 months per year. Not just 2 months. It is a big difference as you can see in the HMRC internal manual

https://www.gov.uk/hmrc-internal-manuals/international-manual/intm264435

https://www.gov.uk/hmrc-internal-manuals/international-manual/intm264430

I can only reiterate. What you are talking about is only for personal tax. The rules for corporate tax are different.

agreed.

OP states it himself
"or the work tie (>3 hours of work for >40 days) so those 2 ties are there for good, hence max 90 days in UK for me" which is gonna be complicating things. Its not like just chillin at the fams home for a while.

 

[Xshore]

Yes, as mentioned 183 days is already way more than enough to form a PE. It can be with as little as 30 days in come countries. 2 months does not rule anything out. Especially, OP is talking about 2 months per year. Not just 2 months. It is a big difference as you can see in the HMRC internal manual

https://www.gov.uk/hmrc-internal-manuals/international-manual/intm264435

https://www.gov.uk/hmrc-internal-manuals/international-manual/intm264430

I can only reiterate. What you are talking about is only for personal tax. The rules for corporate tax are different.

Interesting! They second link states the need for a permanent location thought, so depending on OP's situation it might not so easily be a PE if he's not working from the same location.

And, if he is working for his own one man US LLC with no other connection to the UK, I would personally think there is a very minuscule chance that HMRC would ever be aware of this company or the potential PE.

 

[Cloudbanck]

Interesting! They second link states the need for a permanent location thought, so depending on OP's situation it might not so easily be a PE if he's not working from the same location.

And, if he is working for his own one man US LLC with no other connection to the UK, I would personally think there is a very minuscule chance that HMRC would ever be aware of this company or the potential PE.

Yeah, I wouldn't push it though, you can't count on tax agencies to follow their own rules, or what you think is a sensible interpretation of the rules. I wouldn't stay 2 months in the UK if I had a foreign business, especially not if I was a UK citizen and a previous tax resident of the UK.

Another issue here is what personal tax residency to put in the annual reporting to the IRS for the US LLC. Either UAE or Indonesia I guess - you cant put that you arent a tax resident anywhere. Im not sure about Indonesia, but for the UAE you can use your Emirates id as TIN, even though the UAE technically doesnt issue personal TINs.
And from the US perspective, it isnt really their problem if you are a tax resident of the UAE or just a resident. The UAE might get the information from the US, and if so they will probably do nothing, but who knows really.

 

[jkl197]

to fully cut ties with UK, in some cases, you have to spend less than 15 days in a year in the UK, read very carefully the rules