Best country for a freelancer / digital nomad post-covid

[JackAlabama]

Have you considered Paraguay? It seems like some of the countries you mentioned are similar to it. The weather is ideal I hear as well. I'm also a software engineer and looking to move there at the end of the year. You can get a permanent residency by putting $5k into a bank account for 3 months. It's terratorial tax based, so you'll pay 0% tax. It's not the biggest country, but you probably only need to spend 4 months a year there (no 183 day tax residency rules, but 4 months is advised) as well and land is cheap so you can build a mansion

Ps. Sorry if I mention Paraguay a lot in posts, I'm getting excited about my move - also have spent the last 3 months researching every county on earth.. with the best taxes.. the best livability.. and the least COVID hysteria.. and this is my solution.

Yes, I had a deep look into it, but put it on hold as of now.
It is pretty hot down there, very remote, limited food choices and pretty much a backwater, if you want a certain high standard of living. Also safety is an issue if you build a mansion, you might need private security 24/7 or your mansion is empty when you leave for some vacation.
Time zone is also an issue unless you work only for North American clients. (a zoom at 10am in europe requires you to wake up at 1am-ish).

Rest is solid, plus its dirt cheap to live and also appealing if you are single . Cheap power, water and agriculture are also big plus.
Who would have been your lawyer down there?

 

[jjrapy]

Have you considered Paraguay? It seems like some of the countries you mentioned are similar to it. The weather is ideal I hear as well. I'm also a software engineer and looking to move there at the end of the year. You can get a permanent residency by putting $5k into a bank account for 3 months. It's terratorial tax based, so you'll pay 0% tax. It's not the biggest country, but you probably only need to spend 4 months a year there (no 183 day tax residency rules, but 4 months is advised) as well and land is cheap so you can build a mansion

Ps. Sorry if I mention Paraguay a lot in posts, I'm getting excited about my move - also have spent the last 3 months researching every county on earth.. with the best taxes.. the best livability.. and the least COVID hysteria.. and this is my solution.

PM when you get to Paraguay if you need something

 

[tyrexoid]

This is definitely the case. Territorial taxation is exactly that: They tax you on the work you perform in their country. Since "freelancing" is "work" you will be taxed.

To name a few other popular countries where the very same applies: Malaysia, Philippines, Thailand.

Territorial taxation is only favourable for retirees who are able to live off interests, dividends, capital gains. And even then it should not be an excessive number of transactions and monies are best not to be remitted to the country with territorial taxation.

as someone who was freelancing from 2006 to 2014 and did not pay any tax ever (not on purpose, I was a new grad and I really didn't know that taxes exist outside of scope when the employer "automatically deducts something" from a monthly paycheck - I truly believed that employers/clients "always will take care of that stuff on their end". And only learned about the miracle of "you go somewhere to authorities, tell them how much you earn, and give them money voluntarily by yourself, automagically every year" when I relocated to US. It was new to me, pretty fascinating (think 'culture shock' from the fact how law-savvy and financially smart every citizen must be in order to survive in this country, just think about it, there are still places where people are illiterate - they really can't read text, in Cambodia for example, even in the capital, there are people who never learned to read their own language and only know to talk it, and they're adults, and they're fine and cool about that).

So the question I have is, how in the world, it's enforceable and provable that a person is "working" (Thailand let's say) in order to collect tax, if the person is doing some random stuff online (builds websites, draws stuff, sings a song lol, whatever) and people pay him to some random bank accounts in other countries (well I was traveling a lot so I had a bunch of accounts everywhere) especially because nowadays there are these "online only" banks, even if they report all info and is all shared, I highly doubt the tax authorities will even bother trying to ask the questions of "hey dude you have this bank account in country XYZ and we saw some $$$ in there, mind to give me some since you live in our place for X time?" because it's literally a ton of work to make a case to prove and collect these pennies (and it'll be pennies if we talk about freelance and 100k-150k annual income range...).
Just curious what more experienced people think about this? And yes I know these "forgotten" taxes can come back and bite me in some of the countries one day, and I could get a bill plus interest over all these years, but I had tiny amounts of income so I don't mind even if I'll get a tax bill of 200% over the original tax owed. Would not dare such thing with the US though, these folks are scary, I'd lose my sleep if I owe a single dollar to the IRS .

 

[Filar]

Speaking about freedom, what are your thoughts about Switzerland?
It seems that they will have more freedom than the rest of EU in the future and taxes seem way better than France/Spain.

 

[backpacker]

Speaking about freedom, what are your thoughts about Switzerland?
It seems that they will have more freedom than the rest of EU in the future and taxes seem way better than France/Spain.

"Freedom" is a relative term. When it comes to everyday life then Switzerland is far more regulated, controlled and depressed than France or Spain. For a reason many Swiss move to Spain when they retire - it is not only because of the weather.
Even though in Switzerland the popular vote has the last say when it comes to local or national regulations, that does not come with more "Freedom". In Switzerland you need a license or regulated permission for almost everything you want to do. Even though trivial, Switzerland was the first country which introduced obligatory insurance plates for bicycles already way back in the 1970s - I guess that says a lot about the local understanding of "Freedom".

When it comes to taxes it is pretty uninteresting: Switzerland already has what the EU is about to introduce very soon - wealth taxation. When doing more than a fixed number of stock market trades per year you are even liable for social security contributions + income taxes on capital gains.

Consider the high cost of living, the fact that ever more regulations are being copied from EU-regulations (latest disaster is FinSA, something similar to MiFID) and it is not a worthy alternative.

 

[Marzio]

When it comes to taxes it is pretty uninteresting

Yes the cost of living is high, it's highly regulated but corporate taxes are very appealing!

 

[rhomber]

Ugh, so I had some agents get back to me about Cyprus just now. A lot of the things I had trouble with seem like they aren't a big hassel, they are:

1. You don't need to setup a company there, you can get residency by renting and showing you earn $40k EUR/year.
2. You will obviously get 100% tax exempt if you pay yourself in dividends (from something like a BVI, HK or SG company), but of course need to pay the 2.65% on top.

The deal breaker for me though... the COVID hysteria. I left Australia to avoid the vaccine passport s**t back at the start of the year and it's in force in Cyprus, you cannot go anywhere without a SafePass. Which you either need to be vaccinated or prove you have had a covid test within the last 72 hours, which even though it's $10EUR to test, is a lot of hassle to get something shoved up your nose every 3 days. So yeah, too dystopian for me, as is the rest of the EU which is also following this with the "Green Pass". I cannot of course say that Paraguay will not have this later, but they aren't in a position now to be able to give their citizens vaccines or even tests, so that to me says I have time.

 

[heliotrope]

Can you clarify if you meant that the 60-day certificate would not suffice for Spain (or any other aggressive country), even though you're not living in any of those countries?

Discussed before e.g. on this thread.

 

[uplana]

For someone with a high net income or high profits in their business it may very well make sense to move your business and yourself to Lugano or Zug!

 

[rhomber]

Yes, I had a deep look into it, but put it on hold as of now.
It is pretty hot down there, very remote, limited food choices and pretty much a backwater, if you want a certain high standard of living. Also safety is an issue if you build a mansion, you might need private security 24/7 or your mansion is empty when you leave for some vacation.
Time zone is also an issue unless you work only for North American clients. (a zoom at 10am in europe requires you to wake up at 1am-ish).

Rest is solid, plus its dirt cheap to live and also appealing if you are single . Cheap power, water and agriculture are also big plus.
Who would have been your lawyer down there?

Yeah, those are some reasons why you might not want to choose it. I'm still looking for one (lawyer), or deciding if I will do it solo. To do it solo is possible, but it takes longer because you need to first rent somewhere and get a utility bill. And yes, if you're single Or like me, want to grow some stuff to be self sufficient - my "mansion" is more of an eco village, so I am hoping with some others (locals, expats) living there with me as a family I won't get the same hatred as the "rich farmer" (i.e. eat the rich). We'll see, I may end up just living there for long enough to secure some money and move to Ecuador where the land taxes are less and you can get interest payments tax free (at 8-12% I might add).

 

[khinkali]

So the question I have is, how in the world, it's enforceable and provable that a person is "working" (Thailand let's say) in order to collect tax, if the person is doing some random stuff online (builds websites, draws stuff, sings a song lol, whatever) and people pay him to some random bank accounts in other countries

If you're doing a bit of web design and living a typical "cheap expat" existence then it is very unlikely that anyone is going to find your secret income. There was a raid in Chiang Mai some time ago, when officials decided that this kind of work didn't count as Thai income anyway. I guess you already have a visa for some purpose (e.g. student) and can live that lifestyle while getting paid offshore for your work.

If you make good money while working in Thailand for foreign clients and buy a big house and a Ferrari then I would expect attitudes to your Thai Permanent Establishment to change.

 

[rhomber]

If you're doing a bit of web design and living a typical "cheap expat" existence then it is very unlikely that anyone is going to find your secret income. There was a raid in Chiang Mai some time ago, when officials decided that this kind of work didn't count as Thai income anyway. I guess you already have a visa for some purpose (e.g. student) and can live that lifestyle while getting paid offshore for your work.

If you make good money while working in Thailand for foreign clients and buy a big house and a Ferrari then I would expect attitudes to your Thai Permanent Establishment to change.

Yeah, they have actually posted officially stating they will not chase digital nomads. The main problem with this, it's almost impossible to get a tax file number here. That's why I am leaving Thailand, I've no way to prove to my home country that I lodge tax returns

 

[user9823671]

as someone who was freelancing from 2006 to 2014 and did not pay any tax ever (not on purpose, I was a new grad and I really didn't know that taxes exist outside of scope when the employer "automatically deducts something" from a monthly paycheck - I truly believed that employers/clients "always will take care of that stuff on their end". And only learned about the miracle of "you go somewhere to authorities, tell them how much you earn, and give them money voluntarily by yourself, automagically every year" when I relocated to US. It was new to me, pretty fascinating (think 'culture shock' from the fact how law-savvy and financially smart every citizen must be in order to survive in this country, just think about it, there are still places where people are illiterate - they really can't read text, in Cambodia for example, even in the capital, there are people who never learned to read their own language and only know to talk it, and they're adults, and they're fine and cool about that).

So the question I have is, how in the world, it's enforceable and provable that a person is "working" (Thailand let's say) in order to collect tax, if the person is doing some random stuff online (builds websites, draws stuff, sings a song lol, whatever) and people pay him to some random bank accounts in other countries (well I was traveling a lot so I had a bunch of accounts everywhere) especially because nowadays there are these "online only" banks, even if they report all info and is all shared, I highly doubt the tax authorities will even bother trying to ask the questions of "hey dude you have this bank account in country XYZ and we saw some $$$ in there, mind to give me some since you live in our place for X time?" because it's literally a ton of work to make a case to prove and collect these pennies (and it'll be pennies if we talk about freelance and 100k-150k annual income range...).
Just curious what more experienced people think about this? And yes I know these "forgotten" taxes can come back and bite me in some of the countries one day, and I could get a bill plus interest over all these years, but I had tiny amounts of income so I don't mind even if I'll get a tax bill of 200% over the original tax owed. Would not dare such thing with the US though, these folks are scary, I'd lose my sleep if I owe a single dollar to the IRS .

Basically you are flying under the radar and 99% are fine doing this. Assuming the amounts are not huge <$100k you are "probably" ok and your home country will matter here. If you have left your home country and they accept you are not resident there any more and they are not too aggresive in their tax departments you are fine. Compared to the US where you must always file taxes on everything you own and they often and do audit random people then it is probably less safe.

The risk is, that some country who might have a claim on you does an audit and you cannot answer their questions, then you are in trouble. Does this happen yes, is it likely to happen to you? No.


Come from the UK, I like you had no idea of taxes, it was always PAYE (employer handles it all) the concept of filing taxes was completely alien to me. And in similar years to you I was working away, getting paid through paypal and never declared anything. Had it all going through my UK bank, never had an issue. Didn't try to hide anything, just didn't do anything that I probably should have done.

Is it a clever tax free strategy, hell no. Will it work for most who are earning a bit of money whilst travelling / nomading / whatever you want to call it, yeah probably.

 

[georgio]

Worth noting that the 60-day certificate may not be worth much if you're trying to escape from aggressive countries that see it as a sham.

That's my biggest issue, I'm from an aggressive country too, that would not accept a non-dom residency in another country. Discussed here: Non-dom resident status Cyprus

 

[heliotrope]

That's my biggest issue, I'm from an aggressive country too, that would not accept a non-dom residency in another country. Discussed here: Non-dom resident status Cyprus

Germany is as aggressive as they come. Plenty of Germans have moved to Cyprus without issue. Are you possibly confusing the concept of 'non-dom' with some particular length of time you need to spend in Cyprus? If you spend over 183 days in Cyprus and meticulously eliminate all ties with your source country, it can be done. It may be laborious, but if your country has DTAs with Cyprus, it can be done.

You definitely need a conversation with a tax advisor in your home country, someone conversant with the DTA.

 

[johndoes84]

Ugh, so I had some agents get back to me about Cyprus just now. A lot of the things I had trouble with seem like they aren't a big hassel, they are:

1. You don't need to setup a company there, you can get residency by renting and showing you earn $40k EUR/year.
2. You will obviously get 100% tax exempt if you pay yourself in dividends (from something like a BVI, HK or SG company), but of course need to pay the 2.65% on top.

The deal breaker for me though... the COVID hysteria. I left Australia to avoid the vaccine passport s**t back at the start of the year and it's in force in Cyprus, you cannot go anywhere without a SafePass. Which you either need to be vaccinated or prove you have had a covid test within the last 72 hours, which even though it's $10EUR to test, is a lot of hassle to get something shoved up your nose every 3 days. So yeah, too dystopian for me, as is the rest of the EU which is also following this with the "Green Pass". I cannot of course say that Paraguay will not have this later, but they aren't in a position now to be able to give their citizens vaccines or even tests, so that to me says I have time.

I too am from Australia and I need to leave as soon as possible. Easy to get my wealth out, not so easy for me to physically get out. Things are heading to hell in a hand basket here very fast. Looking at all options. Looking at Portugal re tax and I have been there before but expensive now.

 

[avalanche]

The service sector is quite popular. Definition by Philippine authorities is extremely flexible and generous. If you do not want to be active yourself in that sector you can share-in and invest into the hotel industry (of course, post-COVID). There are plenty of projects open for foreign investment in any well-known area of the country with the notable exception of Boracay.

Stay away from everything "South". Better go to the "North". Highly recommended is North Luzon. It is cheap, accessible by road from Manila (an advantage which can not be valued highly enough in a country with more than 7'000 islands) and has a welcoming population. The provinces of Isabela and Cagayan Valley are quite nice and do have the infrastructure you are looking for. Santiago, Cauayan City, Ilagan and Tuguegaro have big shopping malls (SM, Robinson), modern hospitals (specifically Cauayan City) and low crime rates.
Don't worry too much about diseases. This is widely overestimated and the northern part of Luzon is definitely no problem. Even the water quality is quite o.k. . You just have to get used to the humidity but that is the same almost everywhere in SE-Asia.

Be aware guys: in Philippines its a badge of honor for the local to ditch and scam foreigner. There is no easy way to find out company debts and sometimes you may even lose your shares in the company if you partner with locals. If you are see-through type and can read people well - it may be ok. Plus not many people there actually have sufficient education and attitude to perform administrative duties without raking up penalties from the gov.

P.S I seen a US guy losing their entire business and properties due to asset transfer signature faked by their local attorney. Another guy who is German he had his business ran down into problems by his admins who were stealing money from his cash register and then extorting him with reputation issues.

Aside from that, law in the Philippines doesn't exist in a normal sense. There is no open source where you can check the local legislation as a book. Many things are uncertain and depends on interpretation. There are numerous contradictions within the law. Even Georgian law is a lot more precise and structured compared to Philippine law

 

[backpacker]

in Philippines its a badge of honor for the local to ditch and scam foreigner.

Most western foreigners have the attitude of colonialists. If they turn out to be different they are treated different. If a German runs his Philippine business like as if it would be located in Prussia he won't have many sympathies in the Philippines.
Btw., successful businessmen in the Philippines are mostly foreigners - it all depends on the foreigners' ability to understand the cultural differences .... .

Even Georgian law is a lot more precise and structured compared to Philippine law

No, Philippine law is very precise and structured. The problem in the Philippines is the court system. You easily wait 4 years before having your first hearing. Again, this has nothing to do with what is written in the law. However, when you consider your case to be urgent it is up to you to let the judge know (think culture!).
Regarding the tax-code: There is nothing unclear. Specifically with TRAIN (Tax Reform for Acceleration and Inclusion) the simplicity of this tax code is obvious. Very clear text, obscure "public decisions" and "internal rulings" are reduced to the bare minimum. And compared to the court system no need for dubious advisors and lawyers.

 

[daxbr]

Be aware guys: in Philippines its a badge of honor for the local to ditch and scam foreigner.

Looks like things have not changed much in the Philippines since the 1990s. We had to buy office supplies including coffee and toilet paper daily or it was stolen. The only reason business did well was because all sales staff was western and locals could not figure out what we were doing.

 

[Filar]

"Freedom" is a relative term. When it comes to everyday life then Switzerland is far more regulated, controlled and depressed than France or Spain. For a reason many Swiss move to Spain when they retire - it is not only because of the weather.
Even though in Switzerland the popular vote has the last say when it comes to local or national regulations, that does not come with more "Freedom". In Switzerland you need a license or regulated permission for almost everything you want to do. Even though trivial, Switzerland was the first country which introduced obligatory insurance plates for bicycles already way back in the 1970s - I guess that says a lot about the local understanding of "Freedom".

When it comes to taxes it is pretty uninteresting: Switzerland already has what the EU is about to introduce very soon - wealth taxation. When doing more than a fixed number of stock market trades per year you are even liable for social security contributions + income taxes on capital gains.

Consider the high cost of living, the fact that ever more regulations are being copied from EU-regulations (latest disaster is FinSA, something similar to MiFID) and it is not a worthy alternative.

Interesting, I wasn't aware of that. Thank you for the explanations.