Can I insist on paying a tax as a tourist?

[JohnnyDoe]

Alright. But of what country?

of the country where you were born/have assets/relatives

Don’t worry, taxes and death are our only certainties.

 

[fshore]

Ok tell me one country where the UN principles don’t apply.

UK.

 

[khinkali]

Ok tell me one country where the UN principles don’t apply.

The United Kingdom of Great Britain and Northern Ireland

This is how it works: flowchart for UK Statutory Residence Test

This is what the tax man says about it

This is the law, signed by The Queen that a judge will use if it ends up in court.

What @JohnnyDoe describes is true in some places. It is not true in others. It is often incorrect to write "never" or "always", "everywhere" or "nowhere" when it comes to international matters.

Anyway, let's get back to my original question.

Sorry, I just felt it's important to deal with the "one size fits" all myths when it comes to international issues like this.

 

[JohnnyDoe]

The United Kingdom of Great Britain and Northern Ireland

This is how it works: flowchart for UK Statutory Residence Test

This is what the tax man says about it

This is the law, signed by The Queen that a judge will use if it ends up in court.

What @JohnnyDoe describes is true in some places. It is not true in others. It is often incorrect to write "never" or "always", "everywhere" or "nowhere" when it comes to international matters.


Sorry, I just felt it's important to deal with the "one size fits" all myths when it comes to international issues like this.

The “statutory test” is nothing else than an expansion of the UN principles.
Good luck with HMRC if you believe to be able to trick it. They will come after you anywhere in the world, if you are worth the effort.

 

[FixieHartmann]

these are the principles used to determine one’s residency, not necessarily when it is in doubt between two countries. In other words, nobody can be without a (tax) residence, even when living on a boat in international waters.

This is simply not true.

Here an example:
„Liability for income tax
A person’s liability to Austrian tax is determined by residence status. A person has unlimited liability to taxation (is a “tax resident”) if that person’s residence (that is, any home readily available for the resident’s use) or habitual place of abode (which is automatically given from the start once the stay exceeds six months but possibly also earlier) is in Austria. The general rule is that such a person is assessable on worldwide income.
If neither of these conditions is fulfilled, the person has only limited liability to taxation (is a “nonresident”) in Austria, in other words, is generally assessable only on income derived directly or indirectly from sources in Austria.“

src: Austria

So, say you are Austrian but leave Austria permanently and don’t have any income from Austria. Now you move to Barbados on the digital nomad visa.

• You will not be liable to pay Barbados Income Tax and therefore will not be subject to any double taxation

src: Explore 12 Month Barbados Welcome Stamp - Visit Barbados

Well, at this point you are non-resident of Austria and you will not become tax resident of Barbados. You don’t have any tax residency, easy as that.

Of course this setup doesn’t work with all citizenships (e.g US, Australia, NZ require you to have a new residency) but if you are from most of the European countries it is very doable.

 

[JohnnyDoe]

This is simply not true.

Here an example:
„Liability for income tax
A person’s liability to Austrian tax is determined by residence status. A person has unlimited liability to taxation (is a “tax resident”) if that person’s residence (that is, any home readily available for the resident’s use) or habitual place of abode (which is automatically given from the start once the stay exceeds six months but possibly also earlier) is in Austria. The general rule is that such a person is assessable on worldwide income.
If neither of these conditions is fulfilled, the person has only limited liability to taxation (is a “nonresident”) in Austria, in other words, is generally assessable only on income derived directly or indirectly from sources in Austria.“

src: Austria

So, say you are Austrian but leave Austria permanently and don’t have any income from Austria. Now you move to Barbados on the digital nomad visa.

• You will not be liable to pay Barbados Income Tax and therefore will not be subject to any double taxation

src: Explore 12 Month Barbados Welcome Stamp - Visit Barbados

Well, at this point you are non-resident of Austria and you will not become tax resident of Barbados. You don’t have any tax residency, easy as that.

Of course this setup doesn’t work with all citizenships (e.g US, Australia, NZ require you to have a new residency) but if you are from most of the European countries it is very doable.

So you think you can legally be not resident anywhere? Good luck.

 

[FixieHartmann]

So you think you can legally be not resident anywhere? Good luck.

Well, you are making very strong claims without providing any sort of evidence. How do you back up your statements?

I just showed you one of many examples how this could work and I’ve discussed setups like this with tax consultants from multiple jurisdictions so I am quite confident that this actually works.

Maybe being American slightly clouds your judgement? How much experience do you actually have with tax authorities in Europe?

 

[Sols]

It is entirely possible to be completely tax non-resident and legally not be liable for tax anywhere in the world. It is, however, grossly impractical to do nowadays, which is why it's generally considered wise to establish provable tax residence somewhere. If residence in a zero-tax jurisdiction is within your reach, that can be a great complement to an otherwise nomadic lifestyle.

The reason you'd want provable tax residence is so that you can satisfy source of wealth checks that banks and financial institutions are increasingly performing. Failure to convince a bank that your money is clean will lead to account closures and applications being denied. That's just the reality of the world we're in today. Things were different back when being a Perpetual Traveler was the cool new thing.

It seems Mr. Donkey has figured this out, but is looking for a shortcut: live a nomadic lifestyle but be able to show tax filings somewhere.

The answer to that specific question is a resounding maybe. It depends on country. Good luck on your hunt to find one. However, tax departments are usually divorced from immigration departments, so you don't necessarily have to worry about immigration status. Getting a tax ID is usually and intentionally one of the easiest things a foreigner can do. Although sometimes you will be asked for proof of residence, local employment agreement, or similar.

What this doesn't solve for is proof of tax residence. It's one thing to pay taxes. It's a wholly different story to get tax residence certificate. So the tax authority will gladly take your money, but they are far less likely to give you a receipt and confirmation of tax residence.

As compliance is only going to get more detailed, expect banks to begin asking for certificates of tax residence. Not from everyone, not all the time. But the risk will be there, especially for anyone who deviates from the norm.

 

[FixieHartmann]

It is entirely possible to be completely tax non-resident and legally not be liable for tax anywhere in the world. It is, however, grossly impractical to do nowadays, which is why it's generally considered wise to establish provable tax residence somewhere. If residence in a zero-tax jurisdiction is within your reach, that can be a great complement to an otherwise nomadic lifestyle.

The reason you'd want provable tax residence is so that you can satisfy source of wealth checks that banks and financial institutions are increasingly performing. Failure to convince a bank that your money is clean will lead to account closures and applications being denied. That's just the reality of the world we're in today. Things were different back when being a Perpetual Traveler was the cool new thing.

It seems Mr. Donkey has figured this out, but is looking for a shortcut: live a nomadic lifestyle but be able to show tax filings somewhere.

The answer to that specific question is a resounding maybe. It depends on country. Good luck on your hunt to find one. However, tax departments are usually divorced from immigration departments, so you don't necessarily have to worry about immigration status. Getting a tax ID is usually and intentionally one of the easiest things a foreigner can do. Although sometimes you will be asked for proof of residence, local employment agreement, or similar.

What this doesn't solve for is proof of tax residence. It's one thing to pay taxes. It's a wholly different story to get tax residence certificate. So the tax authority will gladly take your money, but they are far less likely to give you a receipt and confirmation of tax residence.

As compliance is only going to get more detailed, expect banks to begin asking for certificates of tax residence. Not from everyone, not all the time. But the risk will be there, especially for anyone who deviates from the norm.

Great summary, totally agree!

 

[JohnnyDoe]

Great summary, totally agree!

Urban legend. Sorry to ruin your dreams but it is not legally possible.

Maybe being American slightly clouds your judgement? How much experience do you actually have with tax authorities in Europe?

I’m Swiss + Italian (and other countries) citizen, resident in the Bahamas, pay flat tax in Italy and other taxes in another country. I’ve spent enough money on lawyers and accountants to know what can and what cannot be done.
Unfortunately I had experience with tax authorities (personal taxation) of 5 European countries + UK.
The PT urban legend was trendy in the late ‘90s, early ‘00s, but it is now well debunked.

Of course all this applies if you have a decent amount of taxable assets. If you are talking of evading 5-low 6 figures taxes then unless you are particularly unlucky or stupid you can follow the PT/nomadic lifestyle and live happily without taxes (simply because nobody cares about you).

 

[fshore]

It is entirely possible to be completely tax non-resident and legally not be liable for tax anywhere in the world. It is, however, grossly impractical to do nowadays, which is why it's generally considered wise to establish provable tax residence somewhere. If residence in a zero-tax jurisdiction is within your reach, that can be a great complement to an otherwise nomadic lifestyle.

The reason you'd want provable tax residence is so that you can satisfy source of wealth checks that banks and financial institutions are increasingly performing. Failure to convince a bank that your money is clean will lead to account closures and applications being denied. That's just the reality of the world we're in today. Things were different back when being a Perpetual Traveler was the cool new thing.

It seems Mr. Donkey has figured this out, but is looking for a shortcut: live a nomadic lifestyle but be able to show tax filings somewhere.

The answer to that specific question is a resounding maybe. It depends on country. Good luck on your hunt to find one. However, tax departments are usually divorced from immigration departments, so you don't necessarily have to worry about immigration status. Getting a tax ID is usually and intentionally one of the easiest things a foreigner can do. Although sometimes you will be asked for proof of residence, local employment agreement, or similar.

What this doesn't solve for is proof of tax residence. It's one thing to pay taxes. It's a wholly different story to get tax residence certificate. So the tax authority will gladly take your money, but they are far less likely to give you a receipt and confirmation of tax residence.

As compliance is only going to get more detailed, expect banks to begin asking for certificates of tax residence. Not from everyone, not all the time. But the risk will be there, especially for anyone who deviates from the norm.

However it might be difficult to be tax resident somewhere if you're a nomad (eg travel too much) and spend the time in countries that have a 183 rule for tax residency. But it can be very beneficial to have a residence address and tax number there, even you don't fulfil the criteria for being tax resident.
Banks will generally ask for a tax number and where you are tax resident. However I've never had any bank (or anyone else) actually ask for a tax residence certificate. Those are also generally hard to get (depending on the country), even when you qualify for one.