Non Tax Resident in Spain or France with low substance offshore Company

[fshore]

It costs them almost nothing to gather enough evidence to make a tax claim on you.

How would they know that you have any taxable wealth or income?

 

[Sols]

How would they know that you have any taxable wealth or income?

I don't view absence of information as a meaningful, reliable control mechanism to protect against tax claims.

Some people make it easier than others to be found. Sometimes it's things not under their control.

But I've said repeatedly that people do these things without drawing any attention to themselves. If you're comfortable leaving things up to chance/secrecy, go live your best life.

 

[fshore]

I don't view absence of information as a meaningful, reliable control mechanism to protect against tax claims.

Some people make it easier than others to be found. Sometimes it's things not under their control.

But I've said repeatedly that people do these things without drawing any attention to themselves. If you're comfortable leaving things up to chance/secrecy, go live your best life.

I think it's a risk analysis. If you spend 3 months in Spain, while having just 60 days residency in cyrpus, and no way that Spain knows about you, then the risk is probably small. 4 months, a bit bigger, 5 months bigger again, but still probably not very big if Spain is not aware of you and you do have a residency in another country.

 

[Konstanz]

If you are not citizen of Spain or France I don't think they would come to you unless you really live full time in SPain like Shakira , or you are very public person or go to tax inspector yuorself
If your are just more like a tourist, no one cares if you are not citizen.
Mostly 99.99 cases problems come when you have citizenship and live in that country

There are many people from around europe who even have holiday homes in France, Italy, Spain. They spend some time in winters, even all summers and have no problem with local tax

In this forum sometimes people are overthinking

If you don't work , don't have business in Spain or France and live only part time I don't see how they can consider you tax resident. But you have to have some real "Home country" with your stuff , activity, company, work in it

 

[Don]

Which other countries in Europe can you recommend for perpetual travellers?

Estonia. Not bad choice first of all because dividends received from abroad are not taxed (if tax was already paid abroad). Secondly, you can live/be resident there without becoming tax resident in certain cases (i know such examples for 8+ years).

 

[JustAnotherNomad]

I have a tax residency in Cyprus where I also stayed for the past 2 years completely but somehow want to use the 60-90 Day minimum there and spend more time travelling in other EU countries without exceeding there any duration above 5 months.

If you spend <183 days per year in Cyprus, then you will only be considered tax resident in Cyprus even under domestic rules if no other country claims you as tax resident.
So as soon as Spain says you're tax resident there (for whatever reason), having residency in Cyprus wouldn't help you.

Estonia. Not bad choice first of all because dividends received from abroad are not taxed (if tax was already paid abroad). Secondly, you can live/be resident there without becoming tax resident in certain cases (i know such examples for 8+ years).

How would you pay out money from the company though? I believe you'd have to take a salary, and that salary should be taxed where you are tax resident. But if you have no clear tax resident, it's a grey area in Estonia (not defined in the law), so there's a risk that they could say, if the salary isn't taxed anywhere else, it should be taxed in Estonia.
Or has something changed?

 

[Don]

How would you pay out money from the company though? I believe you'd have to take a salary, and that salary should be taxed where you are tax resident. But if you have no clear tax resident, it's a grey area in Estonia (not defined in the law), so there's a risk that they could say, if the salary isn't taxed anywhere else, it should be taxed in Estonia.
Or has something changed?

I was referring to personal tax residence and legal residence and not implying incorporating a company or permanent establishment there, but it's worth noting that Estonia itself does not require directors to take salaries. Salaries paid to non-resident employees are generally tax-free in Estonia if the work is not performed in Estonia.

There are examples where this setup has worked long-term, I know somebody who did 15 years of perpetual travelling between UK-Estonia-Monaco-other nice places.

Getting the money out is very specific to jurisdictions where you have your companies, but management fees from abroad are typically exempt from tax by treaties, that often contain articles dealing with "Directors' Fees" which outline how income from the role of a director (including board members) is taxed. Typically, such fees are taxable in the country where the company that is paying these fees is resident. This is due to the fact that the board member is contributing their service to the company, and their fees can be seen as arising in the country where the company is established. It might be the case that these management fees are also not taxed in the country where the company is resident, so the total tax will be 0%.

 

[JustAnotherNomad]

Secondly, you can live/be resident there without becoming tax resident in certain cases (i know such examples for 8+ years).

I believe Lithuania is like this, too.

Salaries paid to non-resident employees are generally tax-free in Estonia if the work is not performed in Estonia.

Is this something that has changed? I spoke to an Estonian tax lawyer about this some years ago and he said it's a grey area with employees that are perpetual travelers with no clear tax residency. It's simply not clearly regulated in the law. I would imagine that the risk of being taxed on an Estonian salary would be even higher if one has residency in Estonia (though I understand we're talking about two different cases here).
He said there's a good chance it wouldn't be taxed in Estonia, but there was no precedence for this and people who went with such a model were in unchartered territory. That was quite a few years ago though.

There are examples where this setup has worked long-term, I know somebody who did 15 years of perpetual travelling between UK-Estonia-Monaco-other nice places.

Was that person ever audited? Was there a ruling from the Estonian tax authority?

Typically, such fees are taxable in the country where the company that is paying these fees is resident. This is due to the fact that the board member is contributing their service to the company, and their fees can be seen as arising in the country where the company is established. It might be the case that these management fees are also not taxed in the country where the company is resident, so the total tax will be 0%.

Director's fees are unfortunately always subject to 20% or so personal income tax in Estonia, even for non-residents.

 

[fshore]

Is this something that has changed? I spoke to an Estonian tax lawyer about this some years ago and he said it's a grey area with employees that are perpetual travelers with no clear tax residency. It's simply not clearly regulated in the law. I would imagine that the risk of being taxed on an Estonian salary would be even higher if one has residency in Estonia (though I understand we're talking about two different cases here).
He said there's a good chance it wouldn't be taxed in Estonia, but there was no precedence for this and people who went with such a model were in unchartered territory. That was quite a few years ago though

I've seen it confirmed several places that salaries to non residents that works outside Estonia is not taxed in Estonia. This is also the most common approach in most countries, very few countries (Singapore is one) tax non residents for salaries performed abroad paid by a local company.

Anyway, this is off topic.
If OP has a tax residency in Cyprus by staying 61 days then I'd think its less likely Spain or France would claim you as tax resident by staying 3/4/5 months (and provided no other strong ties).

 

[Don]

Director's fees are unfortunately always subject to 20% or so personal income tax in Estonia, even for non-residents.

Yes, local Directors' fees are subject to 20% tax as Directors' fees are normally taxed in the residence jurisdiction of the company. If you have a company abroad that is a non-resident in Estonia, the Directors' fees can be exempt from tax in Estonia based on the treaty (e.g., UAE).

The OP wanted to find out about countries for perpetual travellers.
1) perpetual travellers are normally not tax residents anywhere, however, it can be beneficial to obtain tax residence somewhere for various reasons, such as banking, reducing tax risk exposure, etc.
2) it is possible in certain cases to obtain residence without becoming a tax resident in the same jurisdiction (this is based on a treaty, and means the person will be a tax resident somewhere - it makes sense in a zero personal income tax jurisdiction like UAE).

The OP wants to establish a company somewhere offshore.

Perhaps it's worth looking into Somalia. As far as I understand, Somalia does not tax foreign earned salaries, which could be an interesting setup for perpetual travellers without tax residence. It's also crypto-friendly.
They have a modern online business registration procedure.
"The experience (of incorporating a company in Somalia) was better than establishing a company in some European countries" - said Norwegian renewable energy services company business development director Kristen Petillon.
It's a non-CRS country and you can open an account as a non-resident.

To access EU regulations and get VAT registration, it's easy and cheap to combine it with Estonia as you can register the local branch or permanent establishment online. These countries also have strong diplomatic relations.

 

[Radko]

I'm from Spain and I live in Spain, my humble advice is that even if you stay less than 6 months you keep a low profile, which is easy to do.
Don't open a bank account as you'll need a NIE to do that, don't rent an apartment in your name (if you have two passports just move every 3 months and use them alternatively,) if you stay at a Hotel or Motel the police will know as they have to inform the police of everyone staying in the hotel, so move around, don't use a debit/credit card to pay for everything, pay with cash, so bring as much cash as possible, or drive to Portugal to get the cash, but you won't be able to get more than 200€ at a time from the ATM, so increase the number of withdrawals that you can make with your card.

If you follow these rules there's zero chance they will come after you as they won't be able to prove anything, even if you stay for more than 6 months the key is to not give anything to Hacienda that they can use to come after you, they are really nasty, but there's nothing to fear if you do as I say.

You could also go to Portugal under the NHR and have your base there, no customs to go through when coming to Spain.

Best of luck

 

[Mike Forman]

I don't believe hotel info is shared with tax authorities, but who knows nowadays with all data sharing and mining. Better be safe than sorry.

You can also use a debit / prepaid card on someone else their name.

Let someone else spend with your card in your claimed country of residence in case they ask questions.

Chances are smal being on the radarl if you are the first two
years careful, after 2 years I would limit my stay in Spain to a few weeks or even don't stay in Spain at all. Authorities only receive data after some time and it will take some time before you can/will get on their radar. Don't leave many traces (payments, withdrawals, rental on your name,..) and you should be fine. The more years you will stay in Spain the higher the risk.

Once they get on to you they will go back at least 3 years, highlikely 7 years. In that case you will have to proof you were somewhere else a resident.

 

[Don]

I don't believe hotel info is shared with tax authorities, but who knows nowadays with all data sharing and mining. Better be safe than sorry.

You can also use a debit / prepaid card on someone else their name.

Let someone else spend with your card in your claimed country of residence in case they ask questions.

Chances are smal being on the radarl if you are the first two
years careful, after 2 years I would limit my stay in Spain to a few weeks or even don't stay in Spain at all. Authorities only receive data after some time and it will take some time before you can/will get on their radar. Don't leave many traces (payments, withdrawals, rental on your name,..) and you should be fine. The more years you will stay in Spain the higher the risk.

Once they get on to you they will go back at least 3 years, highlikely 7 years. In that case you will have to proof you were somewhere else a resident.

Remembering the case with Shakira where she argued that she was a "nomad with no roots," living in the Bahamas during the time, but tax inspectors found no evidence of her presence in the Bahamas from 2012 onward.

In terms of direct evidence, the Tax Agency was unable to find receipts for purchases, social media posts, or use of credit cards indicating she lived in Spain for 183 days to be considered a resident. But the agency did have indirect proof and considered her tours and concerts to be "sporadic absences" because she returned to Spain after her work was done. The moral of the story is that basically habitual abode can be enough for them to consider you a resident.

 

[Mike Forman]

Remembering the case with Shakira where she argued that she was a "nomad with no roots," living in the Bahamas during the time, but tax inspectors found no evidence of her presence in the Bahamas from 2012 onward.

In terms of direct evidence, the Tax Agency was unable to find receipts for purchases, social media posts, or use of credit cards indicating she lived in Spain for 183 days to be considered a resident. But the agency did have indirect proof and considered her tours and concerts to be "sporadic absences" because she returned to Spain after her work was done. The moral of the story is that basically habitual abode can be enough for them to consider you a resident.

Totally agree on this. Too many people in this forum believe getting a residence certificate somewhere, spending there 2-3 months is enough to make you non resident in another country. Only thing it might achieve is that it also makes you a resident in that country.

If you spend most of your time in Spain and when you travel always return to Spain, it is clear to every logic mind your residence (home) is in Spain even there are many technical details to be considered.

Best remains to have a low tax residence where you actually spend most of your time and what you call home and keep proof, stay in a country that has lax tax controls or just travel around the world and don't spend more then 3 months in any country.

In Germany it is sufficient to have a room available at some family member or friends place to be considered a resident.

 

[Radko]

Remembering the case with Shakira where she argued that she was a "nomad with no roots," living in the Bahamas during the time, but tax inspectors found no evidence of her presence in the Bahamas from 2012 onward.

In terms of direct evidence, the Tax Agency was unable to find receipts for purchases, social media posts, or use of credit cards indicating she lived in Spain for 183 days to be considered a resident. But the agency did have indirect proof and considered her tours and concerts to be "sporadic absences" because she returned to Spain after her work was done. The moral of the story is that basically habitual abode can be enough for them to consider you a resident.

The tax authorities went to the hair salon where Shakira used to go and got all the visits she made, they do that if they think they can get a lot of money from someone, like checking for a gym membership.
If you are regular person they will not employ so many resources if they come after you, generally the first thing they do is threaten you with jail time, then they will ask you to pay a bunch of money, most people will pay to avoid having to go to court with a lawyer and all that mess. I went to court and won my case, I'm sure they will try to get me again in the future, that's one of the reasons why I'm leaving Spain, this country is a tax inferno.

 

[pixbix]

I went to court and won my case, I'm sure they will try to get me again in the future, that's one of the reasons why I'm leaving Spain, this country is a tax inferno.

for what reason they tried to fxxx you ?

 

[Konstanz]

Remembering the case with Shakira where she argued that she was a "nomad with no roots," living in the Bahamas during the time, but tax inspectors found no evidence of her presence in the Bahamas from 2012 onward.

In terms of direct evidence, the Tax Agency was unable to find receipts for purchases, social media posts, or use of credit cards indicating she lived in Spain for 183 days to be considered a resident. But the agency did have indirect proof and considered her tours and concerts to be "sporadic absences" because she returned to Spain after her work was done. The moral of the story is that basically habitual abode can be enough for them to consider you a resident.

She was not living in Bahamas. That was the issue.
No flights to Bahamas, no real life in Bahamas.
She was living full time with her husband in Spain
I think she would have got away with Andorra residence. Spending some time there.
Bahamas is much more hard to prove

I have read that it was her ex husband who gave her in to tax authority

https://www.marca.com/en/lifestyle/celebrities/2022/09/17/6326185be2704e6fb48b456f.html

 

[Radko]

for what reason they tried to fxxx you ?

For two reasons, first they said that I had to pay taxes on money that I made outside of Spain when in fact I had paid taxes in that other countries with which there is a double tax treaty.
And when they investigated me they checked the CRS and found out that I had an offshore account, so they tried to get me for that as well when the money that I have offshore had previously come out of a Spanish bank and that money never generated any type of capital gains or interest at the offshore bank, they tried to send me to jail, then they offered me a deal in which I would pay a massive fine plus backup taxes, I went to court and that was the end of it, no taxes were owed, no fine, no jail time.
The tax agents said to me "we will get you next time"

I was planning on leaving Spain anyway, that's why I transferred most of my savings to an offshore bank, I'll be leaving as soon as I sell my home, the Socialist/Communist government of Spain just increased the wealth tax, so more taxes to pay if you have a decent amount of wealth between your home, your art, paintings, collectables, investments and cash.

They can literally kiss my a*s, I don't have a problem paying taxes, I do have a problem when they do everything they can to destroy your life for no good reason, they enjoy going after people and threatening them, I wasn't ready to take their bullying tactics.

 

[pixbix]

For two reasons, first they said that I had to pay taxes on money that I made outside of Spain when in fact I had paid taxes in that other countries with which there is a double tax treaty.
And when they investigated me they checked the CRS and found out that I had an offshore account, so they tried to get me for that as well when the money that I have offshore had previously come out of a Spanish bank and that money never generated any type of capital gains or interest at the offshore bank, they tried to send me to jail, then they offered me a deal in which I would pay a massive fine plus backup taxes, I went to court and that was the end of it, no taxes were owed, no fine, no jail time.

I can understand you. I am afraid of the same thing to not happen to me, because of CRS report in Romania, but people here (on this forum), can't understand me, they think i am some kind of pimp or something and i want to hide money:

https://www.offshorecorptalk.com/posts/261893/

The tax agents said to me "we will get you next time"

That's strange. Spain have one the lowest crime rate in European Union, people seem so nice. Even people from Romania who go there to work they keep saying how friendly people are.

What happened in Spain with the "new reset" , you can have sex with animals? pedophiles are free to do whatever they want ? they tell young kids (5 years) men can give birth and so on ?

I know that if you have a kid with a spanish wife, even if you own a home, she can divorce and kick you out of your home, is it true?
is it also true a lot men killed their wife, if she asked for divorce, and told the judhe was "Severely affected emotional out of love" , so they get out of jail after 2-4 years, and they don't spend any $ on divorce?!

In Spain everone who earns over 5000 euro a month (60 000 euro a year) is taxed 45 !??! wow, that's a lot! So if you earn 5000, you will remain with something like 1000 euro? 50% tax = 2500 euro then social securities (health , pension) ... = 1000 euro?!?!?! wtf?!

Madrid 0 to 12 000 euro / year = 21.5% TAX ....

What do they really do with so much money in Spain ? They help single mums, like in France?

pension and health is only 4.7% there? maybe because of that , in romania they take 10% tax, but 10% for health , and 25% for pension

 

[Radko]

I can understand you. I am afraid of the same thing to not happen to me, because of CRS report in Romania, but people here (on this forum), can't understand me, they think i am some kind of pimp or something and i want to hide money:

https://www.offshorecorptalk.com/posts/261893/


That's strange. Spain have one the lowest crime rate in European Union, people seem so nice. Even people from Romania who go there to work they keep saying how friendly people are.

What happened in Spain with the "new reset" , you can have sex with animals? pedophiles are free to do whatever they want ? they tell young kids (5 years) men can give birth and so on ?

I know that if you have a kid with a spanish wife, even if you own a home, she can divorce and kick you out of your home, is it true?
is it also true a lot men killed their wife, if she asked for divorce, and told the judhe was "Severely affected emotional out of love" , so they get out of jail after 2-4 years, and they don't spend any $ on divorce?!

I don't know where you're getting this information.

Spanish people are very nice in general, low crime, nothing like in the US.

You obviously can not have sex with animals, or with children, or kill your wife to get out of a marriage, all that is completely false, come to Spain and try to do any of the above things mentioned and you'll end up in jail for many years, guarantee (there's even now a new Pet law that gives animals the same rights as People, so be careful mistreating your pets.)

There is a massive difference between Spanish people and the Spanish tax authorities, they are unforgivable and extremely nasty, they don't care, you either fight them or you do whatever they say.