How much time I have to spend in a jurisdiction or what ties do I need to have with the jurisdiction (other that my person being a tax resident there), so that my offshore company would be considered corporate tax resident there? Let's say I wanna spend 1-5 months per year in different countries and I wanna avoid triggering the "managed and controlled from that contry" rule.
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Offshore Company Managed by a Perpetual Traveller
- Thread starter Jea
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It varies from country to country. Not all of them look at just how many days you spend there. Some (also) look at if you have strong ties to any other jurisdiction and, if not, you are tax resident.
Research the places you plan to visit well ahead of time.
In reality, as long as you keep a low profile, the risk of getting caught is low if you don't register as resident and get a tax ID in the jurisdiction. It's probably a legal grey zone in many cases.
One good tip is get an international health insurance, so that you're not a burden on the local healthcare system if you get into an accident or need medical attention.
These days, it might be wise to establish an actual tax residence somewhere, even if you don't live there all the time. This will help you when it comes to opening bank accounts. For EU nationals, Cyprus and Malta are favourable. Otherwise, UAE and Panama both have lenient and attractive residency programs that can fit a PT.
Research the places you plan to visit well ahead of time.
In reality, as long as you keep a low profile, the risk of getting caught is low if you don't register as resident and get a tax ID in the jurisdiction. It's probably a legal grey zone in many cases.
One good tip is get an international health insurance, so that you're not a burden on the local healthcare system if you get into an accident or need medical attention.
These days, it might be wise to establish an actual tax residence somewhere, even if you don't live there all the time. This will help you when it comes to opening bank accounts. For EU nationals, Cyprus and Malta are favourable. Otherwise, UAE and Panama both have lenient and attractive residency programs that can fit a PT.
At least fewer problems than if you struggle to show any kind of residence and tax ID.
If a financial institution can't pinpoint where you live and pay taxes, it's easier for them to decline the application than to take you on and try to sort out where you live.
So best would be to find a low tax / no tax country within the EU and get your self residency there? That brings us back to Lichtenstein, Switzerland and Luxembourg?
I guess you mean for EU nationals? Then Malta and Cyprus are the top locations in most cases. With the typical setup, both have lower total taxes and costs than Luxembourg, Liechtenstein, and Switzerland.
Luxembourg's tax system isn't always that favourable, especially not for individuals.
Despite being an EEA members, Liechtenstein has a special deal whereby they only issues about 20 residence permits per year even to EU/EEA nationals.
Switzerland is doable as an EU national, but they might not issue you a B permit (long-term residence) if you don't have strong ties to Switzerland. I've seen examples of EU nationals only getting L permits (usually 3-6 months) even though the guidelines say EU nationals should get B permits in nearly all cases.
And the opposite is also seen Niklas Nikolajsen | Bitcoin Suisse to give a more nuanced image. Not all around this forum are an average Joe with a low income, some may actually have the money to get a B permit without "strong ties to Switzerland" - for instant to setup a company there with a small office of 20 m2 and a manager is sufficient as long as the company makes profits.
Not even close to that
But I could make it happen. If you have at least 1m in the bank. It's the lowest for you to think about it.
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First hand experience opening accts and emis that were recommended here (hat tip to xzars), doing token transactions for extended period of time and then changed residency and address from eu to one mentioned above. In one case, opened acct previously summarily rejected for. In another case that requied personal appearance, made change next day.
Are you talking about personal or corporate taxation here?
Let's use Georgia as an example:
1. Personal taxation is pretty straightforward. Resident and nonresident individuals are taxable only on Georgia-source income, so no issue here as my income is from the outside of Georgia.
2. Corporate taxation: According to this PWC summary, "A resident enterprise is any legal entity that is established under the laws of Georgia or has its place of effective management in Georgia".
I wanna stay in Georgia 1-4 months per year, and I'll be managing my offshore company from there. When would Georgia consider my offshore company a Georgian corporate tax resident? After any specific amount of time spent there? When I as an individual get an official (permanent or temporary) residence in Georgia?
You have to consider the exact word of the law as well as the common interpretation of the law in your situation.
The wording "effective management" has different interpretations. In the strictest interpretation, it means wherever in the world you generally or mostly take decisions for the company. So if you spend 4 months in Georgia and less than 4 months in two or more other countries, the effective management is probably in Georgia. Another factor is the amounts involved and nature of business. If you do business with Georgians, you are more likely to be in scope for the local tax authority, overworked, understaffed, and underfunded though it may be.
Georgia doesn't have the resources to go after every tax dodger or enforce every article of the tax code — and, like many other quasi tax havens, benefits from not being too aggressive against people like you. You bring enough value to Georgia by owning or renting a property and participating in the local economy.
Compare this to for example Germany or Spain, which will not rest until you have paid every single cent of tax they can possibly drain from you, regardless of who you are or where you are from.
Hope for the best, or invest time and money in speaking with a qualified Georgian tax adviser.
So generally there's only one place of "effective management" of a company? Or can there be multiple places of "effective management" similar to natural person being able to have multiple tax residencies in one year?
Thanks for your answers, I'm currently looking for one. I've contacted several tax lawyers and big 4 accounting firm's offices in Georgia and I'm waiting for quotations. I'm trying to get as much information as possible before I get to these paid consultations as I have mostly negative experiences with lawyers.
kept my revolut account after leaving europe for asia and I use it seldomely with low amount. haven't change my registered address as they only service EU and it seems they don't give a f**k. hopefully they service worldwide soon ...
Yes, you generally only have one place of effective management. However, you can have multiple Permanent Establishments, which are also taken into consideration when determining tax residence.
If following the OECD model, a PE is defined as:
This is also important:
Article 5 of Model Tax Convention on Income and on Capital: OECD iLibrary | Model Tax Convention on Income and on Capital: Condensed Version 2014
That is a good question for a Georgian tax lawyer who has experience with the day to day reality of how the law is enforced. But Article 29 paragraph 4 of the Georgian tax code looks relevant:
I'm not a lawyer and more importantly I have zero experience dealing with the relevant government departments, but my guess is that if you spend a month or two managing your company while in Georgia then you don't become a PE of your company. But if you spend 4 months managing your company from here then I'd be surprised if you weren't a PE. These are just my guesses from reading the tax code.
But I have a question.
Article 97 paragraph 2:
So if an offshore company is being run by a PE in Georgia, but doesn't have any Georgian sourced income then it looks like Georgia won't tax it anyway?
Article 104 (Georgian source income) has 32 parts to it. If you're dealing with physical goods outside of Georgia, it looks promising. But regarding services etc., I'm confused. Also, I suspect that the reality has a lot to do with the practices of officials in Georgia.
Does anyone know whether a non resident company managed from Georgia has "Georgia source income" if it:
- supplies goods from one place to another, both outside of Georgia, managed by someone in Georgia. My guess is no, due to:
- 104, 1.b) "income or benefit earned from the supply of goods in the territory of Georgia"
- provides services, performed by the Georgian resident manager? My guess: yes due to:
- 104 c.g) "a service provider and a service recipient are in different states and the service provider is a Georgian resident, except where the service provider delivers services through its permanent establishment in another country that confirms the fact that the service provider has delivered services in another country (other than in Georgia). "
- provides services, performed by a non-Georgian resident, who is managed by a Georgian resident? My guess is no, due to the above paragraph.
- trades crypto on international exchanges, using software developed and deployed offshore but managed by a Georgian resident?
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