Permanent Establishment rules UAE, with new CT on Companies

[Cloudbanck]

Finland also has a rule similar to that. Denmark (including Faroe Islands and Greenland), Sweden, and Iceland are more relaxed: tax residence end when you leave.

Oh interesting, didn't know Finland had a 3 year rule as well.
Looking into it, it seems Finland's 3 year rule is less strict than Norway's. If you cut your ties with Finland you can stop being a Finnish tax resident straight away, but the burden is on you to show it to the tax authorities. Also, Finland has no 10 year of residence rule - if you are not a citizen, even if you have lived in Finland forever, you are out of the tax net when you move abroad.

"A permanent move from Finland usually changes person’s tax status in Finland and/or in the other country. According to Finnish legislation a resident national who leaves Finland permanently is considered to be resident in Finland until three years have elapsed from the end of the year in which he left the country. Tax residency can only end earlier if the taxpayer can produce evidence that he has not maintained substantial ties with Finland. In comparison, a person without Finnish nationality is considered to be non-resident immediately after moving permanently away from Finland."

Source: Moving abroad | Fiscales

 

[Marzio]

UK, and Ireland would. You have to give them an address abroad somewhere, but what matters is the time (not) spent in Ireland / UK, not the address abroad. Same thing with Estonia. And for Sweden/Denmark/Finland, it's similar - just give them an address somewhere - , but they have tougher rules on severing the connection. Probably most of Eastern Europe is like this.

For Italy, well, you have to register with AIRE somewhere which includes show proof of residency at an Italian embassy - but then you can live on a sailboat.

So i met this Italian guy in Chiang Mai last year and he was in deeeeeeep troubles becuase apparently there's a law in Italy that states that Italy can revove your non resident status if you don't live where you said you were.
I don't know exactly which law he was referring to but he was really s**t-scared so defintely he found something.

The "just give them an address somewhere and you'll be fine" story is really too simplicistic.

And if you are not considered a tax resident because you do not pay taxes in Costa Rica, but you reside the whole year there (and maybe also own a property), where are you consider tax resident? In your home country even if you de-registered from the local population, do not own anything, and haven't spent a single day during the year there?

So based on all those considerations where he is tax resident?

Nowhere?

 

[OffshorePhantom]

So based on all those considerations where he is tax resident?

Nowhere?

It should be in Costa Rica since he spent the whole year there and has no ties in other countries (I understand that Costa Rica will not see him tax resident there).

A country like Italy wouldn’t never claim tax residency in Italy (if he is Italian) if he registered to AIRE and have no ties to Italy and never come back there.

 

[Marzio]

A country like Italy wouldn’t never claim tax residency in Italy (if he is Italian) if he registered to AIRE and have no ties to Italy and never come back there.

No clue what you tried to convey here.

 

[OffshorePhantom]

No clue what you tried to convey here.

The fact that it is extremely rare/unlikely that even a high-tax country like Italy claims you as Italian tax resident (based only on your citizenship if, like you mentioned, you do not have other tax residencies) if you completely cut ties with it and move to Costa Rica and live the whole year there, even if officially you do not pay taxes in Costa Rica thus you are not considered a tax resident.

 

[Cloudbanck]

The fact that it is extremely rare that even a high-tax country like Italy claims you as Italian tax resident (based only on your citizenship if like you mentioned do not have other tax residencies) if you completely cut ties with it and move to Costa Rica and live the whole year there, even if officially you do not pay taxes in Costa Rica thus you are not considered a tax resident.

There must be more to this Italian in Chang Mai than just the issue with being resident (or not) in the country where he is registered in AIRE. Guessing he has ties to Italy somehow, and possibly a large income that authorities are aware of.

I know lots of Italians that are not correctly registered in AIRE, often because at some embassies it can take over half a year just to get an appointment. It's really not a big deal, unless I guess the Italian authorities can make a case for tax residency in Italy, and there is money to be had.

 

[OffshorePhantom]

There must be more to this Italian in Chang Mai than just the issue with being resident (or not) in the country where he is registered in AIRE. Guessing he has ties to Italy somehow, and possibly a large income that authorities are aware of.

I know lots of Italians that are not correctly registered in AIRE, often because at some embassies it can take over half a year just to get an appointment. It's really not a big deal, unless I guess the Italian authorities can make a case for tax residency in Italy, and there is money to be had.

Exactly, this guy probably hasn't cut ties correctly with Italy and the Italian "Agenzia delle Entrate" is aware of some income stream (maybe even Italian based).
I also know a lot of Italians people who are not registered to AIRE formally but stay away from Italy since they live abroad and it never has caused any issues, clearly this depends on several factors and situations.

 

[Marzio]

There must be more to this Italian in Chang Mai than just the issue with being resident (or not) in the country where he is registered in AIRE.

He sweared that he did everything by the book: no bank account, no home, no wife, no kids.

The only thing he did without thinking about too much was the foreign address that he gave and BTW the address he gave was a temporary address he gave when he initially was looking for an apartment.

Then he moved from that place to another city but always within Thailand.

He didn't said he was living in Thailand and then secretly moved to UAE.

Having said this, after a very short google search take a look at what i found.

If that line i highlighted is what i think, his AIRE was revoked and he was considered Italian resident without him even knowing!

Or better said, he became aware of this when his mom rang him and said "Darling we received a letter from our beloved tax agency. Do you want me to buy you an anal lubricant now or shall we wait until you come back?"

 

[OffshorePhantom]

The only thing he did without thinking about too much was the foreign address that he gave and BTW the address he gave was a temporary address he gave when he initially was looking for an apartment.

He may have sweared this but on the contrary, I know a lot of Italians in UAE for example who do not have a permanent address, namely they move from one hotel to another.
Also in UAE you can even go to the Italian embassy and give them the address of your friend's house without showing them proof of rental contract (there is no law in Italy that oblige you to do that), saying you plan to stay in different hotels and they register you to AIRE without issues and from what I know the Italian tax agency never came after them since they completely cut times from Italy (UAE is also on Agenzia delle Entrate blacklist).

This guy must have done something else that he didn't want to tell you; a temporary address only does not cause all those issues (if it is a proper address); maybe it could cause them if he put the address of the Thai Grand Palace (lol) but otherwise I really doubt it.

 

[Marzio]

Also in UAE you can even go to the Italian embassy and give them the address of your friend's house without showing them proof of rental contract (there is no law in Italy that oblige you to do that), saying you plan to stay in different hotels and they register you to AIRE without issues and from what I know the Italian tax agency never came after them since they completely cut times from Italy

Maybe i'm dumb or my distrust in authorities makes me extremely skeptical of everything they say and i want 2 backup plans for everything but in the AIRE cancellation official page they clearly state that if you are allegedly unavailable at the address you provided you AIRE is cancelled.

Allegegly unavailable means "we presume you are not there"

So they don't have to know you are not there, it's enough the presumption from their part and then it's your job to prove otherwise.

Now your example of people who stay in different hotels without any consequences is like saying "a lot of people evade taxes, nobody i know got caugh so if i'll do the same and i'll be fine"

I don't know if he did something else or not but this page isn't talking about all the things he could have done wrong, this page says "even if you do everything right but we presume you aren't where we think you are, we revoke your AIRE and you are automatically considered tax resident in Italy"

If the situation you are describing is really what's going on in UAE i'm going to branch out part of my company and start to a consultation gig with the Italian revenue service.

I'll propose them something along the lines of "You'll pay me 5% the income you will recover from everybody who is not avalable at his UAE address. If i don't find anybody, you don't pay me"

Oh, and I will obviously invoice them from BVI or some other tax free location just for fun!

I feel like John Connor in front of the ATM

 

[OffshorePhantom]

Maybe i'm dumb or my distrust in authorities makes me extremely skeptical of everything they say and i want 2 backup plans for everything but in the AIRE cancellation official page they clearly state that if you are allegedly unavailable at the address you provided you AIRE is cancelled.

Allegegly unavailable means "we presume you are not there"

So they don't have to know you are not there, it's enough the presumption from their part and then it's your job to prove otherwise.

You are right @Marzio, but reality in Italy it is a little bit different, trust me
They will not claim you tax resident in Italy if you do not spend time there and do have anything there.

In my example I was saying also that if you stay in Costa Rica the whole year and have an house there and register to AIRE with a real address it is almost impossible you are considered tax resident in Italy or you are considered a tax evader.

 

[Fred]

I believe Germany also falls in that category. I've never heard of them asking for an address when you leave. But as usual, most countries may ask questions if you return after a few years.

That's correct.

You can simply tell them during de-registration that you are going on a World Trip.

They have to mention a country in there System so you can just mention anything - have never seen or heard that something came back if you play it right.

 

[Cloudbanck]

Maybe i'm dumb or my distrust in authorities makes me extremely skeptical of everything they say and i want 2 backup plans for everything but in the AIRE cancellation official page they clearly state that if you are allegedly unavailable at the address you provided you AIRE is cancelled.

Allegegly unavailable means "we presume you are not there"

So they don't have to know you are not there, it's enough the presumption from their part and then it's your job to prove otherwise.

I share your distrust in authorities! Anyway, it says:

• "for alleged unavailability, unless proven otherwise, after one hundred years from birth or after carrying out two subsequent investigations, or when the address previously communicated abroad is no longer valid and it is not possible to obtain the new one;"

So the 100 year old thing is to remove people that have passed away from the registry - that's fair, and a sign of how little they keep track of residents abroad that they need such a clause.
And then two investigations, so they really have to make sure that you are not living at the given address before cancelling AIRE. And I presume they only do investigations in cases where they suspect the person in question actually lives in Italy (and has a lot of money).
Then if the address is no longer valid - that's if the letters they send out (voting cards, invitations to cocktails at the embassy, stuff like that) bounce with addressee unknown.

So it's a little bit annoying that they don't just leave you alone entirely, but I believe if you want to go sailing for two years, in 99.99% of cases it's fine to just register for AIRE somewhere. In the 0.01% case when you have a reason to believe they will investigate your residency, best to maybe go and talk to them at an embassy. Say look I have a home here, and this is my base, but I will be sailing the oceans so you will not be able to reach me so often. You can reach me by email or phone here.

I've been dealing a bit with an Italian embassy in an African country (where by the way mail service doesnt work, so you dont have the bounced mail issue) and they were honestly super nice and easy to deal with, and very apologetic about the clunkiness of Italian bureaucracy.

 

[Marzio]

I share your distrust in authorities!

I distrust them so much that i read this phrase in two chunks (and i'm surely wrong):

1. for alleged unavailability, unless proven otherwise
2. after one hundred years from birth

Then if the address is no longer valid - that's if the letters they send out (voting cards, invitations to cocktails at the embassy, stuff like that) bounce with addressee unknown.

You gave me an awesome idea to kickstart my JV with Italian revenue service!

@OffshorePhantom if you'll receive an invitation to cocktail at the embassy you'll know it's me

 

[OffshorePhantom]

@OffshorePhantom if you'll receive an invitation to cocktail at the embassy you'll know it's me

Better make sure I receive those invites and also participate in the cocktail party then