(Tax) residency wanted. Down to the real problem of being a digital nomad

[therover]

Dear all,
I've been reading several posts in this forum and I'd also like to open some discussion on what I think it is the real problem of being a digital nomad.
Some background information:
I've been living abroad from my European home country for several years, (yes, I'm European). Since last year I started my nomad life (thanks covid) and I've been operating in EU through an Estonian limited company opened with the e-residency program.
I pay myself out the amount I need to live and I keep all the rest of the profit as as retained earnings, reinvesting all of them.
Now the problem I'm encountering is that I want to cut ties with the country I've lived in the last three years. I know I've not triggered PE for my Estonian entity, and it is not a problem keep doing that.
The real problem is that at the end of day a digital nomad needs a residency. We need to provide proof of residency for way too many services as well as for renewing documents, ecc..
I don't mind about paying (a relatively low amount of) taxes on my income, the important thing would be not to trigger PE for my company and to not have to go through a lot of bureaucracy (as in the NHR Portugal program).
Do you have any suggestion?
I was considering the following:
* as a European I'm allowed to get residency in any EU country if I have health insurance and adequate means of subsistence.
* if I'm not living more than 183 days I wouldn't trigger tax residency
Have anyone any experience with this setup?

 

[Konstanz]

Dear all,
I've been reading several posts in this forum and I'd also like to open some discussion on what I think it is the real problem of being a digital nomad.
Some background information:
I've been living abroad from my European home country for several years, (yes, I'm European). Since last year I started my nomad life (thanks covid) and I've been operating in EU through an Estonian limited company opened with the e-residency program.
I pay myself out the amount I need to live and I keep all the rest of the profit as as retained earnings, reinvesting all of them.
Now the problem I'm encountering is that I want to cut ties with the country I've lived in the last three years. I know I've not triggered PE for my Estonian entity, and it is not a problem keep doing that.
The real problem is that at the end of day a digital nomad needs a residency. We need to provide proof of residency for way too many services as well as for renewing documents, ecc..
I don't mind about paying (a relatively low amount of) taxes on my income, the important thing would be not to trigger PE for my company and to not have to go through a lot of bureaucracy (as in the NHR Portugal program).
Do you have any suggestion?
I was considering the following:
* as a European I'm allowed to get residency in any EU country if I have health insurance and adequate means of subsistence.
* if I'm not living more than 183 days I wouldn't trigger tax residency
Have anyone any experience with this setup?

solution to your problem would be UAE residence:
1. Forming UAE FZE company
2. You will get visa and residence
3. Visit UAE 2 times a year

What is your home country?

 

[Fred]

Hi @therover ,

we setup a Dubai Company with Residence Visa and local UAE Business & Personal Bank Accounts for many Digital Nomads right now.

As you already mentioned - the Digital Nomad Lifestyle has it's limitations - especially when it comes to banks.

Many Digital Nomads used in the past EMI Accounts they had verified with there old home country Residence Address and got troubles with blocked accounts due to a lot of travel and from a CRS reporting perspective it can makes problems as well if not now then in the future.

At least you can get a very solid base in the UAE for your Business as well as for your Finances with a minimum requirement of being every 6 months for 1 day to the UAE.

 

[therover]

Thanks for your answers!
My home country is Italy.
There are actually requirements for having Dubai as home country for Italian passport holders. Being Dubai a tax heaven, Italy requires you to provide proofs you really live there.
Is the requirement of two days per year a UEA law? I wouldn't mind spending there even some months, but if it's possible I'd avoid renting an apartment for a full year.

 

[Fred]

Thanks for your answers!
My home country is Italy.
There are actually requirements for having Dubai as home country for Italian passport holders. Being Dubai a tax heaven, Italy requires you to provide proofs you really live there.
Is the requirement of two days per year a UEA law? I wouldn't mind spending there even some months, but if it's possible I'd avoid renting an apartment for a full year.

That's not an issue to get the Residence Visa, Emirates ID and local UAE Business & Personal Bank Accounts.

To get the Tax Residence Certificate you are required to spend official 183 days in the UAE - however from practice experience you get it with being to the UAE 3-4 times a year for 2-3 weeks.

The Dubai Company with Residence Visa and local UAE Business & Personal Accounts makes especially as Business & Finance Center sense.

And in case you feel more comfortable somewhere else where again the Business & Finance Center makes less sense like in SE Asia you can spend there some time as well to get some kind of Proof of Residence.

However - the above mentioned way with the UAE is by far the easiest with as less as possible bureaucracy when getting the Residence Visa through the Dubai Company Formation.

 

[therover]

Thanks Fred!
And as far as you know, would it be possible to keep the Estonian entity alive?

 

[Fred]

Thanks Fred!
And as far as you know, would it be possible to keep the Estonian entity alive?

Yes, why not.

I assume you bank the entity with an EMI anyway?

We would recommend to verify this EMI with your new UAE Residence Visa - in case yur current EMI isn't able to do this we give you an equal recommendation of EMI with same functionality but able to have your UAE Residence Visa on file.

 

[zzzzzz]

Thanks for your answers!
My home country is Italy.
There are actually requirements for having Dubai as home country for Italian passport holders. Being Dubai a tax heaven, Italy requires you to provide proofs you really live there.
Is the requirement of two days per year a UEA law? I wouldn't mind spending there even some months, but if it's possible I'd avoid renting an apartment for a full year.

Proofs: usually they want to see your utility bills, rent contract, credit card transactions, bank statements, passport stamps....etc. It's not that easy. Sometimes I ask myself what is worse/better: cutting ties + fictitous tax residency OR not cutting ties + hiding behind the company?

 

[Golden Fleece]

The real problem is that at the end of day a digital nomad needs a residency. We need to provide proof of residency for way too many services as well as for renewing documents, ecc..

Countries for easy residencies: Panama Friendly Nations Visa (you only need to visit once every two years) and Paraguay (you only need to visit once every three years). Just remember that establishing residency is not necessarily the same as establishing a tax residency. That may matter for Panama.

Regarding proof, you will always have that problem if Italy always requires proof for a new residency in any country. If Italy only requires proof for known tax havens, then Paraguay is a good bet because it is not known as a tax haven. I have heard that banks seldom question Paraguayan residencies.

Your best choice is to simply obtain a residency in a low-tax Eastern European nation, find a cheap rent, pay a fair 10%-15% income tax rate, have the proof of a real residency, and travel as you wish.

 

[Ibus]

Cyprus require only two month of residency a year to be an official resident.
You have to get a lease from a landlord.

 

[therover]

Yes, why not.

I assume you bank the entity with an EMI anyway?

We would recommend to verify this EMI with your new UAE Residence Visa - in case yur current EMI isn't able to do this we give you an equal recommendation of EMI with same functionality but able to have your UAE Residence Visa on file.

What exactly you mean for EMI? Something like Transferwise? In that case yes. But most of the money are on the trading account. But since both would are owned by the company I don't see problems.
Also how much would it cost to maintain a residency and a Dubai FZE entity? The(apart from the traveling and the months spent there living)
idea seems attractive, there could be a lot of interesting partnership that I could get in Dubai

 

[therover]

Countries for easy residencies: Panama Friendly Nations Visa (you only need to visit once every two years) and Paraguay (you only need to visit once every three years). Just remember that establishing residency is not necessarily the same as establishing a tax residency. That may matter for Panama.

Regarding proof, you will always have that problem if Italy always requires proof for a new residency in any country. If Italy only requires proof for known tax havens, then Paraguay is a good bet because it is not known as a tax haven. I have heard that banks seldom question Paraguayan residencies.

Your best choice is to simply obtain a residency in a low-tax Eastern European nation, find a cheap rent, pay a fair 10%-15% income tax rate, have the proof of a real residency, and travel as you wish.

Thanks! But more than an easy residency I think a nomad looks for one where it's easy to prove you're living there and that can be actually be used for documents without having to spend 12 hours on a plane.
I would have no problems being resident in a place that's not a tax heaven, but where services work like Germany or Austria, but I'd like to have the guarantee that if I'm not spending there more than 6 months I don't trigger PE for the Estonian entity. Definetly no more east European countries, I'm willing to pay for efficiency, services and quality of life.

 

[Fred]

What exactly you mean for EMI? Something like Transferwise? In that case yes. But most of the money are on the trading account. But since both would are owned by the company I don't see problems.
Also how much would it cost to maintain a residency and a Dubai FZE entity? The(apart from the traveling and the months spent there living)

Yes I mean Transferwise, Revolut etc.

Something you use for our daily expenses but not for siginifcant amount of money (med. 6/7 figures) as it can always be randomly blocked for no clear reason and getting funds released is a nightmare.

Dubai Company Formation with Residence Visa and Bank Accounts is 7k EUR Setup and 4k EUR Renew in Fees.

idea seems attractive, there could be a lot of interesting partnership that I could get in Dubai

That's it.

Just take a look who is located in the DIFC - that's why I claim Dubai the place to be for someones Center of Business & Finance.

 

[CoffeeExpert]

a Caribbean digital nomad visa? Many Caribbean countries have not tax.

 

[patterson]

Dubai Company Formation with Residence Visa and Bank Accounts is 7k EUR Setup and 4k EUR Renew in Fees.

Also possible to get visa only, @Fred ? I already have my company in Malta, which works well so far. Good rep and banking. UAE would be more difficult in that regard.

 

[Fred]

Also possible to get visa only, @Fred ? I already have my company in Malta, which works well so far. Good rep and banking. UAE would be more difficult in that regard.

The Residence Visa is grant through the Dubai Company Formation.

Dubai Banking isn't difficult if you know how it's done.

 

[CaptK]

Italy will want utility bills that have been paid, tenancy agreement, debit card use in country.

All agressive tax countries are starting to do this now.

 

[yolem55820]

As you have your company in Estonia, why don't you get residency there? Estonia as no personal income tax on dividends received and as long you stay in the Estonian population register you are considered resident (and tax resident) from day of arrival... To be in the population register you just have to rent a place (can just be a cheap room/studio), add yourself in the population register and go the police station to get the Estonian resident ID card then you can give your new residency to your previous country, open a resident bank account in Estonia. etc..

 

[John M]

I would sugest Romania. If you find a local company to employ you for minimum wage, you’ll be employed with a full tax residency (as you are a full time employee in Romania). You’ll also need a local address and maybe a local mobile phone contract (for banking).

 

[yolem55820]

I agree with you and also to thousands users in differently jurisdictions, this could be valid but for trade purposes of services as well merchandise but not for trading in stock exchange, shares, crypto, etc...In EU do not exists a law suitable for digital nomads investors in stock exchange. In every country there are reductions but never zero taxes and in mostly cases you have to pay capital gain taxes, as per example in Estonia.....

If he uses his Estonian company to invest then there is no taxes as long as it is not distributed... good to compound money...