most people have family where they come from and will spend time there, usually also considerable time (which is ok under the context of family/health - check paragraph about it right below the 182 days rule in the corresponding legal texts whoever is interested in it)
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What are options for tax residency as a digital nomad that never spends more than 3 months in a country?
- Thread starter DaveFischer
- Start date
yes better worded with do not be longer in germany than in the most visited other jurisdiction / tax certificate jurisdiction
so 61 days cyprus and 80 days germany is a bad idea... 80 days germany and 200 days cyprus will fly under family & co
so 61 days cyprus and 80 days germany is a bad idea... 80 days germany and 200 days cyprus will fly under family & co
Be sure to check that there is a tax treaty in place with any countries that might want to tax you, and that it is in your favor. A tax residency certificate doesn’t necessarily mean much, though it’s obviously better to have it than not to have it.
You also need to make sure that your income would be classified as “foreign” in Georgia.
I would assume that you can’t use your Georgian company for this. And if you use a foreign company, you’d probably have to pay corporate income tax again, unless you incorporate in a tax-free country (or use an offshore company that isn’t taxed - Andrew Henderson is said to use a Hong Kong company for example). If you pay out a salary, I would expect it to be taxable income in Georgia again.
Well, it's important not to be "nomadic" but to have a new low tax country where you build your new residence and strong ties / substance. Rent buy apartment/house, pay water/electricity bills and try to make them with normal amounts, spend time in the country. Pay everywhere with a credit card, so later you can prove you lived in your new country. Subscribe local newspaper, subscribe to gym, subscribe to clubs, apply for discount cards at shops, visit dentist/doctor in your new country etc etc. Once you build an effective substance with your SINGLE new country and make sure you have more ties/substance in your new country rather old, you should be fine. Make sure you will get tax residency certificate of your new country and confirmations from local council you are legit resident and have place to live..
Do not cheat with fake address etc..
Nomadic lifestyle would not help you to build safe and effective tax-free residency...
Do not cheat with fake address etc..
Nomadic lifestyle would not help you to build safe and effective tax-free residency...
That’s not how this works. Countries must have a legal basis to tax you. If you don’t fulfill the criteria for tax liability, then a country can’t tax you, period. So nomadic lifestyle simply means that you avoid triggering tax liabilities. I can’t stress that enough. Some people think that they can keep their apartment in their home country and go on a few trips per year and then they don’t have to pay taxes. Obviously that’s not how it works if your home country considers having an apartment a tie for tax residency purposes.
It is still a good idea to have a proper tax residency, but that’s mostly because the concept of a nomad is not really understood by banks and governments.
Believe me in most countries is not the case. The tax auditor will ask you a simple questions. If you are not tax resident in your home country show the country were you are tax resident. And they will check the validity of that new tax residency. I have tax expat myself and went all through this.
You can have nothing in your home country, but you still have your citizenship. The most important tie with the country. So, if you cannot show any other tax residency, they will tax you based on citizenship tie.
I´ve talked with a tax lawyer in a Scandinavian country, and I was told the same. If you don´t have any other tax residency and you "claim" to be a nomad who lives 3 months in each country, then they most likely will tax you(your home country/passport country).
From my experience you need somewhere you call "home".
The argument is that if you call place X home how come you never go there.
For example I have a very good client who is from Gambia but also holds a Belgium Passport but " lives" in the UAE. He spends most of the year in the UK ( he owns a property), pops into Belgium ( no assets or ties except family), goes to Gambia 4/5 times a year (to see his parents and family has property there) and refreshes his tax residency every 170 days in the UAE. He goes once in December ( F1) once in March (Gold Cup Horse Racing) and takes the kids in the August for a week in the summer Holidays as a minimum.
All his stationary, business cards, website, contact numbers are all UAE details. His UAE mobile is always on him as well.
The argument is that if you call place X home how come you never go there.
For example I have a very good client who is from Gambia but also holds a Belgium Passport but " lives" in the UAE. He spends most of the year in the UK ( he owns a property), pops into Belgium ( no assets or ties except family), goes to Gambia 4/5 times a year (to see his parents and family has property there) and refreshes his tax residency every 170 days in the UAE. He goes once in December ( F1) once in March (Gold Cup Horse Racing) and takes the kids in the August for a week in the summer Holidays as a minimum.
All his stationary, business cards, website, contact numbers are all UAE details. His UAE mobile is always on him as well.
That isn’t very useful information without the specific country so we can compare the statement to what is written in the law. Some countries require you to show a tax residency certificate from a new country, or some other proof that you have properly “left” - if that’s the case, then obviously just being gone isn’t enough. Some Scandinavian countries also still tax you for a certain number of years after you are gone, unless you have become tax resident in a new country which their home country has signed a tax treaty with. You can’t use tax treaty benefits if you’re not a tax resident. Other countries, however, require to spend time in the country. Especially the UK for example has very clear rules for this.
I generally agree though, it is better to have a proper tax residency, simply because the concept of a nomad doesn’t really exist in the law. With nomadism growing, I’m also sure we will soon see changes to the law that will require you to pay tax to your home country, unless you can prove tax residency somewhere else.
There’s one more thing:
In some countries, spending just 6 weeks is or less is enough to trigger tax residency.
Going to the same place year after year can also trigger tax liability (permanent establishment).
And then finally some countries simply tax you any work that you do on their soil, even if you’re just there for a day. There is usually an exemption for such activity in their tax treaties (if you’re staying less than 183 days and there is no permanent establishment) - but to be able to make use of that exemption, you’d have to be tax resident in a country they’ve signed a tax treaty with. As a nomad, you’d have to pay taxes. Obviously in practice it would be impossible to enforce such a law though if it’s just you working from your laptop at the beach.
In some countries, spending just 6 weeks is or less is enough to trigger tax residency.
Going to the same place year after year can also trigger tax liability (permanent establishment).
And then finally some countries simply tax you any work that you do on their soil, even if you’re just there for a day. There is usually an exemption for such activity in their tax treaties (if you’re staying less than 183 days and there is no permanent establishment) - but to be able to make use of that exemption, you’d have to be tax resident in a country they’ve signed a tax treaty with. As a nomad, you’d have to pay taxes. Obviously in practice it would be impossible to enforce such a law though if it’s just you working from your laptop at the beach.
This is the test the UK applies to decide if you are tax resident:
https://assets.kpmg/content/dam/kpmg/pdf/2016/01/statutory-residence-test-flowchart.pdf
It would be great if all countries had such clear rules.
https://assets.kpmg/content/dam/kpmg/pdf/2016/01/statutory-residence-test-flowchart.pdf
It would be great if all countries had such clear rules.
Initiatives like this are interesting: Croatian Prime Minister: Croatia Will Soon Introduce Digital Nomad Visas - SchengenVisaInfo.com
Although it's probably more eye-catching than anything else, because there will still many details to be studied concerning minimum periods of residency and how this would interact with any DTAs Croatia may have signed.
I was talking about OECD countries, EEA countries and etc. They do have similar rulings of tax residency. Mostly all tax residency requirements are based on these main things:
1. Living place - this is easy part, you just count days
2. Social, personal and economic ties-
this is the most tricky part because it is very subjective on many factors
For example if you are Spanish citizen and lived all your life in Spain and become Nomad, there would be very hard to prove to Spanish authorities that you are not a tax resident anymore if you cannot prove any other tax residency. They will say you have been tax resident all your life in Spain, you are Spanish citizen, you still have some social or personal or economical ties with the country and most importantly your don't have any other HOME country with tax certificates etc.
You can be nomad, but you have to have a single home country with substance and tax residency
You need to differentiate between what the law in theory says and how it is interpreted and how they will simply not care and knowingly go against it. These are very different things.
If you claim a nomadic lifestyle and you happen to have a tax agent assigned to you that is a bit more on the a*****e side what will happen is simply that he will not accept your arguments, counter with some bulls**t suspicion based not really on facts. The result will be you will get a tax invoice + back taxes + penalty + future tax payment for the contested time. Depending on time and size also criminal charges.
You will have about a month to pay this. You can contest it but it again they need to approve this and they will not. So you can stretch that out for another few weeks or month maybe but then it will be collections going after you. Depending on where you claim to live / be at that time / your postal address this will result in a variety of things. Will eventually go to european arrest warrant, assets freeze, passport collection should you enter Germany if you do not pay that amount (which of course you can contest later in front of the finance court).
You absolutely DO NOT want to end up at this point but the chance of this happending if you dont have your ducks in order (yes a tax certificate and proper country of residence goes a -long- way in this) is very high.
Even if you contest it all and maybe win in front of some higher court later this will take forever and if you did not manage to make them place a hold on the payment you have already lost and its likely to f**k you over for good depending on timeframes, penalties etc we are talking about.
Remember tax law in these countries (Germany) is not based on innocent until proven guilty. It is the other way round and they dont give a s**t -at all-. They will without blinking destroy your life knowing exactly that even though they are wrong - they have the burocratic process on their side. They will with full knowledge use that fact against you.
If you claim a nomadic lifestyle and you happen to have a tax agent assigned to you that is a bit more on the a*****e side what will happen is simply that he will not accept your arguments, counter with some bulls**t suspicion based not really on facts. The result will be you will get a tax invoice + back taxes + penalty + future tax payment for the contested time. Depending on time and size also criminal charges.
You will have about a month to pay this. You can contest it but it again they need to approve this and they will not. So you can stretch that out for another few weeks or month maybe but then it will be collections going after you. Depending on where you claim to live / be at that time / your postal address this will result in a variety of things. Will eventually go to european arrest warrant, assets freeze, passport collection should you enter Germany if you do not pay that amount (which of course you can contest later in front of the finance court).
You absolutely DO NOT want to end up at this point but the chance of this happending if you dont have your ducks in order (yes a tax certificate and proper country of residence goes a -long- way in this) is very high.
Even if you contest it all and maybe win in front of some higher court later this will take forever and if you did not manage to make them place a hold on the payment you have already lost and its likely to f**k you over for good depending on timeframes, penalties etc we are talking about.
Remember tax law in these countries (Germany) is not based on innocent until proven guilty. It is the other way round and they dont give a s**t -at all-. They will without blinking destroy your life knowing exactly that even though they are wrong - they have the burocratic process on their side. They will with full knowledge use that fact against you.
I totally agree with you. The same happened to me. Tax agent looked at me very formally and with lots of interpretations. I had to prove many things which were not in the law, rather their own interpretations.
Like plain tickets, tax residency certificate, proofs I have more ties with new country etc etc. So I advise anyone to collect as many documents as possible , to have proofs of everything that you are living in your new home country... If you cannot present documents, they will tax you and later on you can go to courts..
Compare it a little bit to how US corporations f**k over the stupid US sheeps. Be it in natural desaster areas or cancer causing cases and so on. Sure they all know they would win and get a big paycheck some day but they also all knew they would not live long enough to see that day.
Are you going to have a long enough breath when one of the more hardcore IRS's in the EU goes after you even if you would win at whatever higher court many many years later? What happens if you dont manage to get them to hold off on the payment until then?
Are you going to have a long enough breath when one of the more hardcore IRS's in the EU goes after you even if you would win at whatever higher court many many years later? What happens if you dont manage to get them to hold off on the payment until then?
Yes, I'll make sure to break all ties to my home country. I'm sure the French government will not come after me, since I'm not French. My only fear is the EU-government where I've been born, where I have a passport.
I'm considering #1 Georgia, #2 Panama, #3 Cyprus, although Cyprus is going to cost me much more, €10k yearly + 15% taxes. It looks like there is a lot of administration in changing tax residency though, so it'll take some time. Georgia has more double taxation treaties, although I'm not sure it matters as I'll make sure not to end up a tax resident by mistake in other countries. I also don't really live in the western world, so tax enforcement in most countries is much weaker.
I don't know if the EU government can ask money from me if I relocate to Panama and actually live there. It seems so unlikely, that they would be able to demand money from me while I'm living in Panama or just have tax residency there.
I have no interest in ever living in my home country again, I've already lived 5 out of the last 7 years in different countries. I was much happier outside of my home country. I'm sick of people trying to enforce their ideologies and will upon me, it's tyrannical. Even paying 50%+ taxes, making €50k, people will consider you as evil richies, whereas I'm from a poor area full with bums that really destroyed their own lifes, that are idealized as if they are the great, chosen ones, whereas people that make more money are evil. People will consider you as bad if you make €100k working for a bank or for the government, they think it's unfair you make more than other people. You also have too many rights, can't be fired easily, so your gross salary will be only €50k (€32k after taxes) as a permanent employee and €160k as a freelancer. People keep demanding more rights, but don't see how it kills wage growth.
I'm considering #1 Georgia, #2 Panama, #3 Cyprus, although Cyprus is going to cost me much more, €10k yearly + 15% taxes. It looks like there is a lot of administration in changing tax residency though, so it'll take some time. Georgia has more double taxation treaties, although I'm not sure it matters as I'll make sure not to end up a tax resident by mistake in other countries. I also don't really live in the western world, so tax enforcement in most countries is much weaker.
I don't know if the EU government can ask money from me if I relocate to Panama and actually live there. It seems so unlikely, that they would be able to demand money from me while I'm living in Panama or just have tax residency there.
I have no interest in ever living in my home country again, I've already lived 5 out of the last 7 years in different countries. I was much happier outside of my home country. I'm sick of people trying to enforce their ideologies and will upon me, it's tyrannical. Even paying 50%+ taxes, making €50k, people will consider you as evil richies, whereas I'm from a poor area full with bums that really destroyed their own lifes, that are idealized as if they are the great, chosen ones, whereas people that make more money are evil. People will consider you as bad if you make €100k working for a bank or for the government, they think it's unfair you make more than other people. You also have too many rights, can't be fired easily, so your gross salary will be only €50k (€32k after taxes) as a permanent employee and €160k as a freelancer. People keep demanding more rights, but don't see how it kills wage growth.
Yes obviously, but if you only visit your home country for 2 weeks per year and have no other ties, would they really still demand taxes and force me to proof I'm tax resident somewhere? Maybe they would actually.
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