What are options for tax residency as a digital nomad that never spends more than 3 months in a country?

[Konstanz]

It depends on the tax treaty. A tax treaty is no magical solution to all your problems, but it does offer additional protection because it limits the taxes a country can charge. With no treaty, it does not matter if you have substance in the other country.

How can home country tax me if I don't have a house in home country, I don't have a wife or kids there, I am not employed there and I don't live there?

 

[JustAnotherNomad]

Didn’t you just write that if you don’t have substance in any other country, your home country will always tax you, even if you have no ties to your home country anymore except your passport?

 

[smartchoice]

Double tax treaty - even the name of it tells what it is. It means let's say your home country A income tax rate is 20%. your new country B tax rate is 15%. If you receive income in country B at 15% rate and let's say country A say that you are still a resident, they can still tax you the difference of 5% and you still have to provide proof that you paid 15% at country B. So, basically double tax treaty would not help you to reduce your tax in most cases.

This it's not true the double tax treaty is done to pay only one tax (always do things to be smaller tax possible ), never both. If I pay 15 % in B, the A never tax me again the 5%.

 

[smartchoice]

I agree. This nomad thing with Georgia will not work. You have to have a normal residence place in your new country. With utility bill , your stuff and etc. You have to spend some decent time there.
Other way they just say you are domicile fraud despite DTTs... They will tax you and you can go to courts if you wish.

This nomad thing with Georgia will work very well, just because you are an EU citizen, rent a small flat in Georgia, have all the bills on your name, open a bank account, tax resident there, spend a couple of months in summer if you want. Been an EU citizen will not be recorder on crossing the border between Georgia and anywhere in the EU, you will use a passport or ID (better). so no stamp, no visa nothing registred. And you have a solid case to prove you are resident in Georgia. If you will travel outside of the EU, Georgia don't break the 183 days rules. In this situation, your country can't tax you as a resident but in this case, the tax treaty can be applied by your country. (not always depends how big it's your income and the source ) So check this too. What country you are a citizen?

 

[JustAnotherNomad]

You are both partially right.
What @Konstanz is referring to is called the credit method, while what @smartchoice is referring to is called the exemption method. We are generally seeing a trend to move from the exemption to the credit method. This is relevant when your home country can legally tax you as well.
But the important part is that usually the DTA defines very clearly which country can tax you in the first place.

 

[JustAnotherNomad]

Been an EU citizen will not be recorder on crossing the border between Georgia and anywhere in the EU, you will use a passport or ID (better). so no stamp, no visa nothing registred.

Of course it will be registered. Georgia is not even a Schengen country, so the border crossing will be registered, and also all flight passenger information is stored for at least several years, probably forever.

 

[smartchoice]

Of course it will be registered. Georgia is not even a Schengen country, so the border crossing will be registered, and also all flight passenger information is stored for at least several years, probably forever.

Flight passengers are recorded everywhere in the world., the point is I can enter in Georgia with my EU ID, Georgia has a treaty with the EU, and anyway very soon it will be a member. The ''taxman'' from home country can have access to flights recorders only if I am under investigation of tax fraud, money laundry, etc, need an official investigation on my name, so in this case it's irrelevant.

 

[Konstanz]

Flight passengers are recorded everywhere in the world., the point is I can enter in Georgia with my EU ID, Georgia has a treaty with the EU, and anyway very soon it will be a member. The ''taxman'' from home country can have access to flights recorders only if I am under investigation of tax fraud, money laundry, etc, need an official investigation on my name, so in this case it's irrelevant.

Well, I have been asked by tax men of my country to provide flight tickets and other documents to prove I have NOT been living in home country and that I have lived in other EU country.
If you don't live in other country what you will show?

It's not true they need criminal investigation. Tax authorities has right to get information in case you are audited by them.

 

[smartchoice]

Well, I have been asked by tax men of my country to provide flight tickets and other documents to prove I have NOT been living in home country and that I have lived in other EU country.
If you don't live in other country what you will show?

It's not true they need criminal investigation. Tax authorities has right to get information in case you are audited by them.

I don't know your personal situation, so I cant' comment exactly what you need to do, but in this case, if I have a flat rented for 12 months in my name in Georgia, paying tax there (for my property ), all the bills, my income received in my Georgian bank. (play nice with the bank when they request, prove your foreigner income, don't make red flags ) and the ''taxman'' can't do anything, they will request info to Georgian authorities which will confirm all of this. In the worst scenario, the taxman can only apply the double tax treaty -case close...like I say depends on the amount of money and other red flags about you.

 

[xipoid]

I don't know your personal situation, so I cant' comment exactly what you need to do, but in this case, if I have a flat rented for 12 months in my name in Georgia, paying tax there (for my property ), all the bills, my income received in my Georgian bank. (play nice with the bank when they request, prove your foreigner income, don't make red flags ) and the ''taxman'' can't do anything, they will request info to Georgian authorities which will confirm all of this. In the worst scenario, the taxman can only apply the double tax treaty -case close...like I say depends on the amount of money and other red flags about you.

OK, so we went from zero residency in Georgia to needing a flat there for 12 months. At which point I'd probably prefer Cyprus for a) being in the EU and thus slightly better for company reputation b) not being as bad a shithole.

You made some comments I cannot agree with earlier about Georgia soon joining the EU, it's not even tabled for accession. The Balkan states will be first and they have years to wait. Also, the EU is going in the direction of really tightening the screws on entrances, exits and record of presence -- that's a key reason for the introduction of ETIAS.

 

[kkein]

OK, so we went from zero residency in Georgia to needing a flat there for 12 months. At which point I'd probably prefer Cyprus for a) being in the EU and thus slightly better for company reputation b) not being as bad a shithole.

You made some comments I cannot agree with earlier about Georgia soon joining the EU, it's not even tabled for accession. The Balkan states will be first and they have years to wait. Also, the EU is going in the direction of really tightening the screws on entrances, exits and record of presence -- that's a key reason for the introduction of ETIAS.

Have you ever been to Cyprus? If not, perhaps go there first. I'm not sure whether you'd consider it better than Georgia

 

[Dandyline]

Flight passengers are recorded everywhere in the world., the point is I can enter in Georgia with my EU ID, Georgia has a treaty with the EU, and anyway very soon it will be a member. The ''taxman'' from home country can have access to flights recorders only if I am under investigation of tax fraud, money laundry, etc, need an official investigation on my name, so in this case it's irrelevant.

I think it's very unlikely that the "taxman" has access to flight records what so ever. And as long as you dont have a very unique name, it wouldn't be any issues.

 

[smartchoice]

It's not important if Georgia joins the EU in 10- 15 years, it's important the agreement between EU and Georgia is in place today, for this reason, the Georgian authorities start implementing this strict measures which it's not good for us.

Second YES, Cyprus can be a better option, but again I say because many people here start the post without telling us the citizenship, I have friends with a very good set up with Cyprus but some start having problems with ''taxman'' like UK or Germany and some don't have any problems like Portugal, Bulgaria or Romania, for this reason, it's very very important your personal situation (citizenship )because what is good for me can be bad for you and vice versa...every case it's unique .

 

[jackfrost]

You can indeed pay twice (also twice in full btw - many German LLC owners found that out the hard way as Germany would not accept their definition of a corporation). Usually this will be with countries like the US that have world wide income taxation per default no matter where your residency is. There it usually is default that they will credit taxes paid in other countries against what you would owe in the US on that income.

 

[jackfrost]

Btw you can have kids but you cannot be married usually. Kids are excluded from the tie calculation but if you are still married to someone from your home country thats already game over no matter what your situation is.

 

[JustAnotherNomad]

Btw you can have kids but you cannot be married usually. Kids are excluded from the tie calculation

No, not really. Depends on the country.
If you have underage kids, some countries at least consider you tax resident.
It’s exactly such cases where you’ll want to have a DTA in place that will say that the tie can be disregarded.

 

[Konstanz]

You can first move to DTA EU country like Cyprus for a couple of years and then change to non-DTA like Panama.
Legally you would emigrate to DTA country. And then emigrate from DTA to non-DTA.
Of course, it much depends to each personal circumstance like citizenship etc. Also keep in mind that Cyprus is non-Schengen country like Georgia.
There are "tax free" schemes in Europe besides Portugal in Schengen if you can afford to pay ~20-30k taxes a year.
For example Monaco don't have DTA agreements and still many rich people move there

 

[JustAnotherNomad]

Yes, like I mentioned, it’s perfectly fine to live in a country with no DTA if you are 100% sure that your home country cannot/will not tax you. This is the same case as having tax residency nowhere. If you have tax residency nowhere and you aren’t liable for tax in your home country per its national laws, then there is no tax. From the perspective of your home country, it makes no difference if you are tax resident nowhere or tax resident in a country with no DTA. There may of course be a difference in how much effort they put into trying to prove you should still pay taxes, but that is the legal situation.

 

[Konstanz]

In my country, the laws clearly state you have to have substance in a foreign country to be able to move tax residency to another country. Not much different than DTO agreement. It's much more different than to claim you just left the country. That would not be sufficient.
I am not sure which country you are referring to, but legislations seem to be different.

 

[JustAnotherNomad]

I am not talking about claiming you have left the country, I am talking about actually leaving. I’m not sure which country you are referring to, maybe you can quote the law you mean?
Though this is mostly academic - I think we basically agree.