Advice Needed - Where to Move?

[eRabbit]

Hi everybody,

I have some questions and I'm seeking your advice!

All my work is done online and my earnings come from affiliate marketing, I virtually use no public infrastuctures, all the highways are private, the post offices are private, I have never used public services like hospitals or schools and the tools I use (my computer and the internet) have been paid for by myself.
The country I live in is extremely corrupt, unfair and bureaucratic, if you make about €5000/month you are considered top tier and you pay 55% tax on all your earnings + having to pay for social security (I don't want the government retirement money either).

I'm tired of all this, I want to move to a country where there's freedom to grow, where the government doesn't treat anyone who goes a little bit above the average as a fat cat.
I would also like to leave the European Union in general because I don't like all its regulations and the fact that they impose 75% of their laws on every member state.
I have considered moving to the USA or Panama, since Panama seems like such a simple option, I am more inclined to move there, at least for now.

I have read that, this year, Panama is now on the EU's black list... what does that mean for someone who wants to leave his EU country and go live there?
Here is what I have thought about doing:

- Getting the Friendly Nation Visa
- Cutting ALL my ties to my country
- Moving to Panama
- Having my permanent and fiscal residency in Panama
- Earning money as an individual from online affiliate marketing networks based in the USA

Would this be okay to do? Would the government of my current country not bother me claiming that I'd have to pay taxes to them claiming I'm living in a black listed country?
Would the earnings from online affiliate marketing be considered foreign earned income and liable to pay 0% tax in Panama?
Would I have to pay taxes somewhere else?
Would it be better to have an Estonian company to receive the commissions through the company and then receive the dividends in Panama?
Would it be better to have a Panamanian company to receive these commissions?

Finally, is there a better suggestion? A good country to move to other than Panama where quality of life is good and income taxes are low or nonexistent?

Thank you in advance for your precious help!!

 

[Outlander]

The EU black list doesn't mean anything negative from a residence standpoint. It means that if you open a Panamanian company, you'd have the hell of a time doing business and opening bank accounts.

In order to know if your home country would tax you after you leave, it's necessary to know what is your home country. Countries like France have a grief tax for several years after you relocate to a tax haven.

You don't need to setup your business in Panama (although you must create a company for obtaining your visa) just because you decided to live there. You can create it elsewhere with a better reputation, even a LLC in the US is an option.

I'd stay away from Estonian companies because of the high taxation, what is the point?

 

[eRabbit]

The EU black list doesn't mean anything negative from a residence standpoint. It means that if you open a Panamanian company, you'd have the hell of a time doing business and opening bank accounts.

In order to know if your home country would tax you after you leave, it's necessary to know what is your home country. Countries like France have a grief tax for several years after you relocate to a tax haven.

You don't need to setup your business in Panama (although you must create a company for obtaining your visa) just because you decided to live there. You can create it elsewhere with a better reputation, even a LLC in the US is an option.

I'd stay away from Estonian companies because of the high taxation, what is the point?

Thank you for your help!!

About the grief tax, do you know how it would work in case my home country is Portugal?

Apart from Panama, would you recommend any other country with an easy to acquire residence, decent cost of living and low or non existent taxes?

Thank you again!

 

[Outlander]

About the grief tax, do you know how it would work in case my home country is Portugal?

Portugal doesn't have a grief tax

Apart from Panama, would you recommend any other country with an easy to acquire residence, decent cost of living and low or non existent taxes?

Paraguay is a popular option, check it out for details for example here

AFAIK Uruguay is also doable, but a little more strict for obtaining visas

Thailand, Georgia are all territorial taxation and worth a look.

Or you can live in the UAE if you don't mind living in the desert

 

[eRabbit]

Thank you for your precious help! I’m going to look at the options you suggested!

Portugal doesn't have a grief tax



Paraguay is a popular option, check it out for details for example here

AFAIK Uruguay is also doable, but a little more strict for obtaining visas

Thailand, Georgia are all territorial taxation and worth a look.

Or you can live in the UAE if you don't mind living in the desert

So, if I decide to do the following:

- Getting the Friendly Nation Visa
- Cutting ALL my ties to my country
- Moving to Panama
- Having my permanent and fiscal residency in Panama
- Earning money as an individual from online affiliate marketing networks based in the USA

Would the earnings from online affiliate marketing be considered foreign earned income and liable to pay 0% tax in Panama?
Can I earn these commissions as an individual and pay 0% income tax?
Or do I have to have a company to receive the commissions?

Thank you again!

 

[JustAnotherNomad]

Be careful. Most countries with territorial taxation only treat foreign dividends as foreign-sourced.
That means that when you work from your home/office in that country, the money you earn will usually be taxed. Only when you own a company outside of Panama that you receive dividends from, then it's tax-free. Ironically, Portugal has such a system, but only for foreigners who move to Portugal, and only for 10 years (NHR).
So wherever you move, make sure you really know and understand the rules.
If you want to be sure, it's easier to move to a country without income taxes like the UAE, Qatar etc.

 

[eRabbit]

Thank you for your help!
In the case of Panama, what would be your suggestion? Having an LLC in the USA? In which case, how much corporate tax would be due? Which other countries have the same rules as UAE and Qatar?
Yeah, that's another reason why Portugal is such a shitty place for its citizens, if you are a foreigner living in Portugal and earning millions from foreign sources you pay 0% taxes (since January the socialist party has changed this, so it's actually 10% now...) On the other hand, if you are Portuguese and make over €6000 per month you pay 61% tax because you are considered very rich!

 

[JustAnotherNomad]

No, I think they only changed it for pensioners. So only for poor old people. If you're a Chinese billionaire immigrant, you still don't pay taxes.
I don't know enough about Panama. I just meant that as a general precaution. In countries with territorial taxation, you always have to check the rules carefully - but I have also heard that Panama is very lax about enforcing them anyway.
But if you go to a tax-free country like the UAE, then there simply is no tax anyway, so there is nothing to be careful about. That's an advantage. But you must also like the place you live, so just travel and see which place you like best.
Tax free: UAE, Qatar, Oman (I think), ... probably others (Labuan?).
Territorial taxation (check local rules!): Panama, Georgia, Paraguay, Cyprus, ...

A US single-member LLC (meaning you as an individual, not a company, are the only owner) is usually treated as a pass-through entity. Which means that for the purpose of taxes, it doesn't even exist. So it's not relevant for taxes. But if you think your customers would be skeptical to doing business with a company from Qatar, you can register a US LLC and "hide" that you live in Qatar.

 

[eRabbit]

Hahah, I didn't know the rule in Portugal works like that, even worst!
Can you recommend a good website for reading more about forming a LLC? Perhaps a service provider for forming one? Sounds like a great solution!
That means that I could have a LLC, receive commissions from affiliate marketing on it, pay dividends snd, if I live in Panama, pay 0% tax on those dividends, right?
(sorry about being a noob on this!)

 

[ih8socialism]

If you consider middle east, than you should take a look at Bahrain. A very good alternative to UAE

 

[JustAnotherNomad]

If it’s a single member LLC, the LLC is “pass-through”, it does not exist. So it may not be able to pay dividends. You’d need to talk to a tax lawyer in Panama about how Panama would treat payments from the US LLC. But yes, it would probably work.
But again, check the rules for when you work from Panama. Even if the company is registered in the US. There are lots of potential traps with territorial tax, even though countries like Panama probably don’t even enforce their own rules for foreigners.

 

[eRabbit]

Thanks for your help! I'll look into all those possibilities!

 

[eRabbit]

Thank you for your help, @Outlander! I’m going to look at the options you suggested!

So, if I decide to do the following:

- Getting the Friendly Nation Visa
- Cutting ALL my ties to my country
- Moving to Panama
- Having my permanent and fiscal residency in Panama
- Earning money as an individual from online affiliate marketing networks based in the USA

Would the earnings from online affiliate marketing be considered foreign earned income and liable to pay 0% tax in Panama?
Can I earn these commissions as an individual and pay 0% income tax?
Or do I have to have a company to receive the commissions as dividends?

Thank you again!

 

[eRabbit]

If it’s a single member LLC, the LLC is “pass-through”, it does not exist. So it may not be able to pay dividends. You’d need to talk to a tax lawyer in Panama about how Panama would treat payments from the US LLC. But yes, it would probably work.
But again, check the rules for when you work from Panama. Even if the company is registered in the US. There are lots of potential traps with territorial tax, even though countries like Panama probably don’t even enforce their own rules for foreigners.

If I wouldn’t be able to receive dividends from the LLC, how would I receive money from the company? As a salary? Thanks!

 

[JustAnotherNomad]

The company is just you from a tax perspective. At least from the US side. It’s as if all payments were made to you personally anyway. But you’d need to check how Panama treats the situation.

 

[eRabbit]

If the money generated by the company came from American affiliate marketing networks, would that be taxable? Also, what would be the best state for opening a LLC? Thanks!

 

[JustAnotherNomad]

No, not unless you have Effectively Connected Income (ECI). If you only work from outside the US and have nothing “on the ground” in America (like a warehouse or people working for you), then there is no US tax.
Alaska, Wyoming, New Mexico, Delaware (more expensive) are states that are often recommended. But I don’t think it really matters much if you’re not selling any physical goods and you don’t have a presence in the US. Except if you want to stay anonymous, then there can be differences because some states don’t have public company registers.

 

[eRabbit]

No, not unless you have Effectively Connected Income (ECI). If you only work from outside the US and have nothing “on the ground” in America (like a warehouse or people working for you), then there is no US tax.
Alaska, Wyoming, New Mexico, Delaware (more expensive) are states that are often recommended. But I don’t think it really matters much if you’re not selling any physical goods and you don’t have a presence in the US. Except if you want to stay anonymous, then there can be differences because some states don’t have public company registers.

Thank you!

 

[Outlander]

A good website for learning about LLCs is llcuniversity.com.

LLCs are a state arrangement and don't exist on the federal level. Thus they don't pay state corporate taxes (they even aren't a corporation!), and on the federal level, all profit is reported on the individual's tax income.

For non-residents, if you do business with the US your profits will be taxed on 30% on a federal level. If your business activity isn't from US sources (for example, selling to US-based customers), then you don't pay taxes in the US.

In Panama, my understanding is that your LLC works as if you were selling the goods yourself as an individual. So the answer to whether you're due personal income tax in Panama for your activity using the LLC is the same as if you were selling yourself. I think the answer to both questions is no, but please check on that.

Nowadays the banking system in Panama is very strict. If you go the US LLC route you should well try visit the US and open a bank account there, and spend your money in Panama (or whatever country you decide for)

 

[JustAnotherNomad]

No. Having US customers is NOT enough to trigger US taxes. Don’t spread false information.

And there are cases where the US treats a LLC as pass-through, but not the other country. But you said he needs to check that, so that’s fine.

Getting a business bank account in the US can be tricky. It would probably be a good idea to use the address of a CPA or friend for the company and not a big mail forwarding company.