Asia (HK/Thailand) and Europe lifestyle strategy?

[thomasparra]

I have been to quite a few places this year: US, West and Central Europe, Mexico, Thailand, and currently Hong Kong. Bangkok is the only place I never went to. I was impressed by its very cost efficient lifestyle, the food, its people.

I am starting a business in HK and I am in the process of getting a multiple year visa to regain full long term legal tax residency. I don't see myself living in HK all year round (couple months per year?), and spend the rest of the year in West Europe, and maybe Bangkok/Bali. This is definitely not set and stone and the schedule will depend on my client base/needs and meetings with prospects - who are all based in global financial capitals (HK, London, Dubai, SG, NYC, Paris).

I plan to stay less than 6 months in any country to avoid double taxation, while keeping HK tax residency and economic substance supported by a long term HK visa and business. I will probably not be able to get CIT exemption on offshore income but I am completely fine with the 8.25% tax up to USD 255k in profit. I can also optimise and pay myself a salary, with 3-4% in income tax so I am looking at a minimum effective tax rate of 3-4%, and a maximum of 8.25% up to 255k in profit.

Does this plan fit my lifestyle and overall business strategy? I would love to hear your thoughts or suggestions.

 

[Sols]

Just be careful not too stay too long in a particular place, especially Paris/France. The others you mentioned aren't quite as aggressive. As long as Hong Kong is the place where you spend the majority of your time (i.e. more time than any other place), you'll probably be fine.

 

[thomasparra]

Just be careful not too stay too long in a particular place, especially Paris/France. The others you mentioned aren't quite as aggressive. As long as Hong Kong is the place where you spend the majority of your time (i.e. more time than any other place), you'll probably be fine.

Thanks Sols. I will definitely spend more time in HK (even less than 6m) as long as I don't stay longer in any other countries individually

 

[Mike Forman]

Avoiding taxation in a country is not just about how much time you spend there but where do you actually live. Having a Hong Kong residence and business will let you pay taxes in Hong Kong but this doesn't mean any other country won't / can't tax you, which depends on your situation. Countries tax on your place of residence OR habitual abode.

So if you only stay 2 months in Hong Kong and 6 months in Europe while renting a flat or house in for example Germany for the whole year you will be considered tax resident in Germany as well.

If all your assets are located in an EU country such as savings and property you can also be considered this is your place of abode. Or if your family you live with are living in an EU country it's the same.

Countries in EU don't care where you have a residence, as you can have multiple residence. They care if they believe you should pay taxes in that country because they believe this is your place of habitual abode. 6 months in two years stay can be considered as tax residence. Also when you work in that country and have a foreign business and they find out you might pay tax also there.

I would stay out of Europe as much as possible and not spend more than 3 months a year there to be on the safe side, especially if you are an EU citizen.

Some chatgpt content that will explain habitual abode as in German tax law.

In German tax law, the concept of "habitual abode" (gewöhnlicher Aufenthalt) is one of the criteria used to determine tax residency. An individual is considered to have their habitual abode in Germany if they stay in the country for a continuous period that is not only temporary. Specifically:

1. A stay is generally considered "not only temporary" if it lasts for more than six months. This period does not have to be within a single calendar year; it could span across two years.

2. Even short breaks (like vacations) do not interrupt the continuity of the stay for the purposes of determining habitual abode.

3. Having a habitual abode in Germany usually means that an individual is subject to unlimited tax liability in Germany, which means they would be taxed on their worldwide income.

4. It's worth noting that "habitual abode" is different from the concept of "residence." One can have a residence in Germany (i.e., a home or a place to live) without necessarily having their habitual abode there, and vice versa.

Determining tax residency can be complex, especially when international situations are involved. It's always a good idea to consult with a tax expert or advisor when assessing one's tax status in Germany or any other country.