Question Digital nomad tax, individual entrepreneur in IT

[gear]

I work in remotely in IT My goal is to travel the world (EU mostly) for the next few years. I want to optimize my taxes and want to clarify some questions to which I couldn't find the answers on this forum. My plan is:

- Set up individual entrepreneurship in some low-tax country (Georgia is 1% I heard, Armenia is 5%?). Lets call that country A.
- Receive money from my employer to the bank account in country A.
- Pay the tax in that country A after receiving money.
- Get the EU digital nomad visa in a EU country (using bank statements from the bank above if required).
- Travel EU while using the card from the bank in country A.

With this scheme I never open the bank account in any of EU countries, so I shouldn't get taxed with their crazy 20-30% rates (say I make about 100k EUR annually). Is that correct?

What if I do open the bank account in EU (although I don't understand why would I need to do that yet) and transfer money from bank in country A in my name. Would I get taxed in EU with this? I assume a tax agreement between two countries comes into play here.

Does tax residency have any relevance to my case (or is it just for individuals, not individual entrepreneurs)?

If I want to stay in EU and buy property there, would I need to open the bank account there? What other things am I missing in this scheme?

If I want to invest my money, I'd need to open the broker account. They would probably ask for my residence proof, which I'd be able to provide by using bank statement from country A, and I'd be on the hook for investment-related taxes only in country A, is that correct?

Thanks!

 

[johndunham]

I suggest you read some more on this topic. You will be f*cked in the *rse big time if you go ahead with such a plan / your current level of knowledge on the topic.
Let's start with the basics. Are you from the EU?

 

[Larin]

Hello!
I'll try to answer your questions in the order they appear. But, one thing to note is that you seem to be conflating setting up a company (with all of the taxes that apply to the company) and personal taxation (and all of the taxes that apply to you as an individual). While it is possible that your company would be taxed at 1%, it doesn't follow that once the company pays you that the money becomes tax free.

I work in remotely in IT My goal is to travel the world (EU mostly) for the next few years. I want to optimize my taxes and want to clarify some questions to which I couldn't find the answers on this forum. My plan is:

- Set up individual entrepreneurship in some low-tax country (Georgia is 1% I heard, Armenia is 5%?). Lets call that country A.
- Receive money from my employer to the bank account in country A.
- Pay the tax in that country A after receiving money.
- Get the EU digital nomad visa in a EU country (using bank statements from the bank above if required).
- Travel EU while using the card from the bank in country A.

With this scheme I never open the bank account in any of EU countries, so I shouldn't get taxed with their crazy 20-30% rates (say I make about 100k EUR annually). Is that correct?

Bank account does not have anything to do with taxation. You can maintain a bank account outside of the EU, or open one say in France and receive money there, it does not mean that you will automatically be taxed in France.

What if I do open the bank account in EU (although I don't understand why would I need to do that yet) and transfer money from bank in country A in my name. Would I get taxed in EU with this? I assume a tax agreement between two countries comes into play here.

Again, bank accounts do not normally imply tax residency, so opening bank accounts anywhere does not normally automatically make you a tax resident of that country.

Does tax residency have any relevance to my case (or is it just for individuals, not individual entrepreneurs)?

Yes. It has all of the relevance here. There is normally no distinction between 'individuals' and 'individual entrepreneurs' in tax codes when it comes to whether you are a tax resident or not.

If I want to stay in EU and buy property there, would I need to open the bank account there? What other things am I missing in this scheme?

It depends on the country and depends on the seller of said property. I know several countries where do not need a local bank account to transfer the funds for the purchase of the property. But, again, as above, bank accounts in of themselves rarely have any impact on your tax residency.

If I want to invest my money, I'd need to open the broker account. They would probably ask for my residence proof, which I'd be able to provide by using bank statement from country A, and I'd be on the hook for investment-related taxes only in country A, is that correct?

They would indeed ask for proof as residence as part of the onboarding process. They may also specifically ask for your tax number, and/or to specify the country(s) where you are a tax resident. If you are a tax resident in Country A only, then you would indicate that.

Last thing to note is the your point about getting a digital nomad visa from a European country. Each country will have rules governing the visa and taxation of such individuals. This will likely be the biggest determinant of your tax residency, not a bank in any one country.

 

[Fred]

@Larin mentioned it already.

However your context is clear and not uncommon.

Basically you are looking for a business and finance center while travelling the EU.

Dubai is the perfect fit for this matter.

You get Company, Residence Visa and local retail Banking done at the same time by being tax neutral (0% Tax) Business and Personal Level by being every 6 months at least 1 day in the UAE.

If structured right you don't have any CRS reporting (I guess that's important for you when you mention Georgia or Armenia) due to the fact everything is setup as a Resident Case with the necessary Substance.

For travelling the EU part you shouldn't build substance in any EU country - only renting and living like a tourist, not staying anywhere longer then 6 months and of course you should stay the least in your home country in case it's within the EU.

 

[lostguy]

Dubai is indeed a cool place for digital nomads to have some sort of corporate base!

 

[CyprusLawyer101]

Actually Cyprus has introduced an excellent opportunity for Digital Nomads. Effectively you can reside in Cyprus and work for a foreign employer, with income taxed at 0%

 

[joffreylol]

Actually Cyprus has introduced an excellent opportunity for Digital Nomads. Effectively you can reside in Cyprus and work for a foreign employer, with income taxed at 0%

sounds interesting, can you get a personal account in a real bank and do you need to rent an apartment for the whole year?

 

[CyprusLawyer101]

sounds interesting, can you get a personal account in a real bank and do you need to rent an apartment for the whole year?

Yes for bank acc and better yes for annual rent

 

[CyprusLaw]

Actually Cyprus has introduced an excellent opportunity for Digital Nomads. Effectively you can reside in Cyprus and work for a foreign employer, with income taxed at 0%

This is not exactly the case. The digital nomad visa is another form of permit which is given to individuals that:

• work remotely using information and communications technology,
• are employed and work remotely by their own company or another company, located outside of the Republic of Cyprus or are self- employed and their customers are located outside of the Republic of Cyprus,
• can prove that they have sufficient and adequate monthly income to support their living in Cyprus, of at least €3,500, after the deduction of contributions and taxes.

The permit is valid for one year with the potential to renew for a further two. You still need to satisfy the number of days rule to become a Cyprus tax resident, and then a number of tax incentives is given, such as tax exemptions for certain percentage of their salary etc, but not "0 tax".


http://www.moi.gov.cy/moi/crmd/crmd.nsf/All/FE2829CCA899862DC22587EA002E321F?OpenDocument

 

[CyprusLawyer101]

This is not exactly the case. The digital nomad visa is another form of permit which is given to individuals that:

• work remotely using information and communications technology,
• are employed and work remotely by their own company or another company, located outside of the Republic of Cyprus or are self- employed and their customers are located outside of the Republic of Cyprus,
• can prove that they have sufficient and adequate monthly income to support their living in Cyprus, of at least €3,500, after the deduction of contributions and taxes.

The permit is valid for one year with the potential to renew for a further two. You still need to satisfy the number of days rule to become a Cyprus tax resident, and then a number of tax incentives is given, such as tax exemptions for certain percentage of their salary etc, but not "0 tax".


http://www.moi.gov.cy/moi/crmd/crmd.nsf/All/FE2829CCA899862DC22587EA002E321F?OpenDocument

What is not exactly the case?

 

[gear]

I suggest you read some more on this topic. You will be f*cked in the *rse big time if you go ahead with such a plan / your current level of knowledge on the topic.
Let's start with the basics. Are you from the EU?

My citizenship is Russian. I'd gladly read something if you link it. What is the exact danger in this plan?

Hello!
I'll try to answer your questions in the order they appear. But, one thing to note is that you seem to be conflating setting up a company (with all of the taxes that apply to the company) and personal taxation (and all of the taxes that apply to you as an individual). While it is possible that your company would be taxed at 1%, it doesn't follow that once the company pays you that the money becomes tax free.

Bank account does not have anything to do with taxation. You can maintain a bank account outside of the EU, or open one say in France and receive money there, it does not mean that you will automatically be taxed in France.



Again, bank accounts do not normally imply tax residency, so opening bank accounts anywhere does not normally automatically make you a tax resident of that country.


Yes. It has all of the relevance here. There is normally no distinction between 'individuals' and 'individual entrepreneurs' in tax codes when it comes to whether you are a tax resident or not.

To be clear I am only looking at 'individual entrepreneur' schemes at this time as most companies don't want to deal with LLC (or equivalent) when hiring someone. I understood the bit about residency (which from what I read is attained by staying 183 days in a country or having life interest there, like kids, property, etc. of course this varies and is defined by a given country's law) but I thought if you register as 'individual entrepreneur' then it doesn't apply. After all if you are registered such entity in one country, it wouldn't magically transfer to another country after 183 days, would it?

Dubai is the perfect fit for this matter.

You get Company, Residence Visa and local retail Banking done at the same time by being tax neutral (0% Tax) Business and Personal Level by being every 6 months at least 1 day in the UAE.

If structured right you don't have any CRS reporting (I guess that's important for you when you mention Georgia or Armenia) due to the fact everything is setup as a Resident Case with the necessary Substance.

For travelling the EU part you shouldn't build substance in any EU country - only renting and living like a tourist, not staying anywhere longer then 6 months and of course you should stay the least in your home country in case it's within the EU.

Can you link more info about Dubai for this? What makes it special from the mentioned countries (except 0% tax)? I only mentioned Georgia and Armenia because of my citizenship, those countries don't require any visa and it's very easy to set up individual entrepreneurship, I don't mind CRS reporting as I figure that all countries will report sooner or later.

 

[Fred]

My citizenship is Russian. I'd gladly read something if you link it. What is the exact danger in this plan?

Can you link more info about Dubai for this? What makes it special from the mentioned countries (except 0% tax)? I only mentioned Georgia and Armenia because of my citizenship, those countries don't require any visa and it's very easy to set up individual entrepreneurship, I don't mind CRS reporting as I figure that all countries will report sooner or later.

BANKING.

Getting access to Banking which really works - forget Georgia in the current situation - USD transfers are basically dead for everyone - even for Western nationals:

https://www.offshorecorptalk.com/threads/georgian-banks-closing-business-accounts.35962/
https://www.offshorecorptalk.com/threads/problems-with-georgia-because-of-russia.37561/#post-216106
Armenia won't be much different especially considering how reluctant they were already in the past pre-war:

https://www.offshorecorptalk.com/th...h-ameriabank-armenia.30199/page-2#post-153135

 

[FantomOffshore]

How easy is it to convert crypto to GEL through a Georgian bank and vice-versa?

 

[khinkali]

How easy is it to convert crypto to GEL through a Georgian bank and vice-versa?

As a company? Very, very difficult.

As an individual? Easy, but it's better to develop a relationship with the bank first so that they understand where your crypto comes from. Then you can ask what kind of crypto turnover they are comfortable with, in your specific case.

 

[Larin]

To be clear I am only looking at 'individual entrepreneur' schemes at this time as most companies don't want to deal with LLC (or equivalent) when hiring someone. I understood the bit about residency (which from what I read is attained by staying 183 days in a country or having life interest there, like kids, property, etc. of course this varies and is defined by a given country's law) but I thought if you register as 'individual entrepreneur' then it doesn't apply. After all if you are registered such entity in one country, it wouldn't magically transfer to another country after 183 days, would it?

183 days is a very simplified and often an incorrect view on obtaining tax residency. Whether you are deemed a tax resident will very much depend on a country, but in the UK for example you can become a tax resident in as little as 16 days. Statutory Residence Test Explained.

In any case, your view on 'individual entrepreneur' and registration is also too simplistic. The assumption that you can register anywhere in the world as an 'individual entrepreneur' and then travel the world tax-free, while engaging in work is incorrect. Your registration can be deemed to be local if you are a tax resident of the state. So, if you register in Georgia and trigger tax residency in France, you and your registration would very much be liable to pay tax in France. You can think of jurisdictions where you register as places to do administration, but tax is a different matter entirely. Lastly, if there is no double taxation treaty between the place of registration and residency (if different), you can expect to pay tax in both places.

One more thing to note, normally, you are liable to pay income tax on salary anywhere that you are *physically* present and do work (i.e. where you actually are while performing your duties). This will be governed by the work visa that you receive. As I understand, there are some visas that do offer tax advantages. But, keep in mind that there is no such thing as an EU-wide nomad visa, and your visa would only allow you to work in the country that issues it.

 

[alessio]

@Larin mentioned it already.

However your context is clear and not uncommon.

Basically you are looking for a business and finance center while travelling the EU.

Dubai is the perfect fit for this matter.

You get Company, Residence Visa and local retail Banking done at the same time by being tax neutral (0% Tax) Business and Personal Level by being every 6 months at least 1 day in the UAE.

If structured right you don't have any CRS reporting (I guess that's important for you when you mention Georgia or Armenia) due to the fact everything is setup as a Resident Case with the necessary Substance.

For travelling the EU part you shouldn't build substance in any EU country - only renting and living like a tourist, not staying anywhere longer then 6 months and of course you should stay the least in your home country in case it's within the EU.

Dear Fred,

thank you for your precisions,

I do not understand how it is possible for this remote worker to expect 0% Personal tax from taking advantage of this set-up ? As if I understand, you suggest he can keep travelling and not building any substance somewhere ? My question is where does the substance will be fixed so, for him to exit his own taxation country in favor of a more profitable one ?

I am a new begining here and just learning, thank you for your time in advance and for all your help in the forum