Digital nomad tax

fshore

Trusted Member
Business Angel
Very few banks will insist that you are tax resident somewhere. They will want an address and a tax number, but will not ask for a tax residency certificate.
If your previous country does not require you to be tax resident elsewhere then its little point in getting a new tax residency.
 

KJK

Building Trust
Entrepreneur
Why wouldyou not be able to give up your residency where ever it is now, move to Dubai, stay there for some time and even move to another country.
Because that is what GrumpyMess already pointed out several times. You can give up residency but you still have some ties to your home country - whether strong ones (family, job, children) or weak ones (even citizenship can be considered when defining you "center of vital interests").

So if you give up your original residency, you should be able to get a tax residency somewhere else - which in most cases means staying 183+ days per year there.
Being a "digital nomad" or whatever you call it is sure sexy but I'm not sure it works well. What you described wouldn't be accepted in Finland - if you are Finnish, you end your residency and then travel the world for 3 years, if you come back, you will be considered resident of Finland again - not just for the current year but also for the past 3 years. Even when you had no address in Finland and you didn't live there, you still were a tax resident there.
 

negon

hannibal the cannibal
BANNED MEMBER
Entrepreneur
if you are Finnish, you end your residency and then travel the world for 3 years, if you come back, you will be considered resident of Finland again - not just for the current year but also for the past 3 years. Even when you had no address in Finland and you didn't live there, you still were a tax resident there.
Are you sure about that? So I'm glad I don't live in Finland this is odd and sounds a little bit strange.
 

xzars

Trusted Member
Business Angel
According to law, 183-day rule for residency applies but for practical implementation purpose, every EU member state relies first and foremost on residency (residency termination) applications. It's hard to accurately track someone's location without a court order all throughout the year.

If you leave Finland for any longer period, you will most likely have an obligation to file a form to determine your tax residency during those 3 years of absence. If you do not file this or forget to do so, you are still a resident in Finland by default. In the form, they normally ask questions about whether you will retain your main home in Finalnd, whether you have any underage children stay in Finland during your absence etc. Basically they want to still keep you a tax resident by having you confirm some residency indica via a signed document. Nobody wants to see a milking cow leave for other pastures.
 

Mencjusz

New Member
It seems nobody has mentioned the double tax agreements. If country A (host) has no agreement with country B (home) then you might need to pay the income tax difference between A and B. For example, country A has income tax 19%, while your home country B has income tax 25%. Officially, you should pay the tax difference (6%) no matter your residency status.

As mentioned by others, whatever you apply, you will need to provide a utility bill and/or bank statement from your resident country. Further, some brokers might not accept your current country of living, others might not accept frequent changes in residency.

I have been a nomad for past 7 years, it's not that easy with the official crap.
 

busdriver

Building Trust
Entrepreneur
Many banks now, at account opening, will ask you for your tax ID. I am not sure if it'a good idea if you give your old one. I am also not sure if you could lie or if they check at some point. You could become tax resident where you have to pay no (or little) tax or where they would not bother if you don't declare or pay if you never set foot in that country (again). I read the Philippines is not taxing foreigners on offshore income. Are there other countries that would do the same or where you can get away with things ;) ?
 

StuartG

Member
Thailand will give you tax residency and not tax money earned outside Thailand, provided it is is not remitted to Thailand. Also, a pleasant place to live with excellent internet (except during thunderstorms)
 

Nyep

Trusted Member
Business Angel
Thailand will give you tax residency and not tax money earned outside Thailand, provided it is is not remitted to Thailand
Sorta kinda. You are still not allowed to WORK without a work permit in Thailand. Work permits are only given to people working for Thai registered companies. If you ignore that specific labor law, and work in Thailand anyway, then you are still exposed to the tax laws. If you get compensated directly for your work (=salary), then by law you need to pay tax in Thailand regardless of remittance.

Note that none of this is actively being enforced in Thailand at the moment. If you work online then you are relatively safe at the moment, but it can easily change.

Anyway, the excerpt you were referring to is regarding dividends. Dividend income received abroad is only taxed (and requires reporting) if it was remitted to Thailand within the same calendar year in which it was received. So if you do decide to try it out, make sure to structure it so you do not actually "work" and receive a salary. You just receive dividends from a business that you own, but not directly operate, and you never remit in the same calendar year.

The Philippines make it a lot simpler, but that's a different topic for a different day.
 

busdriver

Building Trust
Entrepreneur
A friend was able to get a PH tax number with some help. I think getting a work permit is not very difficult in the Philippines. But why would you actually need one? What do you plan to work there? How would any authorities find out you are working? Digital nomads sit in cafes with a laptop. Many civil servants would not even consider that working anyway ;) .
PH also allow money to flow in to your PH bank account.
Tax-wise, I think
1) you need get rid of your old status (stop being tax resident in Europe for example)
2) get a tax ID somewhere (needed to open bank accounts and such)
3) renew your passport every now and than to be able to keep traveling (at your embassy)
4) maybe create a company in HK or Estonia or elsewhere
The first step is where many have problems; all else is relatively easy nowadays.
 

UniversalMan

Active Member
Hi,
I have gone all over the thread and also most of the forum posts and still have a question :

1. I got rid of Tax resident status in my home country(Non EU,Non US) , also got no wife,kids,bank account or apartment there
2. under tourst visa, I spent most of my time in the last 4 years In EU plus few other countries , less than 183 days a year in each country
3. I have physical bank accounts in the eu where I trasnfer funds from eu EMis under my offshore comapny , in my banks when they asked where do I pay taxes, I told my citizenship country and they didn't ask for proof

from what amount in my bank accounts , bank can ask for proof of tax paying , over 100,000eur? 500,000eur? 1M eur ?
what happens if I fail to provide such document as I am not obliged for taxes in my citizenship country? do they block my money or just close my account and let me withdraw it?
can the eu country where my bank is located and in the account about 100k Eur decide I am a tax resident and tax my income?
can my citizenship country decide to want to tax me if I don't have any tax residency in other country?

If I apply for panamian friendly nations residency, do I have to be there over 183 days a year for the tax certificate and do I even need it?
 

xzars

Trusted Member
Business Angel
Hi,
I have gone all over the thread and also most of the forum posts and still have a question :

...
There is a clear legal concept for this scenario defined in CRS/AEOI, called Stateless Persons. On contrary, an entity is never stateless. If an entity fails to fulfill residency requirements through PE rules or other laws in any country, it is resident where it is incorporated.

Every bank may have their own risk-based approach to Stateless Persons but the CRS/AEOI model gives clear guidelines. Some banks are refusing stateless persons altogether and there's nothing illegal about such approach either.

Unless the bank has their own risk-based approach, they generally default to following:

1. Ask the client to provide sufficient evidence of stateless status (bank statements for last 12 months from their own records may suffice)
2. If they cannot provide plausible evidence of stateless status, proceed to close the account

If you tell your bank you are tax resident in a country where you renounced your tax residency, you are shooting yourself in the foot. If the tax office receives this claim, they will happily treat you as such. Start by showing your bank the form of tax residency renunciation and provide sufficient proof of frequent travel.
 

busdriver

Building Trust
Entrepreneur
I know many (but probably not yet all) banks ask for tax ID at account opening. I am not sure, but I think the do already or might later update records at some point if they did not ask for tax ID in the first place.

So I would be wondering what tax ID a stateless person would provide. If there is a way to get a (full-fledged*) tax ID, it would probably also work to be stateless.

If you are stateless, who would be providing your passport? I can imagine countries will (at some point) start saying the country of citizenship would be the tax residence if no other can be proven. So even if that concept works now, it might not in the long run. Having something that works now is already better than nothing ;-)

* are there different types of tax ID?
 

UniversalMan

Active Member
There is a clear legal concept for this scenario defined in CRS/AEOI, called Stateless Persons. On contrary, an entity is never stateless. If an entity fails to fulfill residency requirements through PE rules or other laws in any country, it is resident where it is incorporated.

Every bank may have their own risk-based approach to Stateless Persons but the CRS/AEOI model gives clear guidelines. Some banks are refusing stateless persons altogether and there's nothing illegal about such approach either.

Unless the bank has their own risk-based approach, they generally default to following:

1. Ask the client to provide sufficient evidence of stateless status (bank statements for last 12 months from their own records may suffice)
2. If they cannot provide plausible evidence of stateless status, proceed to close the account

If you tell your bank you are tax resident in a country where you renounced your tax residency, you are shooting yourself in the foot. If the tax office receives this claim, they will happily treat you as such. Start by showing your bank the form of tax residency renunciation and provide sufficient proof of frequent travel.
I have read about Stateless Persons but this isn't my case as I have a citizenship,nationality and passport from my country of origin and I travel with that passport,
I just havn't lived there for the past 4 years and with the countries laws and with consulting with lawers I am not a resident anymore and not obliged to pay taxes to this country.

I know many (but probably not yet all) banks ask for tax ID at account opening. I am not sure, but I think the do already or might later update records at some point if they did not ask for tax ID in the first place.

So I would be wondering what tax ID a stateless person would provide. If there is a way to get a (full-fledged*) tax ID, it would probably also work to be stateless.

If you are stateless, who would be providing your passport? I can imagine countries will (at some point) start saying the country of citizenship would be the tax residence if no other can be proven. So even if that concept works now, it might not in the long run. Having something that works now is already better than nothing ;-)

* are there different types of tax ID?
I provide my tax numebr in my citizenship country in these cases.
 

xzars

Trusted Member
Business Angel
Tax ID number is not a mandatory field in CRS protocol. It's optional, and optional it should be on a sign-up form in every bank. I'm aware not all banks have adequate web front-ends.

In general, I do agree that today, having a "soft residency" or home base somewhere would be beneficial for digital nomads. Not all banks will care about stateless persons as it's only a tiny percentage of potential customer base. As more and more banks turn stateless persons away, the honey pot of untapped client base will grow. Due to market forces, this should eventually result in a few banks re-considering their position. Or we might even see a few purpose-built banking solutions for digital nomads.

@busdriver You don't have to worry about passport. No country has legal authority to take away anyone's citizenship by birth rights. This means they will continue to issue you your passport as long as you ask for it, until you die. No matter where you live or pay your taxes. Doing the opposite would be a serious breach of international law.
 

busdriver

Building Trust
Entrepreneur
@xzars - “This means they will continue to issue you your passport as long as you ask for it, until you die” - I would expect that, but heard from a US citizenships living in EU that she had to file or pay (I don’t remember) her taxes in order to get a new passport from the US embassy. This might only have been a story of course. One never knows if what people say is true because they have no clue or want themselves interesting ;)

@xzars - “Tax ID number is not a mandatory field in CRS protocol” - interesting thought, not sure what would happen if one would not provide the tax ID. I feel it’s at least very helpful to provide it when applying for a new account. Also when opening a business bank account for an entity, the directors and/or shareholders tax ID is asked by some big banks, EG in HK. I’d actually expect the tax ID being mandatory now (see Common Reporting Standard - Wikipedia )

@xzars - “we might even see a few purpose-built banking solutions for digital nomads” - we actually do see that in online banks, such as N26, Revolut or Neat

@UniversalMan "I provide my tax numebr in my citizenship country in these cases." - You may want to check because I might be wrong, but banks do or will report your account balance and some other information once a year to the country of that tax number. Than the country might, at some point, ask for tax on your (world) income. If you renounced your tax residence with your country of residentship, this might also be against the TnC of the bank and they might freeze accounts because the might smell money laundering or because the simply have a good reason to keep it for some time and make you leave them without they having to cancel your account themselves. You actually provided a tax ID that became invalid or even was already invalid when you provided it. So you are a lier for the bank, at least not a good person ;) . Your country of residence would know about your assets and might declare your renouncification as invalid and ask you you to pay tax ... I don't say it will happen, but chances would be higher.

I did not check if the Philippines would officially tax ones world income with 0% if from abroad. But if they do, one would have taxed it (at 0%) which is at least better than not taxing it.
 

fshore

Trusted Member
Business Angel
There is a clear legal concept for this scenario defined in CRS/AEOI, called Stateless Persons. On contrary, an entity is never stateless. If an entity fails to fulfill residency requirements through PE rules or other laws in any country, it is resident where it is incorporated.

Every bank may have their own risk-based approach to Stateless Persons but the CRS/AEOI model gives clear guidelines. Some banks are refusing stateless persons altogether and there's nothing illegal about such approach either.

Unless the bank has their own risk-based approach, they generally default to following:

1. Ask the client to provide sufficient evidence of stateless status (bank statements for last 12 months from their own records may suffice)
2. If they cannot provide plausible evidence of stateless status, proceed to close the account

If you tell your bank you are tax resident in a country where you renounced your tax residency, you are shooting yourself in the foot. If the tax office receives this claim, they will happily treat you as such. Start by showing your bank the form of tax residency renunciation and provide sufficient proof of frequent travel.
I think you confuse stateless with non resident. Very few people are stateless but some are not tax resident anywhere.
About the question, there's are specific threshold on amounts in the account where the banks must do further due diligence, I believe its $1M.
 

xzars

Trusted Member
Business Angel
@busdriver N26, Revolut, TW... I'm not sure they are qualified as digital nomad banks. In my context, they only qualify if they clearly state in their FAQ that they accept a 'tax resident of nowhere', i.e. persons who split their time in between multiple countries.

In regards to Tax ID, many CRS member states do not have it to begin with. I don't see how it could be mandatory at this point.

@fshore you're right, the terminology varies per implementation guides and official documents. I'm mixing them up. With that said, you may expect most banks treating 'stateless persons' and 'tax resident of nowhere' similarly, if not identically in regards to CRS AEOI.
 

fshore

Trusted Member
Business Angel
@busdriver N26, Revolut, TW... I'm not sure they are qualified as digital nomad banks. In my context, they only qualify if they clearly state in their FAQ that they accept a 'tax resident of nowhere', i.e. persons who split their time in between multiple countries.

In regards to Tax ID, many CRS member states do not have it to begin with. I don't see how it could be mandatory at this point.

@fshore you're right, the terminology varies per implementation guides and official documents. I'm mixing them up. With that said, you may expect most banks treating 'stateless persons' and 'tax resident of nowhere' similarly, if not identically in regards to CRS AEOI.
However as a person without any tax residency its normally very easy to just use your previous address and tax number, while a stateless person doesn't have a passport and can't open an account at all.
 

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