Digital Nomad Visas and Tax Residency

[Barney2201]

There are lots of countries offering Digital Nomad Visas including many zero tax Caribbean islands.

A general theme seems to be they all claim you will not pay taxes in the digital nomad country but continue to pay taxes in you normal country of residence.

How does this work in reality, I assume they are saying they will not give you a local tax number. If you are self employed or company director would the fact your new country becomes your residence as you spend over 183 days there make you ineligible to pay tax in your previous country of residence?

 

[Sols]

A general theme seems to be they all claim you will not pay taxes in the digital nomad country but continue to pay taxes in you normal country of residence.

For the target audience, that's probably close enough to being true. They are targeting people in the 20-30 age bracket that can leave quickly and make a clean break with their home jurisdiction.

But it's not always that easy.

How does this work in reality, I assume they are saying they will not give you a local tax number. If you are self employed or company director would the fact your new country becomes your residence as you spend over 183 days there make you ineligible to pay tax in your previous country of residence?

Maybe. Usually, but not always. It depends on the local laws and how tax residence is defined. In many cases, it's enough to simply leave and give notice that you're leaving. But if you have real estate, children in school, a second home, or other ties back to your home jurisdiction, you might be tax resident and subject to some or full taxation.

That's personal taxation.

Another is corporate taxation, if you form a new entity. That entity likely has very low risk of being considered tax resident in your old jurisdiction if it's formed in the new one with directors/shareholders (you) being resident in the new jurisdiction.

The only way to be sure is to have speak with an attorney. It's a small price to pay for the peace of mind.