Hypothetical questions: 183 days, tax residency, prosecution

[felizafeliz]

Hypothetical questions:
- how does the check work after 183 days (for EU countries)?
- they want to see airline tickets, here you could theoretically show false tickets or just a oneway ticket. Will they look at passenger tracking (check where you entered etc).?
- they might want to see utility bills- these are quite easy to get, but surely that should not be enough to satisfy them?
- How likely is it that they will check? Assuming you don't have a spouse, children, real estate, rents, etc. in the country being audited.
- for what amounts of money (monthly income) are such intensive audits common?
- can they ask for account movements and balances for the last few years? (for EU banks)
- can they ask non-EU banks - e.g. UAE or USA? These countries will not provide information, will they?
- If they don't have information about income on accounts (both EU, and non-EU), can they prove anything at all or order a penalty? After all, they cannot estimate income
- Suppose you are penalized by an EU country (e.g. fined) - if you don't pay it and flee, what happens? If one flies through an EU airport (or even any airport?), does one get caught at passport control? Or does this only happen when you enter the country that fines you?

 

[Sols]

Hypothetical questions:
- how does the check work after 183 days (for EU countries)?

The tax authority makes a guess based on information available to them. If they're wrong, it's up to you to prove you're innocent.

- they want to see airline tickets, here you could theoretically show false tickets or just a oneway ticket. Will they look at passenger tracking (check where you entered etc).?
- they might want to see utility bills- these are quite easy to get, but surely that should not be enough to satisfy them?

All of the above and potentially more, such as bank statement showing day to day transactions (groceries, movie tickets, restaurant visits).

- How likely is it that they will check? Assuming you don't have a spouse, children, real estate, rents, etc. in the country being audited.

It depends on whether you draw any attention to yourself and how easy and worthwhile you make it for the tax authority to come after you.

- for what amounts of money (monthly income) are such intensive audits common?

Amounts far above average.

- can they ask for account movements and balances for the last few years? (for EU banks)

There is almost no limitation to what they can ask.

- can they ask non-EU banks - e.g. UAE or USA? These countries will not provide information, will they?

Yes, and they may or will provide information. Look into CRS (AEOI) and TIEA.

- If they don't have information about income on accounts (both EU, and non-EU), can they prove anything at all or order a penalty? After all, they cannot estimate income

They sure can estimate income, for example by estimating how much the car you drive is worth or look into how much the house you bought costs. It's up to you to prove they're wrong.

- Suppose you are penalized by an EU country (e.g. fined) - if you don't pay it and flee, what happens? If one flies through an EU airport (or even any airport?), does one get caught at passport control? Or does this only happen when you enter the country that fines you?

It depends on how big your tax debt is. Small debts might be forgiven. Large debts can be worth pursuing.

You risk arrest upon reentry in case your debt is significant enough and things have spun out of control into fraud, money laundering, and other crimes.

 

[CyprusLawyer101]

The more wealthy you are or the more higher profile person you are the more extensive the investigation you will go under..

 

[karishi]

The more wealthy you are or the more higher profile person you are the more extensive the investigation you will go under..

But nobody, at least in Italy got to prison for it. I mean Valentino Rossi, Vucinic, Most TV anchormen, they all settled.
But things change, of course.
In Italy you usually go to prison for tax fraud, like if you create a company to sell products in Italy evading VAT, like Stockisti did.

- Suppose you are penalized by an EU country (e.g. fined) - if you don't pay it and flee, what happens? If one flies through an EU airport (or even any airport?), does one get caught at passport control? Or does this only happen when you enter the country that fines you?

If it's not your country of origin, it depends from a lot of factors. Maradona was convicted in Italy and simply never went back to italy afterwards.

 

[CyprusLawyer101]

But nobody, at least in Italy got to prison for it. I mean Valentino Rossi, Vucinic, Most TV anchormen, they all settled.
But things change, of course.
In Italy you usually go to prison for tax fraud, like if you create a company to sell products in Italy evading VAT, like Stockisti did.


If it's not your country of origin, it depends from a lot of factors. Maradona was convicted in Italy and simply never went back to italy afterwards.

There is a difference between tax fraud and misapplication of tax rules. One can get you in jail the other can get you a tax bill with penalties.

 

[Konstanz]

Yes it depends how wealthy you are.
Sometimes they even check discount, royalty supermarket cards to prove you did shopping in country etc
They can check visits to doctors etcetc
They will ask for all bank statements and based of that they will send information requests to all parties you had payments to/from and will ask all information what you bought etc , where it was shipped
If they suspect you lived in some place. They can ask city cameras information , ask neighbors if they saw you

The problem these days everything is online, everything is tracked and even filmed.
I think its time to forget times you can pretend living in place A in reality living in place B

 

[Mike Forman]

Above is a bit extreme and it depends where you go and how severe it is. Outside Europe like Asia or South America should be ok.

If you are sentenced for tax fraud and depending on how severe it is they will chase you and issue a red notice at interpom. Any airport or police check will execute that red notice, put you in prison and send you back to the country of origin of the notice (you can fight against that but many countries don't want to help tax fugitives)

 

[karishi]

There is a difference between tax fraud and misapplication of tax rules. One can get you in jail the other can get you a tax bill with penalties.

yes but you have to be very clear of what you risk: in some counries, the US I think for example, misapplication of Tax Rules means Jail.
It's like when they tell you, even on this forum, to fake documents to open a bank account: that's fraud and gets you in Jail everywhere. A tax bill, as large as it is, it's in a totally different league. The messagge that it's important to always give is that you should never ever cross that line which might get you into jail, and that line varies from country to country

 

[CyprusLawyer101]

yes but you have to be very clear of what you risk: in some counries, the US I think for example, misapplication of Tax Rules means Jail.
It's like when they tell you, even on this forum, to fake documents to open a bank account: that's fraud and gets you in Jail everywhere. A tax bill, as large as it is, it's in a totally different league. The messagge that it's important to always give is that you should never ever cross that line which might get you into jail, and that line varies from country to country

Please share an example of a diference in treatment and the countried involved.

 

[karishi]

Please share an example of a diference in treatment and the countried involved.

USA: If you make a wrong IRS declaration, 5 years of jail. AFAIK people tend to err on the side of caution and paying more to IRS, to avoid problems.
Italy: If you make a wrong tax declaration, a tax bill if they ever catch you and the tax bill is worth a 10 year civil proceeding. That's why everybody settles in Italy, a civil cause for unpaid taxes takes 10 years to arrive to a resolution. 10 years where you can make the money disappear or make it hard for the italian governement to get it.
And speaking of differences, in italy your first house can't be evicted for any reason. So if you don't have a job, you have an enormous tax bill, and a good first house, basically nothing happens as long as you don't have money.

 

[zzzzzz]

Are Tax residence certificates usually issued only for the past year or you can request it for any year in the past (if needed)?

 

[Mike Forman]

yes but you have to be very clear of what you risk: in some counries, the US I think for example, misapplication of Tax Rules means Jail.
It's like when they tell you, even on this forum, to fake documents to open a bank account: that's fraud and gets you in Jail everywhere. A tax bill, as large as it is, it's in a totally different league. The messagge that it's important to always give is that you should never ever cross that line which might get you into jail, and that line varies from country to country

A few months in jail isn't the end of the world, I would prefer three months jail then having all my assets wiped out. That's for anyone to decide for themselves how much risk they want to take.

 

[Steve3000]

Yes it depends how wealthy you are.
Sometimes they even check discount, royalty supermarket cards to prove you did shopping in country etc
They can check visits to doctors etcetc
They will ask for all bank statements and based of that they will send information requests to all parties you had payments to/from and will ask all information what you bought etc , where it was shipped
If they suspect you lived in some place. They can ask city cameras information , ask neighbors if they saw you

The problem these days everything is online, everything is tracked and even filmed.
I think its time to forget times you can pretend living in place A in reality living in place B

That's why it's important to keep a low profile, pay in cash, never use loyalty cards. i.e. normal life for our parents!!!

By the way, I am 100% clean and 100% law-abiding, but I am paranoid when it comes to Privacy. Not for me, but for the legal precedents that will be pushed further and further until we are all forced into an Orwellian dystopia where we are all guilty.