No-residency trick in jurisdictions that don't ask for "next residency"... FAKE NEWS?

[DavidS]

In almost all jurisdictions when you cancel a residency, you have to indicate the next residency to government.
In order to ensure you always have a residency.

But see this:
- EU citizen from [COUNTRY A] goes to a specific jurisdiction [COUNTRY B] that doesn't have this rule (doesn't ask for next residency)

- Sends his gov a letter "cancel my residency I live in [COUNTRY B] now"

- Then sends a letter to [COUNTRY B] gov "cancel my residency, I won't live here anymore"

AND HERE apparently if [COUNTRY B] gov is not asking for next residency jurisdiction!!!

- Now you have NO residency.

- Cash out crypto with NO residency. 0% tax!

- Go back to original [COUNTRY A] and declare your assets: "Oh yeah, I have this. I was in [COUNTRY B] and was not resident of [COUNTRY A] when I acquired this."

Now the person has declared assets and cashed out with 0% tax.

What are the problems with this method?

 

[CaptK]

Couple of issues

The bank you cash out to will by default be your tax jurisdiction.

Your nationality of your passport can claim default residency.

If using a centralised exchange they could report you to the tax authorities in the country you registered it. For example Coinbase are reporting the previous calender year transactions to the UK government.

 

[fshore]

This depends on the countries in question. Many countries don't require you to always have another tax residency after you've left.

Check the rules of the specific countries.

 

[Konstanz]

In almost all jurisdictions when you cancel a residency, you have to indicate the next residency to government.
In order to ensure you always have a residency.

But see this:
- EU citizen from [COUNTRY A] goes to a specific jurisdiction [COUNTRY B] that doesn't have this rule (doesn't ask for next residency)

- Sends his gov a letter "cancel my residency I live in [COUNTRY B] now"

- Then sends a letter to [COUNTRY B] gov "cancel my residency, I won't live here anymore"

AND HERE apparently if [COUNTRY B] gov is not asking for next residency jurisdiction!!!

- Now you have NO residency.

- Cash out crypto with NO residency. 0% tax!

- Go back to original [COUNTRY A] and declare your assets: "Oh yeah, I have this. I was in [COUNTRY B] and was not resident of [COUNTRY A] when I acquired this."

Now the person has declared assets and cashed out with 0% tax.

What are the problems with this method?

In most European countries, it would not work. The tax inspector of your home country would ask a simple question. If you are not a resident of your citizenship country, so where are you resident then?

 

[KJK]

Why overcomplicate things? You can make your "COUNTRY B" a country with zero tax on capital gains or even a low/zero tax country in general.

 

[Waldo Roni]

In almost all jurisdictions when you cancel a residency, you have to indicate the next residency to government.

Residency you mean - which? Tax one or residency as a country where you spend most of the time?

In what "almost all jurisdictions", where? In Europe? Certaintly not everywhere in the world, nor even in the most countries in the world, nor even in a half of them.

In some your residency is canceled automatically when you leave a country and spend sometime outside of a country non-stop. No?

 

[DavidS]

Basically I'm asking this, because there is one specific country in continent of Europe that doesn't ask for "next residency" after you cancel residency in their jurisdiction.

So by having "literally no residency" it could be opportunity to "cash out" taxfree.

But... many people here pointed out legit issues and failure points with this.

 

[bizniz]

- Now you have NO residency.

- Cash out crypto with NO residency. 0% tax!

- Go back to original [COUNTRY A] and declare your assets: "Oh yeah, I have this. I was in [COUNTRY B] and was not resident of [COUNTRY A] when I acquired this."

Now the person has declared assets and cashed out with 0% tax.

What are the problems with this method?

This is the old Perpetual Traveller theory. I think it still works if you pull it off right. It just became much harder over the years.

In the example above, provided you can avoid any reporting to country A when you cash out (should be fairly easy) then why would they even think to ask? Does country A require new/returning residents to declare their assets? Some countries do, but most just require you to declare income.

 

[Konstanz]

This is the old Perpetual Traveller theory. I think it still works if you pull it off right. It just became much harder over the years.

In the example above, provided you can avoid any reporting to country A when you cash out (should be fairly easy) then why would they even think to ask? Does country A require new/returning residents to declare their assets? Some countries do, but most just require you to declare income.

General rule is that you have to be tax resident at some place. Banks will ask tax residence country to open bank accounts..

 

[bizniz]

General rule is that you have to be tax resident at some place. Banks will ask tax residence country to open bank accounts..

I would agree it makes life easier if you have one or more tax residencies.