Perpetual Traveller (And Being A Tax Resident Nowhere - UK Citizen)

[AbsetJW]

So, with the recent Dubai developments, i.e. 9% corporation tax plus 183 days to be a tax resident in Dubai...

As a UK citizen, what's stopping us from operating a Hong Kong Company/US LLC or low-tax company and traveling all year round?

Just making sure to not spend more than 3 months in any country?

And then renting an apartment somewhere cheap to give the banks an address?

I've read plenty online that says this is fine - and then a few people on this comment will say it's not possible.

What gives?

 

[TheCryptoAnt]

As a UK citizen, what's stopping us from operating a Hong Kong Company/US LLC or low-tax company and traveling all year round?

Nothing I believe, you are the only western passport that can pull this for what ive seen (legally)

Just making sure to not spend more than 3 months in any country? And then renting an apartment somewhere cheap to give the banks an address?

yeah

I've read plenty online that says this is fine - and then a few people on this comment will say it's not possible.

What gives?

go live your life and just use a US LLC

 

[manukahoney]

For the UK:
Tax residency in UK: Statutory Residence Test, Domicile, Remittance (you can also find the same info on gov.uk website)
It's very straightforward to lose the UK tax residency, just be sure you don't acquire an unwanted residence somewhere else.

If you own and operate a company, most EMIs and banks will ask you for a PoA and it should be preferably from a respected country.

 

[jafo]

you are the only western passport that can pull this for what ive seen (legally)

Not really... All European passport holders who were born in a colonized country and who have never lived or registered in Europe can also do this without ANY issues. I speak from experience. The islands just don't care or don't have rules to impose this.

 

[Don]

Not really... All European passport holders who were born in a colonized country and who have never lived or registered in Europe can also do this without ANY issues. I speak from experience. The islands just don't care or don't have rules to impose this.

Its definitely possible for other european nationalities.
A lighter version of "perpetual traveller mode" is to establish legal residence somewhere, but be tax resident nowhere.
Personally I like this option better since its easier for compliance purposes.

 

[Cloudbanck]

Among western countries, I think it's just Americans, Australians and Norwegians that can't do this. And Norwegians can do it after three years abroad. Australians maybe with legal residence somewhere, I'm not entirely sure.

 

[scooterguy]

Most westerners can do it, but read the fine print of certain tax laws.

Some countries, such as Italy or Spain, will make their citizens continue paying tax (for five years) if they move to a tax-free jurisdiction or if they do not acquire a new tax residency. The solution here is to acquire tax residency in a non-blacklisted country where you can still avoid foreign income tax, such as certain SEA countries.

In my experience doing this, however, it's cheaper and more convenient to reside in SEA than travel around the world. Especially once you get a cute Asian gf and succumb to her charms Then you're stuck in this simple and cheap paradise for a long time.

But yeah, as a UK citizen, you have the freedom to do what you intend. The UK has very clear tax laws, probably one of the most transparent tax offices in the world.

 

[Konstanz]

Most westerners can do it, but read the fine print of certain tax laws.

Some countries, such as Italy or Spain, will make their citizens continue paying tax (for five years) if they move to a tax-free jurisdiction or if they do not accquire a new tax residency. The solution here is to acquire tax residency in a non-blacklisted country where you can still avoid foreign income tax, such as certain SEA countries.

In my experience doing this, however, it's cheaper and more convenient to reside in SEA than travel around the world. Especially once you get a cute Asian gf and succumb to her charms Then you're stuck in this simple and cheap paradise for a long time.

But yeah, as a UK citizen, you have the freedom to do what you intend. The UK has very clear tax laws, probably one of the most transparent tax offices in the world.

The same with eastern europe countries. They don't want to release it's tax payer until he has some new tax residence.

 

[jafo]

The same with eastern europe countries. They don't want to release it's tax payer until he has some new tax residence.

This is shocking to me. I actually substituted the word "tax payer" with slave and then it made more sense

In practice, I wonder how it works.
If "Jakub Kowalski" picks up his bags and leaves Poland to never return, what are they going to do? Search for him? What if he dies overseas and nobody notifies Poland? Do they keep searching for Mr. Kowalski to get their "share"? When do they give up the search?

 

[Konstanz]

This is shocking to me. I actually substituted the word "tax payer" with slave and then it made more sense

In practice, I wonder how it works.
If "Jakub Kowalski" picks up his bags and leaves Poland to never return, what are they going to do? Search for him? What if he dies overseas and nobody notifies Poland? Do they keep searching for Mr. Kowalski to get their "share"? When do they give up the search?

If he is no name person. No one would care. Everything gets interesting if a person still have some ties to his country and some valuable assets either in country or outside coutry
They don't want to loose milk cow

The most cases I see from my experience that the persons still have business in their citizenship countries or customers or do lot's of traveling back and out

 

[scooterguy]

This is shocking to me. I actually substituted the word "tax payer" with slave and then it made more sense

In practice, I wonder how it works.
If "Jakub Kowalski" picks up his bags and leaves Poland to never return, what are they going to do? Search for him? What if he dies overseas and nobody notifies Poland? Do they keep searching for Mr. Kowalski to get their "share"? When do they give up the search?

In Spain, for example, it works like this:

When a citizen leaves, they're required to fill the proper paperwork, go to the consulate of their new country, demonstrate the new legal residence/permits and fill some more paperwork.

Failure to do the above process triggers some flags. There are some small fines, but obviously the bigger issue is with Hacienda. They will not follow the citizen around the world, but if the citizen ever comes back to Spain they'll have a tax inspector visit them and tell them what they've failed to do and how to fix it.

If they never go back to Spain, or if they go back after 20 years, probably nothing happens. I've seen Spanish citizens have this problem after leaving Spain and coming back 2-3 years later without having acquired residency anywhere else; Hacienda still considered them to be Spanish residents.

 

[Konstanz]

In Spain, for example, it works like this:

When a citizen leaves, they're required to fill the proper paperwork, go to the consulate of their new country, demonstrate the new legal residence/permits and fill some more paperwork.

Failure to do the above process triggers some flags. There are some small fines, but obviously the bigger issue is with Hacienda. They will not follow the citizen around the world, but if the citizen ever comes back to Spain they'll have a tax inspector visit them and tell them what they've failed to do and how to fix it.

If they never go back to Spain, or if they go back after 20 years, probably nothing happens. I've seen Spanish citizens have this problem after leaving Spain and coming back 2-3 years later without having acquired residency anywhere else; Hacienda still considered them to be Spanish residents.

Come back you mean to live permanently?
This can be a problem in many countries. Because if you come back just after 2 or 3 years they can say you have never intended to leave. So the emigration was not genuine intent but just to avoid tax.

 

[Cloudbanck]

In Spain, for example, it works like this:

When a citizen leaves, they're required to fill the proper paperwork, go to the consulate of their new country, demonstrate the new legal residence/permits and fill some more paperwork.

Failure to do the above process triggers some flags. There are some small fines, but obviously the bigger issue is with Hacienda. They will not follow the citizen around the world, but if the citizen ever comes back to Spain they'll have a tax inspector visit them and tell them what they've failed to do and how to fix it.

If they never go back to Spain, or if they go back after 20 years, probably nothing happens. I've seen Spanish citizens have this problem after leaving Spain and coming back 2-3 years later without having acquired residency anywhere else; Hacienda still considered them to be Spanish residents.

Same in Italy. And it's a mistake to go straight from Italy to a tax haven like the UAE. Instead you get residency in some non-tax haven place where it's easy to get establish residency, like a Latam, African or even European country - and register as an Italian living abroad at the Italian embassy there - similar paperwork requirements as for Spain. Then you are free to travel and live wherever you want.

 

[scooterguy]

Come back you mean to live permanently?
This can be a problem in many countries. Because if you come back just after 2 or 3 years they can say you have never intended to leave. So the emigration was not genuine intent but just to avoid tax.

Exactly, come back to leave permanently.

And yes, that's usually the argument: you never intended to leave, maybe you were in a long vacation or something. Especially if you didn't acquire an official residency anywhere else.

 

[banafinfodafuggiano]

Not really... All European passport holders who were born in a colonized country and who have never lived or registered in Europe can also do this without ANY issues. I speak from experience. The islands just don't care or don't have rules to impose this.

I am from Spain, left spain when I finished high school (literally the day after) and never lived in Europe for the past 15 years.

Spain will never care about my tax residency I suppose?

Same in Italy. And it's a mistake to go straight from Italy to a tax haven like the UAE. Instead you get residency in some non-tax haven place where it's easy to get establish residency, like a Latam, African or even European country - and register as an Italian living abroad at the Italian embassy there - similar paperwork requirements as for Spain. Then you are free to travel and live wherever you want.

Nah, all you have to do is register with AIRE in the new country and live there permanently enough to get a tax certificate and cut all your ties with Italy and you will be fine.

 

[Cloudbanck]

Nah, all you have to do is register with AIRE in the new country and live there permanently enough to get a tax certificate and cut all your ties with Italy and you will be fine.

Never heard of an Italian being asked for a tax certificate. In what situation would that be asked? For Italian citizens with significant assets/business interests where tax authorities see a chance of taxing them in Italy even if they live abroad maybe?
Or if moving to a tax haven?

 

[JackAlabama]

In Spain, for example, it works like this:

When a citizen leaves, they're required to fill the proper paperwork, go to the consulate of their new country, demonstrate the new legal residence/permits and fill some more paperwork.

Failure to do the above process triggers some flags. There are some small fines, but obviously the bigger issue is with Hacienda. They will not follow the citizen around the world, but if the citizen ever comes back to Spain they'll have a tax inspector visit them and tell them what they've failed to do and how to fix it.

If they never go back to Spain, or if they go back after 20 years, probably nothing happens. I've seen Spanish citizens have this problem after leaving Spain and coming back 2-3 years later without having acquired residency anywhere else; Hacienda still considered them to be Spanish residents.

Yah, thats a too short time. Easy to claim for them you actually never wanted to emigrate for good.
Better try to get welfare abroad than to return after 3 years lol (requires to have a least a legal residence somewhere).

I am from Spain, left spain when I finished high school (literally the day after) and never lived in Europe for the past 15 years.

Spain will never care about my tax residency I suppose?

Nah why would they? Only if you pull off a shakira.

Nah, all you have to do is register with AIRE in the new country and live there permanently enough to get a tax certificate and cut all your ties with Italy and you will be fine.

 

[Gediminas]

So, with the recent Dubai developments, i.e. 9% corporation tax plus 183 days to be a tax resident in Dubai...

As a UK citizen, what's stopping us from operating a Hong Kong Company/US LLC or low-tax company and traveling all year round?

Just making sure to not spend more than 3 months in any country?

And then renting an apartment somewhere cheap to give the banks an address?

I've read plenty online that says this is fine - and then a few people on this comment will say it's not possible.

What gives?

Hey,

Yes, theoretically it works: if you set up tax transparent HK company and make sure it does not have any substance and local transactions in HK, such an entity would not be taxable.

Also, it should not create substance anywhere else (otherwise any other country might be interested in taxing it).

Also if you manage to travel all year round and not be a tax resident anywhere you could take dividends from this company and not pay tax.

On the other hand, all this business is based on the assumption that neither the company nor you are tax residents anywhere.

You would not have a tax residency certificate. The company would not have tax returns. Under the general OECD approach a person should be a tax resident somewhere. You can see it from some double tax agreements – some agreements say that if all listed residency criteria are not relevant person might be considered a tax resident based on citizenship (these are however very rare cases).

So the above might work, but I would say living without tax residency is quite risky and might raise some questions in the future (for example after some time, anyone can start asking where you pay taxes, what is your residency country, and similar).

I would rather prefer to set up residency somewhere else (even if you don’t live there for a long time) and report worldwide income in this country (even worldwide income is not taxable or taxable with a very low rate).

 

[Don]

Hey,

Yes, theoretically it works: if you set up tax transparent HK company and make sure it does not have any substance and local transactions in HK, such an entity would not be taxable.

Also, it should not create substance anywhere else (otherwise any other country might be interested in taxing it).

Also if you manage to travel all year round and not be a tax resident anywhere you could take dividends from this company and not pay tax.

On the other hand, all this business is based on the assumption that neither the company nor you are tax residents anywhere.

You would not have a tax residency certificate. The company would not have tax returns. Under the general OECD approach a person should be a tax resident somewhere. You can see it from some double tax agreements – some agreements say that if all listed residency criteria are not relevant person might be considered a tax resident based on citizenship (these are however very rare cases).

So the above might work, but I would say living without tax residency is quite risky and might raise some questions in the future (for example after some time, anyone can start asking where you pay taxes, what is your residency country, and similar).

I would rather prefer to set up residency somewhere else (even if you don’t live there for a long time) and report worldwide income in this country (even worldwide income is not taxable or taxable with a very low rate).

I must note that from business perspective its better to have an entity that is a tax resident somewhere. Otherwise you can run into the problem that your clients need to pay withholding taxes since your invoices are not deductible.
You might also need a physical address somewhere which can already be considered a PE.
Banking with no tax residency can also be a problem.

 

[scooterguy]

I must note that from business perspective its better to have an entity that is a tax resident somewhere. Otherwise you can run into the problem that your clients need to pay withholding taxes since your invoices are not deductible.

I think that this only applies to dividends.

For example, if I send a $7,000 invoice to an US client for "Logo design" and the invoice has a St. Kitts address, I believe that they can still deduct taxes.

Banking with no tax residency can also be a problem.

It usually isn't, the problem for banks is when you don't have a legal residence.

As long as you have a valid residence visa/permit somewhere and utility bills to produce, banks are good to go. And having a residence visa/permit doesn't necessarily make you a tax resident of that country, because you could still be failing the days test or other conditions.