Tax residency defines where you as an individual pay your taxes.
This is usually the country where you either spend most of your time, where your economic interests are located or, in some cases, your country of citizenship.
When you are constantly traveling, you are in most cases free to select a country as your place of tax residency that mostly suits your needs.
Sometimes your country of citizenship will still ask you to file a tax return every year or to provide proof that you are paying taxes in that other country.
What is the 183 days rule?
The majority of countries adheres to the so-called 183 days rule, which states, that, if you spend 183 or more days in a calendar year/tax year/365 days period in a certain country, you will become a tax resident of this country.
183 days are chosen, because a normal year has 365 days and, with a few exceptions that involve time travel crossing the international date line, you will not be able to spend 183 days in two countries in the same year/365 day period.
However, not all countries use 183 days as a measurement, some use 180, some use 90, some even less. So be prepared to check out the rules before you stay in a country for a longer time, to avoid becoming a tax resident there by accident.
Is it legally possible to pay no taxes at all?
This depends a lot on your nationality and the countries where you are spending your time, but there are ways to reduce your personal income taxes to 0% with the right strategy.
However you will still pay some taxes, e.g. VAT/sales tax, airline ticket taxes, etc if you buy products or services in a country.
What is corporate taxation?
Corporate taxation defines where your business is paying taxes. If you are a freelancer or sole proprietor, this is usually the same place where you are paying your personal taxes. If you formed a legal entity (limited company, corporation, etc.), this company will usually pay their taxes in the place where it is incorporated, except if CFC rules apply.
What are CFC rules?
CFC (controlled foreign companies) rules are put in place to make it more difficult for you to simply open an offshore company in the British Virgin Islands or another tax haven and not to pay taxes anymore, while staying in the comfort of your home.
They usually have regulations that if your company has no real substance (office, employees, phone line, etc.) in the country of incorporation and/or the management is done from another place, this company will be taxed like a local company in your place of personal tax residency.
Are there countries with 0% tax?
Yes, there are some countries that do not tax corporations, e.g. some countries in the Middle-East and some Caribbean islands.
Some other countries only tax locally generated income and levy 0% tax on foreign income.
What is permanent residency?
The concept of permanent residency describes that you live in another country where you do not have citizenship for a longer time, usually with the goal to attain citizenship by naturalization after some years. However, you may opt to simply renew your permanent residence permit every few years and never apply for citizenship, as some countries make a good (tax) residency but their passports are not the best to travel the world.
How do I apply for permanent residency?
This varies from country to country.
Usually there are investment programs or family reunion options, some countries like the USA or Liechtenstein also have a lottery where you can win permanent residency.
In some countries you might first need to apply for a temporary residence permit and have the option to upgrade to permanent residency later.
Do I really need to live in a country where I have permanent residency?
You do not have to stay in the country all the time, but some countries place a limit on how often and for how long you need to check back into the country to maintain your status.
Can I open a bank account remotely?
Most banks will request you to show up in person before they open your account to comply with local KYC rules and to fight money laundering.
Depending on your nationality and place of residence, some countries may allow you to open an account by verifying your identity on a video call, by sending notarized copies of your documents or by visiting a post office for identification verification.
Should I have separate bank accounts for my business and my personal expenses?
We definitely recommend that you keep your business funds separate from your private savings using separate bank accounts. This will make taxation issues easier and also helps you to keep your life going if either account randomly gets frozen.
What is CRS?
CRS is the common reporting standard, by which over 100 countries agreed to exchange information about foreigners holding an account in their banks. E.g. if you are from the United Kingdom and open a bank account in Spain, the Spanish bank will report this information including the amount of money in that account at the end of each year to HMRC (UK tax office).
What is FATCA?
FATCA is the US version of CRS, which means that banks around the world report bank accounts of US citizens and US residents to the IRS.
How does (health) insurance work for nomads?
Please check this article for an introduction into the topic.
Will my insurances be valid abroad?
This depends on your individual insurance contract. A lot of companies allow limited use of insurance services abroad, some do not cover anything outside your home country. Read the terms and conditions carefully before signing up for an insurance policy that will not work where you go.
About Tax for Nomads
What is Tax for Nomads?
Tax for Nomads is the one-stop knowledge base for all digital nomad and location independent business topics.
We offer services and consultations regarding personal and business taxation, incorporation permanent residency, second citizenship, insurance, trademarks and wealth management.
This depends on which country you are looking for, the nature of your business and how much you want to do on your own and how many steps have to be taken care of by us.
The cheaper jurisdictions start around EUR/USD 1000 and prices go up to EUR/USD 20.000 or more for premium jurisdictions and special services.
Are you a licensed lawyer, tax adviser or CPA?
We work with partners in over 50 jurisdictions that take care of the legal framework in these countries to make sure every service we offer complies with local legislation, however, we are not licensed as a lawyer, tax adviser or CPA in your country, so we may not give legally binding advice or represent you in certain circumstances. If you wish to have a legally binding evaluation before you start a process, we advise that you check our solutions with a lawyer or accountant of your choice in your local jurisdiction at your own expense.
For a legalese answer of this question, please refer to our legal and financial disclaimers.
Do you offer a money back guarantee?
If you are not happy with one of our consultations, you will not pay for it or receive your payment back from us (except transaction fees), however, since we were not able to offer you a satisfactory service, we will not perform any additional consultations or other services for you to save your and our valuable time.
For all other services (incorporation, bank accounts, visa, etc.) we do not offer a money back guarantee and all sales are final.