Your personal tax residency is the jurisdiction in which you, as a physical living person, pay your taxes.
In general, the world differentiates between two different systems on how to determine, which place this is.
While two countries, the United States of America and Eritrea have decided to attach taxation to the citizenship of their people, the rest of the world uses a system of determining your place of habitual residence and your places of personal or economic interest.
Which basically means that being a citizen (or permanent resident) of the US or Eritrea makes you liable for paying your taxes in the corresponding country (although there are some exceptions like foreign income exclusions), no matter where you move and live as a digital nomad, but it also means, that being a citizen of another country means, that you can – more or less easily – leave your current country and decide to move to another place and pay your taxes there.
But which country do you want to chose as your new place of personal tax residency?
While this depends quite a lot on your current nationality and somewhat on the type of your business, there are are certain types of countries that are especially appealing for this:
Countries with a 0% tax rate
These countries simply do not levy any (income) taxes from their residents. Some examples are middle-eastern countries like Bahrain, Kuwait and the United Arab Emirates, Caribbean territories like the British Virgin Islands, Cayman Islands or Countries like the Bahamas, Bahrain or Monaco. Some of these countries may still have some kind of sales tax, VAT or social security system that you need to pay into as a resident.
Countries with a territorial tax system
These countries only levy a tax on income earned from sources inside the country and do not tax foreign income. These countries are especially interesting, if you are looking for some kind of paper residence, i.e. if you do not plan to really live in the country, or if you want to migrate there but all your income comes from an online business located offshore. Examples of this are Georgia, Paraguay, Panama or Malaysia.
Countries with a “non domiciled” regime
The non domiciled (non-Dom) status basically implies, that you are living in a country, but have your domicile in another country and thus are not taxed by the country on your earnings as long as they do not enter the country. If e.g. you are from Mexico, but live in the United Kingdom and declare yourself non-Dom, only income that enters the UK (e.g. by using an ATM or receiving a bank transfer) will be taxed there. Some examples of countries with a non-Dom system include the UK, Malta, Cyprus or Barbados.
In general, nationals of some countries can even live without a tax residency at all, because they just have to de-register themselves from their country of nationality, without stating their country of new tax residency, while other countries require proof that one has taken the tax residency of another country before they stop levying taxes from their citizens.
You can find some popular tax residency options on our services page. If you require assistance in moving your tax residency to another country, book your individual consultation.