With this kind of visas I've always been curious: Unless you're US or Eritrea citizen, does this mean you don't have to pay any income tax at all, given you loose your home country's tax residentship in 183 days after leaving?
In Spain, it takes 5 years before losing tax residency after you've left the country. In France, having your wife and children in France makes you resident even if you don't live there. In the UK, you can be resident by only spending 15 days in the country if some other conditions are met.
On top of that you have to add the interaction between national law and double taxation agreements between countries.
Do you have a reference? I have never heard about that (which can happen, spain has many rules) and I doubt anyone holds to those rules but it would be good to know. I had a business in spain and as a foreign tax resident I tried to do everything by the book; the locals laughed in my face for declaring taxes at all. The system is so complex and unfriendly (the fines are high and there is world wealth tax which has fines that are probably not even legal in the EU; there are legal cases going on about it) I doubt anyone can follow the exact rules, but I tried (and probably paid way too much because of it).
https://m.timesofindia.com/sports/football/top-stories/messi...
Of course this doesn't protect you from outright tax evasion. Also there are some rules like the calculation of capital gains that differ from the US system, meaning that you are not necessarily protected from double taxation, since each system taxes a different transaction.
I would way that anyone moving to Portugal to apply for NHR status and who is a programmer is wealthy. IE, anyone making over 80k to 100k on the low end.
Do they? The Amazon invoices I receive have German VAT.
Or why the tax authority would prefer a situation where the tax code is sufficiently complex the Messis and their financial advisers think such an evasion scheme is worth trying to one where they just receive a percentage of his very large earnings without any fuss or court case, like your average employee of a Spanish company. The reality is the reverse: people with a lot of income to disguise and creative tax planners love finding ambiguities and imaginative interpretations of deductions and exemptions designed for other purposes, and tax authorities would rather not be chasing them through the courts years later.
Individuals of Spanish nationality who accredit their new fiscal residence in a country or territory labelled as a tax haven will not lose their status as taxpayers for Individual Income Tax. This rule is of application during the tax period in which the change of residence occurs and for the next four tax periods."
https://www.oecd.org/tax/automatic-exchange/crs-implementati...
This is just another example of braindead legislation created by people who are unable to consider the full spectrum of the consequences of the law (beyond just the "intended" effects) and/or their primary motivation is publicity ("look at all these great laws I passed!")
Good to know is that Spanish taxes can go back 4 tax years which equates to about 5 years. This is shorter than most countries I did business in.
In Croatia you do - this is why sailors who spend >6 months on the sea don't pay income tax.
And I'm pretty sure our law was based on laws in other countries, like the UK.
https://www.oecd.org/tax/automatic-exchange/crs-implementati...
Even as a non-resident you are still liable to pay UK tax on UK income, however.
The CRA want some sort of document detailing that you are a tax resident elsewhere which is difficult to obtain if you are mobile between several countries.
It's cool that Costa Rica is doing this though. It legitimises what people have already been doing illegally.
The “family tie” test is not as onerous as it sounds. It just means you can’t have a spouse or child under 18 who is themselves a full-time UK resident.
Your understanding of what is a family test isn't correct either. If you have a boyfriend/girlfriend and you spend enough time together, you will be considered as "living as spouses or civil partners" and that would prevent you from passing the family test. The burden of proof would be on you to prove you that you're not that close to your partner to pass the test. And by the way, if your bf/gf owns or rent a place in the UK in which you spent a single night, HMRC would consider you have an accommodation in the UK.
There are solicitors who make a living solely on individual tax residency because it is way more complex than spending >183 days in the UK.
The point is that if you have enough wealth to make achieving non-tax residency desirable, then most of the time you will also have the resources to arrange your affairs in such a way that you can achieve that status while still being able to spend significant time in the UK. Yes, individual circumstances vary, but for most people in that category these tests are not a huge hurdle.
> "If you have a boyfriend/girlfriend and you spend enough time together, you will be considered as "living as spouses or civil partners" and that would prevent you from passing the family test."
In most circumstances that is unlikely. If you have a partner that you spend enough time with to be considered "living as spouses or civil partners", then they would very likely also be non-resident. Because they'd be living with you!
As an Aussie this sounds really damn tempting but I'm seeing information that implies you can still be considered an Australian tax resident if you have certain assets or interests in AU:
https://www.ato.gov.au/Individuals/coming-to-australia-or-go...
http://www6.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/aat/...
I would be interested in working overseas for a couple of years, but would not be interested in cutting all ties with Australia to do so.
Besides the obvious wife/kids being in Australia = personal ties, ATO also considers the following to be reasonable points to be constituted as a tax resident:
- Australian Bank accounts, even with $0.01 in it.
- Superannuation
- Properties owned, regardless if it is as an investments or owner-occupied (not rented out)
- Any Australian Account e.g. commsec, vanguard australia, telstra/optus mobile, etc
- Postal address/P.O. box
And so forth. ATO is purposefully applying broad strokes to "ties" to Australia so that they can claim their share of taxes accordingly.
I have a mate whom is a miner, working offshore for BHP, and was audited by the ATO since he lives in Indonesia (wife/family) thus claimed he is a non-tax resident. He is originally from WA so got dinged for a house he owns in WA (which he intended to come back to) + his (Telstra) mobile plan that he never used but paid the smallest plan to keep so that he didn't lose his aussie number + his NAB bank account that had $1000 in it so that he has some cash to spend when he visits family. ATO told him that if he wanted to be considered a non-tax resident, he had to liquidate _and_ close everything he has in Australia to be considered a non-tax resident. Since he didn't do so, they considered he has every intention to return to Australia thus place undue burden on medicare & pension system, if applicable, thus had to pay the difference in tax he paid in Indonesia vs. working in Australia.
Form a corporation or trust or both and have those do all the earning, and make a distribution whenever you really need to. This is not simple when you are barely getting ahead in life, but if you are it is very simple.
From a tax perspective you still are taxed on Canadian source income, so if your job is in Canada nothing changes.
With digital nomad visas specifically, as they are temporary and usually confer visitor status and not resident status, you may have difficulty establishing that you've left permanently and are resident elsewhere. That seems like a grey area yet to be tested, and the CRA probably has a good case there.
I'm not an expert, so consult a real expert in the field if you want tax advice.
Just to make the rules easier to enforce, it's sometimes easier to show you have resident status somewhere else. I had much bigger issues with the fact that land ownership / house ownership / bank account laws care a lot about non-resident-ownership.
https://www.canada.ca/en/revenue-agency/services/tax/technic...
I don't recommend trying things like this.
In this specific case I guess you'd make your money from the IP royalties in Costa Rica, so it may avoid the Canadian source income. I doubt it would stand up to scrutiny though, the courts would very likely see right through it.
For the local taxes, there are a lot of other taxes besides income tax the local government benefits from
In that case you won’t have to pay income tax anymore. However, where it gets complicated is that usually under these digital nomad visas you don’t get a new tax residence nor a tax file number from your new residence country. So you are kind of falling between the cracks and have a hard time opening bank accounts etc.
I’ve been through this whole ordeal and it certainly is an interesting experience with pros and cons.
If you really become fiscal resident of a country with 0% income tax and the country you left is fine with that then, yes, you pay 0% income tax. I've got a friend who really went to live with his family in Monaco (he was a native french speaker, but not from France, which helps): he's there since five years now I'd say and, indeed, he pays 0% income tax.
In other words it’s not about what you are taxed in other places, it’s about income.
Maybe someone with better knowledge can chime in.
See here [0] a list of countries and their taxation methods. Go to Taxation Systems / Individuals, the table.
Article 4, bullet point 1
https://assets.publishing.service.gov.uk/government/uploads/...
But if you are self-employed or a different flexible arrangement, in some countries you can do the trick. For example if you live in Romania and move to CR for 2 years, you don't pay the 45% minimum income tax, which basically makes Costa Rica an "evil tax heaven" and you a very, very bad citizen of your country that is not contributing.
Holy shit
You’d have to renounce citizenship to get out of that little gem.
* Costa Rica is pretty cheap. 30%-50% of US living cost. (minus Manhattan or west coast) You also get monkey’s in your backyard!
*insert 1001 loopholes and exceptions here.
In Canada, you didn't have to pay income tax if you were outside the country for more than half the year.
Now as a citizen or resident you have a bank account in Canada, any assets (house, car) or even set foot in the country within any given year you have to pay income taxes there.
Generally the second one is quite abstract and is mostly tested in court and generally the less connection you have in Poland the more likely you are not considered as Poland being the center of your life such as: - not having company there - not having family (wife, kids) there - not having most investments there - not visiting regularly - not having any income from there
however still you can e.g. have a bank account or own flat that you rent there and still not considered to be a tax resident, probably you would have to prove that there is other country that is center of your life (e.g. paying taxes there, staying more than 6 months, having wife/kids living there, etc.)
What's gets very unclear what happens if someone doesn't have any "center of their life" anywhere - e.g. someone keep travelling for many years and every 2-3 months switching countries, living on the boat. After all e.g. 'donuts' don't have any center that belongs to them.
Ukrainian tax code has similar provisions about “center of life interest” and “staying more than 183 days”, and a backup clause stating that if your tax residency status cannot be clearly determined with the above approach then you are considered a resident if you are a citizen.
I guess this covers the case where you claim that you don't have to pay taxes in Ukraine just because no other country has considered you a tax resident and you never paid any taxes there, so you can't use that to argue that you're a non-resident as far as Ukraine in concerned.
If you have assets or a wife in Canada they may declare you a resident even after a year.
During all of that, I had to pay income tax in Canada, even though I went >2 years then almost 3 years without setting foot in the country.