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Comment by sho | Hacker News Reader

> those that didn’t pay hefty fees to set up companies in tax havens

I suppose it depends on your definition of "hefty" but a couple of thousand USD is usually sufficient, depending on jurisdiction, and obviously is expected to pay for itself many (, many, many) times over.

It's not that hard and it's not just for the 1%. Especially if you're anything approaching a "digital nomad" I can't think of any reason why you wouldn't establish a consulting company somewhere offshore, bill from that, pay yourself a quarterly dividend and then import only the money you actually need.

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I’ve not looked into it personally, but I’ll relay what I’ve heard from various people who have looked into this or successfully done this.

In one case one person, as you say, did everything on their own and pays a couple thousand every year to keep the entity in the favourable jurisdiction. When asked if it was all above-board, they said it was one of those grey areas where they hoped the govt didn’t look too deeply into it, but so long as they weren’t making millions they weren’t worried about an audit.

The other cases asked various accounting companies to set this scenario up for them (one to establish a software engineering consulting company, others to set up other companies). The responses ranged from “yes we can do this, it’ll cost you 15-20k upfront, then 5k in annual upkeep” to “no this isn’t looked upon too well by the Portuguese govt”.

Well, your first example is a good "what not to do". Doesn't sound like much of a "grey area" if they're living in fear of being found out. I don't understand this kind of setup - financial information is permanent and once governments get their shit together there will be no safe havens, and this will apply retroactively. People playing such games are going to feel a lot of pain some coming day, I suspect.

I have to admit I don't know anything about Portugal but with a little research it is very possible to find a territorial tax-based country to live, where one does not owe any money on overseas income, and live completely legally there as a tax resident, taxed only only your minimal local salary - if that. Now I suppose that's not for everyone but if people were moving to Portugal specifically for tax reasons then I'm surprised they didn't, you know, check it out a bit first.

If you live in Portugal for longer than 6 months every 12 months you are considered a resident and taxed accordingly. I suppose you could go in and out every few months to escape that.

Just to note, it is a little bit more complicated, as there are other aspects of a tax residency test as well. IE, if it is your "home" as dictated by some other rules it can be a tax residency even with less time spent there.

I can think as ethic concerns about tax elusion as a (big) reason why one wouldn't establish an offshore entity

If you're living offshore and paying taxes to the place you live, there's no particularly good justification (except might makes right) for the US to force you to pay taxes. AFAIK it's the only country, both now and in history, to claim taxation rights over its citizens perpetually no matter where they are.

the comment chain was to which you are responding was not about trying to pay taxes only to the country you're living in (which basically everyone in the world can do minus US citizens), it was about setting up a company in a tax haven (think Cayman Islands) to avoid paying taxes at all because they decided they are too high, which of course raises questions about the morality, legality, and practical details of such a process

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