Hi, I'm Manu, an accountant turned digital nomad and offshore tax expert. AMA!

Question

Wonder how to do your taxes as a nomad? Ask your question now!
About Manu:
Today I’m here to clear any misunderstandings about international taxation for digital nomads. There is too much wrong, outdated and irrelevant information out there.
I will answer any general questions, relevant to the community as a whole. You are welcome to give your own situation as an example. If you are looking for personalized and actionable recommendations or referrals, please contact me or someone else you trust in this matter privately.
About myself: I learned accounting for 5 years in high school, but became more interested in international management and programming at university. I worked as a director and purchasing manager for a 100m+ private trust in Europe and Greater China. In 2013, I resigned from this position to have a better work-life balance and travel more. Since then I have spent most of my time in Asia doing consulting through various companies.
My latest project is a crowdfunding accelerator that will take place in Shenzhen, China later this year.
ASK AWAY!

manu · Accepted Answer

joe156:

I’m an EU citizen spending the whole year in various countries in southeast Asia (no country more than a couple of months). I have no ties (no apartment etc) in my EU country, though do have bank accounts there. Currently, I have no income (I live off savings) - I just leave the profits in the company account, but at some point I want to make this sustainable   What is the best way to take an income from my company?  Where would I pay income tax? Do I need to? What happens if I don’t? Especially in consideration of if I ever go back to the EU and live there normally (not for several years ahead, but possible).  There seems to be more and more people asking, “Where are you tax resident?” and I’ve no idea what to put.

Great question and a very common case. The truth is that without tax residency your HK company is not worth much. They may even refuse your offshore claim, when there is no office anywhere else.
If you’re the only shareholder, all the profits are yours. Even if you don’t pay yourself a dividend. Without residency anywhere, your citizenship will be the last tie breaker in many DTAs. You may manage to fly under the radar for years, but once you return home and e.g. buy an apartment, they will notice and try to tax you. I personally know such cases.
To bullet-proof this kind of setup, you need to take care of all 5 flags, not just the business flag. Most people are missing the residency flag, because it’s harder to solve than simply incorporating in a tax haven. See also slide 7 from this presentation I gave on flag theory for digital nomads.

manu · Answer

Here an anonymous question from a friend of a friend or so.  Country redacted.

A friend asked about 2 similar company opening scenarios, they are not about a digital nomad but a person who has residence somewhere:

If a person lives in XXX, working as a freelancer for a company outside the EU, opens a company bank account in Hong Hong. Then pays 0 income corporate tax for the company in Hong Kong, and then takes the money that is earned and pays tax on dividends in XXX.
Can the government of XXX claim that this person also has to pay tax on the profit of the company in that country in the EU, because that person is domiciled in that country (where and how it is regulated, CFC)? Would it be a problem from the XXX government point of view not working and not having a company in XXX but still gaining money each month?

This is a classic fallacy. When a company is run from XXX, it doesn’t matter where it’s incorporated. You could run a UK Ltd. from Germany and it will be treated like any other German company.
It may work for some time, but could cost you, once discovered. It just needs an unhappy client or employee to point authorities in the right direction. The information exchange on bank accounts also keeps improving each year. The new OECD treaty (aka FATCA for the rest of us) coming into effect next year may close the last loopholes.

tomschouteden · Answer

Hi Manu
What’s your preferred EU country to set up a company as a non-citizen.  Obviously places like Ireland and Luxembourg come to mind, but there’s also a number of interesting alternatives in Eastern Europe.
Of course corporate income tax rates are important but it’s equally important to have a decent judicial system, easy access to open bank accounts, english language government service, …
As an aside, if you’d have to choose (personal) residency in an EU country, which country would be your favorite and would you actually move there or just register for (personal income) tax purposes.
Thanks
tom

levelsio · Answer

@manu what do you suggest for a Dutch person like me?
I have Dutch residency and my business is registered in the Netherlands and I pay tax there.
I do travel a lot and could be away longer than 180 days per year from my country or the EU if necessary.
It’s been bugging me that I’m mostly not in my country but still have to pay 52% income tax. Which is a bit insane.
I’m fine with paying tax, but I’d like to create a more fair construction where I contribute less to my home country and more to the countries where I am in. As that’s what it’s supposed to be I think. What’s the legal way to do this?
I don’t like tax havens like Panama, Cayman Island etc. and I’m not some anti-tax Libertarian anarchist. And I don’t want to make myself suspect either. What do you suggest to me?
Is there much wrong with just a Dutch Ltd (B.V.) and keeping most of the $ in there and pay myself a low wage?

manu · Answer

Ted:

What would you advise someone who wants to get started with this setup in order to minimize and simplify their taxes? i.e. where should the business be incorporated, how should the tax residency problem be solved, and what else should someone do if they have no set requirements and just want to have the optimal setup?

There is no single best solution. It really depends on the combination of those:

your clients/nature of business
your preferred playgrounds/hangout places/family/children?
your home country/passport

To get started fast, I recommend these steps:

Read the basics about flag theory (old, but useful framework, see http://bit.ly/1FqaCOf)
Decide which flags are unsolved for you (for most people it will be business and residency flags)
Talk to someone experienced to get all viable options for your situation. E.g. where to incorporate or reside.
Find local providers to implement your strategy.

manu · Answer

levelsio:

I do travel a lot and could be away longer than 180 days per year from my country or the EU if necessary.

It’s not really about those 180 days, when determining residency. Other issues are:

where is your economic life happening?
your social life? wife/children are where?
you keep your stuff somewhere and have it ready to use?

If some of that applies to you, you are likely to be considered resident even when only staying for a few months.

levelsio:

Is there much wrong with just a Dutch Ltd (B.V.) and keeping most of the $ in there and pay myself a low wage?

From what I see, this gives you 20-25% corporate tax and then 15% withholding tax, to be offset against your personal income tax. You will end up (almost) in the same place as before. There may be exemptions and ways to optimize, a local service provider can tell you.

levelsio:

I don’t like tax havens like Panama, Cayman Island etc. and I’m not some anti-tax Libertarian anarchist. And I don’t want to make myself suspect either. What do you suggest to me?

Actually the Netherlands are a far bigger tax haven than all the places mentioned above. This comes down to how they treat foreign income from royalties, licenses, etc. Starbucks, Apple, Fiat all have billions stashed away in the Netherlands.
As you can see it always depends on the point of view.

levelsio:

I’m fine with paying tax, but I’d like to create a more fair construction where I contribute less to my home country and more to the countries where I am in. As that’s what it’s supposed to be I think. What’s the legal way to do this?

I’m afraid currently there is no way to decide on what your taxes are spent on and where.

manu · Answer

thomas:

What paragraph have info regarding such tiebreakers in most DTAs? I’ve looked a bit on the Norway/Panama one (and a few others), but I cannot seem to find any such clause.

I never saw one without. Usually in the first few articles, after definitions.

thomas:

Is it correct that those social taxes only needs to be paid on salaries to Estonian residents?

If you’re just a shareholder, you won’t pay social insurance. Directors generally pay them I’d assume Estonia is the same, but never looked into it.

thomas:

I am considering Panama due to the low cost and ease of maintaining a tax residency there (only have to visit the country once every 1-2 years), and obviously their territorial taxation and increasing number of DTAs.

Make sure this kind of visiting schedule satisfies the relevant DTA. I’d assume it doesn’t. Like with companies, tax offices want to see some substance, like offices, apartments, rental contracts, passport stamps, flight tickets, etc. The more the better.

thomas:

Is it even possible to employ someone outside of the country where the business is registered?

That’s not an issue at all. Just consider sales agents or service personnel stationed  in another country. Their employer still needs to register them for social insurance, pay income tax and follow labor regulations.

thomas:

If I pay myself dividends from an Estonian company, and I’m a resident of another country, do I then pay the 20% tax on dividends in Estonia, in addition to whatever tax applies on dividends in my “home” country, since the corporate profit tax in Estonia happen when the profits are distributed?

This will be different for each country. Some have withholding tax, some regulate it under DTAs. You may pay the difference, nothing or 2x.

joe156 · Answer

Hi, A few years ago, I registered my own company in HK through which I do my website business. No employees. Turnover is small by anyone’s standards. None of the business is in HK (no HK clients etc) and indeed I spend no time there. This means I can claim Offshore Profits and avoid corporate tax.
I’m an EU citizen spending the whole year in various countries in southeast Asia (no country more than a couple of months). I have no ties (no apartment etc) in my EU country, though do have bank accounts there. Currently, I have no income (I live off savings) - I just leave the profits in the company account, but at some point I want to make this sustainable   What is the best way to take an income from my company?  Where would I pay income tax? Do I need to? What happens if I don’t? Especially in consideration of if I ever go back to the EU and live there normally (not for several years ahead, but possible).  There seems to be more and more people asking, “Where are you tax resident?” and I’ve no idea what to put.
Thanks for any help!

tkrunning · Answer

Firstly, thanks for doing this AMA! I think this is a topic that many DNs have difficulties navigating. I have been reading up on the topic for a while, but there are still a few details I would like to verify that I’ve understood correctly.
Some quick background: Currently, my citizenship flag is in Norway (might be moved to Denmark soon, since they allow dual citizenships now – unlike Norway), and residency and business flags in Denmark (which I’m considering moving to Panama and Estonia respectively).

manu:

Without residency anywhere, your citizenship will be the last tie breaker in many DTAs

What paragraph have info regarding such tiebreakers in most DTAs? I’ve looked a bit on the Norway/Panama one (and a few others), but I cannot seem to find any such clause.

In general I like Estonia’s flat 20% tax rates (for income and dividends) and the fact that profits are not taxed until they are distributed, but their social taxes for employers are very high (near 40%). Is it correct that those social taxes only needs to be paid on salaries to Estonian residents?

If I pay myself dividends from an Estonian company, and I’m a resident of another country, do I then pay the 20% tax on dividends in Estonia, in addition to whatever tax applies on dividends in my “home” country, since the corporate profit tax in Estonia happen when the profits are distributed? I assume that’s how it works. But if I pay myself a salary instead (also see question 5), and my “home” country (say for example Panama), does not tax foreign sourced income, do I then end up not paying tax in either country?

I am considering Panama due to the low cost and ease of maintaining a tax residency there (only have to visit the country once every 1-2 years), and obviously their territorial taxation and increasing number of DTAs. I’m still a little unsure what defines foreign sourced income (in regards to territorial taxation) though:
– Scenario 1: I am a resident of Panama, have a Panamanian company, and clients/customers abroad, and run the business from within Panama. I’m guessing that’s not foreign sourced income, correct?
– Scenario 2: Same as S1, but the company is registered abroad. I’m guessing no change from S1 since the company in reality is based in Panama.
– Scenario 3: Same as S2, but I’m managing the company from the road (making sure to not be considered tax resident in the countries I spend time in), and not when I am physically in Panama (but I’m still a tax resident of Panama). I’m guessing whatever I pay myself in salary or dividends from the company would not be taxed in Panama (possibly depending on DTAs)? Does the company need to have substance in the country of incorporation for this to work out in my favor?
If my 3 scenarios are a bit off, how do a country generally define foreign sourced income?

Is it even possible to employ someone outside of the country where the business is registered? Say, if I have an Estonian company and I’m a tax resident of Denmark or Panama, can I pay myself a salary (not dividends or as a freelancer) and pay tax on that salary wherever I’m a tax resident? Or do I need to incorporate in that country as well to pay myself a salary there (or at least register as an employer somehow)? If I do, I’m assuming the social taxes etc of my tax residency country would apply, not the taxes in the company’s jurisdiction?

Thanks again for taking the time! I also found your presentation quite helpful when you posted it somewhere else in this forum. In particular you helped me discover streber.st which has a lot of useful info, and is a lot less spammy and agenda-less than some other similar sites (NC, IM etc).

piotr · Answer

Manu,
My home country (Lebanon) does not actually charge me taxes, unless if I’m working on Lebanese soil for a lebanese country.
How should I explain that to my US or EU clients? And how can I make them confident enough to pay me directly to my bank account without passing by an intermediary like elance?
Thx

manu · Answer

tomschouteden:

What’s your preferred EU country to set up a company as a non-citizen.  Obviously places like Ireland and Luxembourg come to mind, but there’s also a number of interesting alternatives in Eastern Europe.

Malta is a viable option, if you insist to stay in Europe. You can get corporate tax down to 5% by using a “dividend feeder” model. There is also the option to be a non-domiciled resident, who only taxes income remitted to Malta. Similar to the UK model, but cheaper.
No matter where you go, you will need to demonstrate some kind of “substance” for your business. Else your clients may have invoices refused during tax audits. A mailing address won’t be enough. Renting a small office and having a part-time staff there is the saver option.

stevenirby · Answer

Hey Manu,
Thanks very much for taking the time to answer questions. I have a couple.
I’m from the US. I’m an independent contractor (1099) and I moved abroad before April 15th of this year. As an independent contractor and self employed person, I have to pay taxes quarterly. If I just don’t pay my quarterly tax obligations, wait until April 15th to file my taxes next year.
Can I file for Foreign Earned Income Exclusion (FEIE) and avoid paying all taxes for the last year? Do I have to open a corporation in another country and pay myself through it to obtain this? Such as a company in Panama?
I’m pretty lost at this point. Thanks again.

manu · Answer

alexeymk:

If I have earnings made from US companies and spend a minority of my time there time (but not enough to be a resident for tax purposes), do I still need a US-based accountant?

This links directly to the previous question: You have decided to incorporate/register your business somewhere. Great. Next step is to pick a jurisdiction under which you want to do business. The most important aspects are local regulations, tax rates, capital requirements and auditing requirements.
If you have chosen the US as jurisdiction, you need to play by their rules, even if you’re not a resident. This means following US auditing, reporting and taxation requirements. A US-based accountant can definitely help with that.
In case you’re not happy with this situation and don’t live in the US, you are always free to place your business somewhere else, even if your clients are located in the US.
An exception to this are artists or consultants, who physically go to a place to performa a service. They will be taxed a part of their earnings, because the income is sourced in country X. For digital nomads this will rarely apply. Our products (like websites or SaaS services) can be compared to producing something in country X and exporting it to Y.

leonardo · Answer

I am an Italian citizen and all my income is from adsense.
Currently I can’t afford to pay for a residency (e.g. mm2h), passport or expensive tax lawyer.
My plan is to live 0 Days In Europe and travel (with my girlfriend) with tourist visa in Asia for a couple of years until I have more money and every flag is set up  -  or not because I am broke :D.
To get started I thought I keep my European bank account without incorporating an offshore company and let adsense pay me to my European bank account while I am in Asian countries. I have no address, flat, house, child or anything in Europe (except an unofficial room in my parents house).
Should I wait until I have a couple of 100k euros and all flags are set up correctly or can I fly “under the radar” with this procedure?
Lets say everything goes bad after 3 years: I am broke and must go back home. Do they estimate the tax higher then my last 3 year earnings or are there worse things that could happen from law perspective?

theglobalcitizen · Answer

Dear Pieter,
Giving up (tax) residency as a simple Dutch guy on income took me 15 minutes.
But you are currently running a business. Then it gets very complicated fast.
The problem is that in the Netherlands when you move abroad for the tax man it will considered as if you sold your business (“fictieve vervreemding”).
According to the links below an SP (“eenmanszaak”) will have to be liquidated when you migrate.
Enige artikelen over verhuizen eenmanszaak.
http://www.vanlieradvies.nl/emigreren/emigreren-onderneming.html
http://zweden.placement.nl/default.aspx?menu=251&id=2435
There will be a valuation on what is considered the current market value of your business. This includes things like Intellectual Property that you are currently creating with all your different projects and websites and “goodwill” you have as a person. You need to have this valuated and documented. If you do not do it and end up in a dispute, the tax man will make an estimation and this will NOT be in your favor.
The sour part of it is that as a SP you are only considered for one tax. And that is income tax (up to 52%). And this bracket WILL be reached when you sell your business. (It was already reached when I got a one month salary Christmas bonus with my last job).
You should really start working on getting incorporated. Not just for tax reasons, but you are now just to vulnerable.  Doing international business with a SP is simply not a good idea.
What I would do?
It is not as easy. I thought a first step could be to transfer the Eenmanszaak to a (flex) BV. But bummer, the claim of the tax man will remain on the current “stakingswinst”. It might be a thing to consider anyway.
This is interesting: http://www.higherlevel.nl/extra/columns/view/98
Second thought. Set up an offshore company that will hold your Intellectual Property and invoices the Dutch SP and drain all the profit. Like multinationals do it. I do not know the situation enough to see if this would even make any sense.  And if you run that company and remain resident in the Netherlands it solves very little.
Third thought. At least something that you definitely should do. Start all your new ventures from an LLC. Preferably offshore. And make sure they have a permanent establishment outside of the Netherlands. Income will still be taxed but at least you can start to use tax plannign tools.
It looks like you will have to bite in what we in NL call a “sour apple”.
And the longer you wait, the more headaches and “fair share” it will take.
Now, you mention that you do not want to make yourself a target. This will automatically happen when you mention the word immigration to the tax authorities.
The Dutch tax authorities are not a “happy” bunch. I have seen them really mess people up as soon as they found a mistake.
Make sure you have everything in order.
…They just hate to see you go…
It is interesting that you pay up to 52% of your entire income and not already feel yourself a target.
But that must be the “Anti-Tax libertarian Anarchist” in me (ha!)
Godspeed,
My fellow digital nomads.
And let us ride the tax free waves of international epic-ness (hurray!).
p.s. let me know when you have questions. Although I will be traveling the coming days.

tkrunning · Answer

levelsio:

I have Dutch residency and my business is a registered in the Netherlands and I pay tax there.

You might already be aware, but in case you’re not a sole proprietorship is not a legal person (like a corporation is), and hence even if you have one registered in the Netherlands and you work in another country, you’re supposed to pay taxes in whatever country you’re doing the work. That being said, in many countries you’ll fly under the radar, and the Netherlands will happily collect their 52%. But while probably not being an issue in practice unless you become a tax resident of another country, it’s not quite by the book.

levelsio:

Is there much wrong with just a Dutch Ltd (B.V.) and keeping most of the $ in there and pay myself a low wage?

I would consider some sort of Ltd or corporation just for the legal protection it gives you.

levelsio:

I’m fine with paying tax, but I’d like to create a more fair construction where I contribute less to my home country and more to the countries where I am in.

Actually, by making sure you pay less taxes in the NL (say by moving your residency etc, if that’s something you’re willing to consider), you will have more money to spend in the countries where do you spend your time. That way you’re helping their economy by keeping people employed, and you contribute to the local governments through sales tax or VAT as well as visa and immigration fees.
I’m also not against paying my fair share in taxes, but currently the world’s tax systems are not constructed with DNs in mind. That’s why it (to me at least) makes more sense to maximize my disposable income, so that I contribute more in the countries where I actually do spend my time.

alexeymk · Answer

Manu,
If I have earnings made from US companies and spend a minority of my time there time (but not enough to be a resident for tax purposes), do I still need a US-based accountant?

manu · Answer

joe156:

Wouldn’t it be extremely difficult to calculate, at the very least?  In such a “return home” scenario, could I retrospectively pay taxes in one of my southeast countries according to whichever makes sense (and then avoid being taxed again in my home country)?

They don’t need to calculate it precisely. They will just make an estimate in your disfavor. To resolve this for the future:

Have a residency somewhere. This includes tax residency (apply for income tax number, work visa, etc) and a permanent home. It doesn’t mean you actually need to live there. Just renting a place and spending more time than in other places will do.
be sure to read the relevant DTAs and follow them by the letter. They will protect you from double taxation. Only reside in a country that has a DTA in force with your passport country.

For all further details, please PM me, unless it’s relevant for the whole community.

tedavery · Answer

Thanks a lot for doing this AMA!
I think a lot of digital nomads are in a common situation: no fixed home address and making money online, either with freelance work or with online businesses.
What would you advise someone who wants to get started with this setup in order to minimize and simplify their taxes? i.e. where should the business be incorporated, how should the tax residency problem be solved, and what else should someone do if they have no set requirements and just want to have the optimal setup?

tkrunning · Answer

levelsio:

Tell that to all business travelers out there

Haha, yeah. But they work for a company based in a particular jurisdiction (with most of their activities there), and that company is its own legal person. If you and the company are the same legal person (as with sole proprietorships), the company moves with you.

manu · Answer

leonardo:

Currently I can’t afford to pay for a residency (e.g. mm2h), passport or expensive tax lawyer.My plan is to live 0 Days In Europe and travel (with my girlfriend) with tourist visa in Asia for a couple of years until I have more money and every flag is set up  -  or not because I am broke :D.

You can set this up rather cheaply, if you’re willing to sacrifice some time for money. If Adsense doesn’t require a business, forget that flag for now. Residency is more important for you. Look for anything that gives you a proper visa. E.g.

part time English teacher
take language classes that give you an education visa
volunteer or have your GF volunteer and ride along. (you may need to be married for that to work)

Then be sure to have an official rental contract for as long as possible. Keep that and all boarding passes for the next 10 years. Being allowed to work and having a tax number would be a bonus.

joe156 · Answer

Thanks Manu, I very much appreciate your reply.
You mentioned there might be an issue when returning home regarding buying an apartment. Do you mean because a large sum of money is transferred into the country? Is that what would cause problems? Or would it be regarding the tax office asking where you have been paying income tax in recent years? I don’t see how this can all work. I’d have to show bank statements and specify “this money is company expenses. that money is 120,000HKD but within the HK threshold for tax payments”. Wouldn’t it be extremely difficult to calculate, at the very least?  In such a “return home” scenario, could I retrospectively pay taxes in one of my southeast countries according to whichever makes sense (and then avoid being taxed again in my home country)?
Many thanks again!

manu · Answer

Piotr:

How should I explain that to my US or EU clients? And how can I make them confident enough to pay me directly to my bank account without passing by an intermediary like elance?

If you run a serious business, you should register it somewhere. Either as sole trader or a corporation. This will give your clients the confidence to do business with you. It shows that you offer your services in a professional way and that your are registered and regulated somewhere. Keeping your personal and business finances separate, limiting liability if something goes wrong and the possibility to formally cooperate with other people are additional reasons for doing that.

joe156 · Answer

(I hope I’m not hogging the questions here!)
Is the international community working on a solution for Digital Nomads? The numbers are only going to get bigger. I’d be more than happy to pay into a fair, transparent system (where countries I’m living in receive a fair share of the income tax) with the hope/expectation of more friendly visa regulations etc
Being more or less forced into picking a country that you spend only a little time in (if any time at all) doesn’t make sense from any perspective other than playing the system.

manu · Answer

Paul:

From my understanding, a Ltd company will pay the 20% corporation tax, but what’s the situation with taxes on dividends when you’re out of the country for over 6 months a year? With owned property in the UK.

Property income is most commonly taxed domestically, even if the owners are abroad.
With dividends look out for a withholding tax and see what the DTA with your country of residence says about them. You will probably end up paying 20% + some withholding tax.

manu · Answer

Thanks for the great questions everyone. I see most uncertainty is around residency. This is also much harder to solve than simply incorporating. To conclude I want to point out one issue, I got privately:

How can it [insert some weird business practice] be illegal when many people I know are also doing it?

It’s true that there are some practices that are currently tolerated by authorities or the number of people is just too small for them to bother. If you are currently in such a grey area, I would recommend to reconsider your options and take a very conservative approach on your options. Loopholes are being closed at a very fast rate right now. In just over 6 months, we will have a new OECD treaty on automatic data exchange on bank accounts coming into effect. All your bank accounts will be reported to your country of residence. For old accounts there is a generous reporting limit, but once the infrastructure is in place, we can expect for it to be relaxed. So now is the time to implement your strategy.
I’ll be happy to comment on your proposed strategy or suggest one for your unique situation. All by conservative standards, because this is what you want for these matters.

levelsio · Answer

thomas:

you work in another country, you’re supposed to pay taxes in whatever country you’re doing the work

Tell that to all business travelers out there

manu · Answer

StevenIrby:

I’m from the US. I’m an independent contractor (1099) and I moved abroad before April 15th of this year. As an independent contractor and self employed person, I have to pay taxes quarterly. If I just don’t pay my quarterly tax obligations, wait until April 15th to file my taxes next year.
Can I file for Foreign Earned Income Exclusion (FEIE) and avoid paying all taxes for the last year? Do I have to open a corporation in another country and pay myself through it to obtain this? Such as a company in Panama?

As a European, my knowledge of US tax law is not great, but I’ll try to give you some pointers. The moste relevant rules for you are:

US taxes are based on citizenship, rather than residence.
Spend more than 330 days of any rolling year abroad and you get ~100k tax exemption.

Based on that you still need to pay your taxes until the time you left. Once you stay away long enough, you get the first 100k exempt. To make it official, you should also consider incorporating/registering in another jurisdiction. Make a clear cut.

nomademoiselle · Answer

HI Manu !
I’m Canadian and starting to feel like I’m not really paying my tax at the right place. I have no local clients. Only international. But I’m still paying all my tax in Canada as it’s the only place I can consider my permanent residency.
But what if I am always abroad ?
I think I’m in the same situation of @levelsio here, just in another country.
What do you think of the Estonian E-Residency ? Can this solve the problem ?
https://e-estonia.com/e-residents/about/
http://www.abc.net.au/7.30/content/2014/s4136006.htm

joe156 · Answer

You can set this up rather cheaply, if you’re willing to sacrifice some time for money. If Adsense doesn’t require a business, forget that flag for now. Residency is more important for you. Look for anything that gives you a proper visa. E.g.

part time English teacher
take language classes that give you an education visa
volunteer or have your GF volunteer and ride along. (you may need to be married for that to work)

Then be sure to have an official rental contract for as long as possible. Keep that and all boarding passes for the next 10 years. Being allowed to work and having a tax number would be a bonus.

Is the purpose of this to show that you could not possibly have been resident for tax purposes in your home country?  If you are receiving AdSense income while enrolled in education (in other country), does that mean your home country tax office cannot demand you pay income tax on it?  But could they demand you show proof you paid income tax to that other country?

manu · Answer

thomas:

Is that worse for me? Does it basically mean that the countries exchange information, but I might still be double taxed?

Without a DTA in force or without really spending enough time in your tax residence, the whole exercise isn’t worth much. Tax officers know all the cheap tricks by now and they have computers and databases too. If you come under scrutiny, you need to proof substance. Be it for a company or residence.

manu · Answer

JCW:

I’ve heard you can pay yourself a salary which is under the amount where you have to pay tax in the UK (approx £12,000), then the rest is profits from the business, which isn’t taxed - is this true?

Not true. There is still corporate tax and at some point you will want to spend that earnings. Most countries have the combination of corporate tax + capital gains match the top-bracket of personal income tax. That way there is not much difference on how you earn it. (salary or via a company)
Since you’re not traveling any more, the best you can do is find a local tax advisor and pay them to squeeze a few pound of deductions out for you. The other strategies don’t really apply in your case.

tkrunning · Answer

@manu - thanks for your feedback! A quick follow-up question, as I’ve been studying the agreement between Denmark and Panama, but it seems it’s a TIEA, not really a DTA. Is that worse for me? Does it basically mean that the countries exchange information, but I might still be double taxed?
Cheers

levelsio · Answer

Wow, yes, good point. It’s still reg’d in NL. I don’t think NL has a big problem with it, they’ll lose more money on me if I leave the country completely. Now they get a lot of tax income.

paulrose · Answer

Hey Manu,
It’s great that you’re offering this advice.
What do you recommend for a nomad from the UK?
From my understanding, a Ltd company will pay the 20% corporation tax, but what’s the situation with taxes on dividends when you’re out of the country for over 6 months a year? With owned property in the UK.
Thanks,
Paul

xiufensilver · Answer

Thanks Manu for answering and everyone else for your questions! The AMA is now closed

xiufensilver · Answer

We’re closing questions now, thank you Manu for answering these questions and everyone for participating! We’ll close the AMA soon

jcw · Answer

Hi Manu, thanks for taking the time to help us!
I am going to be moving back to the UK, with a fixed home address, after 6 years on the road.
I now work freelance (for clients around the world) and am wondering what the best tax situation for me is.
I’ve heard you can pay yourself a salary which is under the amount where you have to pay tax in the UK (approx £12,000), then the rest is profits from the business, which isn’t taxed - is this true?
Any advice much appreciated!
Thanks,
Joe

manu · Answer

daphnee:

What do you think of the Estonian E-Residency ? Can this solve the problem ?

No. That’s a way to authenticate online. It doesn’t have anything to do with residency whatsoever.

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Hi, I'm Manu, an accountant turned digital nomad and offshore tax expert. AMA!

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