Do these services provide you with legal representation towards your home country? My guess is probably not.
For some time now I've been researching how to become a digital nomad and legally optimise my taxes.
There are numerous services that claim to be able to help with this, here are just two examples that I found:
https://taxhackers.io
https://denationalize.me
Does anyone have any experience of this and can tell me if it really works and is legal?
Also, why do they charge so much when there are other services that can do this for much less (e.g. Stripe Atlas: https://stripe.com/atlas)?
I am thinking of moving to Thailand, but I do not want to be a perpetual traveller. Can setting up a US LLC as a non-resident (or a UAE free zone company) be considered "foreign sourced income" without being taxed even if I am a tax resident of Thailand (>180 days living there) and what experience can you possibly share if you have tried something like this before?
What additional advice can you give me and others to make this a great trip instead of a nightmare?
Thanks for all your input and a healthy discussion on this topic!
Do these services provide you with legal representation towards your home country? My guess is probably not.
The current laws in Thailand state that foreign sourced income is only taxed if it is remitted to Thailand (source: https://mahanakornpartners.com/overview-of-personal-income-t...).
So this should be an option, don't you think?
These services do not provide legal representation as far as I know.
Your biggest liability (tax-wise) is going to come from your revenue source. That's also where you should be careful. Next, is the country of your passport (because they got you by the **). Everybody else matter very little which is why you should steer away from Dubai, HK, off-shore, etc.. until you understand the nuances of your situation.
Plus you would need customers who are cool with paying you through an entity like that.
One country for citizenship, one country for residence, one country for your money.
This arrangement earns you a lifetime of peace of mind.
I understand at least having a dual residency as a back up plan and that’s our plan with establishing residency in Costa Rica before retirement and keeping our by then paid off condo in the US.
I haven’t researched anything aside from the US && (Costa Rica || Panama) scenario. There are really no tax advantages or disadvantages that way.
Also, I am probably going to consult a tax lawyer there, but it still does not hurt to ask others about there experience I think.
I think this is not so easy though, depending on the individual circumstances. My home country for example might want proof of my tax resident status of the past years if I ever decide to move there again, which will be difficult, if I have not been a tax resident anywhere. Of course this is easy when you reach a certain amount of wealth, but unfortunatelly I am not there yet and might need some time (if ever) to get there.
There are other countries (e.g. Cyprus) that do not require you to stay for 180 days or more to gain residency, so I think this is the kind of setup he is talking about.
The last piece of the puzzle would be international bank accounts, which gets easier the more money you have (e.g. HSBC Expat, which requires 50k USD to set up).
From one of the citations
> The average digital nomad pays $64.76 per day in taxes they do not have to pay - that is over $23.000 per year. Imagine what you could do with all this money. Let us do the paperwork, while you travel the world*
$23K isn’t nothing. But I saved half that much just by moving from a relative low tax cost state (GA) to a state tax free state (FL).
If I lived in a state with higher state taxes and higher cost of living, I would have saved even more.
And anything you do, the first step is giving up your US citizenship since the US taxes worldwide income.
But then you need to have citizenship somewhere else or become “stateless”. From the few countries I looked at, it’s a 3-5 year process.
The US has a relatively strong passport (ranked 9th in the world). You would also have to give that up.
Cypress and Paraguay have strong passports (brought up in your second site).
Edit:
I see you aren’t a US resident. None of what I said applies to you. I’ll keep it up anyway for anyone else thinking about something similar.
The real world application of this advice is that you don't ask for permission, and involve governments as little as possible in your life. This of course means that your source of income has to be adapted to this, usually meaning having your own LLC.
Unless you can provid all of the infrastructure for yourself and insure your property rights are secured from people just taking them.
You realize you are going to have to “obey the laws” of whatever country you live in?
The only way you don’t involve some government in your life is to either live in on a boat or to live off the land in the woods somewhere
You know that LLC is also a legal construct you need a government to enforce. Do you plan to get a passport? Do you plan to be “stateless”? Plan on registering for the countries health care system?
Firstly, it's trivial for a business not to pay tax; simply don't make a profit. (Since you can simply assign any excess to yourself as salary.)
Of course you then gave a personal income tax question; and that has its own complications.
Staying with business; and assuming it makes a profit, you then have choices regarding where to register the company. At the one extreme you have zero-tax places (Isle of Man, Jersey et al) but they come with fixed high annual costs. (Not a "tax" - just payments for services.) Your choice is typically one of these, or the place you live, or the country of your passport.
Things like banking play a role. When you can't visit your bank it gets harder to resolve issues (like when they freeze the account because of money-laundering concerns.)
All this to say, Tax planning is complicated. And if you insist on playing games it gets very complicated. The internet I'd not the place to get advice. You need to speak to a professional, or more likely a professional in all the places that matter. If you are a US passport holder even more so.
Thanks for your input though, this is a valid concern and important to consider: amount of potential tax saved and citizenship.
Advice to all US citizens considering this: take a look at the power of passports, it can go a long way. Here is one of many sources to check: https://www.passportindex.org/byRank.php
@scarface_74: My goal is to avoid a high tax that I am used to from my home country without getting (enough) in return in my opinion. I would rather take my chances and prepare for retirement etc myself than leave it to a government.
I never want to be "stateless", quite the opposite! I would like to collect some citizenships to have more freedom, because even with a strong rank other passports still give you access to different areas of the world.
I am fine with paying taxes if the rate seems fair (e.g. not 50% of my income if I am not a multi-millionaire) and if I get a good value for it. Yes, security is one of those values, but depending on your situation, a government may or may not be able to provide that (in my case, my home country was not able to do so, another good reason to believe that my tax is not being used well enough to achieve that goal).
Look for countries where you just have to prove stable income, or do some type of investment in the country and then depending on the country it takes between 3-8 years to qualify for citizenship after you become a legal resident
The citizenship part is the easiest part. You can never loose your citizenship, and it is in no way tied to your residency or your income/money.
People who dream about migration almost always and erroneously believe that this means that they have to get on a path to new citizenship. But you shouldn't worry about this, unless you are very anxious to be able to vote in elections.
If you are a citizen of a country that taxes your worldwide income - like the US it does affect your income. You want to be a citizen somewhere and not end up “stateless”
But the foreign earned income credit can reduce your tax liability by up to around 100k in some cases.
You should look for countries with low corporate tax that don't tax on dividends.
You can not loose your citizenship for not paying taxes or for owing any taxes.
I quote: "A resident of Thailand is liable to pay tax on income from sources in Thailand as well as on the portion of income from foreign sources brought into Thailand" (resident = stay >180 days per calendar year).
If the "income from foreign sources", which should include income from a foreign company, is not "brought into Thailand", it should not count towards taxable income, if I understand this correctly.
Do you have a different interpretation which would make income from a foreign company with no clients in Thailand fully taxable and how would you explain that?
I just wanted to reach out to my fellow HN users beforehand to get some insight into other people's experiences and this is one of the best places to do that IMHO as I have already read some very wise comments on this beautiful orange website which makes me want to ask here instead of some sub-reddit ;-)
Luckily I am not a US citizen (or Eritrean) so it should be a bit easier for me (fingers crossed as I type this).
Say what you will about the US, but to this day it remains one of the best countries in which to start a business, as far as I can tell from years of personal experience (in other countries) and research.
Then there is US citizenship, which is actually tied to your income, if I am not mistaken.
A citizenship for me would only bring the following advantages
- be able to live in a country without the hassle of renewing visas
- Having a second citizenship if the (political) situation in my home country goes sideways
I am not interested in voting because I do not believe that I can make a difference. I have done so for decades and things have only got worse in my country, so I have lost hope in the political process.
The quote from the revenue department is clear - you will need to pay personal income tax in Thailand since you’re resident there. “Sourced” most of the time means where you do the work, which will presumably be in Thailand for you.
If you set up a company, you will need to pay both corporate tax (wherever you incorporate), plus personal tax on the dividends that you pay yourself with in Thailand.
You originally asked about the LLC, which was why I mentioned it specifically. With an LLC, you would be fully taxed in Thailand at the personal tax rate, because that’s how LLCs work (you don’t pay corporate tax with an LLC).
My advice would be to look into Cyprus and their non-dom program. You can get tax residency there with only spending 60 days per year. Create a Cyprus LTD and your tax rate would be 12.5% + 2.65% for social security. You don’t need to pay personal tax on dividends.