On my previous post, Demystifying Digital Nomad Taxes, I mentioned that there’s actually a way to avoid taxes legally if you are a digital nomad, by adhering to the 183 days rule.

Now, I know this is a very polemic subject, but I really want to propose an open, mature discussion on the subject. We will talk not just about the process, but its consequences, and legal and ethical implications.

Let’s start by refreshing some basic concepts: residence based taxation and the 183 days rule.

Residence Based Taxation Systems And The 183 Days Rule

As I discussed in my previous post about taxes, there are different types of taxation systems.

Most countries apply a Residence-based Tax Regulation. This means that you, as an individual, pay taxes in the country where you have your residence, not necessarily your home country.

All European countries adhere to this regulation system. Most civilized countries -with the exception of the US- do, in fact.

Then, how do you determine your country of residence?

Easy. It’s the country where you spend most of the year, concretely, at least 183 days a year. This rule is a de-facto standard in all countries that apply residence-based taxes.

How To Avoid Taxes Legally: The 183 Days Rule

What If You Don’t Have a Steady Residence?

As a result, if you travel regularly, never spending more than six months a year in the same country, you have no official residence. Thus, you shouldn’t pay taxes, right?

Yes, if you are a citizen of a residence-based tax country, that’s right.

Take into account that this applies to your personal taxes, not the taxes of your company. If you, like me, are an e-Resident with a company in Estonia, your company will still pay taxes there. And rightly so.

However, there are some important caveats and details that you need to have into account. Additionally, there are some legal and ethical considerations.

Let’s talk about them.

How To Avoid Taxes Legally

If you want to stop paying personal taxes, it’s not as simple as moving to a new country and start traveling the world. You need to do it right.

If you simply embrace a nomadic life, your home country can still consider you a de-facto tax resident there, even if you don’t spend a single day within its frontiers.

These are the steps you should be following if you want to confidently say goodbye to taxes while sleeping well at night. However, I am no accountant or lawyer, so if in doubt, ask for professional advice.

Stop Being a Tax Resident At Your Home Country

First, you need to spend some time in a second country and become a tax resident there. In order to do that, you need to inform your home country that you are going to move to another country and become a tax resident there.

In my case, as a Spaniard, I had to fill the 030 form and send it to the tax office. Expect to have to explain your reasons and requiring some extra information or even a call or two. They need those delicious taxpayers.

When you get to your second country, go to the embassy of your home country and inform that you are going to be a long-term resident there (more than 90 days).

Make Effective Your New Tax Residency

Then, you need to spend at least six months and a day in this other country and make sure to pay some taxes there.

Ideally, you should spend a whole year in a country and make something that will require you to pay taxes.

Earning a salary is the most usual way of doing this. However, there are other ways, like owning stocks, investing in real estate, opening a business or co-founding a company.

You don’t even need to actually pay a big amount of taxes. It’s enough if you just do a tax statement.

Be Careful Not To Choose A Tax Heaven

Most residence-based tax countries are wary of tax heavens and impose severe restrictions if you move your residency to such places.

Thus, for this initial country, don’t choose a tax heaven. Choose a country with a good fiscal reputation, like a European country.

Take into account that these restrictions sometimes last for three or more years. In most European countries, you will still be considered a tax resident in your home country if you don’t spend at least the first three years outside of a tax heaven.

How To Avoid Taxes Legally: The 183 Days Rule

Avoid Having “Important Economic Interests” In Any Country

Most legislations discussing tax residency specify as a requisite for being considered a tax resident, apart from the 183 days rule, having “important economic interests” in the country.

What does this mean?

Basically, if the majority of your wealth, businesses or money sources are bound to a country, you are supposed to have a strong link to that country.

Similarly, if your husband, wife or underage children are tax residents in a country, that country can decide that you are a tax resident there too.

Thus, make sure to sever all ties to your home country.

If you have a partner, this is an important decision that you must make together.

Also, if you have dependent children they will probably have to join you too.

Although not mandatory, it’s also recommended not having real estate or other important properties in your home country either. Nothing that could be used against you by your tax office.

Travel The World For Fun And Profit!

Once you have spent a year in your second country, and have made your tax residency effective, you are ready to go. Stop being a tax resident in this country too, and move to any other country.

From that moment on, you won’t need to pay personal taxes as long as you spend less than six months a year on a concrete country. Enjoy!

Caveats

However, not everything is a bed of roses when you are a permanent wanderer. Let’s talk about some of the caveats you need to consider.

How To Avoid Taxes Legally: The 183 Days Rule

Banks

Some days after I handed over the 030 form to my tax office, I received an email from my Spanish bank, ING Direct. The tone of the email was very aggressive, and urged me to update my personal information, tax residence and send them a proof of address, such as a utility bill.

It did cost me a lot of time and effort to be sure that they won’t be closing my account or blocking my funds.

You will have to get used to the fact that banks expect you to live in a country. They are mostly obsolete institutions from times when people rarely if at all left their homes or traveled regularly.

Fortunately, thanks to the digital revolution, there are many alternatives to traditional banking for digital nomads, like the Revolut card.

I actually am in the process of getting rid have managed to get rid of all my traditional banking accounts and I’m operating on digital banking solutions only for my personal finances.

How To Avoid Taxes Legally: The 183 Days Rule

Social Security And Other Benefits

If you live in a civilized country -with the exception of the US-, you are used to some social benefits, like free social security and health insurance.

Unfortunately, most of those social benefits are residence-based. Thus, if you are no longer a tax resident on any country, it can be difficult for you to access free health services or social security.

The European website for the Social Security Cover Abroad fails to address the situation of digital nomads without residence doing freelancing job or owning a company themselves.

Interestingly enough, if you own a company in Estonia as an e-Resident, you could adhere to this situation:

If you are employed but have no substantial activity in your country of residence, you are covered where your employer’s head office or business is located.

I have talked previously about how e-Residents owning a company in Estonia assigned themselves a salary. In the salary calculations, your employee salary was not taxed if you lived outside of Estonia. Conversely, under this scenario, you might wonder if paying taxes for your full salary gives you then Estonian social security benefits in Europa.

I will discuss this in depth in a future post.

Nevertheless, generally speaking, you will lose your social security benefits. If you are European, you may opt-in for the European social security card, but it will cover you for just two years. After that, you will need to sign a private medical insurance contract.

Edit: a fellow member of TechHub from Portugal corrected me. Apparently, in some countries of the European Union (like Portugal) you can still have the European sanitary card if your parents pay taxes or social security in your home country.

Now, this is actually no big deal. I had private medical insurance back in Spain, and the benefits of not paying personal taxes clearly outweigh the costs.

How To Avoid Taxes Legally: The 183 Days Rule

Your Pension

This is something important to consider. If you don’t pay taxes, you are not contributing to your pension. Hence, you will have to contribute to a pension scheme on your own.

Most millennials I’ve spoken with affirm that they don’t expect to have a pension when they become old. I don’t either.

Thus, if you are Ok with the idea of contributing to a private pension scheme, this is no big deal.

Legal And Ethical Considerations

When talking about how to avoid taxes, there is always some dispute over the legal or ethical aspects. As I think it’s important to consider everything before making such an important choice, I would like to talk about them here.

Is It Legal?

Yes, it is. Ask any lawyer or tax office representative. They, of course, will warn you of the do’s and don’t like I am trying to do here, but the law is clear.

You are a tax resident of the country where you spend more 183 days or more a year.

Nevertheless, as I affirmed previously, the world is not ready yet for digital nomads.

Most of the things you do today requiring the intervention of a big corporation or governmental institution require you to have a residence.

This includes important stuff such as getting married, having a child, applying for a mortgage or loan, some job offers, or even paying a traffic ticket sometimes.

There’s no legal or fiscal jurisdiction as of now that fully recognizes and understands digital nomads. Even seasoned accountants have a hard time when faced with someone without a fixed residence doing business and earning money while traveling.

However, I hope this situation will change. The nomadic lifestyle is being adopted by an increasing number of people every year. Initiatives like the Estonian digital nation are starting to create awareness of the fact that a lot of people are not tied to a country anymore.

I am optimistic about the future.

How To Avoid Taxes Legally: The 183 Days Rule

Is It Ethical?

This is a more subjective question. Personally, I think it’s perfectly ethical.

Let me explain why.

Why do we pay taxes? In most modern societies, its citizens pay taxes to enjoy some benefits in exchange. These benefits usually work on a solidarity basis.

This means that you pay taxes so that your neighbor’s children can have a quality education for free. Conversely, your neighbor pays taxes so that when you are ill, you can have quality medical assistance for free -unless you live in the US, of course-.

However, if you are a digital nomad, and you spend less than six months in any given country, you are not making use of these benefits. You actually pay to private companies to enjoy those benefits.

Your children don’t go to public schools.

If you are not a resident, you need private medical insurance, so you are not abusing social security. Additionally, you will not have access to a pension for that time you haven’t contributed.

Also, you probably don’t have a car, so you are not using the public infrastructures and when you do -at a taxi or bus-, you pay for that service.

I could go on an on, but you get the idea. Without the residence, you are basically a long-term tourist. If you are not enjoying the social benefits of a society, why should you pay taxes for them?

In fact, you actually pay some taxes when buying local products or using local services.

Thus, I honestly believe that when you become a wanderer and assume the costs of doing so, it’s completely ethical to avoid taxes legally.

Conclusion

In this article, I talk about how to avoid taxes legally. This is a very polemic topic that always leads to some controversial arguments, but I wanted to address this from a mature perspective, talking not only about the benefits, but also about the consequences, and ethical and legal considerations.

Do you have any comments? Don’t hesitate to share your thoughts with us below!

Let's talk!

Years ago, I quit my 9 to 5 job and became a freelancer first, then a solopreneur, and finally a digital nomad. Managing my company back in Spain was a nightmare until I discovered the e-Residency program and opened my company in Estonia. That changed my life.

After some years managing my business, I know the tricks of the trade. I can offer you advice on how to become location independent, found an European company you can manage online while traveling, and avoid unnecessary costs. If you are ready to take the leap, but have some doubts or don't know where to start, let's get in touch.

Let's do this!

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34 Comments

  1. Pau January 26, 2018 at 6:53 am

    Loved it!! Hay tanta info en internet al respecto que a muchos les da palo investigar más. Me gusta que lo dejas todo bien sintetizado para tener una idea clara y general;)

    Reply
    1. nacho January 26, 2018 at 7:37 am

      Muchas gracias Pau! Si, hay mucha info y en ocasiones incluso contradictoria. Me alegro que te haya gustado. Un abrazo y gracias por tu comentario.

      Reply
  2. Miguel February 6, 2018 at 6:28 pm

    Ok voy a escribir esto en ingles, porque me he pasado horas leyendo esto:

    First, thank you! This is really helpful.

    As an estonian e-resident if you run your own business you “should” pay yourself as a board member and pay 20% + 33% on taxes once your start having money in. This is not required by law.

    How do you deal with this? You just pay yourself as employee and that’s it?

    Again, thank you.

    Miguel 🙂

    Reply
    1. nacho February 6, 2018 at 7:46 pm

      Hola Miguel!

      You are welcome. I explain it all in detail here: VAT and Taxes for e-Residents owning a company in Estonia.. Having a company in Estonia, you should pay yourself a board member salary plus an employee salary, in the case of a microcompany, of course (OÜ). Basically, you do two separate payments, the board member salary (subject to the 20% of gross+33% taxes you mentioned) and the employee salary (that’s not taxed in Estonia, you pay personal taxes for that one in your residence country).

      Make sure to clearly specify “Board member salary” and “Employee salary” in the transfer subject to help accountants identify each one.

      Hope it helped!
      Gracias, Miguel.
      Nacho.

      Reply
  3. Anna February 23, 2018 at 4:05 am

    I’ve just found your blog and I love it! I am myself in a process of becoming a digital nomad and the questions of taxation and residency were incredibly confusing to me. You’ve provided a good overview of the system in a very approachable way! Thank you! I feel much calmer now! 🙂
    My situation is also slowly getting interesting: I am a UK resident, but have an EU citizenship, plus I earn by working for a US company so I was looking at various tax options. I love the Estonian e-residency and company registration, I think it’s extremely forward thinking and incredibly well organised. The online system of the UK tax office is very good one but you still have to be a resident with some sort of UK address in order to set up a company or even trade as a sole trader.
    In terms of the ethics though I am afraid I have to disagree. I understand that you don’t use the benefits; health system, education system etc. But you do use the roads, bridges, forests and lakes :), the police, firemen (hopefully never but…), government institution or military even (lets say its existence assures the country’s stability – that is controversial I realise but still 🙂 If you have a company in that country and you pay corporation tax that’s fair enough but if you don’t if you are a true digital nomad, I am not sure. Is the fact that you paying for your food, accommodation, transport and other consumables good enough? We say that by travelling we help economies of the countries that we are in but do we really? Or do we exploit the lower prices and live lives that are unreachable for an average local? Just wondering…

    Reply
    1. nacho February 23, 2018 at 11:35 am

      Hello there Anna. Thanks for your comment and sharing your thoughts.

      I certainly see your point. However, I still think that you are not using the public services enough to pay taxes for them.

      I have never called the police or the firemen ever in any country I have visited. As I don’t have a car, I don’t use the roads either, except when I pay for a taxi (thus, I am not only paying a service, but also included taxes).

      Same for bridges, etc. I don’t think you or anybody else has to pay for a forest or a lake, those belong to nature, not to countries or any of us.

      In some countries I have had to pay for a tourist fee (like in Italy) or a digital nomad VISA (like in Thailand), so I sincerely think that it’s ethical enough.

      I don’t think it would be fair for me to pay for the schools, hospitals, roads, etc, of everybody else if I am not using them. Still, I see your point and acknowledge it’s a very polemic subject.

      Reply
  4. Pingback: Adiós Hacienda: guía para no pagar impuestos (legalmente)

  5. Alex April 1, 2018 at 4:29 pm

    When you change your legal and tax residency to a new place first time and get a new address and then move on again, how can you maintain your address while away without paying lots of useless rent? Sub-leasing, or somehow find a virtual residential address? If you take your address with you every 6 months, wouldn’t it be lots of administration to file new taxes, make changes, and file forms in every country every 6 months to 1 years seems super exhausting?

    Reply
    1. nacho April 3, 2018 at 3:33 pm

      Hello there Alex, thanks for commenting. The whole point of the process is not maintaining your address. Once you have become a resident at your first foreign country, stayed for more than 6 months, and filled your tax report, you need to fill a form to stop being resident there. Then, you just travel the world without registering anywhere. You just have to make sure that you don’t stay at any given country for more than 6 months. Given that condition, you don’t need to fill taxes changes or forms anymore.

      Reply
      1. Lili April 17, 2018 at 10:41 pm

        Just curious, why do you need that “first foreign country” ? Why can’t you just de-register in, say, Spain, say “I don’t live here anymore” and start moving around the world straight away? I can’t see how “deregistering” in Spain (you lived there, were tax resident, paid taxes, now you leave) is any different from “deregistering” in that first foreign country (you lived, were tax resident, paid taxes…)

        Reply
        1. nacho April 18, 2018 at 9:52 am

          It’s not mandatory, but there’s a chance that if you don’t do it, your home country will consider you a “de-facto” tax resident there, in absence of another country claiming your tax residency.

          Better safe than sorry

          Reply
  6. mart April 17, 2018 at 11:09 pm

    Do you have an understanding in regards to enforceability of treaties such as 183-days-rule and also who instituted them in the first place? If it a EU-wide directive? Is it global affair? OECD member states?

    In the European context, how does a schengen state know that I spent 182 days there and not 215 if there’s no borders?

    Reply
    1. David April 22, 2018 at 3:18 pm

      That’s a good question, I’d like to know how they know how many days you spend if you’re traveling to a shengen state.

      Reply
      1. nacho April 23, 2018 at 9:17 am

        Hello there David,
        Unfortunately, it works the other way around. Your country will try to consider you a tax resident there to make you pay taxes. It’s you who need to prove that you’ve been less than 6 months in other countries or have another fiscal residence.

        Proving that you have a fiscal residence is easy if you have become a resident in another country, and ideally if you have done a tax report for any cause (salary, stocks, real state).

        Proving that you are residing less than 6 months in that -or any other given- country would require evidence like AirBnB receipts or invoices, flight tickets, etc…

        Reply
    2. nacho April 23, 2018 at 9:22 am

      Hello there Mart. Actually, it’s a global legislation of most (if not all) residence-based taxation countries. In EU, there exists of course regulations applied for the Schengen area and the non-double taxation treaties.

      However, unfortunately it’s you who ultimately have to prove that you haven’t spend 183 or more days in a given country. If you do your steps right, and inform your country that you are no longer a tax resident there, it’s easy as long as you can prove later that you’ve spent that time in other places (i.e: flight tickets, AirBnB receipts)… in case you have any problem. Usually you shouldn’t have to, but keep that evidence for at least one or two financial years.

      Reply
      1. mart May 8, 2018 at 12:26 pm

        Always great advice! Thanks

        Reply
  7. mart May 8, 2018 at 2:02 pm

    Also, as spot-on as is your advice regarding going off the tax grid by first becoming a tax non resident in your home country (based on, say, tax returns from your new tax residency) and then also becoming a tax non resident in that new country (it’s always good to be explicit), I would also empathize how much lenient are tax authorities to someone who doesn’t view the country as their home (a Latvian citizen working in Great Britain who informs HM Revenue & Customs she moved) as opposed to that same person going through the similar process in her home country of Latvia in this example. All of a sudden, you find yourself filling all sorts of “residency determination” forms, emailing back and forth with your home Tax Office, mailing physical tax returns, or, god forbid, visiting the establishment in person. Get those tax non resident certificates or some kind of letter from the tax authority in your home country confirming your residency status, I guess is what I’m getting at, until they start making it more difficult to become tax non-resident in your home country.

    Reply
    1. nacho May 8, 2018 at 3:25 pm

      Thank you very much Mart! I completely agree with you. It’s better to make sure, and double check that you are not going to be considered a de-facto tax resident by your home country. Thanks for emphasizing that.

      Reply
  8. Em May 17, 2018 at 10:00 pm

    What a great read – clear, to the point, while still covering all bases from different angles. Thanks so much for this!

    Since you’re from Spain, this doesn’t apply to you – but I’ve read a post covering a way around having to stay 6m-1y in your first new country – while working/paying taxes – so the tax office would accept your ‘resignation’. Apparently, if you get your NIE in Spain – which isn’t automatically connected with the Spanish tax office – the tax office in your home country will still accept this as proof of you living/working/paying taxes somewhere else. This basically means they cut you loose straight away, so you don’t even have to stay/work /pay taxes in Spain, should you want to move on immediately. Have you heard of this as well?

    I still have one rather important question – what happens with your passport/ID/driver’s license when you deregister in your home country? Since you’ve cut all ties, I assume you loose them too, no? And if so – how do you fix this so you’d still be able to travel/drive/work/start a company?

    Reply
    1. nacho May 17, 2018 at 10:48 pm

      Hello there Em. Thanks for your comment. I was not aware of that NIE resignation you talk about, but I will definitely conduct some research on the topic, so thanks for letting me know.

      Regarding your question, your passport/ID is a right that derives from your citizenship, not from your country of residence. As such, it doesn’t matter where you live, where you pay taxes or how much time you spend outside of your country. As a citizen of your country, you have the right to have a valid passport and identity provided by your country.

      Reply
      1. Em May 18, 2018 at 6:41 pm

        Hi Nacho, here’s the link to the post regarding the NIE (to help you with your research) 🙂 https://estherjacobs.info/en/blog/how-to-register-as-a-resident-mallorca/

        The Dutch author of this post also ‘got fired’ by her country for traveling too much and therefor her government refused to renew her passport. The only way she was able to get a new passport after all – was through “a special ‘window’ for homeless people in the Netherlands”. (link to her full story – should you be interested… https://estherjacobs.info/en/blog/digital-nomad/)

        Unfortunately, in Belgium – where I’m from – this ‘homeless-window’ doesn’t exist, unless you stay in the country while being registered at our Public Center for Social Welfare. So how could I have gotten my passport renewed, if my govt apparently does have the right to withhold my passport?

        I’ve read a forum post (in Dutch, so won’t share the link unless you want me to) about a Belgian man who no longer had an official address in Belgium and was living in Norway the past 8m. However, he didn’t register there and when his electronic ID-card needed to be renewed, the govt refused to give him a new one (bc he had no address in Belgium and wasn’t registered anywhere else). The only way out of this, was for him to temporarily move in with his parents – go to the whole procedure of re-registering in Belgium to get a new eID – then deregister again to get a special form he had to use to register in Norway.

        In both cases, govts refused to renew IDs/passports of their citizens who ‘travel too much’. So if I would deregister and cut all ties with my home country (even taxes) and after that first country needed for them to ‘let me go’ (as you mention in this post) never register somewhere else again – simply bc I won’t be in any country longer than 6m – how can I then still be sure my eID/passport would get renewed when needed and where would I do that?

        Reply
  9. Coach Art June 24, 2018 at 12:19 pm

    Thank you for the layman explanations of this complex topic!

    I can understand how you hop from the country of origin (original tax residence) to the next country of tax residence, once you stay long enough and pay taxes there (i.e., move your center of vital interests to the new country). But how can you repeat the procedure in the second country to jump into “homeless” tax residence?

    Each time you want to switch tax residence, you have to declare which is the next country of tax residence or else the current country (whichever it is) can claim that you remain a tax resident there due to “vital interests” beyond the 183 days criterion.

    Reply
    1. nacho June 25, 2018 at 10:21 am

      Hello, thanks for your comment. In theory, once you hop to your second country, become a resident and make effective your tax residency, you need to tell the local authorities of that country that you are no longer a tax resident there (like you did in your home country).

      The difference here is that this second country is not your home country. In absence of a clear tax residence, your home country may consider you a “de-facto resident” there. That does not happen in a secondary residence, because it’s not your home country.

      So in that case, from that moment on you can travel the world and, as long as you stay less than 6 months in any given country, you are no tax resident anywhere.

      Hope that helps.

      Reply
      1. Coach Art June 26, 2018 at 12:00 am

        Thanks Coach! Well, it’s in fact not a matter of “motivation”. Once you declare you are no longer a resident there (by the corresponding form), they have no option. As they are not your home country, they can not rely on your “citizenship” to claim that you are a de-facto resident there :).

        Reply
  10. Abelius August 12, 2018 at 7:25 pm

    Thank you Nacho.

    This has been very useful to finally make up my mind about how I’ll approach my future digital nomad life. It’ll be an expat life instead and I’ll pay taxes to our country (I’m also a Spaniard) in full.

    The thing is, even if I’ll reside most of the year in SEA, I still have children that will depend on those social services that you’ve mentioned, so it’s fair that I contribute to their sustainability. I really didn’t factor that when I started to search for a way to pay less, so thank you for pointing that out for me.

    Reply
    1. nacho August 12, 2018 at 9:57 pm

      Hello there Abelius!

      Thank you, glad to know that I helped. This is not an easy decision, and I think it’s important to know all the pros and cons and make the best decision for you, your business and -especially- your family and beloved ones. Of course if you are participating in a society and getting something back from it (or your children), it’s only fair that you contribute something back :).

      All the best of lucks!

      Reply
  11. Tim October 19, 2018 at 1:02 pm

    Hey Nacho,

    Gracias por tu excelente artículo. I wonder if you might be so kind as to opine on the following?
    I was living and working in Spain 7 years but for three years I’ve split my time between the UK and Spain. I went freelance three years ago after working full-time in Spain and decided to set up in the UK, but I’m still in the Spanish “system” as I never deregistered. I pay a lot in taxes to the UK government. You think it is possible to avoid this, or minimise? Apart from spending significant time in Spain, I also travel a lot, so I don’t think I would spend 183 days in any one place. I also channel euro and dollar payments from clients to a fintech company in Dublin to save on FX fees before sending on to my company account in the UK in GBP. If I simply sent to an account in Spain, I don’t see why the UK authorities would ever be aware, although I have never done this. Do you have any insights on this specific point? I guess the fear is if I were ever audited, the UK taxman might request access to accounts with this FX company, although I don’t know if they can do this and there is no information online that confirms. As you mentioned with digital nomads, the world is still not ready for this kind of thing – using offshore fintech companies in this instance rather than having payments go straight to my UK bank account (and giving a lot of money to the traditional banking system in horrible FX fees too, the bast*rds). Gracias de antemano

    Reply
    1. nacho October 22, 2018 at 10:46 am

      Dear Tim, thanks for your comment. I think your situation has some subtleties worth having a conversation. If interested, please contact me via the consulting page on top 🙂

      Reply
  12. FE October 23, 2018 at 11:19 pm

    Thanks for the great read!

    If I may ask, what was your “bridge” country, where you moved your tax residency from Spain in the first place? Was it Estonia, since you mention opening an Estonian company with the e-residency program.

    I’d like to follow a similar path to the one you took, opening an Estonian company, but I’m not sure if I should then move to Estonia or I can pick another country (I was thinking Cyprus). I’m currently trying to ask lawyers, but if you have some experience to share that’d be great 🙂 PS: my home country is Italy.

    Reply
    1. nacho October 24, 2018 at 12:19 pm

      Hi there FE, thanks for your comment. My bridge country was Latvia, and it’s a very nice country to use as a bridge, for several reasons: it’s beautiful, it’s affordable, it’s different (if you are from the west of Europe, that’s it) and I go back there to spend some months every now and then. It’s a great place in my opinion, but most of the east of Europe is a good place to start.

      Reply
      1. FE October 26, 2018 at 1:57 pm

        Hi Nacho, thanks for the info!

        My main concern is the risk of my Estonian company being considered tax-resident by the tax authorities of my bridge country, since I’d be the sole owner of the company. I think in least in theory that would be the case in several European countries, although perhaps you’ll go unnoticed. Any take on Latvia regarding this issue?

        It’s not so much about taxes, since all European countries have treaties to avoid double taxation, but more about the bureaucracy annoyance of such a situation.

        As I mentioned, I’m considering to use Cyprus as bridge country, since with their non-domiciled program you are required to only stay 2 months a year to get tax residency (provided that you don’t spend more than 183 days in any other single country). I’ve contacted an accountant firm from there, specialized in international laws, and I highlighted that I would be running my company mostly while travelling outside Cyprus: they told me that in that case the Estonian company itself would not be considered tax-resident in Cyprus (although I of course would, as individual). So I’m most probably going that course.

        Just wanted to post this info in case someone else has similar concerns.

        Reply
  13. breakbeat October 30, 2018 at 8:05 pm

    In some countries you can opt-in voluntarily into their healthcare and pension system. If I keep paying into the system will I be considered a tax resident even if I become a tax resident in a bridge country and ultimately becoming a permanent traveler?
    What if you keep your personal bank account in that same country of origin?

    Reply
  14. Arianne Wolodarsky November 8, 2018 at 4:13 am

    Hola Nacho,

    Dejaré el comentario en inglés, por el beneficio de otros lectores.

    Thank you so so so much for writing on this issue about being a digital nomad. I’m unknowingly avoiding to pay taxes, because like you, I agree that ethically it’s ok to avoid it if you really don’t depend on the country’s infrastructure, and/or don’t stay beyond 6 months.
    I’m a UK citizen with a Spanish NIE, and currently working as an online English teacher, working with a Chinese company. I’m currently set up with both TransferWise and Revolut accounts, and I too have an ING Direct bank account, because 2 years ago I did work for a company, for about a month, then left voluntarily. I actually do want to have a homebase in Europe, Spain in this matter, but I’ve been wondering about taxes. Right now, nothing goes straight into my bank account, and I had the idea of maybe getting a part time job with a company, so I don’t have to be an “autónomo”, as it seems to be such a pain in the a** with all this bureaucracy (which is why I’m avoiding declaring as an “autónomo”). I’m not earning massive amounts, but it’s comfortable for me. My original plan is/was to keep a part time job to “cover up” my extra income as a digital nomad. I travel a lot too, and rarely stay more than 6 months in one place. It doesn’t help most of my family is from South America, so I am constantly going there.
    In some near future, between my mum, sister and I, we would like to invest in property, and in that case, of course, we’d be happy to contribute to taxes. But that’s not the situation, yet.

    I wonder, would it be worth it for me to apply for the Estonian e-residency, at all, simply as digital freelancer, as technically, under the Chinese company agreement, I am a “contractor”.

    I just want to thank you again so much for putting in the time and effort, to so eloquently write and make this problematic and controversial subject easy to understand and relate to. I have hopes that the world will soon cater for us permanent wanderers, and not see us as potential fraudsters or “criminals”. We are just normal people with uncommon circumstances, and that should be more acceptable. It was refreshing to read and find out about Estonia’s initiative, and I’m glad I came across your blog.

    Gracias de antemano si me puedes contestar/aconsejar. Thanks!

    Reply
    1. nacho November 8, 2018 at 11:18 am

      Hola Arianne! Gracias por tu mensaje. Comparto tu opinión acerca del problema de ser autónomo, papeleo, etc. Creo que una empresa en Estonia sería una opción perfecta para ti. Si quieres envíame un mensaje en el formulario de contacto y puedo darte más datos acerca de la mejor alternativa.

      Reply

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