> In Spain, it takes 5 years before losing tax residency after you've left the country.

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).

I keep seeing news titles about football playes like Cristiano Ronaldo and celebrities like Shakira getting slapped with back taxes and suspended jail sentences in Spain. A complex tax system and unclear rules are just another opportunity for abuse by tax authorities.

https://m.timesofindia.com/sports/football/top-stories/messi...

It's worth noting that there is special provision for these kinds of cases: https://en.wikipedia.org/wiki/Beckham_law

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.

The NHR in Portugal allows this for everyone (not wealthy per se).

Anyone moving to Portugal under NHR is by definition wealthy :)

How so? It is attractive for more reasons than paying less tax for wealth. I know quite a lot of wfh devs who moved in the past year.

ya those people are all wealthy :)

I guess our definition of wealthy is different. There are bucketloads of 'nomads' under the NHR that have no wealth and just get money from outside PT: I am talking a few 1000 per month. What is wealth for you? The Beckham law wealth is what I would call wealth and sure there are people using nhr to move their wealth from some fund to their person within the 10 years without paying tax. However, unlike the Beckham law, for the NHR you do not need capital to benefit.

I really doubt anyone is applying for NHR status with a few thousand a month, more than likely they would get denied for that. The rules have gotten a lot tighter over the last few years.

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.

Ok, but you would be wrong. It is anyone who works in a profession PT wants to attract. And it got more strict but any IT job qualifies and it matters not what the salary is.

Kinda but not really. I just went through the process and talked to quite a few experts down here. It has changed a bit.

The abuse is both ways...see how much tax Amazon and Apple is paying. Hint: not much!

They are paying VAT (revenue tax), but avoid corporate tax (profit tax).

VAT is not a revenue tax. VAT is the tax paid by consumers not by the company. Company only acts as tax collector. The weird thing is this: they collect VAT on everyting they sell, but then, for everything they buy (raw materials, office supplies, etc.) they can substract amount of VAT paid for those from the amount of VAT collected. So purchases by companies are basically VAT-free. And of course some tax optimisation schemes come into play here, with some companies getting ahead on VAT (like, actually getting a VAT refund from the government, instead of paying it).

At least in Spain a company will usually be able to avoid VAT on purchases they make. It is true that they charge and collect VAT on their sales to consumers. The majority off tax paid by these companies is on what they pay their employees.

This is very hard in reality though especially on goods from abroad; your NIE has to be on the invoice officially (which companies like BA do not do for you and I flew with them a lot for business) and while this is not strictly enforced, I got slapped many times on valid business purchases. The gestor told me to just deduct 75% of the deductible vat to not get onto the radar. Ugh.

This is too real. The ultimate tax is on your time, especially as a foreigner.

VAT is not the only tax to be paid in the EU. Not to mention they pay less VAT than the local businesses through various schemes(i.e registering the company that makes the sale in a country with lower VAT)

That doesn't work anymore and it only worked for small volumes, not bigger retailers. They previously needed a VAT number from the state the custumer was in, which was very cumbersome. Now they just add the destination state's VAT on the invoice and I think the VAT is settled between states.

> i.e registering the company that makes the sale in a country with lower VAT

Do they? The Amazon invoices I receive have German VAT.

What makes you think the tax authorities were the ones being abusive, and not the very expensive tax specialists hired on behalf of a class of people moaning that it's not fair that people earning €100m a year don't pay smaller proportions of their income in taxes than people earning €100k?

All these downvotes, and not one person prepared to explain why portions of a Spain-based footballer's earnings from Spanish companies accruing to Belize based companies is the tax authorities being abusive...

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.

"Taxpayers liable to PIT:

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...

Does this rule actually make sense? So instead of moving from Spain to e.g. Cayman Islands, you move from Spain to the UK, become UK taxpayer (in something like 180 days), cease being Spanish taxpayer, then move from the UK to Cayman Islands. Saves 4 years!

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!")

In your example, the moment you move from UK to Cayman Islands, the Spanish government/tax system will know (unless you make sure you hide it... but this is another topic). At some point you won’t be a UK taxpayer, in that moment the Spanish government/tax system will categorize you as Spanish taxpayer. I mean, if you are a Spanish citizen and you try to pull this trick, it may work as long as you never try to transfer the money you saved in the Cayman Islands to any Spanish bank account (any normal bank account, actually).

That doesn't sound right, but maybe there is something about the Spanish law I don't know. You can transition to other countries tax residency in Germany if you de-register(most countries don't have the concept of de-registering) and enter the other ones without making use of double taxation laws. You do have to notify your local tax authority of leaving though otherwise they'll happily continue treating you like a resident. Usually the overlap is something like a year. Most countries actually have insight into each others tax records nowadays.

Ah ok, that is very particular: tax havens and Spanish nationality. But thanks, I did not know that. And luckily neither applies to me!

It's even more particular, but in practice, it does affect a lot of funds, if not a lot of people - which is why they legislated. One can move to a no/low tax jurisdiction and not be a Spanish tax resident as long as they're covered by a double taxation agreement.

I too thought of moving my business to Spain until I started speaking to friends and acquaintances that had businesses in Spain. Lots of horror stories.

Can you give us a brief idea of what they said?

Not the parent but from my own experience having had companies in many countries: Spain was by far the hardest and most confusing. I only had companies (4) in Andalusia, so I cannot comment on other regions; where other countries are quite logical and I am usually able to reason with the tax auditors, in Spain it was hostile and most accountants, lawyers and gestors basically told us, time and time again, to just relax and do many illegal things as you will lose boatloads of money I'd you do not. However, I like sleeping at night as do my partners so with did everything by the book and it was extremely painful to do so. There are rules on rules on rules, deducting business costs are hard if not impossible etc. And you need help for everything: in Spain there is an industry called Gestors who are not accountants but people who help navigate the bureacracy. The Spanish use them as well and there are many all over the place. So you pretty quickly find out things work if you are a tiny company (autonomo) and just don't declare any tax (put it in your matress), hire people by paying them cash etc. Or you need to be a large corp with lawyers, accountants etc to navigate things efficiently. In between you mostly just get misery. I sold and closed the companies and the people that bought them since then burnt out and quit or just adopted what my Spanish friends call 'the Spanish way', which is, quite simply basically running almost fully illegally: having a 'broken' PoS all the time (so people have to pay cash), using black funds to pay people and goods and just showing losses all the time (paying only the autonomo social security and nothing more). I would find it impossible to sleep as I simply cannot accept the thought of the Guardia stomping down the door in a few years. My friends tell me I worry too much about nothing... maybe; I would never do it again.

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.

I’d also be very interested in learning more.

> Tax residency is a very complicated matter but in general, you do not loose tax residency 183 days after leaving.

In Croatia you do - this is why sailors who spend >6 months on the sea don't pay income tax.

South African sailors who spend more than 183 days outside the country also don't pay income tax, but they usually are still tax resident: The first million Rand of employment income earned outside South Africa is exempt. But independent contract and investment income is still taxed.

And I'm pretty sure our law was based on laws in other countries, like the UK.

Not sure why you’re downvoted. In Serbia it works like that as well.

TBH in most places it is like that, even spain IIRC. I don't know what OP meant

That's not true. If you have an apartment in Croatia, or if your family lives in Croatia, you are a tax resident in Croatia even if you don't spend a single day there.

https://www.oecd.org/tax/automatic-exchange/crs-implementati...

Hmm, I was just this minute looking at apartments in Croatia after a nice trip there. Think I’ll put that plan on hold!

That's almost certainly not the case since I know multiple people who got in trouble when COVID started because they weren't able to board for a long time and they would stay on land for >6 months and have to pay income tax on the year so far + no income from not being able to work.

In the UK you are non-resident for tax purposes provided you spend 183 or more days of the tax year abroad, and your UK residence is not your sole residence.

Even as a non-resident you are still liable to pay UK tax on UK income, however.

Not true.

https://www.gov.uk/government/publications/rdr3-statutory-re...

For the vast majority of people, what I wrote is entirely true. Yes, it’s complicated and some people will have exceptional circumstances. But most of the more complex tests on the page you list are for people who want to prove they are UK tax resident, not that they’re not!

Not really, if you spend 120-183 days in the UK, to not be a tax resident, you'd need to not have family there, not have a house/hotel for more than 90 days, nor work there for more than 40 days, nor have spent more than 90 days there the year prior and you'd need to have spent more time in another country. It's a lot of conditions!

The same with Canada. Technically we have a similar residence requirement as far as number of days present is concerned. However try convincing the CRA that you're not a tax resident is far more difficult.

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.

Yeah, but most of those tests are actually pretty easy to pass for someone who is not tax resident.

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.

It's easy for someone who's not tax resident to pass a non-tax residency test? Isn't that a tautology? ;)

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.

> "It's easy for someone who's not tax resident to pass a non-tax residency test? Isn't that a tautology? ;)"

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!

Another counterpoint, in Australia, you lose tax residency the day you leave (assuming you then spend a majority of the year outside the country).

Got any links with more info on this? Preferably from the ATO?

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.

yea, not sure what the OP is referring to or what their personal circumstances are but that is definitely not as simple as that from personal experience (i left Australia for 10 months) along with first hand accounts of people I know.

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.

Not even close! You can lose tax residency the say you leave ... or you can be overseas for years on end, and still be an Australian tax resident (did that myself for example!). The ATO is notorious for being one of the hardest tax systems to escape.

You just don’t need to tie any of these tax statuses and income to your person.

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.

Um...what? Not sure where you got that UK stat from, but it's completely not true. https://www.gov.uk/tax-foreign-income/residence

Yeah, they designed tax law such that only big companies can evade it.