Post: #26

(09-02-2013 11:49 PM)theArbiter Wrote:  

(09-02-2013 10:27 PM)AsiaBaller Wrote:  If you aren't liable for taxes world wide by your citizenship (this is the case for americans, not sure for which other countries too), then you can legally get around paying taxes at all mostly, if your business is purely online based.

Just to clarify your second point, it is not necessarily true that you can avoid taxes if your business is purely online based.

That was based on the assumption that you don't stay anywhere longer than 90 days per year and that your business entity is based somewhere where taxes are only levied on businesses that generate income locally.

With readily available serviced apartments and monthly rentals this has become easier than ever before.

I didn't even know that singapore doesn't levy taxes on foreign income for residents, but the extremely high costs of living is kind of a tax in itself.

Post: #27

(09-02-2013 11:49 PM)theArbiter Wrote:  Actually, Wikpedia has a list: http://en.wikipedia.org/wiki/Internation...on_systems

Check the "resident foreigners" column. For those countries that tax worldwide income by residency, make sure you figure out how many days you can stay in a country before you are considered a "resident".

I'm not sure if that list is actually correct when it comes to taxation of foreign income for non-domiciled residents of Ireland or the UK. Why do so many Arabs and oligarchs live in London?
Here is one article I found that states the position for Ireland.
http://www.pearse-trust.ie/blog/bid/8999...o-Consider

Post: #28

I also feel that the list might be potentially misleading for certain countries, so I'm going to summarize again:

If you stay in a country for less than 90 days, you're probably safe. If it's above that (and especially if you stay over half the year somewhere), do your due diligence. Check the sources.

Post: #29

This is a complex issue since international tax law is anything but clear. Usually, you will pay tax in the country you work in, however, some countries will decide to tax you if they think you have the most of your life in their country (such as Denmark).

However, there are very few clear rules for this. Americans apparantly need to pay tax regardless of where they live, which in my opinion is close to slavery in that you can never escape the taxman in the US unless you denounce citizenship which I wouldn't do before being a citizen of another 1st world country.

But be realistic, how is the US tax man, far less any other tax man going to figure out if you make a couple of dollars online and you avoid red flags?

If you're making enough, the smart choice is to incorporate a company in Hong Kong or Singapore, which both have no or very low taxes on income earned abroad. Your company is a separate entity which can (but I don't recommend) be set up with strawman. This kind of setup is VERY common and it is fairly safe.

But what you have to keep in mind is that if the US really wants you - as in really, really wants you, then nothing you can do legally will help, they will simply bully any country into handing you over. Sorry, so much for your freedom as an american.

The surefire and only solution to total anonymity is a complex setup of foundations/funds in places like the Seychelles and Caymans and multiple shell companies around. Oh yeah, and keep some gold in a bank vault some where.

The above is not ramblings, this is the way it is done.

I doubt you need that though. I would advise in just getting your money on a Paypal account or preferably by Western Union. Even better is to get the $2K or so and open a Hong Kong account and bill from there. You have to believe that there are better things to do for the IRS than chase small fish.

Just be aware, that working in many countries is not allowed on tourist or educational visas, so keep a low profile. Nothing to be worried about, plenty of people work online and live where they please without paying any taxes.

In reality, local countries tax codes are simply not up to speed with the modern digital nomad, so don't feel bad about it. I would like to pay taxes in the country I choose to live in, but in most cases, it is simply not feasible.

Morally speaking, spending your income earned abroad in the local economy is better than paying taxes anyway and that money will eventually find its way into state coffers.

Hope it helped, feel free to ask me if you have questions about opening a Hong Kong corp.

Post: #30

(09-03-2013 05:09 PM)scandibro Wrote:  ...
Just be aware, that working in many countries is not allowed on tourist or educational visas, so keep a low profile. Nothing to be worried about, plenty of people work online and live where they please without paying any taxes.

In reality, local countries tax codes are simply not up to speed with the modern digital nomad, so don't feel bad about it. I would like to pay taxes in the country I choose to live in, but in most cases, it is simply not feasible.
...

Imagine an American freelancer staying in Thailand on a tourist visa and working for American clients. Is it still technically illegal from the Thai tax office point of view?

Post: #31

(09-03-2013 08:27 PM)Northern Wrote:  

(09-03-2013 05:09 PM)scandibro Wrote:  ...
Just be aware, that working in many countries is not allowed on tourist or educational visas, so keep a low profile. Nothing to be worried about, plenty of people work online and live where they please without paying any taxes.

In reality, local countries tax codes are simply not up to speed with the modern digital nomad, so don't feel bad about it. I would like to pay taxes in the country I choose to live in, but in most cases, it is simply not feasible.
...

Imagine an American freelancer staying in Thailand on a tourist visa and working for American clients. Is it still technically illegal from the Thai tax office point of view?

Yes, and the definition of 'work' is very broad. Going strictly by the letter of the law, even answering some emails is a violation.

In reality, thousands of foreigners work on the internet in Thailand and the local authorities are not in a hurry to do something about it. Remember that prostitution is actually illegal in Thailand. What the law states and how the law is carried out is not at all the same thing.

As long as you can pay your way, you are going to have little problem in Thailand. As I said, who is going to discover someone writing a bit on their blog if anyone asks? Don't brag about it and you will be fine. A friend of mine is sort of a real entrepreneur and sold a major software as service site and he says that several online startups are working out of coworking spaces in Thailand and none of them even have a work permit.

Post: #32

It's correct that US citizens are taxed on their worldwide income, regardless of where they live, but this isn't as bad as people think in terms of tax impact. The US has tax treaties with almost every country, which means you won't be double-taxed. So your tax burden on earned income is equal to the higher of the US tax rate vs the tax rate where you live.

For example, if you live in Germany and you taxes are $20k and you paid those to Germany, then your US tax bill on that income would be $21k, then you also show a credit of $20k for taxes already paid in Germany, and you owe the US $1k. So if you're moving from the US to another country, your taxes are only going to go up if you move to a country with a higher tax rate. They may not go down either, though.

As for online businesses, the first thing to consider is if you want to set it up as a flow-through entity (usually an LLC in the US), where the company's profits are taxed at your personal income tax rate, as earned income. The other way is your company pays profit taxes where it is located, then distributes dividends to you (as the owner), and you pay capital gains/dividends taxes on your personal taxes. In other words, the profits are taxed twice, versus only once as a flow-through. This is nothing new -- if you own stocks that pay dividends, the company paid corporate taxes, then you pay dividend tax (as declared on a 1099-DIV form in the US) on what you receive.

As for just setting up as a Paypal account or something, that can be difficult in terms of tax avoidance as ultimately that account will be somehow linked to a bank account, and then that money is reported to the authorities.

What's not clear here is if the goal is to come up with methods for tax evasion or tax optimization, which are two different animals entirely.

My personal take on things is that until the numbers you're dealing with get pretty big, it's not worth spending too much time on it. Yes, you could set up a shell company in country X with lower rates, etc but you face some minimum flat fees no matter how much you make for that setup. Until you're making decent money, it's not worth the hassle. By the time you do make decent money, you can pay a tax expert to figure out what works best for you.

Post: #33

(09-04-2013 01:37 AM)paninaro Wrote:  What's not clear here is if the goal is to come up with methods for tax evasion or tax optimization, which are two different animals entirely.

My personal take on things is that until the numbers you're dealing with get pretty big, it's not worth spending too much time on it. Yes, you could set up a shell company in country X with lower rates, etc but you face some minimum flat fees no matter how much you make for that setup. Until you're making decent money, it's not worth the hassle. By the time you do make decent money, you can pay a tax expert to figure out what works best for you.

I disagree that tax evasion and tax optimization are different things. The only thing that matters is if it is legal or not. International tax law is a very complex issue and one that has many different shades of grey instead of black and white.

If you plan on living abroad either with a fixed residency or as a sort of digital nomad, then it is absolutely worth spending the little money required (less than $2K) to get a Hong Kong company. A Hong Kong company is also recognized all over the world and has no negative reputation unlike a company in the Carribeans/Seychelles/Malta etc. There are other benefits as well, such as the government not suddenly deciding to take your money as we saw in Cyprus. For Europeans, this may very well be a legitimate concern in the years to come.

It is not difficult and it is not illegal. The only thing you need to do is tell your home country you don't live there anymore. For most Europeans or non-americans, this will have no negative impact and it is usually easy to take up residency again.

But I do agree that if you don't have business or freelance income in the levels of a good job at home, then there is no need to setup a company.

Post: #34

(09-04-2013 09:51 PM)scandibro Wrote:  I disagree that tax evasion and tax optimization are different things. The only thing that matters is if it is legal or not.

Maybe it's just terminology. To me:

Tax evasion - Setting up a company in an off-shore location and not declaring the income at all, hiding it, and doing this illegally.
Tax optimization - Setting up a company in a low-tax jurisdiction, but declaring the income fully and paying those (low) taxes. Legal.

I know people who do both, for various reasons. They both have their trade-offs. I remember hearing a story a few years ago when Russia dropped its tax rate, and tax revenues actually went up. At the previous rates, everyone just evaded. At the lower rates, a lot of people figured it was easier just to pay and not have to always be looking over your shoulder or coming up with complex evasion schemes.