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.
These services do not provide legal representation as far as I know.
Most countries except the US will not tax you if you move to another country.
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.
Plus you would need customers who are cool with paying you through an entity like that.
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?
One country for citizenship, one country for residence, one country for your money.
This arrangement earns you a lifetime of peace of mind.
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.
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.
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.
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
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.
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?
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.
Avoid the need to pay in the first place instead of taking evasive action for payments demanded ;-)
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.
