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Today we are discussing perpetual travelers, people who don’t have a place of residency anywhere. They hop from one place to another and don’t spend too much time in any country to trigger a tax residency.
How does this work from a tax standpoint? Are there some things you should be aware of?
Could this lifestyle be a hack to not pay taxes anywhere? This actually varies case by case. In some cases, it can work in others not so much.
If you’re from the US you can’t do this. Americans will always be taxed in the US no matter where they spend their time.
What about places like Canada or Australia? These two countries don’t have citizenship-based taxation BUT they don’t really like you to be a tax resident nowhere. If you’re not paying taxes to them, they like to see that you’re paying them somewhere else. If you’re not a tax resident somewhere else, you’ll need to be paying taxes in Australia and Canada if these are your home countries.
But this is not always the case. Some countries don’t care and they allow you to be the tax resident nowhere.
What about countries that you spend a few months in? Can they tax you?
Some countries will tax you only if you spend 6 months or more in that country, others are not so simple. You may become a tax resident of a country if you have enough ties to that country.
All of these rules are not so easy to figure out, and it is very important to understand how does the tax residency work. If you’re from someplace like Montenegro you’re fine to be a perpetual traveler without paying taxes anywhere. If you’re from Australia not so much.
That’s why I advise my clients to always get a residency in a low tax country, that way they prevent their home high-tax countries from taxing their income. When it doubt this is the best way to go.
Who are we and what do we do?
We are Offshore Citizen team. We help people become global: get a second passport, set up a second residency, pay less taxes, do banking abroad, etc.
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Author: Michael Rosmer
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