Are you a practising GP/Family Doctor?
Are you thinking post Covid of ways to move online and or to reduce your overall tax burden?
If so, once can easily understand where you are coming from/what you are thinking…. If I can deliver all or most of my services online why live/pay tax in a high tax jurisdiction?
There are 2 aspects to this. The first is the issue of physical residence. The second is the issue of tax residence.
First you need to identify places where you could reside in that are nil tax or tax friendly. Then you’d need to check out their residency programs and whether you’d qualify for residency rights.
There are a number of jurisdictions where one can live exotically and free from tax. Many of the nil tax havens you’ve probably heard of or read about in novels… You may even have holidayed in some of them! They include:
• The Cayman Islands
• St Kitts and Nevis
• Dubai
• Monaco
• The Bahamas
• Bermuda
• Vanuatu
• The Turks & Caicos Islands
• Anguilla
Countries with no Income Tax
The below mentioned countries generally speaking do not levy a tax on income regardless of where the income is/was sourced:
- UAE
- Qatar
- Oman
- Kuwait
- Cayman Islands
- Bahrain
- Bermuda
- The Bahamas
- Saudi Arabia
- Brunei Darussalam
Countries That Don’t Tax Offshore Income
Another option is to live/base yourself in a country which has a territorial tax system (ia country which only taxes you on locally sourced income) and run your business income through a (tax free) Offshore company. Hong Kong is an example of such a place. Singapore is another. Panama would also be in the discussion as would the UAE be. Other examples include:
Costa Rica
Gibraltar
Hong Kong
Malaysia
Nicaragua
Panama
Paraguay
San Marino
Singapore
Seychelles
In such a scenario all your business sales in the first instance would run through a tax-free Offshore Company. Thereafter you should only (maybe) have to report/pay tax locally on any salary paid to you by the Offshore Company.
To be able to live in such a place you’d need to obtain a residency permit or citizenship. We can assist you to obtain residency rights in Panama and the UAE. We can also assist you to apply for citizenship in Nevis.
Second Issue
The next thing you need to would be to take steps to ensure that you effectively exit the local tax system. From a taxing rights perspective in terms of which country has the rough to tax you the question isn’t where I am residing (or where do I have a residency permit for) but where am I resident for tax purposes.
We are often asked by individuals where (ie in what country/s) am I liable to pay tax?
The starting point it this: If you are regarded at law to be tax resident (ie resident for tax purposes) in a particular country you are liable to pay tax there on your (usually, worldwide) income.
The concept of tax residency however (ie what it takes to be classified as non-tax resident) varies from country to country. Depending on where you originate from you may pass the non-tax resident test of one country but fail the same test had you originated from the country next door.
Let me explain….
The most well-known tax residency test is in fact the oldest ie the days spent at home test. Historically, in most countries (USA excepted – see below), you were considered non-tax resident if you spent less than half the year inside your “home” or mother country.
Over the years, and particularly with the proliferation of “fly in-fly out” jobs (seen most prevalently in the oil/mining industries) a number of countries (in particular the more developed countries) have brought into play a multifaceted tax residency test. In other words notwithstanding that you might spend less than half the year on the ground in your mother country if you have a “substantial connection” with your mother country you may still be classified as tax resident of/in that country.
So what constitutes “substantial connection”?
In considering whether you still have a “substantial connection” to your mother country a number of factors are looked at including:
- Do you retain a residency/home in your mother country?
- Do you own any personalty in your mother country (eg a car, furniture/home contents/boat/leisure toys etc etc)
- Do you have a bank account in your mother country?
- Do you have investments or business interests in your mother country?
- Do you retain a professional or trade license (eg Lawyer/Plumber/Doctor/Teacher/Nurse/Engineer/Architect/Builder/Dentist etc) license in your mother country?
- Do you keep current a golf/tennis/leisure club membership in your home country?
- Do you regularly renew a driver’s license in your home country?
- Do you have children at school in your home country?
- Do you have a spouse/partner living full time in your home country?
- Etc etc etc
Chances are, as a minimum, what you will need to do in order to become non-tax resident in your mother country is:
(a) Sell your home/residence in your mother country (or cancel any lease you might have over residential premises there)
(b) Sell any business you own on the ground in the mother country
(c) Sell all personalty owned/held in your mother country
(d) Hand in (and not renew) any professional/trade license you may have in your mother country
(e) Close down any bank/investment accounts you might have in your mother country
(f) Write to your local IRS/Tax Office and advise that you have departed the country permanently and filed your last tax return.
For USA citizens however a unique situation applies. Generally speaking, if you are a US citizen you are required to declare worldwide income in and pay tax in America regardless of (a) whether you spend less than half the year there and (b) whether you have no substantial connection with the USA. (For Americans the only way to be classified as “non tax-resident” of the US is to hand in your passport and denounce your citizenship).
All that said we are not tax advisers or financial advisers. Before committing to move abroad we’d advise you to seek advice from a local Tax Lawyer and a local tax Accountant (ie both in the country where you are departing from and the country where you are going to).
Would you like to know more? Then please Contact Us:
info@offshorecompaniesinternational.com
DISCLAIMER: OCI is a Company/Trust/LLC/LP/Foundation Formation Agency. We are not tax advisers or legal advisers. You are advised to seek local legal/tax/financial advice in regards to your local reporting/tax requirements before committing to set up or use an Offshore Company or other entity.
