Becoming a tax nomad

[BlueSkyNick]

Having read much of the Liveaboard stuff over recent months, I am now indulging in my first post - I am a Scuttlebutter by habit.

SWMBO and I have been considering a home on the Med for some time, and have been researching various alternatives, against our list of criteria. One of these is of course the financial aspects, including personal taxation.

Thinking laterally, it has occured to me that adopting a Liveaboard life style would enable us to become tax nomads. ie spend less time in each country than its required number of days to become resident for tax purposes. This could be done by moving between, say, Portugal Spain and France, and spending some time in the UK each year.

I can't help thinking that it if is this easy, then lots of people would be doing it already. Maybe they are and I just haven't realised it, or am I over simplifying things?

Apologies if this has been discussed in length before - I have searched on the forum and only found THIS POST which was primarily about Capital Gains Tax, but nothing more about income tax.

Finally, are there any recommended websites or publications which address it in more detail?

TIA

 

[Swagman]

Becoming a Tax Nomad

Hi Nick,
I am not an accountant or a tax lawyer - so you can't take this as gospel - it is just my understanding and a good tax accountant should be consulted - it is usually well worth the investment.

To my understanding it is your country of domicile to whom you may have a tax liability for your income.

Most western countries have reciprocal agreements with others to avoid duplicated tax payments - and I also understand most have a time period of residence per annum one needs to exceed before a local liability is created.

I have heard of some who travel continually - never more than say six months in one country - and most of those have claimed they have no obligation to pay local taxes. I suspect the are simply avoiding the issues (good for them) BUT are perhaps not fully compliant with the tax laws of the UK.

I'm sure others will come back with other views - but repeat, it is worth spending the dosh to speak with a good tax accountant or lawyer and following thier advice. If they get it wrong - you can always sue!!
Cheers
JOHN

 

[Sea Devil]

Nick hi,

It is no problem - I sailed the Med for years as tax nomad - but then I was a freelancer working in various countries and paid via an agent...

Catch 22 for you may be if you earn - receive your money in the UK. You have to pay tax on all the dosh you get in the UK - if you earn the dosh outside the UK then as a tax nomad you do not have to pay UK tax on it... You may have to pay the country you earn the tax in their money but that's another matter.

If you do not want to pay tax on monies earned outside the UK and get one or two small advantages then you tell the IR that you are a liveaboard outside UK waters and that's it BUT you will still pay income tax on all monies gained in the UK..

I am not an accountant - this is merely my experience..........

 

[BlueSkyNick]

Thanks; the additional complication which I choose to omit from my initial post is that I work through my own limited company in the UK. Hence my company can receive money from UK clients, or Dutch, or whatever country the client is in and where I worked. My company then pays my wife and I salaries and dividends.

I need to find out if I can pay salaries and dividends to ourselves out of the company in the UK to a bank account in another country.

On the other hand, I could just concede defeat and keep that nice Mr Brown happy!

 

[chrisc]

Re: Becoming a Tax Nomad

it used to be that if you are less than 182 days (counted at midnights)in a country you were not liable to tax .but were of course liable in the country you have official residence in (UK i guess)to achieve non-resident status in uk is a lot more difficult now than it used to be .one has to be out of uk for (i think )minimum 3 years ,but you were allowed a certain amount of time in uk during this time by a complicated rule.

 

[masca]

Re: Becoming a Tax Nomad

We too are currently looking into this possibility, and are in a similar situation business wise. My understanding is that so long as you do not spend any more than 182 days a year AND more than 90 days a year as an average over 4 years, in any one EU country, you are a tax nomad. As far as I am aware, domicile does not effect this (within the EU at least). Am I correct in all this? My current concern is how I will determine where my business income is effectively earnt - i.e.: is it where I am, or where my client is? - and how I will pay a little tax in possibly a lot of countries! The form filling could be something of a nightmare!! What if all business is officially conducted whilst afloat in international waters?

 

[Deleted member 478]

Nick

I proved to Gordon Brown's lot that I was outside the UK by showing him my bank statements (showing withdrawal from foreign ATM's and showing less than £6k pa income) and my mobile phone statement showing foreign originated callsl. I then received a nice letter saying they would no longer be sending me tax returns. The letter also asked me to be nice enough to notify them if I returned.

Wonder if I should?

 

[Captain Coochie]

You've probably got a tax return waiting for you at every port knowing them /forums/images/graemlins/blush.gif(

 

[sailorman]

[ QUOTE ]
You've probably got a tax return waiting for you at every port knowing them /forums/images/graemlins/blush.gif(

[/ QUOTE ]

shouldnt that read Women not tax rtn /forums/images/graemlins/wink.gif /forums/images/graemlins/wink.gif /forums/images/graemlins/wink.gif /forums/images/graemlins/wink.gif

 

[chrisc]

Re: Becoming a Tax Nomad

if you are in international waters you are, possibly, not liable to any financial laws.
there are ,i believe,many new being boats sold a long way from land .

 

[BlueSkyNick]

Thanks for all the feedback, folks.

I discussed the matter with SWMBO last night, suggesting we go Liveaboard and move from country to country. I feel better this morning, as I can drink through a straw now the swelling on my lip has gone down, and the cold compress is working well on the eyes. I am now looking for a parrot - I might as well put one on my shoulder and look the part, as I could be on these crutches for quite a while! /forums/images/graemlins/laugh.gif /forums/images/graemlins/laugh.gif

Seriously though, it obviously needs a lot more research, if only I could find the right place to look without having to pay a bean-counter!

 

[pragmatist]

Have I missed something ? Was all this damage done by SWMBO ? /forums/images/graemlins/blush.gif

On a more serious note if you type tax exile from UK into Google there are quite a few useful articles by well-known beancounters for which you don't have to pay !

On a related but nastier note I had thought that investing offshore (e.g. Channel Islands) would count as outside the UK and some of our CI banking clients had suggested sailing in with a suitcase. However they amongst most of the Europe-based tax havens have agreed to conform to EU withholding tax - the benefit appears to be that they swipe the first 6%. Withholding tax is 15% rising to 20% and thereafter to a swingeing 35% ! If you beg and plead they might allow you to declare your income in your country of residence instead so HMG can take their whack which might be lower - hey ho they always win in the end !

 

[temptress]

First _ I am not a expert in this but have been living out of the UK (mostly) since the 80's although right now I'm back for a few years.

Be very carefull be very carefull. The rules are changing al the time. It is very easy (even by accident) but entirely illegal to evaide tax and they will catch you in the end. I once ended up wiht a TAX bill from HMIT for over 100K it was in error (theirs) and not my fault but it cost me a lot of time, stress and money to sort it out. Eventually they agreed that I owed them nothing but......

It is also entirely possible to do what you are suggesting and it can be done legally BUT you need to employ and PAY an accountant to look after it for you and the fees incurred will not be nominal.

I lived like this for many years but recently it has become cheaper for me to pay UK tax than the fees and extra costs for being a 'tax nomad'. Tax in the UK is the lowest in the EU. If you venture outrside the EU then taht's entirely a different story. TAX is MUCH lower but costs/fees/commissions incurred will be higher.

Also I believe that currently you can spend mpore than 60 days in any year, 90 on average in a roling 3 year period or 30 days contigiously in the UK or you will become 'odinarily resident for TAX purposes'. You also need to be 'gone' for at least five years - although you could plan to be away at least this long and then change your plans they will want some back tax from you...

You will need to check out your company as you may find that you cannot continue to be directors if you are not resident in the UK......

Go to a tax accountant and it can be done...