Digital Nomad from UK, not living anywhere permanently, taxes?

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This topic contains 7 replies, has 6 voices, and was last updated by  Robo 1 month ago.

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  • #3983

    Andrew
    Participant

    Hi

    I have just started working as a freelancer, I’m receiving payment from the freelancing website UpWork into my UK Bank Account (I’ll receive my first payment in a week or two).

    I don’t intend on moving back to the UK, at least not for 2+ years. I’ve been travelling since early last year.

    Would it be of your opinion that the proper legal thing to do is to as soon as I enter any country, register as self employed (or a company, if necessary) in that country? I’m just passing through.

    Equally I understand I’m not living in the UK, so registering as self-employed there doesn’t make a lot of sense…

    I want to record my income properly, and have proper documentation I could show anyone who might ask to see it, that ties in with reality.

    If I were to register as self-employed in the UK, I would have to provide them with an address. I don’t particularly have one, I don’t know if I could provide a relatives address and let them know I don’t live in the UK…

    Hoping there’s a solution to this, that doesn’t involve a lot of bureaucracy every time I decide to move on; typically every 2 months (or less).

    • This topic was modified 9 months ago by  Andrew.
    #3985

    IntFreedom
    Participant

    You should have a look at the so called Flag Theory:

    Flag Theory and Perpetual Travel

    Flag Theory Foundation

    #3986

    Andrew
    Participant

    Hi

    Sounds complicated! What if I just want to play by the rules? It feels like there aren’t any I can play by, that I’m falling through the cracks between nation states.

    Can I just go ahead and pay taxes to the UK, and give them a relatives address? I won’t be paying more than £3000 this year I doubt, and in 3-5 years, I’d like to move myself and my partner to the country I have dual citizenship with, and sponsor her application for residence (I’m a citizen). I need to be provide proof of income; accounts and bank statements, in order to do that.
    The reason I’m here is because I got the impression the real answer is, it’s not legal to work whilst travelling, for visa restriction reasons. Which makes little sense with all the business meetings going on around the world :S.

    #3987

    LP
    Participant

    One of the common things people will do is go and spend a few months a year in a country that doesn’t charge tax, and file your taxes there.

    You’re not tax resident anywhere, so it doesn’t make sense for you to start donating money to any government…

    Anyhow there is an article here on the matter:

    The Permanent Traveller

    #3989

    RichardG
    Participant

    Andrew, I agree you have to read ‘The Permanent Traveller’, as suggested by LP.

    Forget to be 100% compliant if you do not want to deal with a lot of complexity, plus it could not even be possible to work in some country that you are visiting (e.g. Thailand). If you move around EU, then you could officially work, but still making a return in many countries sounds like a nightmare.

    If you move away from the UK what will you do without NHS coverage and not contributing to any pension (well pension is less a concern than health)?

    The easiest solution is to use your relatives address. Lots of people are using friends address and paying a small fee. Of course is not compliant, but it is not a crime to use their address for your UK bank account and other bureaucratic stuff. You could register as sole trader or open an LTD, it depends on how much you will be earning, and you could pay yourself a salary and get some state pension when you will retire.

    However, most of the digital nomads are not compliant.They open a company in a fiscal paradise or low tax jurisdictions. Malta is probably one of the best options, corporate tax for a LTD is 5% (if properly set up). You can work as sole trader from Malta too, because incorporating in Malta is more expensive. Malta has low personal taxes too, plus money not remitted to Malta are tax free. However to pay personal taxes in Malta you have to relocate there, but rents start from 400EUR/month and you could find something cheaper too. Even if you will not stay 183 days in Malta I doubt you will have any problem.

    RAK is an option, 0% tax solution, but it is more expensive and you are supposed to live in RAK for at least 183 days/year and I do not know if it is enforced.

    There are so many options, LLC in US, LLC in Nevis, Bulgaria or Estonia companies in EU. But all these options solves the way to get paid, not taxes. If you have are resident in UK, with a company outside, say in Nevis with 0% corporate tax, then for the UK government you have to pay a corporate tax as it was a UK company.

    If you are working only with Upwork, read carefully their terms, for instance, you might not be able to use a RAK company of a Belize IBC.

    If you want to be compliant or not complicate your life, I would choose UK or Malta.

    What I really would not do, it to register in a country you are visiting, especially if you are staying two months.

    Remember that receiving a bank transfer from the US in USD to your UK bank account in GBP can be very expensive, in fees and forex. You could ask your bank to have a USD account, it is quite easy for a business account, I am not sure for a personal account.

    #3998

    Streber
    Keymaster

    The reason I’m here is because I got the impression the real answer is, it’s not legal to work whilst travelling, for visa restriction reasons. Which makes little sense with all the business meetings going on around the world :S.

    As I touch on in The Permanent Traveller, this is true but breaches are tolerated so long as it’s not abusive, negatively impacts the country, or takes on too much of a local substance.

    A very popular and very much tolerated approach is, as discussed already, form some form of zero-tax or tax-neutral entity and operate under that entity from wherever you happen to find yourself.

    Banking can be a bit of a problem if you have no permanent address, which is one reason many set up semi-residences in places like Panama, RAK, or Malta with real, permanent addresses that don’t have any negative impact on their tax situation.

    #4819

    Andrew
    Participant

    Thanks very much for your advice.

    I earnt a negligible amount of money from that project, before resigning and deciding to continue study and work — turned out spending a few weeks reading Eloquent JavaScript wasn’t quite enough to build a brand new web app employing WebSockets.

    Anyway. I may not work again until some time next year, and want to get these things resolved before I do.

    One option I have come up with myself, appears to be:
    Travel to a country where I can incorporate a company, and where the company will pay a low level of tax on income derived from outside that country. Open a bank account for that country, register a business on Upwork, and ask them to pay the company for its earnings.

    Perform work for the business, and charge my company £0 for my time.
    At some point, be located in some country, and draw down a dividend from the company to my personal account, and declare these earnings.

    As others have said here, I would not be declaring my £0 earnings to whichever country I was in at the time I was working, but I would be there as a tourist, and it would actually be true that I was primarily there for touristic reasons, not business travel — I intend only to earn a small amount each year, to fund my travels (which are surprisingly inexpensive once you start bartering with airBnB hosts in off-season locations, eating mostly local fresh produce from markets, and making use of the outdoor gyms (and outdoor activities) that many countries offer — aside the time I spend sitting on my laptop studying. I’ve also had some small success contacting meetup.com organizers and getting free accommodation in exchange for giving a talk.

    In the above blurb, I sound like I know what I’m talking about “drawing down a dividend”. I don’t, particularly, but I hope I’m on the right track at least.

    #4820

    Robo
    Participant

    Get yourself a permanent residency in any country with territorial taxation, e.g. Panama or Paraguay. Some do not require you to stay at all, some just few months. Any income you earn from outside will be zero taxed.

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