Get personalized advice about tax, asset protection, offshore banking, residency, and citizenships: calendly.com/michael-rosmer?month=2021-03 You can visit our website for more information about us: offshorecitizen.net
Great video. I moved to Panama to take advantages on the tax benefits. I eventually want to spend 4 months a year here and the reminder travelling the world.
Did you end up getting a tax residency certificate? If you end up only doing 4 months you lose this status. Im also curious about this. A country like Canada, would the permanent residency be enough in addition to if you rent an apartment or do they actually need you to show them to tax certificate to leave you alone? This is what Im afraid of as I dont want them to call me a tax resident of Canada, but Im also not even one of Panama either. I guess the only solution is to go somewhere that has a tax treaty with Canada to avoid double tax. Are there countries that you can get tax status officially by living less than 6 months that country like Canada would recognize? Im sure I can get tax residency in somes places by living there one month, but Im positive Canada would tell me too bad youre still out tax resident. Maybe im overthinking this but its a valid concern
As a lawyer, I appreciate how you are explaining far better, some of the nuance required with this strategy, than the other UA-camr in this space describes it. Personally when I think about this strategy, I believe that for it to be successful, you almost have to be an enterprenuer with a staff, you probably need at least two companies for the strategy to be beneficial to you in terms of tax minimization, with limited likelihood of an audit or tax enforcement proceeding prevailing against you. You probably need a transfer pricing study that allows the income generating company to successfully outsource labor costs to the staff hired by that second company. You probably need that second company to be located in a country that does not use a management and control tax residency scheme. You as the entreprenuer likely need to be employed by that second company which is responsible for doing work for the income generating company on a day to day basis and that company likely needs to be the manager of the revenue generating company. You will and probably should be performing most if not all of your work in the country where that outsourced labor providing company is situated. That country would probably be a better locstion for you if it were a territorial tax country, in my opinion. You should probably be paid a salary by that company in that jurisdiction on which you are paying whatever the required taxes are and you should definitely have a work permit or right to work in that jurisdiction. I also think you may need to hold annual board meetings for the income generating tax free company in a jurisdiction which is zero tax, but which is also not necessarily the domicile of the company where the income generating company is registered, unless that company benefits from management and control being exercised in a country such as a Malta with it's non-domiciled tax regime for example, then Malta will obviously be the location of the board meetings. If you are in a zero tax country for your board meetings, then you will need to be worried to a degree about work permits, but also economic substance rules and tax residency. You may need to be worried about work permits for the board meeting country regardless. The good news is that some zero tax Caribbean jurisdictions have favorable rules regarding the need of a work permit and board meetings, mostly to encourage "working vacations," but that is one that takes some reseach to figure out as well. Most of what I am saying is that it is a difficult strategy to implement if you want to spend any time in a sophisticated jurisdiction that is likely to enforce their tax laws and pursue payment. An easier strategy may involve a residency in a territorial tax country that does not have management & control residency rules, this to me means Thailand or Georgia, maybe Paraguay or Costa Rica, with a company resident in a zero tax jurisdiction with actual substance in that country which would be incredibly costly to staff, so that is out, or a business combination that allows for zero tax treatment by the use of multiple structures and certain free zone type companies in specific jurisdictions. In this case where you are living in a specific territorial tax jurisdiction you will probably have a branch company of some variety or a local company in the jurisdiction where you reside that has a transfer pricing study and outsourcing agreement in place with your income generating company regardless to pay you a salary for your work. That is just how I would structure things to make it hard for tax regulators to argue against your minimization strategy, but... As I said, I appreciate the fact that you are pointing out the need for nuance. Absent nuance, you will need far greater mobility than a "trifecta" strategy, I mean what country is going to pursue you for 3 weeks worth of earnings while you were "on vacation" in their country and haven't been there in 3 years? Now if you are in Mexico for 4 months every year, I think even Mexico is likely to argue you are a resident and pursue you for back taxes. Hell at this point, if you were living in Panama for 4 months every year, I think there is an above average chance that with CRS they may want their cut, at least for any salary you drew for work you did in Panama, and those Panamanian socials are no joke.
Yeah it really depends where. A lot of countries aren't very good at enforcement and detection so people easily get away with things that don't conform to the rules. That's fine but it's dangerous to confuse getting away with something with it being within the rules. Fortunately, there's lots of places where the rules aren't so complex. For instance in many places transfer pricing doesn't require formal studies or detailed reporting you're just expected to be able to provide that if they ask to justify the pricing. So really it all comes down to the nature of your business/income and where you want to be. It certainly makes some pure zero tax country like UAE appealing. As an aside Costa Rica isn't nearly so good as people tend to think. It's more an example of a place that isn't good at policing than it is an example of a country with lenient rules.
@@MichaelRosmer Costa Rica would be on a list of places where I would be on vacation as opposed to working. I definitely wouldn't have a business nexus there if I could avoid it.
First, thank you so much for the insights. Second... Holy crap my head hurts after reading that. It's going to take me a while to process this and comprehend it.
Really liked this and you are correct. So many clients think an offshore company and bank account is enough. Your article covers a lot that people do not even consider.
What if you are retired and only have investment income - so much of the complexity you describe relates to complexities of operating one or more businesses?
Great content as always, Mike. In my opinion, getting a tax residency in places like Malta (through the Global Residence/Residence Programme for Eu citizens) or Cyprus (60-day rule) might be great. They have an extensive network of tax treaties. What do you think Mike?
Im looking at these as well, mainly to get a tax residency that I can tell Canada this is where I pay tax now I dont like that Malta has the 15,000 EUR minimum tax though, but the no residency requirements is nice. You do have to rent an apartment at minimum. So therefore, youre looking at around 15,000 EUR + 9600 EUR = 24,600 EUR minimum annually just to get the benefit of the tax residency. Getting up there, may not make sense for everyone. How about Cyprus or Greece. What are their requirements?
I live in Belgium where income tax is the highest in the world but wholesale houses virtually in the US which is US sourced and taxed only on US federal level and because of tax treaties I pay zero in Belgium. Love double tax treaties :)
You might want to check that. Double tax treaties typically don't mean you can pay tax on the other country and not pay tax in your own country. Usually, you'll get a, tax credit for taxes paid abroad by still get taxed locally. As a general rule if you're a, tax resident you're taxable locally, if you're not then you're still taxable on local source income. For instance, the US will tax permanent establishments in the US owned by foreign persons but the foreign countries can still tax them. For instance this common language: "The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as are attributable to that permanent establishment."
@@MichaelRosmer The information you provide looks correct to me but it depends on the specific country that you are in when it comes to DTT. In Belgium you get exempt from paying Belgian income taxes on US sourced income (yet you still pay Belgian SS tax on it, but the income tax is the biggest burden to avoid). You do however have "progressievoorbehoud" which means that foreign income pushes you in a tax bracket in Belgium as if you made the income in Belgium. In other words Belgian income gets easily taxed in the highest bracket, even if it is only a few thousand euros per year. The permanent establishment is not applicable in my situation because it concerns real estate profits, which is always sourced in the country where the real estate is located in, whether you have a PE or not. At least this is how myself and my accountant understand the tax treaties..
Hi Mike, thanks for the video. One question: Aren't the tie-breaker rules of article 4 of the OECD model tax treaty unambiguous? In the latest 2017 draft update, there was a clear hierarchy of tie-breaker tests established. According to that, priority 1 goes to the question of permanently accessible home: If there is only one home permanently accessible (irrespective of whether or not it is indeed occupied), then this becomes the unique place of tax residence and all other criteria become irrelevant (centre of vital interests, place of habitual abode, and nationality). Applied to the trifecta strategy, that means, as long as no permanent accessible home is available in any of the two other temporary "homes", there is no basis for taxation in those countries. Please correct me if I am wrong.
Changes in the MM2H and the dubai golden visa come in helpful to allow u to build a trifecta more easily. With 90 days of living there u can become a tax resident and pay little to no tax in either of them. That said beware not to spend more time in anothet country, particularly one that isn't tax-friendly
Yeah I've made a number of videos in the past about how tax residency in zero tax countries is a bit of a scam. You need to pay attention to non tax residency
@@MichaelRosmer Maybe if you can get tax residency from these types of new "digital nomad" visa's. I guess thats most important. I noticed they just say you can work or stay without needing to renew a visa, but they speak nothing about tax, and often say you will still be taxed by your home country in most cases.
@@MichaelRosmer Yeah, he's the reason why I found u. He's heavy on fluff and light on content on around half of his videos, but it's because he's a daily video poster so he gets repetitive sometimes
Get personalized advice about tax, asset protection, offshore banking, residency, and citizenships:
calendly.com/michael-rosmer?month=2021-03
You can visit our website for more information about us: offshorecitizen.net
Mike. I much prefer your more humble channel to Nomad Capitalist. I find that dude waaaaaaay too smarmy! Keep up the great work.👍
Thank you, truly appreciate your support!
How did you like the video?
Mike your channel is great, you deserve WAAAY more subs mate
Thanks lots!
Agree 100%
instaBlaster.
Residency in Singapore, chalet in Gstaad Switzerland, house in Côte d'Azur, beach house in Greece .
Great video. I moved to Panama to take advantages on the tax benefits. I eventually want to spend 4 months a year here and the reminder travelling the world.
Did you end up getting a tax residency certificate? If you end up only doing 4 months you lose this status. Im also curious about this. A country like Canada, would the permanent residency be enough in addition to if you rent an apartment or do they actually need you to show them to tax certificate to leave you alone? This is what Im afraid of as I dont want them to call me a tax resident of Canada, but Im also not even one of Panama either. I guess the only solution is to go somewhere that has a tax treaty with Canada to avoid double tax. Are there countries that you can get tax status officially by living less than 6 months that country like Canada would recognize? Im sure I can get tax residency in somes places by living there one month, but Im positive Canada would tell me too bad youre still out tax resident. Maybe im overthinking this but its a valid concern
As a lawyer, I appreciate how you are explaining far better, some of the nuance required with this strategy, than the other UA-camr in this space describes it.
Personally when I think about this strategy, I believe that for it to be successful, you almost have to be an enterprenuer with a staff, you probably need at least two companies for the strategy to be beneficial to you in terms of tax minimization, with limited likelihood of an audit or tax enforcement proceeding prevailing against you. You probably need a transfer pricing study that allows the income generating company to successfully outsource labor costs to the staff hired by that second company. You probably need that second company to be located in a country that does not use a management and control tax residency scheme. You as the entreprenuer likely need to be employed by that second company which is responsible for doing work for the income generating company on a day to day basis and that company likely needs to be the manager of the revenue generating company. You will and probably should be performing most if not all of your work in the country where that outsourced labor providing company is situated. That country would probably be a better locstion for you if it were a territorial tax country, in my opinion. You should probably be paid a salary by that company in that jurisdiction on which you are paying whatever the required taxes are and you should definitely have a work permit or right to work in that jurisdiction.
I also think you may need to hold annual board meetings for the income generating tax free company in a jurisdiction which is zero tax, but which is also not necessarily the domicile of the company where the income generating company is registered, unless that company benefits from management and control being exercised in a country such as a Malta with it's non-domiciled tax regime for example, then Malta will obviously be the location of the board meetings.
If you are in a zero tax country for your board meetings, then you will need to be worried to a degree about work permits, but also economic substance rules and tax residency. You may need to be worried about work permits for the board meeting country regardless. The good news is that some zero tax Caribbean jurisdictions have favorable rules regarding the need of a work permit and board meetings, mostly to encourage "working vacations," but that is one that takes some reseach to figure out as well.
Most of what I am saying is that it is a difficult strategy to implement if you want to spend any time in a sophisticated jurisdiction that is likely to enforce their tax laws and pursue payment.
An easier strategy may involve a residency in a territorial tax country that does not have management & control residency rules, this to me means Thailand or Georgia, maybe Paraguay or Costa Rica, with a company resident in a zero tax jurisdiction with actual substance in that country which would be incredibly costly to staff, so that is out, or a business combination that allows for zero tax treatment by the use of multiple structures and certain free zone type companies in specific jurisdictions.
In this case where you are living in a specific territorial tax jurisdiction you will probably have a branch company of some variety or a local company in the jurisdiction where you reside that has a transfer pricing study and outsourcing agreement in place with your income generating company regardless to pay you a salary for your work.
That is just how I would structure things to make it hard for tax regulators to argue against your minimization strategy, but...
As I said, I appreciate the fact that you are pointing out the need for nuance. Absent nuance, you will need far greater mobility than a "trifecta" strategy, I mean what country is going to pursue you for 3 weeks worth of earnings while you were "on vacation" in their country and haven't been there in 3 years? Now if you are in Mexico for 4 months every year, I think even Mexico is likely to argue you are a resident and pursue you for back taxes.
Hell at this point, if you were living in Panama for 4 months every year, I think there is an above average chance that with CRS they may want their cut, at least for any salary you drew for work you did in Panama, and those Panamanian socials are no joke.
Yeah it really depends where. A lot of countries aren't very good at enforcement and detection so people easily get away with things that don't conform to the rules.
That's fine but it's dangerous to confuse getting away with something with it being within the rules.
Fortunately, there's lots of places where the rules aren't so complex. For instance in many places transfer pricing doesn't require formal studies or detailed reporting you're just expected to be able to provide that if they ask to justify the pricing.
So really it all comes down to the nature of your business/income and where you want to be. It certainly makes some pure zero tax country like UAE appealing.
As an aside Costa Rica isn't nearly so good as people tend to think. It's more an example of a place that isn't good at policing than it is an example of a country with lenient rules.
@@MichaelRosmer Costa Rica would be on a list of places where I would be on vacation as opposed to working. I definitely wouldn't have a business nexus there if I could avoid it.
First, thank you so much for the insights.
Second... Holy crap my head hurts after reading that. It's going to take me a while to process this and comprehend it.
Really liked this and you are correct.
So many clients think an offshore company and bank account is enough.
Your article covers a lot that people do not even consider.
What if you are retired and only have investment income - so much of the complexity you describe relates to complexities of operating one or more businesses?
lol @9:20 "go where you're treated best" 🤣🤣🤣
I’m seriously thinking of a Twelvefecta going forward.
I feel like six should be enough for me. Probably.
If you have 3 wives in 3 countries then that makes perfect sense
Thanks for this video Michael, definitely given me something to think about.
Great content as always, Mike. In my opinion, getting a tax residency in places like Malta (through the Global Residence/Residence Programme for Eu citizens) or Cyprus (60-day rule) might be great. They have an extensive network of tax treaties. What do you think Mike?
It can be definitely. It depends on your desires in terms of where you want to live, the nature of your income etc
Im looking at these as well, mainly to get a tax residency that I can tell Canada this is where I pay tax now
I dont like that Malta has the 15,000 EUR minimum tax though, but the no residency requirements is nice. You do have to rent an apartment at minimum. So therefore, youre looking at around 15,000 EUR + 9600 EUR = 24,600 EUR minimum annually just to get the benefit of the tax residency. Getting up there, may not make sense for everyone.
How about Cyprus or Greece. What are their requirements?
I live in Belgium where income tax is the highest in the world but wholesale houses virtually in the US which is US sourced and taxed only on US federal level and because of tax treaties I pay zero in Belgium. Love double tax treaties :)
You might want to check that. Double tax treaties typically don't mean you can pay tax on the other country and not pay tax in your own country. Usually, you'll get a, tax credit for taxes paid abroad by still get taxed locally.
As a general rule if you're a, tax resident you're taxable locally, if you're not then you're still taxable on local source income.
For instance, the US will tax permanent establishments in the US owned by foreign persons but the foreign countries can still tax them.
For instance this common language:
"The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as are attributable to that permanent establishment."
@@MichaelRosmer The information you provide looks correct to me but it depends on the specific country that you are in when it comes to DTT. In Belgium you get exempt from paying Belgian income taxes on US sourced income (yet you still pay Belgian SS tax on it, but the income tax is the biggest burden to avoid). You do however have "progressievoorbehoud" which means that foreign income pushes you in a tax bracket in Belgium as if you made the income in Belgium. In other words Belgian income gets easily taxed in the highest bracket, even if it is only a few thousand euros per year. The permanent establishment is not applicable in my situation because it concerns real estate profits, which is always sourced in the country where the real estate is located in, whether you have a PE or not. At least this is how myself and my accountant understand the tax treaties..
Hi Mike, thanks for the video. One question: Aren't the tie-breaker rules of article 4 of the OECD model tax treaty unambiguous? In the latest 2017 draft update, there was a clear hierarchy of tie-breaker tests established. According to that, priority 1 goes to the question of permanently accessible home: If there is only one home permanently accessible (irrespective of whether or not it is indeed occupied), then this becomes the unique place of tax residence and all other criteria become irrelevant (centre of vital interests, place of habitual abode, and nationality). Applied to the trifecta strategy, that means, as long as no permanent accessible home is available in any of the two other temporary "homes", there is no basis for taxation in those countries. Please correct me if I am wrong.
Changes in the MM2H and the dubai golden visa come in helpful to allow u to build a trifecta more easily. With 90 days of living there u can become a tax resident and pay little to no tax in either of them. That said beware not to spend more time in anothet country, particularly one that isn't tax-friendly
Yeah I've made a number of videos in the past about how tax residency in zero tax countries is a bit of a scam. You need to pay attention to non tax residency
How much do you charge / hour to discuss strategies?
Prices listed here
calendly.com/michael-rosmer?month=2021-03
Can you do a video on the new Cayman Islands Global Citizen Program
Will do
Anything in particular you'd like to know about it?
@@MichaelRosmer Maybe if you can get tax residency from these types of new "digital nomad" visa's. I guess thats most important. I noticed they just say you can work or stay without needing to renew a visa, but they speak nothing about tax, and often say you will still be taxed by your home country in most cases.
Digital Yuan?
Nobody gives a shit to be honest. Americans are just used to the scrutiny of the IRS
Trifecta strategy, another reason for stoping travel.
Ha, I knew you were a follower of Andrew Henderson. You look like him, you talk like him, and you think like him.
The content in Andrew's videos is quite shallow compared to Michael
@@dr.winner2516 I think they're similar quality. But Henderson does a lot of clickbait. Quite annoying.
@@ericyuan9718 Haha, that's the shallow part I was talking about, a lot of times he explains very little and doesn't really cover the video title
I of course am familiar with him, he's done a great job marketing. Not sure I'd call myself a follower.
@@MichaelRosmer Yeah, he's the reason why I found u. He's heavy on fluff and light on content on around half of his videos, but it's because he's a daily video poster so he gets repetitive sometimes