Forum Moderators: martinibuster
If so, what if any challenges have you faced?
To save taxes, he claimed to live only in Monaco.
But German IRS proved, that he was living more than half the year in his apartment in Germany.
So he had to pay the German tax.
I know no low tax country where I would like to live.
Singapore's income tax, on the other hand, is very low.
On $80k you will pay 5.5% tax.
On $320k you will pay 14% tax, plus 21% on further income.
Australia, like the US, taxes its residents on foreign-sourced income (including interest, capital gains, etc etc). Singapore does too, but unless you are rich the rate is quite low. Singapore does not tax "gifts", such as payments of money from family members overseas.
It's totally different is you aren't residing in the country. Residence for tax purposes is decided by the 183 rule for both Singapore and Australia.
If you live in the USA (or any western country for that matter), it may not be a good idea to try living of your income from Switzerland. But if you have a steady job and you visit your friends in another country for a few months of the year then you may have a nice vacation fund.
It used to be that you could just open an account and draw the money off your credit card (ATM, hole in wall), but nowadays your card has a name printed on it which is also kept on the magnetic strip. The information from all bank transfers (including ATM withdrawals) is reported to the authorities, so if you take too much you may get flagged.
You can get credit cards (or card accounts) which have no name on them, just an account number. I have heard conflicting reports on how well these work, depending on where you are in the world.
Travellers checks are all reported these days and the rates and charges banks take make them unattractive as a form of money transfer.
My biggest concern at the moment is where to take my next holiday and for how long.
then you may have a nice vacation fund
Tax laws in the US, UK etc., require you to pay tax on this "vacation fund". Is there any reason why you believe it's not taxable?
I'm surprised nobody's pointed out that you can own an offshore limited company that can earn unlimited amounts without you paying any tax on it in your country of residence.
You pay tax only when you withdraw money from that company i.e. take a salary/dividend etc.
So why not transfer all your Adsense earnings to 2-3 companies in different tax havens?
Talk to some good accountants and they may discuss with you ways of taking 100 year loans from these off shore companies you own. They may have other thoughts they could share with you.
The Rolling Stones made over 80 milion last year. They paid less than 2% of that in tax. If you don't like tax, don't pay it. But find legal ways.
Tropical Island:
Do you believe you have a spare room?
-I'm a real nice guy!
Actually I just had an AdSenser (& a member of this forum) spend 6 weeks in one of my vacation properties.
Think on Borris Baker, a past famouse tennis star in Germany. To save taxes, he claimed to live only in Monaco.
But German IRS proved, that he was living more than half the year in his apartment in Germany.
So he had to pay the German tax.
Even though they catched the wrong guy and instead should have been looking for Boris Becker;-)
a) Hurricanes: Not that they get hit that badly, although Hurricane Ivan did just get them recently. Although as long as I had adequate warning and could fly to London to wait it out...
b) Citizenship: Now takes 15 years of residency
c) Cost of nice homes: The ones I'd want to stay in, the gated area in the best parts of the island are in the $800k USD range.
However, you can get a residency permit fairly easily and quickly, as long as you invest $200k in a home there. They seem to have an adequate number of schools, private schools, OK hospital services, a decent gov't (based on British system). Some golf, not sure how active the tennis community is, and its a paradise if you love diving and scuba.
As a Canadian, we could make it work by becoming a non-resident, but we'd have to sever our ties, sell our homes, get rid of credit cards, and more. And its best to stay out of Canada 2-3 years... from there on, you can visit up to 180 days or so.
Really, we'd have to be making about $1 million a year for me to really consider it. And I'm just not sure it'd be an exciting enough place to live.
I think what someone else suggested: starting a company there, and taking salary here, might be a better scenerio. However, with AdSense, they don't do EFT to the Caymans... so, what, I'd have the cheque sent there to a bank and hope for the best? Makes me nervous thinking about that, but then I don't know if that could work or not.
While we aren't to this stage yet, I figure its best to start considering all these options now, because I think we'd need time to set these things in play.
I'm surprised nobody's pointed out that you can own an offshore limited company that can earn unlimited amounts without you paying any tax on it in your country of residence.
My understanding is that if your offshore company is controlled from within the UK, you need to pay UK tax. ie you'd need to have directors who live offshore running the company - ie probably you.
If leaving the UK for tax reasons, the Isle of Man is appealing (but not cheap cost of living). Government is very keen on IT though.
Seems that there is no income tax in Andorra, and it is considered to be a "tax haven." I suspect there are already many living there with broadband connections...
Also, the tiny nation of Liechtenstein is some type of tax haven as well.
I dont know what the "standard of living" is there. The main source of revenue is apparently tourism.
[en.wikipedia.org...]
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As mentioned earlier, you can just take your AdSense savings and invest it in real estate that you will either live in or lease out. You will only pay taxes in your country of residency if they can show you are drawing funds from your offshore corps. There are a multitude of ways to legitimately withdraw money and not have it taxable. A footnote for the Caymans which I really enjoyed: the three islands have a population of around 40k but there are over 600 international banks with branches there.
I know a person who has inherited a "ghost town" with plenty of room for development... A community primarily based upon Google AdSense workers (and other Net generated income sources) would be a very interesting social experiment (imho)
Googletown? AdSenseville? Of course the entire community would have wireless internet coverage to provide Net access at all times from any location!
I bet the community's Net-based economy would be more stable than a comparable community (small town) based on real-world based jobs... The Net community's economy would be VERY broad-based (many niches)!
I know a person who has inherited a "ghost town" with plenty of room for development... A community primarily based upon Google AdSense workers (and other Net generated income sources) would be a very interesting social experiment (imho)
[edited by: jatar_k at 6:25 pm (utc) on Aug. 29, 2006]
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Also, the tiny nation of Liechtenstein is some type of tax haven as well.I dont know what the "standard of living" is there. The main source of revenue is apparently tourism.
In Liechtenstein they have about 50000 citizens. It's impossible to get a permit to live there.
Their main source of income are all kinds of trusts that are used to erm .. invest money there.
It's a 1 hour drive to Zurich, three hours to Munich, about 5 hours to Genova (Italian Riviera) thirty minutes to Lake Constance and 5 Minutes to the next skying facility.
I heard of people who opened a SA (Societe Anonym == Incorporated) in Switzerland. All earnings are taxed there, but it's a minimal rate, because the company doesn't have customers in Switzerland. The AG keeps the cash in a nice investment fund or whatever - no dividend payed to shareholders. When the shareholders get older and have no other income they start to earn a nice salary from this company - and pay income taxes whereever they live (by then) - but with a very low tax bracket.
Many gringos that work here pay no tax or declare very little.
DSL is readily available (since 97). 1.5MB line is around US$75 monthly.
Very advanced telecommunications for a small country.
Cost of living is lower than the USA.
Woman are beautiful.
Electricity can sometimes be an issue.
Lots of cable TV providers.
Very liberal compared to more developed countries
etc etc etc....
Low incomes and low tax rates often have their effect on efficiency somewhere in society. Always read a country's small print before deciding to move there :)
I'm not even American and I know full well not to mess with the IRS.......
Better to get a good accountant in the US and work with him to reduce your taxes by all sorts of LEGAL means. You may have to pay him a lot but it will be worth it, just don't get one that tries to be too clever.
But if you're English then yes, you have a lot of options to move and work abroad but again take very good (and usually costly but worth it) legal/tax advice.
Dubai rocks...
Best move I ever made!
I think you should stay living at home for a little bit longer...
I have moved to the happiest place on earth
I'm not sure what happen after the $80k limit. Does anybody know?
I also understand it is not legal to renounce citizenship for tax purposes, and there is a presumption of guilt fo the well to do who would consider this course.
So it's very very difficult for a financialy successful US citizen to ever escape the Treasury Dept., alas, no escape from death or taxes.
Best legal conservative tax move? Try a state tax free state like Florida or Texas. Thats a nice annual savings. In fact, come down to Ft Lauderdale and buy my condo!
However, on the good side, we US citizens are actually among the lower taxed nations, particularly developed countries, about the lowest 10% or so. I recall many of the lowest rates are in Asia.
We sure do like to complain about it alot, though...:)
Suffer. I guess you'll just have to become the local satelite internet access guru!
my unwarranted understanding is overseas US citizens will have to pay at least the equivalent tax amount they would pay living in the US, either as tax to the new host country, or, as an additional sur-tax to the US, up to the first $80,000 in income.
U.S. citizens are taxed on their worldwide income, regardless of where they live. Period.
Qualifying U.S. citizens living overseas (the basic qualification is being outside the U.S. (and I believe its territories) for at least 330 days/year) can exclude about $80,000 of their income from U.S. taxes. The remaining amount is taxed at normal rates.
Self-employment income is still subject to self-employment taxes without any exclusion.
You can get a tax credit for taxes paid to foreign governments. (In other words, if you earn money in a foreign country, you have to report that income, which is taxed by the U.S. government. But if it was already taxed by the foreign government, the U.S. allows you a credit, so that money isn't taxed twice.) This tax credit offsets your taxes owed to the U.S. government. Unused credits in a given tax year can be rolled over to the next year.
I have chosen Dubai, which is pretty good if you know what you are doing - but I am lucky as a friend of mine is a corporate solictior over there.
I also have a friend in Cayman (a rather high ranking official at a large bank) and although it sounds great, he has just spent 12 months without a home as the last major hurricane wrecked it and during it had to spend 24 hours in a secure vault or experience the consequences! Me, if prefer a different quality of life.
At the end of the day you can get great tax advantages by looking at places like Dubai but you do sacrifice some things "like home".
But to be honest if you are doing ok then a nice offshore account will do nicely (as long as you live there) - and when you aren't doing ok then move home!
If you fancy Dubai, then at this moment I am their biggest fan! So if anyone else fancies it then give me a shout, I am on commission!
Maybe the USA is the place to be? In New Zealand company tax is 33% on the dollar
[edited by: Interent_Yogi at 12:21 am (utc) on Aug. 30, 2006]
it seems there are a lot of people in the know whom simply don't pay.
The Sixteenth Amendment to the Constitution, ratified on February 3, 1913, states, "The Congress shall have the power to lay and collect taxes on income, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
[edited by: LifeinAsia at 12:33 am (utc) on Aug. 30, 2006]
