Basics of world/EU European Union Taxation & Tax Philosophy

TLDR: are there good firms who can advise on international tax strategy or at least comprehensive EU/US tax strategy? I think E&Y may be one to check out tho I don’t know how many E&Y people/departments/offices one may need to engage!

My main focus right now would be where I will likely be spending time over the next few years: US, Germany, UK, Portugal (if I apply for a GV) and keeping abreast of the best EU countries to minimize tax. I am concerned mostly with personal tax (not business) in re: to capital gains, wealth tax or similar, worldwide-income tax & estate taxes.

I am a US citizen and am familiar with the arcane US tax system. This is split between state/local and federal/national (IRS) taxation. Essentially the feds tax you on your worldwide income (with a potential exemption amount) and if you are “resident” elsewhere in some parts of the world there are treaties that help avoid double-taxation in theory. Thus far, this should be straight forward and if you spend 183+ days/year in US you know you owe US taxes…

Now you have some states (CA) that are fighting to introduce their own measures (60 day rule) so presumably you could wind up “double-taxed” without ever leaving the US because you trigger tax in more than one state. And of course it’s a political debate as to how much state tax you can deduct from your federal liability.

The US has been among the few countries to tax its citizens on worldwide income tho some countries (Canada) are proposing similar rules. So presumably there will be a trend to tax worldwide income among citizens and/or permanent residents. Of course rule-makers may also decide to target specifically naturalized folks not natives, as this is more politically tenable in theory. I am thinking the EU might actually be less friendly to this form of taxation because of the complexities of EU denizens moving between countries.

Then you have so-called wealth taxes as a trend, where you are supposed to determine your net worth and pay a tax based on that. I am thinking this is also a trend. How this is implemented I am not sure - and would this only apply when you are “tax resident” in said territory? Only for citizens? I think I saw that only 3-4 EU countries have wealth taxes as of the moment.

I assume estate taxes only apply where you are most recently resident? These can be quite expensive for one’s heirs.

Somewhere I saw a comment that while the US makes it relatively difficult to give up citizenship, some countries like Argentina don’t let you!

So what is the environment like in the EU? Does the EU tax citizens directly like the IRS taxes citizens of states? Is this a potential for the future? Could the EU pressure member-states into implementing more draconian taxation? Do all EU countries have agreements in place to avoid multi-jurisdiction taxation? Are member-countries harmonious in their rules for tax residency? Portugal seems straightforward with their 183 day rule, unless I am ignorant of other triggers. I know the UK fwiw has a whole flow chart about how one triggers tax residency so you can easily trigger it if for example you work for, I think it was, 2 months while in the UK and then spend no more time there.

One thing I do know is you will have tons of work as a tax adviser for many years to come!

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I would be interested in any advice you can offer. At the moment I am seeking an International Tax Attorney CPA to try and get some clarification on how I should structure my taxes. I currently live in CA but am intending to move to the EU.
I hope you get some sound advice.

I have a similar number of questions and had reached out to EY and KPMG for advice. I had assumed that a ‘big box’ accounting firm would be able to provide structured guidance for different residency scenarios.

What was proposed to me at both firms was a series of referrals to several different country offices for individual country taxation guidance. Unfortunately, there was seemingly no consideration given to an overall analysis of the various country taxation possibilities followed by a recommendation of what would be the optimal tax jurisdiction structure for my situation.

I still have not found a firm that will provide that macro level analysis.

PS Canada also taxes based on worldwide income

Does Canada tax non-residents on worldwide income? That’s the kicker that makes the USA stand out from other countries. There are numerous countries that tax their residents on worldwide income; no big surprise there.

I think the problem here is that there is simply too much “it depends” for a question that, on the whole, not a lot of people ask in the first place. Most folks are starting from a specific somewhere and generally pretty tied to it, to say “I don’t care where I am, find the most optimal solution” is not where most firms, much less people, are coming from. Further, a lot of people in this particular space (digital-nomad-y) don’t have a ton of money to be spending on professional advice and are often very much DIYers anyway. You must admit it’s a difficult problem given what you posit is a mostly-variable-input matrix which probably has multiple plus-or-minus-ok solutions and no one optimal solution. I would really not have figured EY or KPMG, that’s not what they do, they’re only going to do HNW or businesses.

You need a boutique firm / individual such as say Mark Nestmann who does focus on macro at a small-scale level (I’m assuming you are < $10mm annual revenue, or an individual.) You probably want someone Europe-based, not US-based, since your problem is comparing all of the EU situations and there are a ton of them, whereas the US becomes a straightforward matter once you leave since if nothing else you shift your US taxation to some no-tax state which just leaves fed. My best guess would be someone in the UK, honestly. No, I don’t know anyone.

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