My wife and I have slipped into a loophole where we are both not tax residents anywhere but we both earn income online. We have tax-free income.
Are there any future disadvantages to not becoming tax residents anywhere and being perpetual travellers?
So you donāt have any issue to renew your passport?
In some cases you may need the papers in the future:
Thanks Rose, those issues wonāt be a problem for me. Iām wondering if there is anything else that I havenāt considered?
As long as you keep traveling, thereās nothing to worry about.
What happens if you ever change your mind and want to return to your home country really depends on the laws in your country.
I think if you keep travelling that nothing can happen to you. Nobody has your address.
You do have to think about health insurance and pension. But pension shouldnāt be a problem, you must be able to save money if you donāt pay tax. But alsoā¦ What if you get older and end up in a retirement home or nursing home. Things like that are heavily subsidized where I come from. But of course only for citizens.
Maybe at some point banking can become a problem. Usually banks want to know where you live. They have to comply with money laundering laws. In the EU you have to give your tax id to banks, so they can exchange information with your home country. I still use my old address and tax id, so my old home country receives all information. It worries me a bit, and I do not know how long this can continue. Will they ever tell the bank that my address isnāt right?
I worry most about what would happen if something happens with my health, or what will happen when I get older and cannot take care of myself anymore.
I have heard that some countries already will claim you as their tax resident after only a short stay in their territory - if you cannot prove you are really tax resident somewhere else. I think āprovingā requires the usual evidences: a tax identifier number from your tax residency country, an address there, proof of that other country being your centre of business or personal interests etc. If those are absent then the country you are currently in might have laws that allow it to tax you. On the other hand, if you are claiming to your bank that you are tax resident in your old country, and the bank is sending info to your old countryā¦ then it is not too big a leap for the old country to claim you are tax resident there based on your own declaration. Generally these things are tightening up, which is why there is a lot of chatter about actually selecting a residency location and satisfying its period of stay laws / rules so you can always prove a tax residency of your choice.
I guess so far nobody cares to much about the little fish wandering around the planet, but with many governments going deeper into debt every day we can expect they will tighten up on every opportunity to raise taxes any way they can. I think we can expect the number of countries going this way will only increase over time.
The first question Iād ask is whether you are sure you arenāt a tax resident somewhere and donāt realize it. Itās the sort of thing that probably requires some professional advice.
The pitfalls are likely to be, as mentioned, access to whatever pension system you might have access to someday, access to banking systems, access to healthcare systems, and just the general risk of āgetting caughtā and/or having to fight governments who decide after the fact that no really you do owe them taxes.
The first, you may or may not care about depending on your faith in such systems in the first place. Itās only fair one way or the other though - if you donāt pay in, why should you get anything out?
The second can probably be worked around if you futz around enough, but youāre likely to have some issues eventually; your existing accounts will probably coast along for a while, but there is the risk that some random datapoint will cause some review system to pick up a hint and flag you. I believe Interactive Brokers for example will note where youāre logging in from and if itās consistently elsewhere start asking questions; banks will have the same audit systems on where your transactions are from.
I see various articles and posts here and there of people looking for banks that will work with them. You can find banks that will work with you if you look hard Iām sure, but I believe they arenāt going to be your normal retail banks, itāll be the specialist banks like HSBC Expat or the private wealth management ones like Winter or Vontobel or Julius Baer, or some bank in some weird corner of the world like Georgia. Thing being, itās pay to play, which is understandable - youāre a complex case representing a potential significant risk, and they arenāt going to take that risk for free. Yet likely even these banks wonāt work with you if you come to them after-the-fact, simply because KYC is difficult. Ex. I have an account with a certain bank. Iāve been with them a while. They know who I am. If I went tax-residency-less, theyāre likely to be fine with it after a discussion, because they already know who I am. Show up at the door already a ādifficult-case customerā, you better represent a lot of fees for them to want to bother. And most people simply donāt.
The third can generally be worked around if you pay for one of the global policies; health care systems wonāt care much as long as you pay the bills.
The last ties to the second. Youāre generating some sort of financial trail one way or the other, and someone somewhere along the line is likely to notice something. Governments can be slow about these kinds of things, but if and when they wake upā¦ you better have all your ducks in a row. You can of course keep traveling, but it means continually paying attention to the juggling act, which I would view as having a mental cost - time and attention required and any wear and tear on nerves resultant. You can of course hire professional advice, but that turns some of the mental cost into a currency cost. And of course eventually this can turn into a freedom cost if you get it wrong in addition to any taxes and penalties - ex. the IRS can have your passport yanked if you donāt pay them for long enough. If you get ācaughtā/ānoticedā, which of course may or may not happen. All of these things you can work around, but do you really WANT to? Whatās it worth to you?
I suspect that itās something people do for a little while but eventually the lifestyle wears on you and you eventually want to live your life in a way that results in being āsettledā enough somewhere that you end up with tax residency somewhere. But I donāt know. Personally Iād never want to explicitly do it, but thatās me; Iām sure others here would extol the benefits.
Hey Dimitri, thanks for your response. These are all good points to consider. At this stage in my life (39yo) and thanks to covid making me rethink how I spend my time, Iām more living for today than thinking about my future potential poor health and getting old. But simultaneously Iām smart enough to know that todays decisions affect my future, which is why Iām on this forum now, too.
Iāll never return to my country of citizenship, of this Iām certain. But Iām sure one day I will become tired of always moving and want to settle somewhere.
As for the pension, what I save on not paying tax is more than a pension would ever give meā¦
Thanks again for your input
I spoke with someone who said that technically any country I spend some time in could claim me as a tax resident for at least as long as Iām in that country if Iām working during that time, even if my income comes from online sources. But those countries would likely never be able to realise that I was working there if I was just passing through on a tourist visa.
Iām hoping that for now Iām just a little fish as you mentioned, and I wonāt be noticed. But things could certainly change as the governments tighten controls, especially with the banking systems around the worldā¦
Hi Jeff, thanks for your detailed reply. Thereās a lot to consider in what you wrote.
Iām certain my wife is not a tax resident and Iām pretty sure Iām not but I will be ensuring that Iām not before I act too much like a non-resident and then get a bad surprise if it turns out that Iām not.
The challenge Iām facing now is finding a bank. Not that Iāve struggled so far, Iāve only just begun my search. Iāll certainly look at the banks you mentioned to see if any of those could be a good fit for meā¦
Thanks again 
One of the ideas could be this, starting a micro company (corporate taxes for those in Romania are 3% for the companies with no employees or 1% with 1-3 employees, of which you can be one too), and then employ yourself working just 2h per day. That gives you health coverage, you cut your taxes 4 times (if you compare it with a minimal salary for 8h work) and every 3 months you can withdraw the dividends (basically everything you earned through that company) while paying only 5% the dividend tax.
Local accountants will do this for you for 100 EUR per month.
As youāre continuing to travel, the company will be a buffer between the real money you make and what you nominally pay to yourself as a salary. That would also give you access to any Romanian bank, so where you spend your private money should not be a problem anymore.
For the long term, you might consider settling down in a country with a territorial tax system, i.e. one that doesnāt tax income generated overseas, or one no personal tax at all. There arenāt many of them, and in the best ones (Singapore, Hong Kong, Monaco, Dubai) itās not easy to get a visa and housing tend to be expensive. Malaysia has an interesting program for people aged above 50, Malaysia My Second Home. Thailand also has attracted a number of retirees. Closer to Europe there is Georgia, as long as they sort out their relationship with Russia (and if they manage to get into the EU, as they hope, Iām afraid that the territorial taxation will have to be abandoned).
https://en.wikipedia.org/wiki/International_taxation
Why would a citizen of a certain country not be able to renew his passport on account of his tax residency? Changing tax residency does not equate with losing citizenship, come on.
Do you have an informed basis for your confidence that any citizen of any country can renew a passport with no obstacles, regardless of their circumstances?
Many citizens are not eligible to obtain or renew passports. A passport is not a fundamental, inviolable human right.
Feel free to share any comment of mine where I said that any citizen of any country can renew a passport with no obstacles. This is generally not a problem. As anything, exceptions occur.
It also depends on the age of the residence seeker, which tends to be positively correlated to both financial resources and likelihood of need for medical facilities available nearby. Young people are generally healthy, so they can advantageously opt for low cost of living even in the absence of a first-class healthcare system, but after 60 the choice is not so clear-cut. One thing I like of Hong Kong, where I live, is a good NHS-style public healthcare system, available to all residents practically free of charge. The only two things really expensive here are housing and international schools for the children.
I thought I would write an update based on my first-hand experience since creating this thread.
The answer is: NO, if you want to live a decent lifestyle with easy access to your money then you need to be a resident somewhere. You can be a resident of nowhere if you are happy to stay poor, but if you want to have money and freedom, itās better to maintain residency somewhere where you can legally make money tax free.
Itās not ok to continuously use the address where you used to live, or your parents address, simply because you donāt have one. Banks have to report your annual income to the country you tell them you live in, even if you donāt tell them where your tax residency is. They have to report to somewhere.
If you are a perpetual traveller you have to lie and say you live where you no longer live, because you canāt update your address with the bank every few weeks as you move around - because you canāt supply proof such as leases or utility bills.
Lying about your address is probably fine if you earn $2000 per month, but if you have a substantial amount of money then the bank will report how much money you have to the country you say you live in, and one day that country could come looking for you asking for backdated taxes.
Regarding the passport conversation, I guess it depends on what country youāre from but in my experience itās pretty easy to get a new passport from your countryās embassy in foreign countries, if you can wait around for them to produce it.
You can probably do it more easily if you make yourself a shell corporation in the right location and let it do the banking and be taxed for you. If you have the means then you can make it happen. ex. if you created a trust in the cook islands and used it to open an account in the bahamas then operated out of that.
But itād be either a continual dance or a continual expense or both to keep the music playing. Might be easier to just pay the taxes. Or as you say, pick the right locale to have residency.
It wonāt work: AEOI/CRS rules require the bank to report the true beneficiary of the bank account, even when itās held in the name of a company or a trust. Sure, one could bank in a non-AEOI country (of which there arenāt many), but access to the money may be difficult ā and good luck with finding reputable and efficient banks over there.