Paying 0% Tax Legally for 100% Digital Nomads

Tax and legal
1

Hi. I have received some info that is possible to pay 0% tax legally in Italy if your work is 100% digital. The workflow was for Italian, not sure if this is also possible for other nationalities or no. It seems, needs to do 3 things for this:

1- Completely become separate from Italian tax system by going outside of Italy for more than half of the year, I assume this is because to not be a tax resident of Italy anymore

2- Get new residency in country X

3- Register company in country Y

However, I don’t know which countries X and Y are.

But I know what characteristics these countries should have:

Here are the 5 characteristics the perfect jurisdiction for the offshore company should have:

1- no corporate income tax

2- no value added tax

3- streamlined and secure bureaucratic system

4- privacy and protection of the confidentiality of the director and shareholders

5- unlimited sharing of profits

Here are the 5 characteristics the perfect jurisdiction for your residence should have:

1- no obligation to stay (so you can choose where to stay freely)

2- no personal tax

3- fast system to obtain residency

4- state modern and efficient and well connected with the rest of the world

5- transparent process with no hidden fees or traps

Do you know what those countries can be?

3

Hi David. Very interesting post; I’m developing fairly similar ideas, regardless of being specifically DN (works for passive investments as well).

So far, from my research, the UAE or BVI would be your match for the offshore company jurisdiction.

I’ll come back with more ideas once I gather more details for my research.

Best of luck!

Mariano.

4

Point 2.2 does not have to be ‘no personal tax’.
‘no PIT on foreign income’ can be sufficient.

5

Or perhaps consider contributing to the countries that host you.

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6

These steps seem potentially insufficient for an Italian to escape their home country’s tax net, see:

In particular, Italy considers you a tax resident if your strongest personal ties are to Italy (for more than 6 months of the year), not just whether you’re physically there or not.

Also, if you move to a tax haven (which country X would likely be), you are presumed to still be tax resident in Italy unless you can prove otherwise. I’m not sure what that would entail, exactly. However, my point is that it’s often a bit more complicated to sever ties with ones home country than just leaving for 6 months. (Granted, in some countries it is that easy…)

Also see Streber’s article on PT:

Just make sure you actually have foreign income in the eyes of that tax authority.

Generally, if you’re actually based in the country where you’re resident and do all/most of the work for your company registered abroad, that would still be domestic income if you receive a salary or freelancer income from the company.

It may also mean that the company itself becomes a local tax resident and owes local corporate income tax on any profits, unless you have a significant physical presence where the company is registered (several employees, board members, etc).

If you’re a full-time nomad/PT, the result might be different (depending on your home country), but refer to the PT article for all that entails.

While I don’t see any moral problem with legally reducing your tax burden, extreme tax optimization may not be worth pursuing either (depending on your circumstances). Of course, if you’re a full-time nomad anyway, sure, it makes sense to establish a tax home somewhere beneficial.

Personally, I’d rather pay a reasonable amount of tax and spend the majority of my time in a place that offers the lifestyle that I prefer and other benefits (e.g. good healthcare, infrastructure). And perhaps I’m more productive that way, too, potentially leading to a higher increase in income than what I pay in tax.

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