# Do I have to pay tax in UK, USA or nowhere? Full time traveller



## Ty1 (Nov 12, 2020)

Hi, I am a full time traveller for the last 10 years. Although a British citizen I have mostly been out of the country since 2008. I come back to the uk and spend around a month at a time in London for the last 4 years or so.

I don't own any property or assets and all my income comes from out of the UK, mostly the US. I earn between £8000 and £15000 a year, so usually below the tax free threshold. That money gets paid into Transferwise which is an online bank (but UK based) and has a US account.

I am a freelance Web Designer and not on any permanent contracts. I now don't usually spend more than a few months in any country at a time, and most of those are EU countries.

I cannot figure out where, if anywhere, I am supposed to be paying tax, for most of the last several years I have earned under the tax free threshold in the US, UK and Australia, but this year I earned a couple thousand more (from the US). I have not been able to figure out if I should be paying tax somewhere, and when approaching a tax consultant company they just told me they had no specialists who could help me with my circumstances!

I don't know if this is the right place to be asking these questions, but I am trying everywhere I can to figure it out at the moment.

Thanks in advance if anyone has any ideas how I might figure this out, or what I should be doing tax wise.

Cheers
Ty


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## Nononymous (Jul 12, 2011)

It sounds as if you are perfectly legitimately paying tax nowhere. Lucky you!


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## Nomoss (Nov 25, 2016)

Nononymous said:


> It sounds as if you are perfectly legitimately paying tax nowhere. Lucky you!


My rule always was that if someone doesn't ask you, don't ask them


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## Moulard (Feb 3, 2017)

Technically...

The work you perform in a country is considered sourced in that country. Which means that country you are in when you perform the work has the primary right to tax that income. Assuming you are not a resident for tax purposes, that income would be taxed at the non-resident rate (which BTW typically does not have a tax free threshold or has a significantly lower threshold). It doesn't matter where you are paid for the work, just where you perform the work. So technically you probably are required to file a non-resident tax return in each country you work in.

Using Australia as an example, since you mention it by name... Lets say you holed up in Apollo Bay for 3 month, working on the beach there watching the waves roll in. In Australia there is no tax free threshold for foreign tax residents. Up to 90kAUD the tax rate is 32.5%. Ordinarily non residents receive Australian sourced income on things like interest, dividends etc and that tax gets withheld at source and no tax return is required in most cases. Thus technically, you would need a TFN and file a non-resident tax return and pay income tax (but not the medicare levy).

The other element in this that you may or may not have considered are visa conditions...

Using the US as an example, say you are there on a B2 Tourist Visa. Visa conditions specifically prohibit undertaking constructive work while in the country on that visa, this also applies for the B1-B2 Business visa... so if you were working there on that visa, the way you describe you would be in breach of visa terms.

Same applies in Australia, technically you would be in breach of your visa terms unless you happened to be in the country on a working holiday visa as that is the only visitor visa with working rights.


Practically...

Well that is another matter...


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## NickZ (Jun 26, 2009)

Off the top of my head I don't know the UK tax residency rules but making regular trips back might make it harder to claim a clean break with the UK.

Of course you own some assets. Clothing? Laptop? Do you travel with all your stuff? Nothing in storage? No drivers license? No club memberships?


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## Ty1 (Nov 12, 2020)

Moulard said:


> Technically...
> 
> The work you perform in a country is considered sourced in that country. Which means that country you are in when you perform the work has the primary right to tax that income. Assuming you are not a resident for tax purposes, that income would be taxed at the non-resident rate (which BTW typically does not have a tax free threshold or has a significantly lower threshold). It doesn't matter where you are paid for the work, just where you perform the work. So technically you probably are required to file a non-resident tax return in each country you work in.
> 
> ...


*EDIT - After reading your response again, I was wondering if you think the first point still applies as although I am in Greece for example, I am not working for a Greek company but an American, and actually the work I am doing has zero ties to Greece other than that I am using the internet there. And I am likely to stay in Greece for less than 3 months too.*

Thanks for that informative reply. So I actually lived in Australia for 4 years and paid taxes and what not while there (about 8 years ago now), and I do have some savings over there still which earn a tiny bit in interest, that is my only income in Aus (and from what you have said it seems like that may be taxed automatically), and I haven't been back since, I had (or have) PR, but am not allowed back under that PR visa due to some weird regulations.

For the US, I don't actually live or travel there, I did once for 6 months about 5 years ago, but otherwise I never actually go there, I just earn an income from a company based there, does that make a difference? I don't see how I would or could pay tax in a country I have no ties, visas or TFN's, with (but of course I don't actually know which is why I come to those more informed than myself  )

And my money gets paid into the Transferwise account, but I spend 1 month a year at most in the UK, and only for the last four years after being out for the last 8 years!

Thanks very much for your answers mate!


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## Ty1 (Nov 12, 2020)

NickZ said:


> Off the top of my head I don't know the UK tax residency rules but making regular trips back might make it harder to claim a clean break with the UK.
> 
> Of course you own some assets. Clothing? Laptop? Do you travel with all your stuff? Nothing in storage? No drivers license? No club memberships?


I am trying to figure out the UK rules myself, I believe under their regulations I am considered a non-resident, but each of the criteria come with clauses which make me second guess that. I have only been going back for about a month at a time over the last 4 years to visit my mum, but not for 8 years before that.

Yes I do have things like clothes and a laptop, and a paraglider, but that is it really, and yep nothing in storage, everything I carry is everything I have. But I do have a UK drivers license and of course passport. I have my online bank account which is a UK based company, even though the money is paid into the US account within their baking system.


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## jamesriddick (Nov 12, 2020)

Moulard said:


> Technically...
> 
> The work you perform in a country is considered sourced in that country. Which means that country you are in when you perform the work has the primary right to tax that income. Assuming you are not a resident for tax purposes, that income would be taxed at the non-resident rate (which BTW typically does not have a tax free threshold or has a significantly lower threshold). It doesn't matter where you are paid for the work, just where you perform the work. So technically you probably are required to file a non-resident tax return in each country you work in.
> 
> ...


Good post!


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## NickZ (Jun 26, 2009)

Ty1 said:


> I am trying to figure out the UK rules myself, I believe under their regulations I am considered a non-resident, but each of the criteria come with clauses which make me second guess that. I have only been going back for about a month at a time over the last 4 years to visit my mum, but not for 8 years before that.
> 
> Yes I do have things like clothes and a laptop, and a paraglider, but that is it really, and yep nothing in storage, everything I carry is everything I have. But I do have a UK drivers license and of course passport. I have my online bank account which is a UK based company, even though the money is paid into the US account within their baking system.


I glanced at the UK rules. The impression I get is at the moment you likely aren't but you might have been for a couple of years after leaving the UK but that's likely to long ago for it to matter.


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## Moulard (Feb 3, 2017)

Ty1 said:


> *EDIT - After reading your response again, I was wondering if you think the first point still applies as although I am in Greece for example, I am not working for a Greek company but an American, and actually the work I am doing has zero ties to Greece other than that I am using the internet there. And I am likely to stay in Greece for less than 3 months too.*


Who pays you and where they pay you is generally of no consequence. You could work in Greece for a Mozambique company and on a contract pegged to the Baht but paid into a US bank account. If you performed the work in Greece, the work would likely be considered Creek sourced for the purposes of taxation, and Greece would have the primary right to tax it according to domestic law.

As I said practically, its a different matter. Tax laws and tax treaties were not written with digital nomads in mind. Its pretty easy in those to evade those taxes because it would be unlikely that Greece would ever become aware. 



> Thanks for that informative reply. So I actually lived in Australia for 4 years and paid taxes and what not while there (about 8 years ago now), and I do have some savings over there still which earn a tiny bit in interest, that is my only income in Aus (and from what you have said it seems like that may be taxed automatically), and I haven't been back since, I had (or have) PR, but am not allowed back under that PR visa due to some weird regulations.


For many countries including Australia, permanent residency is a bit of a misnomer. You are not a resident permanently, you have the right to reside permanently. Once you leave the country you may loose that right. In Australia, a permanent resident can leave the country for up to 5 years (resident return visa). Beyond that you need to show that you have maintained a close connection to the country.

FWIW, a US permanent resident looses their residency status after 2 years outside the country. 

I am only aware of one country that has a true permanent permanent residency.. that is New Zealand. Once you have a Permanent Resident Visa in your passport, you can leave the country for as long as you like and then return and continue your residence there.


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## Ty1 (Nov 12, 2020)

Moulard said:


> Who pays you and where they pay you is generally of no consequence. You could work in Greece for a Mozambique company and on a contract pegged to the Baht but paid into a US bank account. If you performed the work in Greece, the work would likely be considered Creek sourced for the purposes of taxation, and Greece would have the primary right to tax it according to domestic law.
> 
> As I said practically, its a different matter. Tax laws and tax treaties were not written with digital nomads in mind. Its pretty easy in those to evade those taxes because it would be unlikely that Greece would ever become aware.
> 
> ...


Thanks again for all the info! I unfortunately left Australia on year 4, not reading into what was required at the time and so lost my ability to come back, but the world has many other beautiful places to live fortunately  . Wow only 2 years for the US, I guess I am not that surprised considering how hard people say it is to get in the first place. I am actually looking into trying to get residency somewhere in Europe before Brexit kicks in, but fear I have left it too late.

Thanks for all your help and info regarding taxes, you are definitely correct when you say the world is not setup for digital nomads, I have and have had some amazing experiences living this way, but some things can be really frustrating and difficult to figure out. Pros and cons to every lifestyle.


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## KagLon (Jun 27, 2010)

Hi and sorry to be late to this conversation...I looked into this a bit as I am contemplating retiring into a multi-country if not completely nomadic life. Basically, you may have links to the UK that meas you might be considered tex-resident in the UK - see the link below. 

But on balance, I am now wondering about the benefits of being tax-resident in the UK as each place you live or derive income from, wants you to have at least one designated place of tax residence and might cause more problems and cost more at some inconvenient future moment. 
And I might have a higher tax-free allowance on income from the UK - and at present, rental income I earn in Canada is not taxed at all in the UK on the basis that I pay tax in Canada and do not bring any funds back to the UK. Also, re the USA beware FATCA rules! 
Here is one link re UK tax status Am I a UK Tax Resident? - Statutory Residence Test Explained | Crunch


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## NickZ (Jun 26, 2009)

KagLon said:


> and at present, rental income I earn in Canada is not taxed at all in the UK on the basis that I pay tax in Canada and do not bring any funds back to the UK.


Doesn't matter what you do with the funds. Rental income is always taxed first in the location of the property.


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## KagLon (Jun 27, 2010)

Thanks Nick - although I understood that I will first pay tax in Canada, one international tax accountant I spoke to informally suggested that additional tax would have to be paid in the UK as the UK income tax rate (for me) is higher than the Canadian tax, even with the Non-Resident Tax premium charged in Canada. If you know more about this topic, your advice would be gratefully received.

Like the original post about living in more than one country with income in more than one country I am interested to know how best to organise tax and finances, but I understand it may vary depending on which countries. At the moment for me the confirmed countries are: UK, Canada, Japan and one other - hopefully low-tax and therefore still tbc....


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## Ty1 (Nov 12, 2020)

KagLon said:


> Thanks Nick - although I understood that I will first pay tax in Canada, one international tax accountant I spoke to informally suggested that additional tax would have to be paid in the UK as the UK income tax rate (for me) is higher than the Canadian tax, even with the Non-Resident Tax premium charged in Canada. If you know more about this topic, your advice would be gratefully received.
> 
> Like the original post about living in more than one country with income in more than one country I am interested to know how best to organise tax and finances, but I understand it may vary depending on which countries. At the moment for me the confirmed countries are: UK, Canada, Japan and one other - hopefully low-tax and therefore still tbc....


I have tried to run through that resident test on a few different sites, maybe I am just dense but it always confuses me for one reason or another, and so I am still never sure, but I think because I spend less than 45 days in the UK each year, and because I have no income within the UK, I am not a resident for tax purposes. I even tried going to the hospital last time I was there for an eye issue, and they told me they couldn't really help me because I was not considered a resident. So if I can't get health care, and I am not using any of the systems, not sure why I would be paying taxes!

If you manage to find an affordable accountant who actually has some definite answers please let me know, so far none I have fond seem to be willing to take on the challenge.


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## NickZ (Jun 26, 2009)

KagLon said:


> Like the original post about living in more than one country with income in more than one country I am interested to know how best to organise tax and finances, but I understand it may vary depending on which countries. At the moment for me the confirmed countries are: UK, Canada, Japan and one other - hopefully low-tax and therefore still tbc....


There are two things to think about.

1) Which country are you tax resident in? Unless things have changed in Canada you used to be able to ask for an opinion on your residence. Fill out the form. Send it in and wait.

2) What sort of income do you have? Employment income is for the most part taxed where you work. Capital gains is usually taxed where you're tax resident. Other stuff in between. Some things have a tax withholding depending on your country of residence and the treaties involved. Interest and dividends for example.

If you aren't resident and don't have income in those countries you aren't likely to have taxes payable 

BTW I think under current Canadian rules and laws setting up a scheme (Plan or arrangement) to avoid taxes risks being declared abusive and ignored by the government auditors. 

Ask yourself a simple question. Are you doing things for the sole reason of lowering your tax bill? Or can you justify it for other reasons?


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