Do You Have To Be A Resident Of A Country?

[Basecamp]

I just posed a simlar question here yesterday but thought I'd ask this more specific question here. Sorry for making 2 posts but this question really didn't get answered in my other post.

My passport is Canadian, I was born and raised there. Haven't lived or been a resident there for the past 13 years.

I was a US resident up until my green card was taken away from me last month. I spent very little time in the US so they said, I don't qualify for keeping it. So I'm no longer a US resident.

I spend close to 50% of my time in Thailand, a bit less so I am not a resident here. I have a condo, wife and children here but am out of the country most of the time.

I don't want to have Thai residency because I'd get taxed on my income.

So my question is, is it possible to just be "stateless" so to speak? The reason I want to determine this is I would (obviously) prefer not to pay taxes anywhere. I have an international role with a US based company and therefore am not in any one country for significant time other than Thailand but even here, it's still less than 50%.

Any idea on being officially stateless ........ and I wonder if a US company could even pay such a person... even as a consultant?

Actually just for a bit more info. Since I lost my green card, my company can no longer pay me so I am officially on "unpaid leave". I still am working same as always and they will pay me. They are in the process of setting me up as a consultant but they are unsure about the details. We are a IT start-up so we haven't had this experience before.

Thanks for any help and sorry for making 2 similar posts.

[Thanyaburi Mac]

I just posed a simlar question here yesterday but thought I'd ask this more specific question here. Sorry for making 2 posts but this question really didn't get answered in my other post.

My passport is Canadian, I was born and raised there. Haven't lived or been a resident there for the past 13 years.

I was a US resident up until my green card was taken away from me last month. I spent very little time in the US so they said, I don't qualify for keeping it. So I'm no longer a US resident.

I spend close to 50% of my time in Thailand, a bit less so I am not a resident here. I have a condo, wife and children here but am out of the country most of the time.

I don't want to have Thai residency because I'd get taxed on my income.

So my question is, is it possible to just be "stateless" so to speak? The reason I want to determine this is I would (obviously) prefer not to pay taxes anywhere. I have an international role with a US based company and therefore am not in any one country for significant time other than Thailand but even here, it's still less than 50%.

Any idea on being officially stateless ........ and I wonder if a US company could even pay such a person... even as a consultant?

Actually just for a bit more info. Since I lost my green card, my company can no longer pay me so I am officially on "unpaid leave". I still am working same as always and they will pay me. They are in the process of setting me up as a consultant but they are unsure about the details. We are a IT start-up so we haven't had this experience before.

Thanks for any help and sorry for making 2 similar posts.

Re "... my company can no longer pay me...,"  did you check out that IRS form W-8BEN?

Form W-8BEN (Rev. February 2006)File Format: PDF/Adobe Acrobat - View as HTML

See separate instructions. Give this form to the withholding agent or payer. Do not send to the IRS. OMB No. 1545-1621. Do not use this form for: ...

www.irs.gov/pub/irs-pdf/fw8ben.pdf

Do a google for:  w-8ben

Lots of information there that might suit your payment situation.

Mac

[jstumbo]

Stateless and Residentless (If there is a thing) are different things. Stateless means that you are not a citizen of any country. You are not stateless unless you were to renounce your Canadian citizenship. Your tax liabilities are going to be determined by Canada. I don't know about the rules in Canada, but in the US, you are supposed to pay tax on your world wide income. But they do allow tax exclusions for people that are not living in the US (foreign earned income exemption).

As for paying you as a consultant, it should be very easy. Just have them transfer the money into your account in Thailand. They deduct it from the books as an expense. If you don't want to send the money to Thailand, many people setup a shell company in Hong Kong and then have the money sent there.

[Basecamp]

Re "... my company can no longer pay me...," did you check out that IRS form W-8BEN?

Form W-8BEN (Rev. February 2006)File Format: PDF/Adobe Acrobat - View as HTML

See separate instructions. Give this form to the withholding agent or payer. Do not send to the IRS. OMB No. 1545-1621. Do not use this form for: ...

www.irs.gov/pub/irs-pdf/fw8ben.pdf

Do a google for: w-8ben

Lots of information there that might suit your payment situation.

Mac

I did look through that but my god, it was 100's of pages. I tried some of the links but couldn't really get any info that appeared to fit my situation. It seemed to focus on US residents, citizens and doesn't really apply to foriegners working outside of the US but working for a US company. For sure I'm not lible to pay US taxes as I don't live or work there.

Stateless and Residentless (If there is a thing) are different things. Stateless means that you are not a citizen of any country. You are not stateless unless you were to renounce your Canadian citizenship. Your tax liabilities are going to be determined by Canada. I don't know about the rules in Canada, but in the US, you are supposed to pay tax on your world wide income. But they do allow tax exclusions for people that are not living in the US (foreign earned income exemption).

As for paying you as a consultant, it should be very easy. Just have them transfer the money into your account in Thailand. They deduct it from the books as an expense. If you don't want to send the money to Thailand, many people setup a shell company in Hong Kong and then have the money sent there.

You are quite right. My meaning is resident-less. I'm still a Canadian citizen.

My understanding right now is that the Canadian tax man does not tax Canadian's working and living abroad but I don't really know that 100%. Previously I did file the foreign earned income exemption when I was a US resident.

I'm not sure if any flags would be raised in Thailand or in Canada if the monies were simply wired into either of these countries.

But I'm still wondering if I can be a "residence-less" i.e. not have residency in any country.

[jstumbo]

People transfer money into their Thai accounts all the time. I doubt they would take any notice of it. It is not even taxable unless it is earned in Thailand or you spend more than 6 months here. And even then, they would have to know that it is income from this year and not just savings that was being transfered into your account.

Although I don't know that I would want to deposit my entire paycheck into Thailand. Check out getting an account in Hong Kong.

[g00dgirl]

You don't have to be a resident in any country, sometimes it's called "perpetual tourist" you can google that, and it is a way to avoid being liable for income tax because you would not be a resident for tax purposes in any country.

[Basecamp]

You don't have to be a resident in any country, sometimes it's called "perpetual tourist" you can google that, and it is a way to avoid being liable for income tax because you would not be a resident for tax purposes in any country.

Just Googled Perpetual Tourist as you suggested. This is very interesting information. Thanks for this idea.

http://en.wikipedia.org/wiki/Perpetual_traveler

I think I will set up a bank accout in Hong Kong.

The next problem that occured to me is my credit cards. I think my Bank of America credit cards will be revoked or whatever the word is since I'm no longer a resident in the US. I wonder how I can get a credit card if I'm not a resident anywhere?

Anybody have any thoughts on the credit card problem?

The problems are piling up but seems there are solutions too........

[JohnC]

I would have thought you could set up your own company and become self employed, no need to register it anywhere, then just bill your ex employer as you are now self employed, at the same time open a bank account to which you pay in your fees and apply to them for their credit card using the bank as the address for the card and you collect from your branch. You then give them a mailing address for statements or better still go paperless and do it all online! You could use your home addres in Thailand for the application but explain that you travel worldwide as a consultant. As you would not be working in your home country you would not be liable for any tax I would have thought. Further down the line what about social security benefits? if you dont pay in then you may find you lose all your pension and health care rights? I am not from Canada so I do not know how your system works. Just my thoughts for what they are worth!

[g00dgirl]

Anybody have any thoughts on the credit card problem?

The problems are piling up but seems there are solutions too........

Not all banks close your account / cards just because you dont live in the country anymore, you just don't tell the bank you don't live there anymore, of course it helps to have a mail forwarding address or someone to check your PO Box if you need to receive mail from the bank, depends how often your cards expire, otherwise just use Internet banking and cancel paper statements.

If you live in many different countries over time you might end up with more bank accounts and cards than you ever need. In many countries you get accounts and cards even as a tourist.

[ProThaiExpat]

Whether you are a resident or not in any given country is usually a determination by a taxing authority, regardless on how you view it. On the other hand, what place you are a resident of is usually your own declared place of residence, if any.

If you feel you are not a resident of any country, then your are not a resident of any country. Just beware of any taxing authorities rules regarding who they determine to be residents. The place your income originates from is usually the place you must be most wary of.

The current alarms going off in Germany on how German citizens, resident in Germany, were able to hide income through Lichtenstein, is an example of how many avoided taxes.

I think we are all aware of the many stories coming out of Britain, where their citizens declared residence in a country abroad, but had to return to the Isle of Wight for at least 24 hours a year inorder to qualify for some tax advantage.

[thaihome]

I find it interesting that your company is claiming they cannot pay you anymore since you lost your green card. It sounds to me like they did not do much investigation on how to handle that. Certainly they would have trouble if you were still working in the US, but since you work overseas there should be no issue. At worst they would still have deduct FICA taxes which as a non-resident you will never get the benefit.

We pay people from all over the world in many currencies from a US company, so I don't understand the issues they claim

Also, BofA will only take your credit card away if you tell them you are no longer hold a green card. Once you get the card, they don't ever ask for proof of residency again.

TH

[Basecamp]

I find it interesting that your company is claiming they cannot pay you anymore since you lost your green card. It sounds to me like they did not do much investigation on how to handle that. Certainly they would have trouble if you were still working in the US, but since you work overseas there should be no issue. At worst they would still have deduct FICA taxes which as a non-resident you will never get the benefit.

We pay people from all over the world in many currencies from a US company, so I don't understand the issues they claim

Also, BofA will only take your credit card away if you tell them you are no longer hold a green card. Once you get the card, they don't ever ask for proof of residency again.

TH

We are a very small compay, under 60 people and have no operations outside of the US so yes they would have never investigated it before and they are doing so now. But we have one person that is doing it and she has a lot of other functions to attend to besides this new glitch.

I guess I'm not breaking any law by keeping my BofA account. I also have an account with TDAmeritrade and do remember a few years ago them telling me they would have to close my account if I lost my US residency. Maybe the same applies but it might be a good idea to get rid of stocks that would generate capital gains so I don't have to do a US tax return any more.

[Basecamp]

Just thought of one more issue. I have a bunch of money in my 401K. Since I'm not a US resident anymore, I wonder if that affects my 401K account. If I collapsed it now, would I pay a big penalty or if I wait till I'm 59.5 years old, will my things just continue on as normal.

Thanks to all for your help on all these questions.

[misterme]

Canadian Taxes are different. The form for non-resident is NR73. My advisors recommend using the form to change/comply to the regulations, but not to file it with the Feds, as it can send off alarm bells. Since it's not mandatory to file the form, as long as you meet the requirements, using the form only as a guide serves a better purpose.

Things like cancelling all but one Canadian Bank, phone bills, Credit cards, etc. They study to see if you're really non-resident material.

As a non-resident, you don't have to pay any taxes on money made outside of Canada. But, they make the final determination of non-residency upon your return to residency. What that means is:

They have guidelines for non-residency status

They expect you to fulfill them

Once you're back, they'll look and decide if you were in compliance with the spirit of the law.

If you've been out of Canada for that long, you'll have no problem, I'm guessing.

You may want to file an 'exit return' for taxation purposes. Once this is done, you don't even have to file Canadian taxes anymore (until you come back). You can feel free to visit Canada as often or as long as you want, but as your residency is elsewhere, there is no tax return to file. Any income generated in Canada will then be subject to a flat rate tax (25%, IIRC). Caution that if you sell property in Canada, it may be in your best intrest to become a resident again before you sell, because of this tax. Capital Gains tax is not high for residents, so there are reasons for both sides.

It's a little complicated, but only because it soooooooooooo good for the Canuck overseas.

http://expat.ca/index.htm

http://expat.ca/non_residence.htm

Edited March 5, 2008 by misterme

[Basecamp]

Canadian Taxes are different. The form for non-resident is NR73. My advisors recommend using the form to change/comply to the regulations, but not to file it with the Feds, as it can send off alarm bells. Since it's not mandatory to file the form, as long as you meet the requirements, using the form only as a guide serves a better purpose.

You may want to file an 'exit return' for taxation purposes. Once this is done, you don't even have to file Canadian taxes anymore (until you come back). You can feel free to visit Canada as often or as long as you want, but as your residency is elsewhere, there is no tax return to file.

It's a little complicated, but only because it soooooooooooo good for the Canuck overseas.

http://expat.ca/index.htm

http://expat.ca/non_residence.htm

Mr. Me,

Wonder if you could put me in contact with your legal advisors. I would love to get a real expert's opinion on this matter.

Thanks.........Basecamp

[RAZZELL]

I would have thought that by far the easiest way would be to set up a Thai company or become self-employed and pay Thai taxes.

You could then invoice your parent company in the USA from Thailand. It would also make your visa situation that much clearer.

Who know's what the future will bring? What if one day you wanted to apply for PR?

But I'm pretty sure paying a small amount of tax in Thailand would be of benefit to you, especially as you say you have a family and condo there.

Good luck in your search (to pay no taxes! )

RAZZ

Edited March 24, 2008 by RAZZELL

[Basecamp]

The problem is: This part of your post I don't agree with.... that is the interpretation of "small amount". Thai tax rates are quite high and that affects me significantly.

But I'm pretty sure paying a small amount of tax in Thailand would be of benefit to you,

RAZZ

However, you do make a good point about the future. Becoming self employed and paying Thai tax could have positive future benefits. i.e. PR status. It's just that I don't want to pay those high tax rates if I don't have to. Can't really blame me for that.

I've researched Hong Kong and I'm in the process of getting everything together to get HK residency so if that works out, I'll just pay HK taxes. That'll be ok.

Also, the magic 50 year old retirement visa isn't too many years in the future so I'll have that option to me later, but of course I already have the non immigrant B investment visa and am legally married to a Thai lady so the marriage visa is an option too. So PR status isn't as important for me although who knows, maybe going for citizenship later would be interesting when I'm retired.

Actually, I just had an idea. How about getting 80% of my pay into my HK account, have 20% paid into my Thai account. That way, I start the process of paying Thai tax and working towards residency and citizenship and only have to pay a much smaller amount of tax overall. Hmmmm.........

I would have thought that by far the easiest way would be to set up a Thai company or become self-employed and pay Thai taxes.

You could then invoice your parent company in the USA from Thailand. It would also make your visa situation that much clearer.

Who know's what the future will bring? What if one day you wanted to apply for PR?

But I'm pretty sure paying a small amount of tax in Thailand would be of benefit to you, especially as you say you have a family and condo there.

Good luck in your search (to pay no taxes! )

RAZZ

[paul1970]

Someone on a previous post mentioned the w8-BEN, you must get this filed at your company or beleive me the US IRS will chase you everywhere.

I know as I'm in a similair situation as yourself, I'm a Brit who worked in the US for 2 years before coming to Thailand but I made the mistake of not filing a W8-BEN with my company and now I have the IRS chasing me for unpaid taxes for 2005 and 2006 even though I never had a green card and my work visa had expired, I was out of the country and am not a US citizen.

So whatever you do file a W8-BEN so it shows that your company should not withold us taxes from you, it will save you a lot of grief later.

[RAZZELL]

However, you do make a good point about the future. Becoming self employed and paying Thai tax could have positive future benefits. i.e. PR status. It's just that I don't want to pay those high tax rates if I don't have to. Can't really blame me for that.

I've researched Hong Kong and I'm in the process of getting everything together to get HK residency so if that works out, I'll just pay HK taxes. That'll be ok.

Also, the magic 50 year old retirement visa isn't too many years in the future so I'll have that option to me later, but of course I already have the non immigrant B investment visa and am legally married to a Thai lady so the marriage visa is an option too. So PR status isn't as important for me although who knows, maybe going for citizenship later would be interesting when I'm retired.

Actually, I just had an idea. How about getting 80% of my pay into my HK account, have 20% paid into my Thai account. That way, I start the process of paying Thai tax and working towards residency and citizenship and only have to pay a much smaller amount of tax overall. Hmmmm.........

Could you enlighten me on the residency process in Hong Kong and what are the benefits?

Also, what are the respective tax rates in HK and Thailand?

Just for research purposes

RAZZ

Edited March 25, 2008 by RAZZELL

[Basecamp]

Could you enlighten me on the residency process in Hong Kong and what are the benefits?

Also, what are the respective tax rates in HK and Thailand?

Just for research purposes

RAZZ

Hi Razzle, HK residency isn't too difficult but it's not super easy. We just hired a support engineer in HK that reports to me so we had to set up an entity there so we could pay him etc. It is technically called a marketing office and business cannot be done out of that office. It is enough though for our company to get me residency status there.

From what I understand the Thai tax rates are approximately on a par with US tax rates. Maybe someone here can confirm that.

HK tax rates are about 15% but I think you get a tax break based on number of days in HK. I would be outside of HK 90% of the time so I think I get a tax break on that......... but I'm not yet certain of that situation. Regardless 15% is a lot of money saved vs. 30 to 40%.

Anybody have the schedule for Thai tax rates?

Anyway, below are details on what we're doing right now to get my HK residency status going.

-------------------------------------------------------------------------------------------------------------

1

Letter of authorization for Service Provider to assist application from sponsor company

2

Letter of authorization for Service Provider to assist application from applicant –

3

Form ID(E) 936A

4

Acopy of applicant's passport

5

A copy of applicant's HK ID card if applicable

6

Form ID(E) 936B

7

Form ID(E) 936E

8

CV of Applicant

9

Certificates(s)/ diploma(s) of applicant's educational attainment

10

Form ID(E) 936F

11

Certification of employment from previous employer

12

Form ID(E) 936G

13

Staff list of sponsor company - HK rep office

14

Letter from the employer (also sponsor) explaining why the applicant is the appropriate candidate and in necessary for local

15

Form ID(E) 936L

16

A copy of employment offer letter to applicant in Hong Kong

17

A copy of Business Registration certificate in Hong Kong and business plan

18

A copy of the Certificate of Incorporation of overseas company and its current business registration

19

A copy of latest Audited Financial Statements and latest Management Accounts

20

A copy of tenancy agreement for applicant's living accommodation in HK

21

A copy of last 3 months' bank statement of the employer

22

A copy of tenancy agreement of office premises

23

A copy of Company Profile and info

[Basecamp]

Someone on a previous post mentioned the w8-BEN, you must get this filed at your company or beleive me the US IRS will chase you everywhere.

I know as I'm in a similair situation as yourself, I'm a Brit who worked in the US for 2 years before coming to Thailand but I made the mistake of not filing a W8-BEN with my company and now I have the IRS chasing me for unpaid taxes for 2005 and 2006 even though I never had a green card and my work visa had expired, I was out of the country and am not a US citizen.

So whatever you do file a W8-BEN so it shows that your company should not withold us taxes from you, it will save you a lot of grief later.

Hi Paul,

That's pretty scary stuff. I'll look into this so I can get my US status officially terminated.

Thanks for this head's up.

[RAZZELL]

Basecamp

Cheers for the post on HK, it look's pretty invloved. Keep us informed. All the best for the future

RAZZ

[MJo]

Check out Dubai, i hear few guys over the past 3 years claiming it is easier and better there than HK.

At least couple of years ago income tax was 0% and you could get PR for life just by buying property there...

[Nepal4me]

Check out Dubai, i hear few guys over the past 3 years claiming it is easier and better there than HK.

At least couple of years ago income tax was 0% and you could get PR for life just by buying property there...

Does anybody know if this Dubai zero income tax statement is true or not?

[bkk_mike]

Do not do what one of the earlier posters said, and set up a Thai company to be paid through.

That would simply be making your income taxable in Thailand when you wouldn't be liable otherwise as you're in Thailand less than 180 days a year.

You can try and be paid as a self-employed person, or it may be simpler to set up an offshore company somewhere like the British Virgin Islands. (google BVI IBC). No tax, no reporting, but a $350 annual registration fee. Once it's a company they're dealing with your salary can be treated just like an invoice for services.