Why moving abroad is good? Tax considerations 2021

As we move to a more digital age with remote working, enjoying the benefits of tax redomicile or a greater standard of living is not only restricted to millionaires.  One of the outcomes of Covid-19 has been people moving back home with parents or relocating to a lower cost of living area. If you are able to work anywhere with simply a laptop and internet connection, then Why moving abroad is good? Tax considerations you should consider, why not look at a location with better weather, lower taxes or just experience a new culture entirely?

Why moving abroad is good?

Looking to change your residency, your opportunities are endless. Some may move to another country in which your company has an office, or even become a digital nomad, working from coworking centres, coffee shops or in your apartment. Currently,  more and more countries are offering these types of visas, allowing digital nomads to work and live in their countries, such as Estonia, Germany, and the UAE.

Moving to Portugal from others countries
Tax coonsiderations

When is the right time?

So, when is the right time? There is no cheat sheet on the perfect time, it is totally up to you. There is sometimes a sense of illegality when people consider moving for tax reasons for example. However, this is total nonsense. When you look at going on holidays or even choosing insurance, we shop around for the best product for our needs. So why don’t we do this for taxes too?  For example, Belgium’s top progressive tax rate is 50%. In addition, Capital gains, property income and investments are also taxed.  Now let’s look at another example, Andorra where income tax is 10% for earnings of over 40,000 euros and can be exempt from tax when under 24,000.

There are also other incentives a country may offer to relocate. The cost of living may be lower in other countries allowing you to live a better standard of living. Healthcare and education vary between countries too, for example, Gibraltar’s government pays for university tuition and includes an annual grant to cover living expenses. Looking past government incentives, why not move to warmer or colder weather depending on your preference? Maybe you are tired of the hassle and bustle of modern cities and wish to live work under a palm tree in the Caribbean? Then why don’t you? What is stopping you?

Get in Touch

Choose a destination that suits you

So, once you decide to take the plunge and decide on the country you wish to move to, now you are thinking about what are the next steps. Well depending on the country you wish to relocate to, you will need to apply for a visa. The most common will be a work visa, however, in this article, we are focusing on the self-employed or remote workers.

As briefly touched upon, there are an ever-increasing number of countries offering digital nomad visas, allowing you to relocate if you can prove you are self-sufficient and are able to work remotely. You could also look at other residency programs a country may offer. Each country will have slightly different criteria, some making it easier to gain residency.

So, let us take a minute and look at some examples. Being self-employed does not vary much. In the EU, citizens are allowed to move and reside in any country for up to 3 months without registering. You have the right to register as self-employed in these countries and enjoy the tax benefits of these countries. Andorra is slightly different where you must pay a 15,000 euros deposit while applying that will be returned at the end of your residency.

Digital Nomad - Moving Abroad
Digital Nomad – Moving Abroad is good

 

Various countries offer different passive residency programs. They usually involve having private medical insurance and property rented or bought. A large difference between various countries and different programs they offer might be the requirements. Some require you to invest a certain amount of money into the country while others simply want proof of self-sufficiency through capital in the bank or income statements.

Apart from the passive residency programs offered by countries, there are special programs that might interest some others. These are often more expensive and require large capital investments but offer greater tax benefits.

 

E-residency

I think it is important to discuss Estonia’s e-residency separately as it’s unique. Estonia is the first country to offer e-Residency, a government-issued digital identity and status that provides access to the country’s transparent digital business environment.

While this is not a normal residency allowing you to reside in the country, it allows you to access the Estonian Government’s e-services. This allows entrepreneurs to create and manage their companies from anywhere abroad and pay 0% tax while the money is reinvested or retained in the company. We will cover the benefits of creating or re-domiciling companies in other countries in our next article.

Final reflection

It is never easy to make the decision to uproot your life and start a new chapter. Hopefully, this article gives you some insight into the different options available or at least make you ask the question. There are 195 countries in the world, why limit yourself to your country of birth? With the pandemic throwing everyone lives into turmoil, there is no better time to reconsider your life and choice of residency.

Get in Touch

Sources:

  1. https://www.blueconsulting.eu/blog/coworking-after-covid/
  2. https://www.blueconsulting.eu/en/vivir-andorra-2/
  3. https://www.blueconsulting.eu/en/vivir-y-trabajar-en-gibraltar/
  4. https://www.blueconsulting.eu/blog/visa-types-and-requirements-for-moving-to-portugal/

Estonia: The most advance digital nation in the world!

en_GBEN_GB