Avoiding tax by international travel?

Avoiding tax by international travel?

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I have a client with house and spouse in the UK and an employment in another EU country. He is NR & NOR in the UK.

He is being proposed a project which will require him to spend some time in a number of different EU and perhaps non-EU countries (but less than 183 days in each).

Is it possible that he will find himself totally non-taxable by not falling into the net in any one country?
Andrew Smith

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By carnmores
04th Aug 2006 16:07

Yes
as stated below they used to be called
perpetual travellers

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By gbuckell
04th Aug 2006 15:25

Could be UK resident
If he has a house and spouse in the UK and spends some time here there is a risk he will be regarded as UK resident if he is flitting about elsewhere.

To be safely not resident anywhere one needs to avoid having a base.

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By Dave Collier
03rd Aug 2006 12:08

Rolling Stone
There was a bit on ITV News last night about how the Rolling Stones paid about 1% tax on £100 million of income by flitting between various islands in the Bahamas, going on tour, rehearsing in Canada and having the management in Holland. And HMRC spend all their time going after little self-employed people.....

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By AnonymousUser
03rd Aug 2006 16:21

In relation to Stephens comment....
Is your cruise ship client exempt from tax due to the rules regarding foreign earnings deductions for seafarers? If so, and it does sound like it, then these rules are pretty strictly only available to seafarers on certain types of vessels. I have a few clients who qualify (and I used to be a seafarer myself) and it is not at all the same as someone who simply travels/lives/works overseas.

Just wanted to point this out - or else we could all arrange to be 'out of the country' for the minimum 182 midnights per year - and pay no tax!

Only wish we could, but unfortunatley this tax exemption is reserved for those at sea only.

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By User deleted
03rd Aug 2006 16:34

Yes, this is possible
I have had two clients in recent years who are not tax resident anywhere. One is a film director who travels round the world on different projects and never spends more than a few months in one place. Another is working in the mining industry and divides time between Australia, Russia and Ukraine without becoming resident anywhere.

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By k40911
06th Aug 2006 09:35

I agree with Paul. From what you have said the client will probably have tax & social insurance liabilities in each place he works.

From a UK tax practitioners perspective it does not really matter if he does, because if you suspect he may be but is deliberately evading tax in any country then a requirement is required to NCIS because living off the proceeds of tax evasion would be a crime if committed here.

To my mind this is the biggest headache in looking after PTs (perpetual travellers).

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By dan06
03rd Aug 2006 13:07

Rolling Stones
Further to the revelations about the Rolling Stones tax management, I have written a story about them which you can read here.

Dan Martin
Business Editor
AccountingWEB

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By AnonymousUser
04th Aug 2006 17:18

Can You be Non Resident
Second time I have tried to post this, so its content may be duplicated, if more detailed.

Many European Countries now operate a strict interpretation of the OECD model double taxation agreement (DTA). This means that if your client is employed to work at a client site in another European country he will probably be liable to taxation in that country on monies earned from day one. Care should be taken when working in: -

Holland
France
Norway
Ireland

The DTA only allows for the 183 day rule if there is a true possibility of double taxation, which would not seem to be the case here.

There is another issue not to be overlloked and that is National Insurance or Social Contributions. There is no equivalent to the 183 day rule for National Insurance and as such your client would be liable to NI from day one, unless he can get an E101, which would mean that he would need to be employed by a UK Employer prior to posting (excluding maybe his own UK Ltd.) As you state he is non resident for Tax, I am assuming that he would not get an E101. Rates of NI generally across Europe are higher than the UK.

In a nutshell, your client is likely to be tax resident in each country that he works, plus liable to Social Security in Europe. The rest of the world is another ball game altogether.

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By stephenkendrew
03rd Aug 2006 12:38

yes
Not sure on all the full rules & regulations but I've got a client who works on a cruise liner and spends less than 90 days in any one country.

His employment income is received gross without any deduction for tax.

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By spike418
03rd Aug 2006 11:47

Possibly
I met with a potential client a few months ago who seems to fall into that bracket. He has been travelling for about 6 years across most continents. His income is generated by the production of software from a laptop, updates are emailed to subscribers and payment is made by paypal etc. He has never spent more than 90 days in any one country and whilst I cannot speak for other jurisdictions he certainly has no UK liability.

Reason he came to see me? Getting a little fed up with the lifestyle and will be settling in the UK.

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