We’re living in uncertain times. There is the COVID-19 hysteria of which we have yet to be presented with the tax bill. After all, the infinitely deep budget pits are not going to be filled by themselves.
Furthermore, there is political instability, not only in Europe but also, for example, in the United States, South-Africa, etc… Many people are wondering whether a second passport might be useful, and whether they can avoid taxes in one move.
Avoid taxes…? Let’s make you an illusion poorer right away.
A passport has no tax implications. You are not taxed based on your nationality, except for Americans. So if you have your so-called ‘fiscal residence’ in France for example, you will be taxed here. Whether you are Chinese or French, but you work and live here, then you pay taxes in France. Americans are allowed to live on Mount Everest or float around the Pacific on a rubber dinghy, they will have to file their tax returns in the US. Whether they actually pay taxes is another matter. So quickly ‘buying’ a passport from an exotic island such as Dominica or Barbuda (so-called ‘citizenship by investment’) will not free you from the hot breath of the tax inspector. Or thinking that you can fool your Swiss banker with this and prevent the exchange of information is also nonsense. If you are sitting there, with your blond hair, at the bank in Zug and tell them that you are from Barbuda, the banker will make it very clear that he knows that ‘trick’.
Does it make sense?
A Swedish passport is one of the best passports in the world. You can travel to many countries without a visa. So if a Swede tries to acquire a second passport this has few advantages. If, of course, you have the misfortune of being born in the wrong country, and you are North-Korean or Sudanese for example, well, then you will do anything to get a second passport.
How do you escape high taxes?
As I said, by moving your ‘residence’, in other words by ‘living’ in another country. How do I get started?
To no longer be a taxpayer in e.g. France, you first have to de-register from France. This is an absolute must. Go to your municipality and say ‘I’m out’, please write it down. You ask the tax authorities for a so-called ‘special declaration’ and ask to be allowed to pay your taxes now. And then you pack your suitcases… Of course, you will remain French and you can still come and stay here. But in order not to get into any problems, you have to move your “nerve center of your interests”, your social life, your family, etc. abroad and live there.
Of course, you can have a second residence and real estate in France. If you are unable or unwilling to move, the tax burden may be reduced by relocating your company abroad. Here, too, certain conditions must be met so that you keep to the rules. But here we are to hold your hand.
Normally you have the right to live in any country of the EU. So this is not a problem. Suppose you want to live outside the EU, e.g. in Malaysia, Costa Rica, Uruguay or Mexico, then don’t go looking for a second passport. This is not necessary at all and is usually very complex. Just investigate how to get ‘residence’ in that country and you’re done. Usually you will have to set up a small company and recruit someone for example. This is the easiest way.
The other way around too! Maybe you have friends who want to come and live in Europe, mostly they’re looking for a passport. Either on the basis of ancestors or they pay exuberant prices for buying a passport. Unnecessary! Look for a residence in an EU country. You have the right to reside there, and if it is a Schengen country you can travel around freely in the Schengen zone.
Usually you can then obtain a passport in your country of ‘residence’ after 5 or 7 years, subject to the necessary language exams, etc. This is the best way. Each country has its own changed legislation on this matter, often also politically inspired. Through our international network, we are happy to assist you here! For example we have good options in Portugal…
Visit our websites full of information, practical tips to make the tax burden a bit more bearable, also check out our e-books!