In my practice, I hear a great many misunderstandings and even misconceptions about when, upon emigration, you can escape the iron grip of the tax authorities. We will clarify this in this article.
Reversed burden of proof. I cannot emphasise enough that once you have emigrated, the ball is in the tax authorities’ court. It is then up to the tax authorities to prove that you are still a taxpayer in the country you are leaving!
So you do not have to prove where you are staying by keeping a logbook. No, it is up to them to prove that the center of your interests still lies in your former country. If you want to float around on an oil drum in the Mediterranean or retreat to a monastery in Bhutan, that is your absolute right. You don’t have to take a photo every day and tell the tax authorities: ‘Hey, I’m still on my oil drum.
When are you gone? If you feel you have moved, the tax authorities will also consider you to have moved. Step 1 is to deregister with the municipality or town where you currently live. After that, it is up to the tax authorities to prove that you are still liable for tax. But if you’re gone, they can’t do that. It’s as simple as that.
False stories. You read stories along the lines of ‘I live in Spain and went back to see my old dentist in the country I left, and the tax authorities caught me out’. This is, of course, utter nonsense. It doesn’t work like that. If you’ve moved, you’re ‘gone’ for tax purposes. This means that your partner and your children have gone with you, that the ‘centre of your life’ is no longer in your former place of residence. If you visit your doctor once in a while, this is obviously no problem.
You’re allowed to stay in your former country for up to 183 days. It’s not a single factor that can do you in; it’s a combination of factors. If you’re still hanging from the ropes at the gym twice a week, you can hardly claim that you live in Costa Rica. So the answer lies in common sense.
Property and nationality. You obviously do not lose your nationality when you move. And you are free to retain as much property as you wish.
So let’s make a plan. If you are leaving your country for tax purposes… You must choose the right country, or opt for a life as a digital nomad, or restructure your business. There is quite a lot involved here. Or, if you are a bit older, perhaps start with estate planning.
Seek professional and independent guidance on this. Contact us today at: info@dehoon-dhp.com
