Every nation relies heavily on taxes. The tax funds received by the country is utilized to power the government apparatus infrastructure and various departments. The fact that the world is beginning to exist online is making it difficult for nations to keep track of what taxes should be paid. As Digital nomads make money through PayPal, Skrill and other payment service providers in various countries, it can be challenging for the tax office to find out where any earnings are realized and whether an individual is running a taxable business. This topic is becoming increasingly popular, but the regulators are not clear about the regulations.

In an attempt to clarify the reasons for confusion and some of the best options available to solve the questions regarding taxation The goal here is to ensure that all taxes are paid within the bounds of compliance. As well, we want to make sure that you are not overpaying, as it seems unfair to pay taxes that do not apply to you. We assist Digital nomads in obtaining tax residency in excellent jurisdictions that are fully supportive of your flexible lifestyle.

Where the confusion begins

While you may operate in the country in which you started your business, you are still expected to pay taxes in most jurisdictions on any earnings arising from the country. Meaning that it is deemed as if you are trading from that jurisdiction. If you are resident, you need to pay like a resident. The confusion begins when Digital nomads travel frequently. Digital nomads are increasing in numbers, therefore needs to be a better understanding of what needs to be done in order to properly decide tax residency. It is also important to consider the most practical jurisdictions for your lifestyle.

For digital nomads, it can be difficult to understand taxation. Taxation rules and regulations were mostly created before working could be done on the go. Nowadays all that is required to run a business is mobile phone reception and an internet connection. Your work travels with you, whether you are crossing state borders or the borders of nations. The office rides with you on a plane, on the bus, and in your bed before you head to sleep. Trying to decipher where to pay taxes becomes confusing and overly complicated, due to the vague rules in place when lined up to modern circumstances.

Why is this a concern? Incorrectly filing taxes, or not filing taxes at all, can lead to unbearable penalty costs. When this occurs, it can be difficult to dig yourself out of the financial hole. Making the right choice about taxes can be a matter of making and breaking your nomadic business. Finding a proper tax residency is perhaps the most important tax aspect for digital nomads.

Establishing tax residency

Whenever possible, the easiest way to treat tax is to pay to the country you have residency in. Nations assume you have a place to call home, and the taxation system is based on this assumption. When you are not registered anywhere, you are in default everywhere.

Many countries make it challenging for those that pay taxes elsewhere to remain in the nation. This is hard for digital nomads and often poses a problem. In order to avoid encountering this issue, it is helpful to establish a tax residency. Pay attention to rules on residential taxation.

Different countries have different regulations on earnings. When it comes to territorial jurisdiction, worldwide income is not taxed. The only income taxed is the income earned in that particular location.

In order to make matters easier, it is simple to seek solutions for this problem by obtaining the necessary bank accounts and various legal requirements that help to prove the location of your established business. By having a specified location, understanding where to pay taxes becomes less complicated.

Your solution

Working with Intercompany Solutions means working with a team of advisors and accountants that can help you lead to the best possible solution as a digital nomad. Working with lawyers, tax advisors, accountants, and more allows you to cover all ground. We have solutions for excellent territorial taxation jurisdictions that do not require a minimum stay.