Country of Residence of Cruisers ?

[conachair]

Originally Posted by Nathan1975

I'm sure that this comes up all the time, but if one lives aboard thier yacht and travels World, what determines their country of residence? I am trying to find out info (mainly for tax implications), but am wondering where ones residency lies whilst cruising the worlds oceans?

I was non resident anywhere for 5 years. UK domiciled. I think it's frowned upon but not having much money the inland revinue aren't really bothered. Any income from UK will be taxed but anything earned abroad, you are supposed to pay taxes in the country where you earned it. My memory sometimes got really bad so i kept forgetting to do that bit. Not sure what the Aus regs are but I found the authorities here in UK to be very helpful when i spoke with them.
You need to keep an ear to the ground as well, some people have been hit bad in Spain, seems to be mainly staying long term in the more well known long term liveaboard marinas. Keeping on the move and out of the way i never had any problems there even though i stayed way over the 180 days.

[goboatingnow]

Normally to establish residence, you have to have an address on land, hence to establish non-residence you must have a residence elsewhere. However that may not remove you from the tax effects. In europe, many states have a very extended idea of "establishment", having a business, other property, royalties etc, may be used to consider you established there. In some countries a significant amount of years has to pass, before you are considered non-residence.

Again without the existence of double taxation agreements, you could pay tax in the originating country and also in the country of residence.

I suspect that the outcome of all this is that drifting around on a boat, wouldnt be regarded as non-residence.

dave

[Doodles]

As a CPA our favorite answer always starts with ...."It depends....".

[GordMay]

You need to explore the legal differences between a residence and a domicile.

[Doodles]

Originally Posted by GordMay

You need to explore the legal differences between a residence and a domicile.

And if a foreigner in the US, you want to explore resident alien and nonresident alien. Big difference in taxes.

[hellosailor]

Residency is defined by your sovereign, whether that is a nation or a monarch. Normally others will ask for your passport, and whatever that shows as your residency, is what they will take at face value. In the US? You'd need to check the rules for the state(s) you want to establish/keep it in, and the state that you actually ARE in. In some states, hang around for 30 days and you're considered a resident and allowed to vote. In others, not.

[goboatingnow]

http://www.hmrc.gov.uk/cnr/hmrc6.pdf

Have a read. (a) You retain your exisiting domicile until you acquire another, so cruisers remain domiciled in their original country

Residence is also easy to acquire and hard to loose.

Tax is paid in the UK on worldwide income. BTW ( and thsi is the case in most countries).

dave

[Pelagic]

Originally Posted by Doodles

As a CPA our favorite answer always starts with ...."It depends....".

I think it all depends on how you present yourself and what your past 5-10 year history illustrates.

As a long term live aboard I give a mailing address and when asked about permanent address I entered “No Fixed address”… saying the yacht is presently in ????.

No one has ever question the legitimacy of that answer once they understand I live on my boat.

For a long time, I have never worked or resided in my national country, held a bank account there or even maintained a driver’s license or storage locker. According to tax lawyers this seems to fulfill the legal intent of being a non-resident.

Where people seem to get in trouble is when they maintain properties and business interests in their country of origin, indicating it is their intent to one day return.


I think today, all governments with computerized tracking of nationals give the revenue people an easier read of intent and so it is important to remain consistent in supporting your non-residency claim if challenged.

[s/v Jedi]

Originally Posted by hellosailor

Residency is defined by your sovereign, whether that is a nation or a monarch. Normally others will ask for your passport, and whatever that shows as your residency, is what they will take at face value.

My Dutch passport doesn't show any residency. When they swipe it, they will get info that I live aboard Jedi. I officially emigrated from Holland but didn't immigrate anywhere.

Originally Posted by goboatingnow

http://www.hmrc.gov.uk/cnr/hmrc6.pdf

Have a read. (a) You retain your exisiting domicile until you acquire another, so cruisers remain domiciled in their original country

UK cruisers remain domiciled in their original country then, but whatever the UK government writes is irrelevant for citizens of other countries.

ciao!
Nick.

[goboatingnow]

My Dutch passport doesn't show any residency. When they swipe it, they will get info that I live aboard Jedi. I officially emigrated from Holland but didn't immigrate anywhere.

Your passport doesnt show any residency information, other then country of citizenship. You could have a dutch passport and be resident ( or domiciled) anywhere.

How do you "emigrate" from a country.?? ( you can leave, but that irrelevant).

dave

[conachair]

Originally Posted by goboatingnow

http://www.hmrc.gov.uk/cnr/hmrc6.pdf

Have a read. (a) You retain your exisiting domicile until you acquire another, so cruisers remain domiciled in their original country

Residence is also easy to acquire and hard to loose.

Tax is paid in the UK on worldwide income. BTW ( and thsi is the case in most countries).

dave

Not quite. Residence is easy to loose from UK. Just leave and have no ties in UK. And stay out most of the time. Then pay no UK tax on any income earned outside UK even if it is from a UK company. If you earn a lot and still have property/interests in UK then they might argue you taking the "iss a bit and haven't really left.

[goboatingnow]

Not quite. Residence is easy to loose from UK. Just leave and have no ties in UK. And stay out most of the time. Then pay no UK tax on any income earned outside UK even if it is from a UK company. If you earn a lot and still have property/interests in UK then they might argue you taking the "iss a bit and haven't really left.

I dont know about you, but having "no ties" with your place of berth etc, is not easy for most people. I dont know where you get the notion that income from a Uk company is exempt. Getting income from a Uk company would have HM Revenue, arguing that you are a UK tax resident, ( as opposed to "Ordinary Resident") Hence on that income UK tax was due, unless you were covered by a double taxation agreement.

Dave

[s/v Jedi]

Originally Posted by goboatingnow

Your passport doesnt show any residency information, other then country of citizenship. You could have a dutch passport and be resident ( or domiciled) anywhere.

Exactly. But I don't know if passports from other countries list stuff like address, residency etc.

How do you "emigrate" from a country.?? ( you can leave, but that irrelevant).

In Holland you go to the town hall and fill in the form stating you are emigrating from the country. This will trigger a whole process incl. notification of the tax authorities etc. It's easy and painless; the Dutch government doesn't try to force you to stay or keep paying tax etc.

That said, about the only good thing of Holland is that it's easy to emigrate

ciao!
Nick.

[goboatingnow]

I dont beleive any EU passport has ones address, a passport is a request to provide a citizen with free passage, that all.

It's easy and painless; the Dutch government doesn't try to force you to stay or keep paying tax etc.

Reading the dutch tax law in English , it would seem to be on a par with many other countries, inclusing the UK and Germany. Its not that easy to escape your tax responsibilities.

Dave

[conachair]

Originally Posted by goboatingnow

I dont know about you, but having "no ties" with your place of berth etc, is not easy for most people.

No no t for most but that's not what we're talking about here. It is very easy. Just untie a few lines and point the bow south to where it's warmer and the food is better

I dont know where you get the notion that income from a Uk company is exempt. Getting income from a Uk company would have HM Revenue, arguing that you are a UK tax resident

I got the notion from a few meetings with the inland revenue before going cruising for 5 years, working in middle east and Europe. If you are non resident (not an exact thing to define!) then you will not be taxed on earnings arising outside the UK. you should. however, be paying tax in the country where you earned it. If you are non resident it's not possible to do the UK self assessment form online to declare income, you need to buy some 3rd party software. There's a page where you declare foriegn income which seems to change every year.

1 Broadly, the United Kingdom (UK) charges tax on
• income arising in the UK, whether or not the person to whom it belongs is
resident in the UK
• income arising outside the UK which belongs to people resident in the UK

http://www.hmrc.gov.uk/pdfs/ir20.pdf
Definition of resident and domcile might be of interest.

Edit - that ones out of date - http://www.hmrc.gov.uk/cnr/hmrc6.pdf