[charlesdm]

Yes, if you're making $50k a year. But not if you're an entrepreneur pulling in $1m a year. Everything involving intellectual property rights is generally very fluid and easy to move around.

A smaller scale example would be living life as a perpetual traveller°: an internet based entrepreneur who makes $200k a year and bases him/herself in a jurisdiction that does not tax income. Or who travels around between countries to avoid tax.

Instead of paying 40% tax on $200k (= $80k gone, poof) you put that in your pocket and use that to pay for travel expenses. "Going into tax exile" essentially ends up paying for itself, and then some. That is why companies (and individuals) participate in tax avoidance.

°: exception; this doesn't apply to Americans. You get to pay US taxes wherever you reside, above a certain income threshold.

[csomar]

How does this apply to other countries? Aren't you supposed to get residence in some country before losing the residence connection of your original country?

That being said, there are countries with loose taxation like Thailand where you can establish residence and avoid taxes as long as you are not operating in the country itself.

[charlesdm]

Not really, but it's better to have official residency somewhere, though. Some countries are quite flexible on residency, however. Cyprus offers residency after spending 60 days per year in the country, and exempts foreign income from tax. In Malta you can get residency by paying €20k a year (no requirement to spend any time in the country), and foreign income is also exempt from tax, etc.

> That being said, there are countries with loose taxation like Thailand where you can establish residence and avoid taxes as long as you are not operating in the country itself.

I believe you can run foreign companies from Thailand without having to pay tax there, as they have no CFC laws. So the example the poster above gave basically applies, but you would book all your income in ForeignCo and take a small salary in the Thai company from fees you charge ForeignCo. That's essentially a zero tax country then.

[eloff]

Panama also does not tax foreign income. I worked remotely from Panama for many years and it was lovely. My take home salary was better than what could be achieved working for the likes of Google or Facebook, stock compensation not considered. I met my wife there too. But the threshold to get residency is higher.

[seanmcdirmid]

No countries tax foreign income but the USA and Eritrea.

[eloff]

Not true at all. Canada, for example, taxes your worldwide income.

USA and Eritrea are unique in that they will tax your worldwide income even if you no longer live in those countries (are non-resident.) No other countries in the world have the brass balls to do that.

[jaclaz]

>USA and Eritrea are unique in that they will tax your worldwide income even if you no longer live in those countries (are non-resident.) No other countries in the world have the brass balls to do that.

But to be fair there is a rather large exemption, around US$ 100,000 per year, the nuisance is that you have to file some tax forms anyway:

https://www.irs.gov/individuals/international-taxpayers/us-c...

https://www.americansabroad.org/us-taxes-abroad-for-dummies-...

>The Foreign Earned Income Exclusion (FEIE, using IRS Form 2555) allows you to exclude a certain amount of your EARNED income from US tax. For tax year 2016 (filing in 2017) this exclusion was $101,300.

[seanmcdirmid]

And in most countries, you can just take the Foreign Tax credit and still owe zero given that their rates are higher than the US's.

[charlesdm]

The US is probably also realistically the only country in the world that would be able to do this and get away with it.

(Pretty sure Eritrea isn't collecting much from abroad..)

[eloff]

Yeah, you're right. It comes back to the USA is special. There's a lot of things it gets away with that other countries could not. There are benefits to being #1.

[seanmcdirmid]

Only if you are resident in Canada. A lot of countries do that. The USA will tax you even if you aren't resident as long as you have at least a green card or other immigrant visa.

How many people are collecting income from a full time job while living in Canada anyways? Doesn't foreign income (vs. say capital gains) generally imply non residency?

[eloff]

Not if you have an internet business of some kind, or work remotely for a foreign company. But if you do that, you're a schmuck to live in a country with a high tax rate. You can double your income, which means your savings rate probably goes up 600% or more, just by moving to a country that does not tax foreign income. How much faster can you pay off your mortgage under those conditions? How much faster can you retire?

It's not quite as magical as it seems though. If you retire in your 40s because of doing that, you'll need a lot more savings than you would at 65.

[charlesdm]

Directors of Canadian companies who are living abroad is probably one example.

Also, people who, say, commute from CA to the US on a daily basis will generally be exempt from Canadian taxes because the work is performed in the US (just an example, I have no idea whether you can commute from CA -> US on a daily basis)

[sgt101]

From what I understand they will rebate your tax based on the local taxation you have paid, provided you can prove that.

Alternatively you can give up your citizenship... I think very few people with US citizenship ever do that.

[charlesdm]

That is because there is a cost associated with renouncing US citizenship. You'll get hit with an exit tax on all your assets, making it extremely painful. The US really does not want you to renounce, because then they can no longer tax your global income.

They essentially punish wealthy people (financially) for renouncing.

[seanmcdirmid]

You actually don't have to prove anything, you just state that you paid taxes and how much you paid (if taking a foreign tax credit). As for rebate, that is something else, meaning those taxes were already withheld by the IRS for some reason.