I’m currently paying taxes in my home country (UK) since I have a regular job with a UK company. I live in Estonia with a DNV (and most likely plan on staying the full year).
Technically, if I stay more than 6 months I need to pay taxes here, however, they seem to make it quite complicated and expensive, given my employer doesn’t have an entity here.
This just got me thinking whether you guys in a similar situation just ignore this and assume nobody will say anything, or do you do everything by the book? Or do you make sure you don’t stay more than 183 days?
Your first mistake is paying taxes in the UK when you don’t live there. UK is a territorial tax country. It sounds like you need to hire an accountant in both countries. Don’t try to figure this stuff out for yourself, you will just end up paying more. I have some expérience dealing with HMRC snd they are very difficult to deal with.
Still, if his employer doesn’t have any branch in Estonia, for them paying taxes on employee behalf in Estonia could be so difficult that he could end up loosing his job.
I think what he needs to do is hire a UK accountant to reclaim 100% of the taxes he paid to the UK government. Then hire an accountant in Estonia. You can probably set up an Estonia based company, wire your company a few thousand dollars every month, and pay Estonia taxes only on the amount you pay yourself. Estonia has a low tax rate so you might end up keeping more money even with accounting fees.
You’re not getting the point of what I was saying. If he does that, his employer would probably fire him. This is because from a uk company is kind of a nightmare having an employee abroad (it’s different if he’s a freelance contractor)
Sure he is paying “useless” tax in UK but at the same time, this helps to keep his job. The reclaiming on tax could not be as much as the benefit of keeping his current job.
I’m curious about this too. Technically it would take a lot for them to know/prove that you were actually working in their country for 183 days, for example maybe spent a lot of time going to Latvia or Finland, there are no border controls after all. It seems like they would have to have a specific division for tracking and contacting digital nomad who they believe may owe taxes. But I’m not completely sure and hope someone posts on this thread with more info
I’m wondering too. December 29th will be my 183th days and I don’t want to go back only for 2 days
It works the other way around, the burden is on you to prove you were not there.
Proof is made via credit card statements, travel tickets, accommodations, etc. Most common is credit card statements.
Residence permits (mistakenly labeled as visas) usually have nothing to do with tax residency rules. To understand if you need to pay taxes, you just look at the tax laws of the country you have your permit in. Most of them use 183 days as the basic rules, but there are also nuances like center of interests, property, family, etc.
Some permits explicitly state that you’re exempt from the local taxes. Then you just continue paying them in your permanent residency country. Malta does this (not without its own nuances but still), lots of Carribean countries do this, but not Estonia afaik.
As for if you should comply, that’s your own decision. I wouldn’t recommend messing with taxes but there’s always a chance a country won’t notice or chase you at all.
Depends on the country.
Countries in LATAM have very weak enforcement, so if you keep your mouth shut, you won’t have to pay taxes.
Usually just following Don’t Ask, Don’t tell avoids any issues on countries where enforcement is weak. Just talk with the locals about taxes and you can get a general sense.
I highly recommend working with a local lawyer the verify what the rules are, and what risks you are taking.
You need to speak to an accountant on the matter. It’s worth the money.
Also look into what’s called a dual tax agreement or double taxation. It’s likely Estonia has a deal with the UK where you don’t pay double taxes. A quick google search on double taxation Estonia and UK should give you some answers