Moving to a Tax Haven. Advice please...

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bassmaan

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I am seriously considering giving up my Canadian residency and moving to a tax haven. I just had a meeting with my accountant today and have a meeting set up next week with another accountant who specializes in offshore banking and creative accounting. The main draw back appears to be that I can spend a maximum of 180 days in canada a year. However I love traveling and can easily adapt to a vagabond lifestyle. Starting with ASW I already am planning a 5 months journey around the globe working from my laptop along the way.

my situation:

I am 25 and started with affiliate marketing 3 months ago and see a lot of potential. I currently work as an indevidual in canada getting payed in US$. I have never incorporated or payed income tax(due to insufficient income). I am looking at about $250k a year profit. I own a home in Canada which I can gift to my mom.

Some of the countries I am considering are:

Bahamas
Panama
Belize
Barbados
Cayman Islands
Grenada
St Kitts

Many of these countries have ZERO tax rate and some dont even require you to keep records.

If anyone has any experience or advice to share I would really appreciate it!! This is a big deciscion for me but given my current situation and lifestyle I think it is the write one.
 


250k profit a year? Not worth your while.

This is a LOT more complicated that you think. I looked into it but there are some serious drawbacks that are not immediately obvious. Sit down and speak to your accountant and financial adviser about this, it can get messy.
 
Could you please elaborate on what these drawbacks are??

with tax here at around 44% I would still be saving $100k/year. Plus I would be spending six months of the year traveling any way. And these warm tropical climates are much more apeeling than a Canadian winter. And At this point since I am just starting out I have very few ties to Canada which would need to be severed.

but please share what your findings were. At $600/h for my next accountant meeting I really wanna go in prepared.
 
If you're only source of income is AM and you've only been doing AM for 3 months, you should probably not jump to renouncing citizenship. Things change quickly.
 
droplister said:
If you're only source of income is AM and you've only been doing AM for 3 months, you should probably not jump to renouncing citizenship. Things change quickly.
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I'm with drop, shit can hit the fan, and fast. Most campaigns you run won't be consistent, anything can change at the drop of a hat.

But if it's worth it to you, don't take any of our advice, just sit down with your tax advisor, or find someone that can help you with everything.

Big decision man, choose wisely.
 
I understand the very volitile nature of this business. I do believe my success to this point has been a result of a good business model and not luck and I am confident in my ability to adapt.
I also have a very high risk tolerance.

I will not be renouncing citizenship, only residency. I would keep my passport. I can reclaim residency at any time I believe.

All comments are welcome but I am specifically looking for input from people who have done this or have done considerable research into this and why you made your descision for or against.
 
No clue about how Canada does their thing, but as long as you are a US Citizen they will tax your income no matter where you are and no matter where you make it.
 
droplister said:
No clue about how Canada does their thing, but as long as you are a US Citizen they will tax your income no matter where you are and no matter where you make it.
Click to expand...

Where did you get this info from? Its not so black and white... I live abroad and only pay taxes in the country which i reside. However I don't make 250k and i still file a US tax return. I believe the limit is $85,700. You don't have to pay taxes on that amount if residing elsewhere..if you make more than this, then you would still have to pay US tax.

Anyhow, I'm sure your accountant can help you with the laws in CA.
Good luck to you!
 
Why you have to move or give up on anything? Why not just incorporate in some tax haven?
 
I am an American citizen living in Costa Rica, right on the border of Panama, right on the beach. It's cheap as hell and beautiful. Internet is a bit sluggish but it's still high speed. You can live here for $2k a month like a king, easy, it's pretty awesome.

I wish it was as simple for me to just renounce residency and do what you are trying to do, because I've done the research but the US makes it a BITCH to even try it.

But as a Canadian it's easier.

Not sure what your CA has told you, but I hired a Canadian CA to consult a previous partner on relocating to Costa Rica so some of this might apply.

Ideally pick a country you like as soon as possible, based on your priorities, and seek to initiate the process of residency there. My understanding is that this will help establish your non-residency in Canada. Just cutting ties is not always enough and if you are forced to make a case, having paperwork that shows you are trying establish yourself somewhere else is good.

I can't say much about other Central American countries tax rates, but becoming a Costa Rican resident for tax purposes (and a non-resident of Canada) would definitely be advantageous for you. The tax rates here are quite low, and under current law they have minimal to no tax on outside sources.

However, there are the hitches that have to be considered:

If there is no tax treaty between Canada and the country you are moving to (the case with Costa Rica), you have to be very diligent about "severing residential ties" with Canada to be considered a non-resident.

Generally, no place of residence, minimal assets in Canada, infrequent visits, do not renew drivers' license, do not use provincial health insurance.

The problem is that even with all this, you will not be 100% sure about non-residency status.

You "declare" non-residency simply by indicating the date you ceased to be resident on the last return you file as a resident. But it's not conclusive, and does not necessarily mean that you are not a resident.

Some people submit a form (NR73) to CRA requesting a determination of their residency status. Tax pros discourage that, because it red flags the situation and the people at the CRA who review are idiots.

The reality is that you will just have to live with the fact that the CRA could challenge it.

There is also a "departure tax" in Canada. This is ultra confusing so ask your CA, but basically when you go non-resident, your assets can be deemed sold for market value and gains recognized. Whatever the fuck that means.

Besides Costa Rica, I've heard good things about Panama, I think they make it easier to become a resident than Costa Rica does. I'm still half-assed looking into all this myself.

Hope this helps. Feel free to pm me if you have more questions.

Sean
 
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somlor said:
I am an American citizen living in Costa Rica, right on the border of Panama, right on the beach. It's cheap as hell and beautiful. Internet is a bit sluggish but it's still high speed. You can live here for $2k a month like a king, easy, it's pretty awesome.
Click to expand...

Can you describe "living like a king", I've always dreamed of doing this and would like some help in visualizing this dream! I'm sure others here would appreciate it too. Do you go to good restaurants, clubs.. own a beach house etc? What's a good day out there? Is it going out to sea and snorkeling or whatever else you do in a tropical paradise?
 
you're basing your decision to renounce citizenship based on your ability to pull in $62k in three months... that's not much of a track record.

the saying don't cut off the nose to spite the face comes to mind in your situation.
 
I'm 25 and spending 5 months traveling the world and working from my laptop this year too. Weird...
 
Traveling is not going to convince the CRA that you have permanently severed ties with Canada. You'll need a permanent residence at a foreign country and pay tax there if possible.

I have done a lot of research on becoming non-resident and planning to becoming one in 2-3 years.

You should read this [CEN-TAPEDE] Becoming a non-resident of Canada - living in Korea and engaged to citizen of Japan. - David Ingram specializes in giving expert income tax and immigration help to American and Canadian citizens living out of their home countries from Zi and you can find more non-resident information on The CEN-TA Group, David Ingram, Canada US Income Tax Expert, Immigration Canada Mexico and other countries - Tax Forms, Canada US Income Tax, NAFTA - Tax Wizards.
 
UK is tax heaven for resident foreign people, so you could set a company in tax heaven country (Cayman Island, panama etc) and living in London.
 
You need to seriously take a look at what you are doing here before you commit to anything. I know it has been said before, but at 25, with 3 months of AM income under your belt, it can seem like the world is at your fingertips. Don't jump out of the plane before you strap on your parachute.

Being on track to make $250k in a year is not the same thing as having made $250k a year for the last 5 years in a row. Don't do anything stupid until you have at least a few hundred thousand in the bank to tide you over should a rough patch in your business occur, because it will occur.
 
Making $250k doesn't seem like enough to justify moving out of the country just to save some taxes. Most of the time you hear about ppl doing this is when they are making double digit millions or more per year.
 
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