Where do You Pay Tax as a Digital Nomad? FULL GUIDE
If you're a digital nomad, one big question you might have is: Where do you have to pay your taxes? Or do you have to pay taxes anywhere?
Most digital nomads probably do one of two things:
- They either simply don’t report their income anywhere and don’t pay taxes in any country — which is most likely illegal unless you do things properly.
- Or they simply keep paying taxes to their high-tax home country — like Germany, UK, France, or Canada — wherever they left from, which in most cases is simply moronic.
You don’t actually have to pay taxes to your home country if you don’t live there and if it’s not your permanent home. But in many cases, you still need to actually do something first to become non-resident in that country. And we’ll talk about how to do that in this video.
In this video, I will give you a full guide on taxes for digital nomads
So you know exactly what to do, and I will make this as easy for you to understand as possible — even if you know nothing about taxes.
Let’s start to unpack the topic of today’s video — but first things first:
1. This text is not tax advice.
I am not a tax professional. I am not giving you specific tax advice because the thing about all of these things is that they are always highly specific to everyone’s situation.
They depend on:
- Your citizenship
- The country you’re leaving from
- The countries you spend time in as a digital nomad
- How long you spend in each country
Everything depends.
I’ll just attempt to give you a general idea of how this generally, usually, normally works — but this is not specific advice for your specific situation. You either need to look directly at the laws of your country and the countries you spend time in — or ideally speak to a professional.
So there are sort of two cases that you will normally fall into as a digital nomad:
- Case number one: You need a tax residency.
- Case number two: You don’t need a tax residency.
What is tax residency?
Tax residency essentially means the right for a country to impose its tax rules on you.
So essentially, it means: Where do you have to pay taxes?
Which country’s tax rules apply to you?
Where you need to pay taxes always depends on which countries you are a tax resident in.
Again, this is always complex. Maybe there are some cases where you have to pay tax, etc., but generally, this is how it works.
How tax residency is determined depends on every country — every country has their own rules based on which someone will be considered a tax resident in that country.
What should you do as a digital nomad?
First things first: in any case, you should probably seek to become a non-tax resident in your home country.
Because if you don’t do that, by default, in many cases, you still have to keep paying taxes to your home country.
Example: Finland
For example, I can tell you the example of my country — Finland.
For any Finnish citizen who leaves Finland, by default they will keep being tax residents of Finland for the next 3 years unless they specifically apply to be fully non-resident.
You basically have to show that you have no ties to the country.
Like, I had to prove:
- I don’t own an apartment there
- I don’t have kids there
- I don’t have what they constitute as “ties” to the country
As long as I showed that and I proved all of that — and I then applied to be treated as non-resident from the moment when I left — after that, they approved it, and now I’m officially a non-resident of Finland.
But unless I did that — unless I actually applied for it — I would have had to keep paying taxes to Finland, which would have been absolutely dumb of me to do.
Many other countries — especially if you’re leaving your country of citizenship — they’re going to have more stringent tests for their citizens for them to actually allow them to be non-resident.
On this channel, I’ve covered a few countries specifically. I’ve covered the UK a lot, because the country I most recently left in the West was the UK. So I have a full guide on how to become a non-resident in the UK.
So we want to first of all look at the laws of your country on how to become a non-resident and make sure you become a non-resident.
Now, here’s where we get to the two cases:
Case number one: You need a tax residence somewhere
Your country might specify that to allow you to become a non-resident, you need to be able to show a tax residence somewhere else.
I believe the UK is like that, and I think Australia is like that, and they’re very strict about that as well.
Unless you can show that you have a tax residence somewhere else, they will essentially by default still consider you a tax resident there.
If you’re living in one place full-time, then this will be obvious — this will simply become the place where you’re moving to.
But if you’re nomading around, then essentially you want to pick one of the places where you want to spend time and make that sort of your official main home.
Again, you need to now look at the laws of that place:
- How long do you need to spend there?
- What conditions do you need to meet to become a tax resident?
And probably, you want to choose that country to be such that it’s not a very high-tax place, if your goal is to save on taxes.
The UAE / Dubai
The one that often makes the most sense is the United Arab Emirates, specifically the city of Dubai.
Why does it make sense?
- You only need to spend 90 days in the country to get official tax residency in the UAE.
- It’s easy to set up a company there — so you can set up your company in Dubai and have that be your main business that you operate around the world.
- Via that company, you can easily get a residence permit in the country.
Obviously, a big thing to consider is: you might want to move to some country — but if you don’t have a good residency option that allows you to legally live there, then you simply can’t do that.
The UAE also makes it easy to get residency, and thirdly, obviously, it’s a low-tax place:
- 0% personal income tax
- 9% or 0% corporate tax
The 9% corporate tax (just introduced) applies to every business, including free zone businesses.
However, small businesses are exempted.
- A small business is defined as one earning less than 3 million dirhams (around $816,000/year).
- Even at 9%, this is still one of the lowest corporate tax rates you will pay anywhere.
I have a bunch of videos on this channel аbout:
- Living in Dubai
- Moving to Dubai
- How to set up a company there
- How everything works
If you're looking to move to Dubai or set up a company, I have a team that can help. We've helped 100+ people set up companies and get residency in Dubai.
You can get everything set up in as little as 2 weeks. There’s a free consultation with one of my partners linked down below.
Whether it’s the UAE or any other country, you need to:
- Look at the laws of that country
- Figure out how you're going to be tax resident
- Figure out how to file taxes there, etc.
Then for the rest of the time, let’s say:
- 3 months in Thailand
- 3 months in Indonesia
- 3 months in Malaysia
You can do that with no issues, as long as you’re not triggering the tax residency rules in any of those countries.
Again, you need to be careful especially with Western countries, because even if you just spend 4 months in Germany, but it seems like Germany is still your main home (financial or family ties), Germany might still say:
“Hey, you’re still a resident here.”
I would actually recommend to spend as little time as possible — especially in:
- Your home country
- High-tax Western countries
Case number two: You don’t need a tax residency
For example, in my country — Finland — all I had to show to become a non-resident was that I was moving somewhere else at the time I was moving.
There is no law (as far as I’m aware) that says I need to have a tax residency for the rest of my life to keep being non-resident.
So in theory, it’s possible to have no tax residence anywhere — as long as:
- Your country allows that
- You don’t trigger tax residency elsewhere
But there are a few things to consider.
Without a proper tax residence:
- Opening bank accounts becomes harder — they’ll ask where you're paying your taxes
- Most banks are only available for residents of that country (unless you’re very wealthy)
- You might still be using bank accounts in your home country — but that might trigger a tie back (e.g. to the UK)
Again, it’s a case-by-case basis.
Other things to watch out for:
- Permanent establishment rules
- If you run a business from a country, even if you're not a resident, but you have a fixed place of business for a significant time, that could trigger taxation in that country.
- Corporate tax residency
- Where you register your company is not necessarily where your company pays tax.
- Example: you register in UAE but operate fully from Indonesia — Indonesia may consider your company a tax resident under management and control rules.
If you run a business as a digital nomad, you absolutely need to understand:
- Corporate tax residency
- Where companies pay tax
If you are also thinking about a new life as a Digital Nomad, click the Apply For Residency button and let us help you.
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