Acquiring a new residency is a must for anyone seeking to become location independent. Partly for the tax benefits, partly for the opportunity to obtain a second passport. This guide covers the distinction between residency and tax residency, how to acquire a second passport as well as which countries have the best programs.

 

Residency vs tax residency

A residency is essentially a permission to reside within the borders of a country, usually for a predetermined amount of time. Most countries will grant residency provided that certain conditions are met. This can include having a job offer, being admitted into a university, marrying a local etc. Most countries will also grant long-term residents permanent residency provided that a sufficient level of integration has been achieved. It is important to understand however that being the resident of a country does not necessarily equate to being the tax resident of that country. Tax residency is determined by other factors such as domicile, physical presence and in some cases, citizenship.

To learn how to qualify as a tax resident of a country, please log into your Insiders Club account. Not a member? Click here to learn about the benefits of membership.

 

The road to a second passport

Acquiring a second passport may or may not make sense to you, it really depends on your long-term goals and personal circumstances. Module one of the Zero Tax Nomad course covers all there is to know about pros and cons of acquiring a second passport, how to go about it and how changing geopolitics may affect your plans. Click here to read it.

 

The best residency options

You can access detailed country guides by clicking on the thumbnails

Taking action

To access the Zero Tax Nomad course, all our material about residencies / second passports and for personalized help, please log into your Insiders Club account. Not a member? Click here to learn about the benefits of membership.

  • timmy holohan

    Just to follow on with this subject, by saying no physical residence required is it also true to say that you cannot spend more than
    6 months in any other residence either or you will then be considered a resident there for that financial year?

    Also if you become a resident of any of the convenient options you mention above, most of which are territorial taxed and you do not return
    within the specified time period, what difference will it make to your tax liability if all your earnings have been from activities outside those countries?

    Is it a case where your residency will revert to your old jurisdiction (UK, Germany or wherever on a worldwide basis of taxation) and if so at what point, after two years in Panama, three years in Paraguay and so on, which will make you then liable for taxation in your home country after that period of time? Or will it be for that whole period including the time you were essentially a resident but because you broke the rules are then voided of that period also!!!

  • timmy holohan

    Just to follow on with this subject, by saying no physical residence required is it also true to say that you cannot spend more than
    6 months in any other residence either or you will then be considered a resident there for that financial year?

    Also if you become a resident of any of the convenient options you mention above, most of which are territorial taxed and you do not return
    within the specified time period, what difference will it make to your tax liability if all your earnings have been from activities outside those countries?

    Is it a case where your residency will revert to your old jurisdiction (UK, Germany or wherever on a worldwide basis of taxation) and if so at what point, after two years in Panama, three years in Paraguay and so on, which will make you then liable for taxation in your home country after that period of time? Or will it be for that whole period including the time you were essentially a resident but because you broke the rules are then voided of that period also!!!

  • If you are constantly moving, you will usually be deemed a tax resident of the country where you have the most ties. Such ties can include a home, a car, bank accounts, investments, a family, your legal status (permanent resident for example) etc. If you do not want to be deemed a tax resident in your country of citizenship (to use your example, UK or Germany) then it is simply a matter of establishing more ties elsewhere (for example, Panama) and satisfying the non-residency requirements (country of citizenship). Each country is different though, I recommend talking to a tax attorney in your country of citizenship about “domicile for tax purposes”.

  • If you are constantly moving, you will usually be deemed a tax resident of the country where you have the most ties. Such ties can include a home, a car, bank accounts, investments, a family, your legal status (permanent resident for example) etc. If you do not want to be deemed a tax resident in your country of citizenship (to use your example, UK or Germany) then it is simply a matter of establishing more ties elsewhere (for example, Panama) and satisfying the non-residency requirements (country of citizenship). Each country is different though, I recommend talking to a tax attorney in your country of citizenship about “domicile for tax purposes”.

  • peter93

    If you want to be resident in a particular country but have very few ties in general (say only a bank/investment account) and a global health plan somewhere in the world, how would you establish residency there and still be able to travel around? I.e. which countries have no physical presence or a few months minimum requirement to be considered resident?

  • Many countries will waive the time requirement if you qualified for residency using an investment option. Some also do not have time requirements (Malta for example). Then there is also the option of establishing more ties so that you qualify under the domicile rules.

  • Hey, thanks for this article! I’m curious about Hong Kong’s residency under the Quality Migrant Admission Scheme, but I do like to spend a lot of the year traveling around. Do you have any idea the minimum number of days per year you need to stay in Hong Kong to keep the visa and remain a tax resident? Much appreciated.

    As background I’m a Canadian citizen/resident with Irish citizenship as well, so I’m also curious about Malta.