Thursday, 24 January 2019 20:36

How fictitious residences can work for you

viajeros con maleta

Every wonder how to not pay taxes without having to move from your home becomes country? Believe it or not it is possible to be a paper perpetual travel – someone who becomes invisible without moving to a foreign country. It is possibility is made a reality by a fictitious residence in any country or enclave known as a tax-free haven. This way you get the financial benefits of being a perpetual tourist without having to move around all of the time. 
So you want the perks of a perpetual travel without ever traveling? Become a paper perpetual traveler. A paper perpetual travel is someone who arranges paperwork as if he were no longer a resident while continuing to live in one place most or all of the time. All you have to do is set up a residence in a safe country where taxes are free or low, and then your home country will no longer haunt you for tax money as they would a resident.
In Belgium it is common for professionals to “move” to low tax Luxembourg. They rent studio apartments, register their cars, and set up new bank accounts in Luxembourg, yet continue to live in Belgium as “tourists”. As far as the USA is concerned, it is possible to become a “tourist” there much in the same way that illegal immigrants do.
There is also the possibility of becoming a paper PT in a third country. What this entails is establishing your residence in one location, for example the tax-free Italian enclave on Lake Lugano in Switzerland, and actually physically living in a third country. This fictitious residence scenario allows you to avoid the taxes in your home country and live in any country of your choice as a tourist. This works well if you´ve always dreamed of living in the idyllic location, but know that it’s not in your best financial interest to do so.
Just to give you an example of how this fictitious residence scenario works, we´re going to introduce you to the situation our good buddy Dave created for himself that works quite nicely. Dave is your typical British gent, like many others, who wants to keep his hard-earned money and live comfortably. He invested in real estate and when the Inland Revenue charged him ridiculous taxes on his property capital gains, he took his money and high-tailed it out of England – opting to retire abroad on the sunny coast of Spain. 
Dave, however, lives in Spain as a paper PT. Why didn´t he just change residency to Spain and avoid paper PTing in a third country? Well, the fact is that new extradition treaties and the European Union have made it much more difficult for British tax dodgers to be residents of Spain. This is why Dave’s tax-savvy consultant recommended that he “move” to Andorra, a little tax have country between France and Spain. The best part about Andorra is that they don´t have a tax authority and won´t even enforce tax claims against their own residence. This is why before Dave made his paper PT move to Spain, he first went to Andorra. There he opened up a multi-currency account and opened a maildrop by borrowing an address from a local business. After setting up his fictitious residence in Andorra he was now free to peacefully live in coastal bliss on the coast of Spain, thus escaping British taxes for the rest of his carefree paper PT life.
Dave´s story may seem idyllic, but it is a reality. Controls on creating fictitious residences are getting a tighter than they were back in Dave´s day. Even so, fictitious residences are still possible with the right “moves”. You don´t even have to live in a third country like Dave. It is also possible to be a paper PT while still living abroad in a country that you once were known or used to pay taxes in. So, if you want to “move” countries without really “moving” or investing abroad anonymously a fictitious residence could definitely be a viable, worthwhile option.

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