Tax Myths in Remote Work
One of our last year’s Nomad City keynotes- Grace Taylor shares her impressions of participating in the conference, and rounds up some common tax myths among digital nomads and remote workers.
My name is Grace Taylor, and I run Gracefully Expat, a location-independent business, providing US tax consulting and compliance primarily to American expats and digital nomads. While my professional focus is US tax, I’m originally from Canada, and am currently based in Dublin, Ireland. So I am involved in, and an advocate of, location independence and remote work, both personally and professionally.
What I’ve noticed along my travels, and in my work, is that the realm of taxation is still very unclear to remote workers and nomads, and there are many ways in which incorrect assumptions can be made. I put together a list of a few common misconceptions that digital nomads should be aware of.
As the world of work shifts rapidly towards remote work, and adapts to both changing technologies, and business and personal needs, we all recognise that a few areas have some catching up to do, and taxation is one such area. In the search for answers, unfortunately I see people giving each other bad tax advice all the time. Facebook groups can be really helpful for a lot of things, but not when it’s people who aren’t tax professionals giving incomplete, or frankly incorrect, advice to each other. Here are a few of the common misconceptions I’ve seen, that you should be wary of:
I registered my company in Country X, so that means I‟m not personally tax resident in Country Y. – WRONG! Your personal tax residency is based on your personal facts and circumstances, and not where your company is registered.
I was outside my home country for more than 183 days, so I don’t need to file taxes. – WRONG! Many countries have a departure year filing requirement that’s essential to update your status, and, importantly, there is no such thing as a one-size-fits-all ‘183 day rule.’ Take the time to ensure you’re handling it correctly, particularly in years when your situation has changed.
I’m a resident in Country A, so I can’t be a resident in Country B. – WRONG! Because the
definitions of residency aren’t aligned across jurisdictions, it’s very possible that two countries could both consider you a resident under their domestic tax rules.
This brief list barely scratches the surface. And as you can imagine, each individual’s situation is different in ways that can make a significant difference in how, and where, they’re taxed. This is always true of tax issues in general, and it’s particularly applicable to the wonderfully diverse group of people and companies involved in remote work. Inform yourself well, and when in doubt, seek out a professional to cover all your bases.
You can also come to Nomad City and get first hand advice, as well as connection with your peers. For me, the welcoming, collaborative, and celebratory atmosphere at the conference embodies the Canarian spirit of hospitality, and creates an environment that encourages people to make real, lasting connections. In fact, when I met up with another fellow speaker, Tammy Bjelland, at another event in Ireland this year, we both remarked that one of the hallmarks of Nomad City was the quality of the people it attracts. Everyone there was authentic, positive, and busy doing really cool stuff! It’s inspiring and energising to be around people like that. And to get to do so in such a vibrant, beautiful setting is such a privilege.
I’m looking forward to attending again in November 2019. What better time to soak up some of their amazing weather, when the rest of Europe is chilly and grey? I hope to see you there!