Do you live outside your EU country most of the year and still pay taxes (have a job, trade) or have health insurance there?
You probably don’t have to, and you can save much money.
Suppose you don’t live in your EU country most of the time and don’t have a center of life interests there (you can cancel your permanent residency). In that case, it usually doesn’t make sense to have permanent residency and all the obligations that go with it (such as conscription or paying your health contributions).
You can live somewhere else most of the time (where you pay your taxes and health insurance), but you certainly don’t have to pay it in your EU country. Or you’re lucky if you’re a digital nomad like me and don’t live anywhere most of the time – in which case you may or may not have to pay for global health insurance, which is much better than your compulsory health insurance – it’s worldwide and can reimburse you for things your mandatory health insurance won’t reimburse you for (for example, dental care at private dentists, as long as you pay for that dental insurance). Here are the top 10 global health insurers (I have experience with three of them, and they are very positive).
I meet EU citizens who travel a lot, but for historical reasons, they still have jobs or trade in their EU country and pay almost half of their income to their EU government!
If you don’t live in your EU country most of the time in a year (and you don’t have a center of life interests/permanent residence there), then you can legally get rid of tax slavery.
Either by becoming a tax slave in another country where you live most of the time – in which case you can use legal entities in that country to do business (you are still likely to save money as most countries in the world have lower taxes and levies than in the EU) or if you can afford not to live anywhere for more than half of the year (beware, for example, you can live in Switzerland for a maximum of 1-2 months to avoid becoming their tax resident) and you can afford to be a digital nomad. The ideal country for your tax residency is probably Paraguay, where you don’t have to live most of the time to get one.
In this case, your total tax burden as a digital nomad can be 0% of any global income outside of Paraguay + optional global health insurance costs.
If you have the EU or any non-US customers, the best way to bill them for your services as a digital nomad is through your US LLC disregarded company that you may own as a Paraguayan tax resident. What are the advantages of this? I will describe it below. The US has signed a double taxation treaty with all European countries (except Hungary), so any European company can use your invoice from your US LLC disregarded company as an expense without facing withholding taxes.
If you own a US LLC disregarded company as a non-US citizen and do not do business in the US, you have no US tax obligations (only the obligation to fill out forms 5472 and 1120 once a year, which the agency that set up the company will be happy to do for you). Your tax obligations shift to the tax residence of the business owner, which in your case means Paraguay. And since Paraguay has territorial taxation, any foreign income you earn as a Paraguayan tax resident (including dividends/profits from your foreign companies) is not only not taxable but not even declared (the tax office in Paraguay doesn’t even have a form for this).
If you are crypto-friendly, you don’t even need a bank account!
Customers can pay you directly in crypto or through Archway service, and they can pay you in fiat (usually by SEPA transfer), and you automatically receive the money in stablecoins.
If you have US customers, you can use a Gibraltar company instead of a US LLC company, which has territorial taxation and zero tax on income outside Gibraltar. And, of course, if you own and operate it as a purely Paraguayan tax resident, you won’t be subject to any taxes on dividends/income from that company that you pay out as an individual either.
So, if you don’t live in your EU country most of the time, probably the best thing you can do is cancel your permanent residence—you will get rid of your conscription (as a man) and the obligation to pay health contributions (which you can pay in the country where you live most of the time, to an international health insurance company, or not pay).
You can do business in the EU through a US LLC or other offshore company. If you have tax residency exclusively in Paraguay (meaning you won’t live anywhere else most of the time / have a center of life interests), you don’t have to pay any taxes either.
I did a simple calculation a long time ago—I calculated the total amount of taxes and levies I would have to pay with my income in Slovakia. I figured out that it is significantly cheaper and more profitable for me not to live in Slovakia. It is more profitable for me to pay for nonstop flights and hotel accommodation instead of paying taxes and levies than to live in one place, be a tax slave, and pay taxes.
Make a similar calculation. You might be shocked!
And you’ll see a big chunk of the world in addition to saving money!
At Liberation Travel, we’ll happily help you with everything – from tax residency in Paraguay to a US LLC or other offshore company.