Tax nomads: Rolling stones gather no moss… and no tax?
Andy Wood • September 5, 2024
Introduction – Tax Nomads
‘A rolling stone gathers no moss’ says the old proverb.
Broadly, it translates to the idea that a person who does not settle in one place will not accumulate wealth, status, responsibilities, or commitments.
Of course, some might say that at least half of these are a decided benefit!
But what, if any, are the advantages of being a ‘fiscal rolling stone’?
This is a question we’re being asked more and more.
In many scenarios, this is because jurisdictions are seeking to attract so-called ‘digital nomads’ or tax nomads to their shores as part of a land grab for the internationally mobile wealthy individual.
So, is there more than just better weather on offer?
What’s the plan?
The plan is rather appealing.
Swapping your home office desk to working from the beach? Swapping the grey skies and bitterly cold wind for a tropical climate?
Sign me up.
Indeed, with the improvements in technology, and perhaps a change in attitude to remote working, the practical side of being an overseas, digital worker has never been easier to achieve.
Traditionally, the tax nomad model has been to split one’s time between a number of carefully chosen countries, moving on before falling to being resident for tax purposes in the current jurisdiction.
In theory, at least, it is possible to wander the world, moving on before the relevant tax authority asks you to join their little club.
However, I am a cynic at heart.
There must be an inherent danger that, despite arguing that you are not resident for tax purposes in ANY jurisdiction, you end of with multiple jurisdictions chasing you for their ‘fair share’!
So my preferred route is to find yourself a low tax jurisdiction to make your home base and establish residency there (more on this later). Plant a flag there.
Additionally, this is likely to help on tax and more mundane things like being able to open a bank account. Financial Institutions tend not to like those of ‘no taxed abode.’
To summarise, our cunning plan is two pronged:
• Dis-establish UK residency by reference to the Statutory Residency Test; and
• Create a ‘home base’ in a favourable jurisdiction.
Dis-establishing UK residence
The first aim is to ensure one is no longer resident for UK tax purposes.
The Statutory Residence Test (“SRT”), with effect from April 2013, replaced the unsatisfactory, and frankly preposterous, position that meant one had to rely on a patchwork of case law.
If Elmer the elephant did tax policy, it would have been the pre 2013 UK approach to tax residence.
There are three tests and they apply as a waterfall.
If one finds safety in the first then there is no need to go on to the next.
If not, it is only then that one moves to the next.
The three tests are as follows:
1. Automatic overseas test: if this test is satisfied then the taxpayer is conclusively non-resident;
2. Automatic residence test: if this test is satisfied then the taxpayer is conclusively UK resident;
3. A sufficient ties test: if neither of the above tests are satisfied then one resorts to a day-counting test
This article is not focused on the SRT, so a detailed exploration of this subject is a little off topic. But you can find a helpful link to one that does here
However, generally, speaking, these tests will limit the amount of time one can spend in the UK and claim to be non-resident.
The statutory residence test is not always easy to apply. However, what it perhaps lacks in simplicity it does, generally speaking, provide a greater degree of certainty than under the old rules.
Of course, there are exceptions!
Tax implications of being non-UK resident
Where one is non-UK resident for tax purposes, then one should only have an exposure to UK tax on UK source income. For example, on UK rental income.
This position is further narrowed by ‘disregarding’ certain UK income sources (including dividends from UK companies) from tax where the recipient is non-UK resident.
Further, one will only be in the scope of UK capital gains tax on the disposals of UK real estate, whether directly or indirectly held.
For both income and capital gains tax purposes, there are anti-avoidance rules which might create tax liabilities where the individual subsequently becomes UK resident within 5 years (and one should never underestimate how long 5 years is).
Choosing a home base?
Assuming one is not going to continually move from one jurisdiction to another, then one next needs to choose a tax base. This is the place where one is putting a flag in the ground and saying ‘yep, this is my home’.
Of course, you might use this as a jumping off point to visit other countries (and note, one would not want to become resident in those countries).
However, constructing a tax base where one is liable to tax does not necessarily mean that you rolling stone dreams have been thwarted.
There are many jurisdictions around the world where one might become resident for tax purposes but can broadly live tax-free from much of your foreign income – only suffering local tax on local source income.
For example, one can qualify under Cyprus’ non-domicile regime if one spends as little as 60 days a year in the UK. Generally speaking, income derived outside of Cyprus is not taxable in Cyprus.
Dubai is another very popular jurisdiction. It is not correct to say it is a no tax jurisdiction. VAT has been payable by GCC states for a few years and the UAE introduced corporate income tax (top rate 9%) in June 2023. However, there is still no personal tax, which is an ideal position for the nomadic world citizen.
Barbados is a more recent popular destination for digital nomads due to its special ‘Welcome’ visa. Again, only Barbados source income is subject to local tax along with foreign income and gains to the extent it is enjoyed on the Island.
Previously, one could also become resident in Portugal and avail oneself of the Non-Habitual Residence (“NHR”) regime. This broadly provided for a 10-year exemption on certain foreign income and gains.
As I’m not a travel agent, I’ll stop there.
Employer beware!
Finally, an employer cannot simply leave its employees to set up and start working remotely from a beach hammock without the fear of any consequences.
They will need to ensure that they deal with their employee properly from a payroll perspective.
However, in addition, they will need to ensure that the employee does not inadvertently create any taxable presence in the country in which they are staying.
Conclusion
To conclude, it is certainly possible to be a tax nomad.
However, my preference is to actually plant a flag in the sand somewhere and create a tax home base.
My opinion is that this will assist in mitigating the chances that you have multiple tax authorities on your tail which might be the case where you have not created that tax base.
Following this plan will also tick some more boring boxes such as more readily being able to open bank accounts and purchase other financial products.
Even so, and obviously depending on your circumstances, it should be possible to limit one’s tax liabilities.
Hopefully, unlike the Rolling Stones song, this will give you some satisfaction.
If you have any queries about tax nomads or tax matters in general, then please get in touch.
If you’ve missed your Corporate Tax registration deadline or already paid the AED 10,000 fine, there’s now a golden opportunity to waive or reclaim that penalty — but only if you act quickly. In a recent move to support businesses during the first year of the UAE’s Corporate Tax rollout, the Federal Tax Authority (FTA) has announced a limited-time grace period. The initiative allows eligible businesses to apply for a full penalty waiver if they file their Corporate Tax return early. This is a major relief for thousands of companies who have either: Missed their Corporate Tax registration deadline, or Registered late and were hit with the AED 10,000 fine Why is this happening? According to Gulf News, this initiative is part of a broader effort by the Ministry of Finance and the FTA to ease the transition into the new Corporate Tax system and promote long-term compliance. What You Need to Know: Deadline for the waiver: July 31, 2025 BUT: You must file your return well ahead of your official tax deadline to qualify. Don’t wait – gathering your financial records and preparing your tax return can take time. For most businesses operating on a calendar year basis (Jan–Dec), that means filing within the next couple of months. Who qualifies for the penalty waiver? If you’re asking: “Can I get a refund on my Corporate Tax late registration fine in the UAE?” “Is it possible to waive the AED 10,000 Corporate Tax penalty?” “How do I apply for the UAE Corporate Tax penalty relief?” Then the answer is – yes, you may be eligible. But there’s a catch: you must file your tax return early, ahead of your normal deadline. This is not automatic, and if you miss the window, the fine will not be waived or refunded. Why early filing matters: The FTA has made it clear: early compliance is the only route to relief. This means: Completing your Corporate Tax registration (if not already done) Preparing your financials for your first tax year Submitting your Corporate Tax return well before the deadline This one-time waiver won’t be repeated – so don’t leave it until the last minute. How Mosaic Chambers Group can help: At Mosaic Chambers Group, our FTA-certified tax advisors and legal consultants are ready to guide you through the entire process. Whether you need help: Understanding your eligibility Filing your Corporate Tax return early Claiming your AED 10,000 fine refund Or ensuring future tax compliance We’re here to take the stress out of Corporate Tax. Book a free consultation today and get expert support from our team. Click here to get in touch or below to book your call.
April 6th, 2025 marks the beginning of a major shift in UK taxation. Labour’s new tax reforms have officially scrapped the long-standing non-domiciled (non-dom) tax status — a move that targets wealthy individuals who live in the UK but, under the new non dom regime, have been able to mitigate UK tax on their overseas income and gains. This change spells the end of a tax break that attracted many high-net-worth individuals (HNWIs) to the UK and is already causing ripples across the country’s elite financial circles. The message is clear: if you live here, you pay here. Let's break down what has changed. What Was the Non-Dom Tax Regime? The non-dom tax regime allowed individuals residing in the UK, who claimed their primary home (domicile) to be outside the UK, to avoid UK income and capital gains taxes by not bringing any foreign earnings or gains back into the UK. This system made the UK an attractive location for individuals with international earnings. We covered this in more detail here. What Has Changed? Since 2025-26 tax year, the government has implemented several significant reforms. These reforms include: 1. End of Non-Dom Status All UK tax residents will now owe UK income tax on all global income and gains, regardless of whether these were brought into the country or not. 2. Inheritance Tax (IHT) on Foreign Assets Non-doms could previously avoid UK Inheritance Tax on assets they held outside the UK; now individuals who have lived here for more than four years will be liable for IHT on all their global estate assets. 3. Temporary Reliefs To assist the transition, temporary measures include the following: Tax Year 2025-26 will see a 50% reduction on foreign income tax. Capital Gains Tax (CGT) laws allow us to rebase overseas assets based on their value as of April 2019 for CGT purposes. Temporarily, bringing money from abroad may not incur full tax charges upon entering the UK. Why Has the Government Made These Changes? According to Labour, eliminating non-dom status will provide many advantages: Enhance tax fairness Raise extra funds to support public services Close longstanding loopholes used by the wealthy Rising Tax Bills HNWIs with overseas assets and income will now face significantly increased tax obligations that may have an effect on personal finances, family planning and wealth transference. Making Decisions About Moving Abroad Some individuals are already leaving the UK in order to settle in countries with more advantageous tax regimes. Some common destinations for relocation include: United Arab Emirates (UAE) does not levy income or capital gains tax Switzerland provides fixed annual tax arrangements for its most wealthy citizens Italy - flat tax of EUR100,000.000 on foreign income for new residents Monaco does not levy personal income tax for residents Concerns Raised About Impact Within Industry Concerns are being expressed that this could lead to a decrease in: Investment into UK businesses Jobs funded by private wealth Donations to UK Charities What About Entrepreneurs? Many entrepreneurs utilise non-dom status to reduce tax on international business earnings, however, these changes could require: Establishing headquarters or structures outside the UK Reconsider ownership of intellectual property or company shares An investigation of how profits and dividends are managed is important to ensure long-term growth. What Should Be Done Now? If you or those you work with have been affected, taking immediate steps is key to their safety. Here are a few things you can do. 1. Consult With A Specialist Tax Advisor Every situation varies. Seek tailored guidance from someone familiar with both UK and international tax regulations. 2. Evaluate Your Financial Structures Evaluate how you hold assets - for instance through offshore companies or trusts. Any necessary changes must be implemented for optimal efficiency and compliance purposes. 3. Consider Relocating If the UK's new tax rules no longer suit, you might wish to explore living elsewhere where tax liabilities would be lower. Be sure to carefully consider all legal, financial, and family aspects prior to making any decisions. Summary The changes to the non-dom tax regime mark a profound transformation for those who rely on global income and wealth for tax payments, especially those living abroad. Although intended to increase fairness, these reforms also pose challenges to those accustomed to using it. Now is the time to review your plans, secure your assets, and seek professional guidance. How Can We Assist? At our offices in both the UK and UAE, we assist individuals, entrepreneurs and professional advisors in making well-informed decisions. If you have any queries about this article or need advice then get in touch.