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Ask HN: Does legal tax evasion work for regular people?
Hello fellow HN readers,
For some time now I've been researching how to become a digital nomad and legally optimise my taxes.
There are numerous services that claim to be able to help with this, here are just two examples that I found:
https://taxhackers.io
https://denationalize.me
Does anyone have any experience of this and can tell me if it really works and is legal?
Also, why do they charge so much when there are other services that can do this for much less (e.g. Stripe Atlas: https://stripe.com/atlas)?
I am thinking of moving to Thailand, but I do not want to be a perpetual traveller. Can setting up a US LLC as a non-resident (or a UAE free zone company) be considered "foreign sourced income" without being taxed even if I am a tax resident of Thailand (>180 days living there) and what experience can you possibly share if you have tried something like this before?
What additional advice can you give me and others to make this a great trip instead of a nightmare?
Thanks for all your input and a healthy discussion on this topic!
- chvid 2y agoAs far as I can tell these service are essentially the same as not reporting an income in a roundabout way - illegal but you will likely get away with it because how will the tax authorities of your country know. Do these services provide you with legal representation towards your home country? My guess is probably not.
- o1o1o1 2y agoThat would be problematic, but isn't that still allowed under Thai tax law (see my answer here: https://news.ycombinator.com/item?id=43370402#43370656 https://news.ycombinator.com/item?id=43370402#43370656)? These services do not provide legal representation as far as I know.
- chvid 2y agoBut are you moving your residency to Thailand? If so get a Thai accountant and a Thai company in your name. Most countries except the US will not tax you if you move to another country.
- chvid 2y agoThough all the digital nomads I met in Thailand kept their company / legal structure in their home country. Setting up shop in a new country - in particular in a slightly dodgy one - may not be worth the trouble to save some taxes on a modest income.
- o1o1o1 2y agoExactly, which is a good reason for me to think about setting up a US LLC (also access to superior banking and the country that has platforms like Stripe to make my life easier). Say what you will about the US, but to this day it remains one of the best countries in which to start a business, as far as I can tell from years of personal experience (in other countries) and research.
- o1o1o1 2y agoYes, I am moving there, but I do not want to open a company just yet. I might do so in the future to ensure I pay enough taxes for meeting the requirements to become a citizen, but to grow my funds and because I get nothing in return for paying taxes there for now, I would like to keep my business in a different country. Also, I am probably going to consult a tax lawyer there, but it still does not hurt to ask others about there experience I think.
- bruce511 2y agoI think there are a bunch of things about tax you don't quite understand yet - I recommend you find a financial planner who can help you navigate this. Firstly, it's trivial for a business not to pay tax; simply don't make a profit. (Since you can simply assign any excess to yourself as salary.) Of course you then gave a personal income tax question; and that has its own complications. Staying with business; and assuming it makes a profit, you then have choices regarding where to register the company. At the one extreme you have zero-tax places (Isle of Man, Jersey et al) but they come with fixed high annual costs. (Not a "tax" - just payments for services.) Your choice is typically one of these, or the place you live, or the country of your passport. Things like banking play a role. When you can't visit your bank it gets harder to resolve issues (like when they freeze the account because of money-laundering concerns.) All this to say, Tax planning is complicated. And if you insist on playing games it gets very complicated. The internet I'd not the place to get advice. You need to speak to a professional, or more likely a professional in all the places that matter. If you are a US passport holder even more so.
- csomar 2y agoIt's 2025 and your depending on your country they might be getting quite a bit of information (bank accounts, brokerage account, insurances transactions, Beneficial Ownership, etc...) Lookup CRS.
- chvid 2y agoBut do any of these setups help you with that? Ie. get a tax free company that is not under your name but under your control. And get an international bank account for that company plus an international debit card. Plus you would need customers who are cool with paying you through an entity like that.
- csomar 2y agoNot only that but the system is guarded through the banks. Even if you open a bank account for your company, you have to fill beneficial ownership rules for that bank account. So they might end up linking you to it that way.
- eacapeisfutuile 2y agoNo those services won’t be legal. If you stay in Thailand for that period you can pay tax there and then use FEIE to not pay double to the US
- o1o1o1 2y agoOk, this may be true for US citizens who are taxed based on their citizenship, but what about other nationalities (I am not a US citizen)? The current laws in Thailand state that foreign sourced income is only taxed if it is remitted to Thailand (source: https://mahanakornpartners.com/overview-of-personal-income-tax-in-thailand/ https://mahanakornpartners.com/overview-of-personal-income-t...). So this should be an option, don't you think?
- eacapeisfutuile 2y agoSame, but residence probably always require a time period. I think it highly depends on your actual citizenship and what tax agreements they have with Thailand etc.
- o1o1o1 2y agoI am not a tax resident in my home country anymore, since I already migrated to a different country (UAE). I am also not trying to avoid becoming a tax resident of Thailand, but as the law seems to state currently foreign sourced income is not being taxed there necessarily.
- csomar 2y agoThe most important thing to understand is that these services don't have your interest in mind and they are out of country, so they can offer you bad advice with no liability on their end (vs. say a CPA). Your problem is not setting up a "free zone company" or whatever that means but getting your current obligations to drop. You do that by visiting your local tax office and telling them you are off the country. It doesn't mean your liabilities disappear overnight. Your biggest liability (tax-wise) is going to come from your revenue source. That's also where you should be careful. Next, is the country of your passport (because they got you by the **). Everybody else matter very little which is why you should steer away from Dubai, HK, off-shore, etc.. until you understand the nuances of your situation.
- carlosjobim 2y agoYour life should be split like this: One country for citizenship, one country for residence, one country for your money. This arrangement earns you a lifetime of peace of mind.
- scarface_74 2y agoWhy is that optimal? I understand at least having a dual residency as a back up plan and that’s our plan with establishing residency in Costa Rica before retirement and keeping our by then paid off condo in the US.
- carlosjobim 2y agoIt's optimal because you get left the hell alone. Governments do not know what they citizens do if they are neither living in the country nor having their money in the country. Governments do not know what their residents do, if they are neither citizens nor have their money in the country. Governments do not care what foreigners do with their money in their country if they are neither citizens nor residents.
- scarface_74 2y agoCan you explain a real world scenario based on ease of applying for residence, tax situation, etc? I haven’t researched anything aside from the US && (Costa Rica || Panama) scenario. There are really no tax advantages or disadvantages that way.
- o1o1o1 2y agoA simple example would be someone who does not have US citizenship (or Eritrea) and is able to move their tax residency to a second country that has very low or no income tax (e.g. UAE). There are other countries (e.g. Cyprus) that do not require you to stay for 180 days or more to gain residency, so I think this is the kind of setup he is talking about. The last piece of the puzzle would be international bank accounts, which gets easier the more money you have (e.g. HSBC Expat, which requires 50k USD to set up).
- idontwantthis 2y agoYou should pay a real certified accountant from your country to answer your questions.
- o1o1o1 2y agoThe problem with this is that they usually have no idea about international set-ups and many of them are just interested in making money (unfortunately a lot of people are, because money is a very important aspect of our lives).
- comprev 2y agoTax avoidance rather than evasion is what you’re after. Avoid the need to pay in the first place instead of taking evasive action for payments demanded ;-)
- o1o1o1 2y agoThank you for the correction, you are right, I am actually looking to avoid them ;-)
- scarface_74 2y agoI just read the citations you posted. Do you make enough for it to be worth it? From one of the citations > The average digital nomad pays $64.76 per day in taxes they do not have to pay - that is over $23.000 per year. Imagine what you could do with all this money. Let us do the paperwork, while you travel the world* $23K isn’t nothing. But I saved half that much just by moving from a relative low tax cost state (GA) to a state tax free state (FL). If I lived in a state with higher state taxes and higher cost of living, I would have saved even more. And anything you do, the first step is giving up your US citizenship since the US taxes worldwide income. But then you need to have citizenship somewhere else or become “stateless”. From the few countries I looked at, it’s a 3-5 year process. The US has a relatively strong passport (ranked 9th in the world). You would also have to give that up. Cypress and Paraguay have strong passports (brought up in your second site). Edit: I see you aren’t a US resident. None of what I said applies to you. I’ll keep it up anyway for anyone else thinking about something similar.
- o1o1o1 2y agoAnswer to your first question: yes, even if it means paying such companies and, if necessary, additional tax lawyers, as income is taxed rather brutally in my home country. Thanks for your input though, this is a valid concern and important to consider: amount of potential tax saved and citizenship. Advice to all US citizens considering this: take a look at the power of passports, it can go a long way. Here is one of many sources to check: https://www.passportindex.org/byRank.php https://www.passportindex.org/byRank.php
- yellow_lead 2y ago> And anything you do, the first step is giving up your US citizenship since the US taxes worldwide income. But the foreign earned income credit can reduce your tax liability by up to around 100k in some cases.
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- seekingcharlie 2y agoAn LLC is a pass-through entity, which means you don't pay corporate tax but you pay personal tax on all profits. With an LLC, you can't pay yourself with dividends like a normal company, so it won't count as "foreign sourced income". This means that it's generally a bad solution for paying less tax, as personal tax rates are much higher than corporate. You should look for countries with low corporate tax that don't tax on dividends.
- o1o1o1 2y agoI think you misunderstand how personal income is taxed in Thailand. Take a look at what the Revenue Department has to say about this: https://www.rd.go.th/english/6045.html https://www.rd.go.th/english/6045.html I quote: "A resident of Thailand is liable to pay tax on income from sources in Thailand as well as on the portion of income from foreign sources brought into Thailand" (resident = stay >180 days per calendar year). If the "income from foreign sources", which should include income from a foreign company, is not "brought into Thailand", it should not count towards taxable income, if I understand this correctly. Do you have a different interpretation which would make income from a foreign company with no clients in Thailand fully taxable and how would you explain that?
- seekingcharlie 2y agoI don’t understand what you are asking. How are you going to live in Thailand without bringing income into Thailand? The quote from the revenue department is clear - you will need to pay personal income tax in Thailand since you’re resident there. “Sourced” most of the time means where you do the work, which will presumably be in Thailand for you. If you set up a company, you will need to pay both corporate tax (wherever you incorporate), plus personal tax on the dividends that you pay yourself with in Thailand. You originally asked about the LLC, which was why I mentioned it specifically. With an LLC, you would be fully taxed in Thailand at the personal tax rate, because that’s how LLCs work (you don’t pay corporate tax with an LLC). My advice would be to look into Cyprus and their non-dom program. You can get tax residency there with only spending 60 days per year. Create a Cyprus LTD and your tax rate would be 12.5% + 2.65% for social security. You don’t need to pay personal tax on dividends.