You’d be surprised how many people ask this question! There’s something very appealing about enjoying the life of a proverbial rolling stone (not the rock band!) that gathers no moss, especially when it comes to paying taxes!

The term stateless person meaning a person of no nationality seems to conjure up visions of being tax-exempt and living a life free from the long arm of the law, aka the South African Revenue Service (SARS). Unfortunately, in most cases, this is just a pipe dream as everyone has to pay taxes somewhere; it’s just a case of where. Of course, some manage to skip from one place to the next quite frequently, but this doesn’t mean they are tax-exempt. Let’s deep dive into the world of tax and residency rules and see if we can answer the question; is it possible to be a resident of no country?

Stateless person meaning:

A stateless person meaning someone with no nationality may seem odd as all of us automatically inherit the nationality of our biological parents or acquire it from the place of our birth. However, statelessness (a resident of no country) can occur for several reasons, including changes in law, discrimination, or illegal immigration, to mention a few scenarios.

Being stateless also means not having any identity documents, which impacts things like getting a job, opening a bank account, going to school or hospital, and renting accommodation. So perhaps going stateless isn’t the best tax saving option after all!

What is a digital nomad?

This is another question frequently raised by self-employed clients looking to understand if they need to pay tax and, if so, in which country. Firstly, a digital nomad is a self-employed individual or entrepreneur who can work from anywhere in the world irrespective of their location so long as they have access to the internet. Jobs such as pc programmers, freelance writers, bloggers, and even social media influencers fall into this category as they can work remotely using a laptop, mobile phone, or other forms of technology.

What is digital nomad tax?

As a digital nomad, you will still be a citizen of your home country, which may mean you still have to pay taxes depending on that country’s rules. Unfortunately, simply leaving your home country doesn’t give you an automatic free pass in the tax department! It also means that until you give up your citizenship, you must play by your home country’s rules or put yourself at risk of being on the wrong side of the tax authorities!

Quite a few countries offer digital nomad visas between one and two years to those who wish to stay longer than a tourist visa allows. Of course, digital nomads must show they can support themselves without resorting to public funding. See below some of the countries that will allow South Africans to work on digital nomad visas:

• Estonia
• Georgia
• Norway
• Costa Rica
• Portugal
• Germany
• Greece
• France
• Malta
• Mexico
• Spain

Tax residency determines your taxes

Unfortunately, while it’s nice to dream of living a nomadic tax-free life, most people have a tax residency, including those who seem to reside on the moon!

Below are three rules that most countries use to ensure you pay taxes to one country or another, no matter how often you hop on a plane.

• You are a tax resident of any country where you live for more than 183 days of the year.
• If the above doesn’t apply to you, you are a tax resident of any country where you have strong ties (wife, family, property, investments, etc.). This is also known as tax-domicile.
• Lastly, if the first two rules don’t apply to you, then your tax domicile reverts to the nationality represented by your passport.

South African tax residency rules

South Africa uses a residency-based system for taxation purposes. This means South African residents (based in South Africa) are taxed on all income, including foreign income. Non-residents (based abroad) are taxed on South African income.

According to South African tax residency rules, you must pay taxes in South Africa if you meet the below criteria:

• South African citizens or those holding a South African residency permit must pay taxes in South Africa.
• Those who own a home in South Africa (non-residents included) must register with SARS for capital gains tax purposes.
• Those who earn R1.25M + in foreign income as a tax resident

In addition, should you wish to prove that you are not a tax resident of South Africa, you need to ensure you don’t accidentally exceed the below time limitations, as this may mean you are a South African tax resident by default! To avoid overstaying your tax-free welcome, you should not be in South Africa for more than:

• 91 days in the year of assessment
• 91 days in each year prior to the year of assessment for a period of five years.
• 915 days in total during the five previous five tax years (183 days per year)

Conclusion

Let’s be honest; taxes and the residency rules that govern them can be confusing, but more worrying than that are the consequences and penalties for getting things wrong! As a South African expat or emigration newbie dipping their toe into the pond of tax residency rules, you may be concerned about your taxes and what moving country will have on your obligations to SARS. If this is your situation, perhaps it’s best to contact the expert team at FinGlobal for some friendly, tax-free advice; we’re always happy to help no matter where you are based in the world!

Emigration advice from the friendly FinGlobal team

For quality, accredited emigration advice, and services, FinGlobal is the name to trust. Our friendly team has an excellent reputation for assisting expats with every step of their bespoke emigration journey. From taxes to pensions, retirement annuities, and forex, we can easily handle all your financial emigration requirements.

To discuss your unique needs with our team, simply get in touch with us. Give us a call on +27 28 312 2764 or send us an email at info@finglobal.com, and we will assist you promptly.