DO:s/DONT:s to minimize risk while staying long in hungry high-tax countries

What is it with the Iberian peninsula? So many threads about people wanting to violate the local tax laws there. There must be something in the tap water...

yggdorf said:

Wondering if someone has a good idea of do:s/don'ts when it comes to spending more than suggested/allowed time (180 days) in a country like Spain while being tax-resident elsewhere. Also, a two specific questions related to this;

Do: only be a tourist, spending the amount of time a normal tourist would.

Don't: play with fire.

yggdorf said:

1. Will EMIS/Banks like Revolut & Wise in any way report where I am (since they can follow both my spending and login geo-location data) to the authorities in different countries? Is this part of the CFC reporting, for example?

None of that data is ordinarily reported. But be smart and assume all of them report everything, because there is nothing they wouldn't report if asked.

I have seen examples of banks proactively assessing a person is tax resident somewhere other than the account holder stated. The banks based the assessments on the behaviors of the account holder. A consequence of this can be that the bank reports the account holder to the jurisdiction where the bank firmly believes the customer is resident.

yggdorf said:

2. Will airlines report in/out transfers to said authorities?

This varies a little. Immigration authorities usually have access to this data. The interconnectedness between immigration and tax authorities varies a lot. The smart thing is to assume that they either know or can, upon request, know.

yggdorf said:

3. If the tax authorities in said country comes knocking on my door, is it up to them to prove that I've overstayed and thus need to pay taxes, or is it up to me to prove my innosense (for example with a tax residency certificate)?

The burden of proof is reversed. They give you a bill with some huge number on it and give you 30 days (give or take) to pay or fight. The bill is due immediately and becomes overdue as you keep fighting.

Depending on where it's from, a certificate of tax residence might not mean much. But it could be a part of the trove of evidence you need to prepare to fight the tax bill.

Sols said:

I have seen examples of banks proactively assessing a person is tax resident somewhere other than the account holder stated. The banks based the assessments on the behaviors of the account holder. A consequence of this can be that the bank reports the account holder to the jurisdiction where the bank firmly believes the customer is resident.

Really, is that an option at all? Don't they required to report based on the information you provide as KYC ?

clemens said:

Really, is that an option at all? Don't they required to report based on the information you provide as KYC ?

No, they are free to look at other factors as well.

For example, in one of the cases I saw, a person hadn't told the bank in a European country that they had moved to another country. One day, the bank sent an email basically saying "We think you live in X and will update our records accordingly, please provide TIN from X". We suspect the bank made the decision based on IP address and that the person was transacting (including using debit/credit cards) in X instead of their home country. Another possibility is that the bank has found the person's address in X from an incoming wire transfer with another bank.