overseas remote work taxes guide - りもーとノマ道

In recent years, more and more digital nomads and people living overseas are working remotely. As this culture spreads, questions and worries about taxes are also increasing. Many questions have arisen, such as ” What about taxes for nomad working ?’ and In which country should I pay taxes on my income from remote work abroad?”

This page will help you answer those questions one by one.

nomads and taxes

Digital nomads, or people who work regardless of their location, are taxed differently depending on the country where they earn income, the country where they stay, and the period of time. Generally, if you earn income in a country where you stay for a long period of six months or more, there is a high possibility that you will be taxed in that country.

Taxes on income earned from Japan and sent overseas

If you earn income from a Japanese company while working overseas, it will be taxed in Japan based on the source country principle under Japanese tax law. However, tax treaties may help avoid double taxation. However, if you set up a company overseas and have a business outsourcing contract and receive it as a “outsourcing fee” in a corporate account or in a personal account registered as a sole proprietor, you will not have to pay taxes to Japan. If you can negotiate with the company, try negotiating with the company to see if it can be turned into a business outsourcing fee.

How to avoid paying taxes for overseas nomads

If you are an overseas nomad and travel to various countries every three months, or depending on the rules of that country, you may leave for less than six months a year, you will be considered a tourist who is not staying in any country, and as a general rule you will not pay taxes. It will get better. Living like a permanent traveler.

Also, depending on the country, there are some countries where you don’t have to pay income tax or corporate tax, so I’ve picked out a few.

georgia

In Georgia’s tax system, in addition to the basic rules, there is a business status system that is very advantageous in terms of taxation. Surprisingly, Georgia residency is not required to obtain small business status, which can reduce your tax burden as a sole proprietor.

small business status

Georgia offers “Small Business Status” for small and medium-sized sole proprietorships. This small business status is a special status that only requires paying 1% tax on total sales.

⭐️ Micro business status ⭐️
If annual sales are less than 30,000 GEL

Tax 0%

⭐️Sole proprietor with small business status ⭐️With
annual sales of 500,000 GEL or less

Tax is 1% of sales

・Be a sole proprietor
・Do not fall under any prohibited business

Most freelancers can register as a sole proprietor with small business status in Georgia and pay 1% of their sales to Georgia.

⭐️ Sole proprietor without small business status ⭐️
20% of net income

⭐️Employees or individuals who are not registered as a business in Georgia ⭐️20
% of gross income

⭐️ LLC (Limited Liability Company) ⭐️
15% corporate tax, 5% personal dividend tax (these are only taxed on dividends) If you otherwise reinvest or hold funds within the company, or other assets owned by the company 0% for funds reinvested in its subsidiaries.

⭐️Virtual Zone Company⭐️Special
tax rate for very limited IT businesses that do business with clients outside of Georgia.

Corporate tax 0%, dividend tax 5%, VAT 0%

⭐️International Company Status (ICS) ⭐️For
IT and maritime companies (or companies with divisions in these fields) that have offices and employees in Georgia.

Profit tax 5%, dividend tax 0%, payroll tax 5% only

⭐️VAT REGISTERED BUSINESS⭐️Both
sole traders and corporations must register as a VAT taxpayer if their continuous taxable turnover exceeds 100,000 GEL in a 12-month period. In other cases, registration is available as an option.

estonia

Establishment of OU Limited Company

Although it is not completely tax-free, establishing an Estonian company is one of the easiest in the world and can be set up quickly from anywhere.

Corporate tax is only levied on dividends, so if you don’t pay any real dividends, the tax is 0%.

There is also the option of obtaining a nomad visa as a freelancer, but honestly, our editorial department believes that it is far more profitable to set up a corporation based on your experiences.

Consultation on establishing a company and relocating to Estonia

Digital nomads: What you need to prepare in addition to taxes

Overseas eSIM

If you want to travel and stay in various countries without having to worry about purchasing local SIM cards every time, and if you want a plan that includes all of your plans with one eSIM, we recommend this airalo.

/Click here to apply for a cheap eSIM that can be used in over 100 countries around the world/

airalo official website

overseas insurance

In addition to SIM cards, we recommend this insurance at a low price if you are traveling abroad or traveling abroad. Since the insurance that came with my card was a bit questionable, I am thinking of switching to NOMAD insurance.

Check out this article for more details! We also have discount codes exclusive to this site.

Click here for the lowest price recommended overseas insurance at $45.08 per month!
SafetyWing

Overseas remittance

I don’t have enough money! It is a common story that people were forced to exchange money at a very high rate locally. WISE is recommended for exchanging money at a reliable rate and at a low price. Furthermore, use the wise debit card and live a comfortable cashless life.

\Click here for the recommended overseas remittance method that is cheaper than anywhere else/

wise official website

VPN

When sending or receiving money overseas, it is best to do so over a secure network. Of course, you can use this VPN to easily connect to the Japanese network when you have free time, for work, or when you really want to see local information only available in Japan.

\Security measures for €3.19 per month / Fastest and most comfortable VPN life /

NordVPN

Hotel

If you want to stay at a hotel, we recommend booking through Agoda, which offers cheap domestic and international hotel reservations !

You can rank up to receive benefits faster than with Booking, and it’s often cheaper.

\You can stay almost anywhere for a cheaper price! /

Agoda official website

company

If you want to create a company where everything can be completed online from any country with an internet connection, we recommend establishing a company in Estonia.

Why not start your own company as a first step as a freelancer? Create an e-residency card, apply in just 10 minutes, and start a company at a low cost! You can easily have a corporate account that supports EUR, making transactions in the EU easier.

Easy company establishment in Estonia with enty

E-residency estonia is introduced in the article at this link. If you would like to consult before starting a company, please use the link below ↓

Living abroad and remote work

When Japanese people living overseas earn income through remote work, taxes are often incurred based on the tax laws of the country where they are staying. In particular, if your stay exceeds a certain period, you may be required to declare taxes in the country of your stay. If you use the wise app wisely to transfer foreign currency funds and pay taxes, you can exchange money very cheaply.

Virtual currency and taxes

Taxes on virtual currency transactions and profits vary by country. In Japan, profits related to virtual currencies are taxed as income, so profits from overseas transactions and investment activities can also be subject to tax in Japan.

Virtual currency overseas experiences

By the way, at one point, the author received a salary from a Japanese company in virtual currency as a business outsourcing fee. Cryptocurrency is very easy to send and receive. Although it may seem risky, you may be able to receive it in a stablecoin with a stable price. It was a bit troublesome to create the invoice for converting Ethereum to Yen . . The tax system for virtual currency differs depending on the country you live in, so be sure to check it before trading or receiving your salary.

·Portugal

・Georgia

·Germany

Such

*The virtual currency system may become more regulated in the future due to Mica in Europe.

Differences between taxes in Japan and overseas

The Japanese tax system and overseas tax systems can differ significantly. For example, Japan has a resident tax, but some countries may not have such a tax.

overseas tax system

There are various taxes in each country. Many countries have tax systems that are different from Japan’s, such as consumption tax, income tax, and corporate tax. For example, in some countries, freelance income is taxed at low or even no tax.

For example, in Estonia, if you open a personal freelance account with a certain bank, all taxes will be automatically calculated, and there is even a system where you can almost automatically pay taxes. Therefore, you can easily file your tax return without having to calculate it yourself or ask a tax accountant or accountant.

Consultation on establishing a company and relocating to Estonia

Overseas Nomad Interview about taxes etc.

On a separate page, we introduce interviews with people who have actually gone abroad as nomads, talking about taxes and other topics. Please feel free to use it as a reference.

Digital nomad tax summary

Taxes have become an unavoidable topic when working remotely and enjoying a nomadic life overseas. You are required to understand the tax laws of the country you are staying in and the tax laws of Japan, and pay taxes appropriately.

(Note: This article contains general information only and does not provide advice regarding specific tax treatment or tax laws. For specific tax questions or issues, please contact a tax accountant or other professional. Please consult us.)

Q How are Japanese taxes calculated when working remotely overseas?: A

Japan’s tax system is basically a resident tax system, and if you reside in Japan, income earned all over the world is subject to Japanese tax. However, if you live overseas for a certain period of time, you will become a non-resident and only income earned in Japan will be subject to tax. As the specific calculation methods and tax rates are complex, we recommend that you seek advice from a tax expert.

Q Which country’s taxes do digital nomads have to pay?: A

Digital nomads are typically required to pay taxes in their country of tax residence. However, in order to establish tax residency, you must remain in the country for a certain period of time. Additionally, some countries offer income tax exemptions or reductions under certain conditions. It is important to understand each country’s tax system and file appropriate tax returns.

Q How should I report income earned from overseas remote work?: A

Generally, income earned from overseas remote work must be reported on that year’s income tax return. How you report depends on the tax laws of the country in which you are a tax resident. Proper reporting and calculations can be made by seeking advice from experts (tax accountants and accountants) in your country of residence.

Q What taxes are paid on income from overseas companies?: A

Taxes on income from foreign companies vary depending on the tax laws of the country of residence. Generally, income tax and consumption tax may be applied. Double taxation can also be avoided through bilateral tax agreements. We recommend that you consult an expert regarding specific tax rates and tax regulations.