61. International Taxes for Digital Nomads | Marchela Georgieva
As a digital nomad, navigating international taxes can often seem like a daunting task. The rules, regulations, and implications vary widely across different countries, adding layers of complexity to an already intricate topic. However, understanding these systems is crucial to ensure compliance and to make tax-efficient decisions.
Our recent podcast episode featured Marchela, an experienced tax professional and a digital nomad herself. She offered valuable insights into the three types of tax systems around the world: citizenship, residential, and territorial. Marchela explained that the US and some other countries use the citizenship tax system, while most countries use the residential tax system. The residential tax system considers someone’s residency status and taxes them on a worldwide basis if they are a resident. The territorial tax system, on the other hand, only taxes income derived from within the country’s borders.
This nuanced understanding of international tax systems is so important for digital nomads. The implications of these systems on your income and assets can be significant. For instance, mimicking others’ tax decisions without understanding these intricacies could lead to tax accidents, especially with the notorious 180-day rule.
The episode also delved into the possibilities of setting up a base abroad. Marchela shared insights about Georgia’s territorial system, and the enticingly low tax rates in Bulgaria and Malta. It’s important to consider various factors like the cost of living, lifestyle, and physical presence while choosing a base location. Incorporating a company or freelancing also has its tax implications which need to be considered.
Marchela’s insights highlight that it’s not all about taxes. The quality of life, insurance, pension, and social security are all important considerations when choosing a tax base. Ultimately, it’s about finding a balance between tax efficiency and the quality of life that suits your unique circumstances as a digital nomad.
We end the episode with a cautionary note about the common mistakes digital nomads make when dealing with international taxes. Marchela advised against the assumption of the 180-day rule and emphasized the importance of consulting local tax rules to avoid tax accidents. Additionally, she highlighted the cost of doing nothing, particularly for residents of high-tax countries.
In conclusion, understanding international tax systems and making informed decisions can significantly impact your financial health as a digital nomad. Consulting a tax expert like Marchela and staying informed can help you navigate this complex terrain more confidently.
Connect with Marchela
If you’re ready to pay less taxes, you can either send Marchela a DM on Instagram @marchela_georgieva_ or you can book a free call so you can chat through your current tax situation and see if you’d be a good fit to work together. You can book some time directly here: https://calendly.com/marchelageorgieva/30min
Listen to more of the Profitable Nomad Couple podcast HERE!
