Do you have to pay taxes when you teach languages and travel around the world? This is a delicate topic and I certainly don’t want to encourage anyone to evade taxes. If you’re a US citizen, you can skip this article, anyway because no matter what your personal situation is like, your government requires you to pay taxes.
I paid taxes when I still lived in Germany and I also did when I lived in Portugal in 2016. However, at the moment, I don’t pay any taxes and this is perfectly legal.
Disclaimer: Being a German citizen, I’m only familiar with German regulations as I’ve read a lot about these things recently. However, I’m not a lawyer and although laws regarding tax residence seem to be similar in many countries, it’s your own responsibility to find out what which laws and regulations apply to your home country.
How being a permanent traveller can enable you to live a tax-free life
The reason why I don’t pay taxes at the moment is very simple: I’m currently a permanent traveller. Don’t mix it up with being a digital nomad. Many digital nomads I know have a home base somewhere and are residents of those countries. As soon as you’re a resident somewhere, you’re required to pay taxes in that country. In many European countries, you will have to register with the urban administration if you stay for longer than 3 months. In other countries like the UK, such formal registration doesn’t exist, renting an apartment and having your name on electricity bills is enough.
In Germany (and other countries), staying in the country for more than 183 days a year automatically makes you liable to taxation, no matter if you’re a registered resident or not.
However, the case of the famous German tennis players Boris Becker shows that there are more details to be taken into account than just those 183 days. In the 1990’s, Boris Becker’s official residence was in Monaco. However, he still had an apartment in Munich which he kept quiet about in his tax declaration. When the German revenue authority found out about it, it was a proof for them that he still had strong ties to Germany and was trying to evade taxes. He was found guilty and was convicted to a suspended sentence and a high fine.
Am I really not liable to taxation?
If you’re not sure whether you’re liable to taxation, here are some points you should take into consideration:
- Do you still have constant access to an apartment? This could even mean that you have the keys for your parents’ house and one room is exclusively used by you.
- Do you still have any contracts (mobile phone, insurances) which may suggest that your country of origin continues to be the centre of your life?
- Does most of your income come from clients in your country of origin? In this case, you may be subject to limited tax liability.
Still in doubt? Consult a lawyer!
So what exactly is a Permanent traveller?
As the name suggest, it’s a person who constantly travels and has no steady home. Permanent travellers often have businesses in countries where profits from abroad are not taxed and don’t pay any income tax because they don’t live here.
Read this article about the American millionaire James Mellon to get an idea why people are doing this. If you wonder how an American can avoid paying income taxes: He gave up his American citizenship.
In my case, it’s simply a necessity and not meant to last forever. At the moment, my complete income still comes from italki. I’m aware that I earn more than many people in the countries where I like to live for a while. However, I have a daughter who studies in Germany, I have credit card debts to pay off and I’m past the age to book the cheapest accommodation and means of transport. So at the moment, I’m simply not prepared to give away my money to any state in this world by paying taxes.
Not long ago, I thought of doing this and settling down in Peru. If I had had something like US$5,000 on my savings account, I would have done it. However, it’s not an option for me at this moment in my life. Perhaps in the future. By the way, if you’re interested in obtaining a residence permit for Peru, get in touch with NVC Abogados in Lima. The owner of this law firm, Sergio Vargas, is a good friend of mine and one of the best immigration lawyers in Peru.
My italki income will continue to be my basic income and I have no intention to pay taxes on it while I’m travelling in South America. However, I hope to generate income through other sources soon and will then set up a company, either in Estonia or another country which offers good conditions for me. This will have nothing to do with teaching, though.
So no taxes when you’re just teaching?
Some people may not agree with me, but yes, if you meet all the requirements (not being a resident anywhere and travelling permanently), don’t worry about taxes. I’ve recently met some teachers (from the UK, Australia and France) who lived this lifestyle and all of them laughed at me when I asked them if they paid taxes.
They’re travelling and they make some money teaching their native language. It’s not a business. And that’s exactly how I see it, too. I’m absolutely reliable as a teacher and quite good (I think) but I don’t see it as a business. And this is not going to change. A little while ago, I explained in this article why becoming a so-called teacherpreneur doesn’t always have to be your final goal.
Hope I didn’t shock anyone with this article. I like being honest and my views are often not mainstream. If I had some money left, I’d actually prefer to invest in a social project of my choice than paying taxes.
So what’s your opinion and how do you handle taxes? Don’t hesitate to write in the comments.