Moving countries (EU), switching banks, payroll and tax questions

[luna70]

Hey, I'm looking to move to a different country within the EU, and also technically starting a new job in another country, and this has raised many financial questions in me. I'll explain without specifically naming the countries if that's okay, so I'll use A B C D to represent them for privacy, these are all within the EU.

Country A is where I currently reside/work/am a citizen atm.

Country B is where I want to move to.

Country C is where I also am a citizen but do not reside.

Country D is where I'll be getting freelance work from.

So rn I live in A, but the taxes are ridiculously high, and the country is crap, so I want to move to B in like 1-2 years. I work as a freelancer, I'm doing fine, but my country has limits to how much you can earn as a freelancer, and I'm nearing that limit especially if I take the offer of D, and if I go over the freelance limit I should have to create a company for tax purposes, but if I do I'd be losing so much money on taxes that it wouldn't even be worth taking the new job from country D.

So that got me thinking, since I want to move countries I probably could open a bank account there and get D to send the money to my account in country B, and I assume I'd have to pay tax on it there, and if I would have to, I'd definitely be losing less money all in all, even if I have to create a company to do all of it in country B. But this is where it gets confusing to me, so here are my questions:

Can I even open a bank account in country B if I'm not a citizen, and am not (YET) residing there? (like generally, or does this vary by country?)

If I can open one, and country D sends my pay there, I assume I pay taxes to country B for this income, and not country A correct?

So if I live in country A, but have a bank account and pay income taxes in country B (or C if I end up not moving) is that generally legal? Or is this some form of tax fraud?

Thank you for the help in advance! My main goal is not to commit tax fraud obviously, but I don't know anyone who is employed in a country, but gets payed from another country, and lives in a different country.

 

[resjudicata]

@luna70 In summary: you have to pay taxes where you live. If you live in A, you pay taxes in A, otherwise is tax fraud.

About the bank accounts, it varies on each country, so ”it depends”, look for information for that specific country

 

[arielovesjesus]

@resjudicata Exception being the income from renting a flat. You pay it only in the EU country where the flat is located.

 

[butrflys78]

@luna70 Being a tax resident in A and not paying income tax in A is likely a tax fraud in A. Not being a tax resident in B and paying income tax in B (that was your question) is dumb.

 

[angelavoltaire]

@luna70 You generally owe taxes wherever you are a tax resident. So I suspect you'd have to have residency in country B and not in A, in order for A to forego taxing you.

So even if you open an account in B, the income is taxable in A if you are still a tax resident in A.

But this is just a guess. The best way to know is to talk to an accountant in each of A and B.

 

[ellmattay]

@luna70 The country of your bank is irrelevant. You're required to declare all your income to country A while you live there, whether that's on a foreign bank account or not. If only it worked as you described, we'd all just open a bank account in the lowest taxation country...

 

[robert4963]

@luna70 It sounds like you work as a contractor? I would suggest that you relocate to country B, register with the tax authority there (as a corporation or self-employed), and open a bank account (you will probably need a local address and phone number). Meanwhile, you'd want to deregister from country A (close your business, possibly VAT account, etc.).

The bottom line is, to benefit from country B's tax system, you need to be a resident there. That doesn't mean you have to live 365 days there however. You could still spend part of the year in other countries, while your home and center of life is still in country B.

 

[godwithus]

@luna70 Taxes don't work in the way you described.

It does not matter where your bank is (in the EU) as far as your personal taxes are concerned. You have to tell your current and future bank where you legally reside. And you will pay your taxes wherever you live.

Many banks won't accept non-residents but some will.

Generally you cannot simply start a company abroad and do all your business in a different country to escape your tax obligations in your current country. Think about it, why would ANYONE ever start a company in your current country if it were that easy?

In other words, if you want to benefit from a country's tax system, you have to move there. Anything else is either illegal or only works in far more complex situations

 

[lharabauer]

@luna70 You (probably) don't need to open a new bank account:- inside the Eurozone you can use any Eurozone bank account anywhere inside the Eurozone without any problems (usually, IBAN discrimination used to be a problem but not so much anymore).

 

[ardabili]

@lharabauer Not my experience when I recently moved to the Netherlands. The company here demanded a NL IBAN…

 

[lharabauer]

@ardabili That’s definitely IBAN discrimination, hope you reported them!

 

[terez]

@lharabauer I’m moving to NL and when looking for which bank to open account in, I got same advice. Sometimes employers will just demand that you have an NL IBAN account.

 

[kbhit]

@luna70 Looking to do something similar in a few years, the only way for you not to commit a tax fraud and pay tax rates of country B is to be resident of country B.

Therefore you need to rent or buy a spot there and register at the local city hall, it's then trivial to open an account at a local bank. Officially you'll have to reside at least 6 months a year in country B to keep residency, but no one really checks especially if you travel by car.

 

[ellmattay]

@kbhit Still tax fraud, just less detectable tax fraud. Don't do this.

 

[kbhit]

@ellmattay It's actually not a tax fraud as long as you don't stay for at least 6 months in another country within a year, then the last country you've spent 6 months applies for tax residency.

Thus, remain at least 6 months in country B to register as a tax resident and then be vigilant on the above.

 

[ellmattay]

@kbhit Yes, then it's valid. But that wasn't the premise. The premise was to rent a room and register without being an official resident there because "no one's checking". Also realize that comes with other obligations such as getting valid health insurance in country B, since an insurance company in country A likely won't insure you if you don't live there on paper, and so forth.

Still, if somehow you get audited and you can't really prove you're a valid resident in country B, you have problems.

 

[resjudicata]

@ellmattay Would you mind explaining why it is a tax fraud?

 

[ellmattay]

@resjudicata Because you're faking being a tax resident of country B for lower taxes while still de facto living in country A. I think the sentence "Officially you'll have to reside at least 6 months a year in country B to keep residency, but no one really checks" says it all.

 

[emmettsmith]

@ellmattay This, and many EU countries are now including language in tax laws to cover "you are taxable to the country where your significant life interest are located", meaning any dependant family, housing, job, and actual living time. So if country A check these things and find traces of these elements, they can deem you tax liable to that country, even if you claim you live and work elsewhere, you'll just get tax reduction for already paid taxes in country B/C/wherever (as countries where the job is conducted have the primary right of initial deduction)

 

[constantine1946]

@kbhit The problem you will have is that if you are audited your bank records will show where you were shopping and it will then become very difficult to argue that you were resident in country B whilst drinking coffee every day in a coffee shop outside the country. The more you hide things like bank records and other proof of location the more the authorities will dig into other electronic records of where you actually were. Tax fraud is largely pointless because even if you are getting away with it you have to live in fear that they will catch you and best case make you pay it all back worst case you can go to jail, pay it all back and finês on top. That kind of worry can ruin your quality of life.