What you will accomplish at this stage
- Understand what tax residency is and how it influences your financial situation.
- Understand how international taxation works when you live and work across different countries.
- Distinguish between legal residency and tax residency.
- Learn how legal residency is obtained and which criteria determine tax residency.
- Evaluate which country best suits your tax, professional and personal situation.
- Understand how to end your previous tax residency correctly.
- Understand the function of a tax-residency certificate and TIN, and how to adapt your banking arrangements.
- Follow an orderly process to establish and maintain your new tax residency.
Educational notice
The content of this guide is strictly educational and shares our experience and personal perspective on expatriation and international tax residency. Every tax situation is different and, before making important decisions, it is always advisable to consult a professional who specialises in international taxation.
The next step in optimising what you generate
On the previous page, we saw that international taxation revolves around two closely connected dimensions: your personal tax residency and the structure of your business activity.
In this guide, we will address the first: how to establish and optimise your personal tax residency.
Expatriation is the final stage of the journey towards financial freedom structured on this website, and it arrives precisely here: when your online business begins to generate stable income, a point may come when it makes sense to manage what you produce more efficiently, legally reduce your tax burden, simplify your administration and reinvest a larger share of your capital in your growth.
The digital environment offers an important advantage: the ability to work and generate income from almost anywhere in the world. However, expatriation and tax optimisation do not make sense for everyone or at every stage. They generally begin to become genuinely worthwhile when your income level compensates for the costs associated with changing residency (advice, visas, moving or ongoing administration).
To do this correctly, you first need to understand what determines your tax residency and how it relates to your legal residency, economic activity and the ties you retain with each country.
What is tax residency?
Definition
Tax residency determines the country or jurisdiction that considers you a resident for tax purposes and, therefore, which personal tax obligations may apply to you.
Although it may seem like a simple administrative matter, tax residency can have a significant impact on your finances, especially when you conduct international activity. Each country applies its own domestic laws to determine when it considers an individual to be tax resident and the scope of that person’s tax obligations.
Understanding how tax residency works is essential to:
- Avoid residency conflicts and double-taxation situations.
- Comply correctly with your tax obligations in each jurisdiction.
- Organise your international income and wealth more clearly.
How does your tax residency affect income from your online business?
When you conduct your online activity through a company, it is important to distinguish the company’s taxation from your personal taxation. In simplified form, the flow usually follows this structure:
Client
→
Company
→
Salary / dividends
→
Individual
↓
Tax residency
Client
The client pays your company
The income from the activity enters the company first.
Company
The company is taxed under the applicable rules
Its taxation depends on the jurisdiction in which it operates, but other factors may also matter, such as where its effective management is exercised or whether it has a permanent establishment in another jurisdiction. We will analyse these aspects in detail in the next guide on company structuring. If you plan to incorporate a company, the country comparison for setting up your online business shows the tax and costs in each jurisdiction.
Individual
You receive your personal income
When you receive a salary, dividends or other income from the company, your personal tax residency and the rules applicable in your country of residence come into play.
When your personal tax residency and business structure are correctly aligned, a jurisdiction with more favourable taxation may allow you to keep a larger share of the income you ultimately receive.
Well-optimised taxation can therefore become an important accelerator of your long-term financial growth.
Legal residency vs tax residency: what is the difference?
Before planning a move to another country, it is important to distinguish between two concepts that are often confused but governed by different legal frameworks:
| Concept | Area | Definition |
|---|---|---|
| Legal residency | Immigration | Gives you the legal right to live in a country for the period and under the conditions established by your visa or residence permit. |
| Tax residency | Taxation | Determines the country that considers you resident for tax purposes and the personal obligations that arise from that status. |
Holding a legal residence permit in a country does not automatically mean that you are tax resident there. Likewise, you may be considered tax resident in a country because you meet the criteria established by its legislation, even if your immigration status is governed by different rules.
How to obtain legal residency as an expatriate
If you want to settle legally in another country, you must first identify the residence permit that suits your situation. Each jurisdiction sets its own requirements and routes of access for foreign nationals. The most common for entrepreneurs and investors include:
Residency based on your own resources
Demonstrate stable income or sufficient wealth to support yourself in the country without needing to undertake local salaried work.
Visas for digital nomads or entrepreneurs
Programmes for professionals who work remotely or carry out a business activity and meet certain income requirements.
Company formation or investment
Incorporating a local company, creating employment or making certain investments may provide access to residency programmes in some countries.
Property investment
Some countries offer residency programmes linked to the purchase of property above a specified value.
Specific treaties or agreements
Some nationalities may have access to simplified residency routes through bilateral or regional agreements.
Obtaining legal residency does not by itself determine your tax residency. You will then need to analyse whether you meet the criteria established by the country’s tax legislation.
How is tax residency determined?
Unlike immigration authorities, tax administrations apply quantitative and qualitative criteria to determine when an individual is considered tax resident in their territory. The most common criteria are:
Physical presence
Many countries use a threshold of 183 days, although the reference period (calendar year, twelve-month period, etc.) and the exact counting rules depend on each jurisdiction’s domestic legislation.
Centre of economic interests
The place where the main focus of your economic, professional or business activities is located.
Personal and family ties
The place where your personal and family life is centred, especially where your spouse or children habitually live.
💡 Scale & Own objective
The objective is not simply to obtain residency on paper, but to build a coherent situation between where you live, your legal residency and your tax residency. The clearer that reality is, the lower the risk of residency conflicts between different administrations.
How to choose the best country for your tax residency
Choosing a destination is not about blindly looking for the jurisdiction with the lowest tax rate. A well-planned expatriation seeks a strong balance between taxation, cost of living, economic stability and your personal or family plans.
At Scale & Own, the criteria we share are based on our own experience of living, building businesses and developing online activities from different countries. There is no perfect jurisdiction for everyone: each person must weigh these criteria according to their family, professional and financial situation.
In the short term, it is common to give tax optimisation the highest priority. Over time, factors such as quality of life, personal safety, the quality of the healthcare system or the possibility of obtaining a second passport take on decisive importance.
| Criterion | Key questions and points to evaluate |
|---|---|
| Income taxation | Does the country apply a territorial or worldwide tax system? Are there special regimes for new residents or expatriates? How are dividends and capital gains taxed? |
| Ease of the process | What conditions, procedures, investments or financial resources does the programme require? How long does the process usually take? |
| Naturalisation and a second passport | Is there a clear long-term route to citizenship? What conditions and time periods does local legislation impose? |
| Actual cost of living | Assess the budget required for housing, food and quality services. Zero taxation can be offset by an excessive cost of living. |
| Connectivity and digital infrastructure | The speed and stability of telecommunications, air connections and time zones compatible with your clients or team. |
| Environment and quality of life | Climate, cultural offering, nature and compatibility with your lifestyle. Your environment directly affects your personal well-being and effectiveness. |
| Safety and public order | Crime levels, social stability and day-to-day peace of mind for you and your family. |
| Healthcare system | Quality of the public and private hospital network, the cost of health insurance and healthcare infrastructure. |
| Educational offering | If you are moving with your family, examine the quality of education, the availability of international schools and their cost. |
| Minimum physical presence | What physical presence does the country require to obtain or retain legal residency, and what conditions does it apply to consider a person tax resident? |
| Institutional and legal stability | Strength of the financial system, legal protection of private property, institutional stability and low levels of corruption. |
Scale & Own jurisdiction comparator
To help you move from theory to practice, we have created a jurisdiction comparison that brings together the main criteria we analyse when choosing a country of residence: taxation, residency requirements, naturalisation, cost of living, safety, healthcare and other relevant factors.
scaleandown.com · jurisdiction comparator
82 jurisdictions · interactive map · data verified in August 2026
📚
External source:
For more detailed information on the tax rules of a specific jurisdiction, you can supplement our comparator with Deloitte International Tax Source, which brings together international tax guides by country.
How to stop being tax resident in your home country
Ending your previous tax residency correctly is as important as establishing your new one. A poorly planned or documented departure can create residency conflicts or double-taxation situations.
The applicable rules depend on each jurisdiction, but three broad areas should be reviewed to check that your change of residency is coherent:
01
Review the tax-residency criteria
As we saw earlier, tax residency is generally determined using several criteria. When you expatriate, you must review those same factors from the perspective of the country you are leaving to determine whether any of them may continue to connect you to it for tax purposes.
- Time spent in the country: review the presence limits set by your home country and how days are counted. Remaining below a particular threshold is not always enough if you continue to meet other residency criteria.
- Centre of economic interests: analyse whether the main focus of your economic, professional or business activities remains in your home country and what consequences its legislation establishes.
- Personal and family ties: if your spouse or children continue to live habitually in your home country, that connection may be relevant when determining where the centre of your life is located under the applicable legislation.
02
Administrative procedures
Administrative procedures allow you to formalise and document the change, but they do not replace compliance with the applicable tax criteria.
- Where applicable, notify the relevant authorities of your change of address or tax residency and complete the applicable consular procedures.
- If you retain locally sourced income, such as rent from a property, check which tax obligations you will continue to have as a non-resident.
03
Evidence and record keeping
In the event of a review, documentation may be essential to demonstrate that your effective residence is in the new country. Keep a file containing, where applicable:
- A tax-residency certificate issued by the tax authority in your new country.
- A residential tenancy agreement or local property title.
- Recurring utility and service bills.
- Documents that demonstrate your presence and habitual life in the country, such as bank transactions, contracts, invoices, travel records or other relevant evidence.
What are a tax-residency certificate and a TIN?
Once you have established your new tax residency, there are two documents that you should distinguish and that you will encounter frequently in your international arrangements: the tax-residency certificate and the TIN.
Tax-residency certificate
A tax-residency certificate is one of the main forms of documentary evidence of your new tax position. It is issued by the tax authority in your new country and formally certifies your status as a tax resident.
It is used to demonstrate this status to other tax authorities, financial institutions or payers and, where applicable, to claim the benefits provided by a double-taxation agreement.
TIN (Tax Identification Number)
A TIN is the number that a tax authority uses to identify you for tax purposes. Its name varies by country (NIF, RUT, RFC, etc.).
It may be required to:
- File your tax returns and complete tax procedures.
- Identify yourself for tax purposes to banks and other entities subject to international tax-reporting obligations.
- Keep your tax information up to date with operational platforms, payment providers and banking institutions.
Important
Having a TIN in a country does not necessarily mean that you are tax resident there. You may need a tax-identification number, for example, because you hold certain assets or receive locally sourced income there.
How to organise your bank accounts when expatriating
When you change your tax residency, you must also update the information that banks and other financial institutions hold about you. In many jurisdictions, this information is also used under the CRS (Common Reporting Standard) for the automatic exchange of tax information.
Keep your tax information up to date: notify the financial institutions you use of any change in your address, tax residency or TIN so that their records accurately reflect your current situation.
Consider opening a local bank account: having an account in your country of residence can make it easier to pay everyday expenses, rent, taxes and other local services.
Use multi-currency banking when it makes sense: if you receive or make payments in several currencies, multi-currency accounts can simplify your operations and reduce conversion costs. Services such as Wise or Revolut are common examples for this type of arrangement.
Avoid depending on a single institution: depending on the country and your activity, it may be useful to retain access to more than one financial institution to diversify your banking arrangements and manage different currencies or international payments more flexibly.
Checklist: key steps for your new tax residency
Below, we summarise the process as an orderly route for establishing your new tax residency and maintaining it correctly over the long term:
Preparation and departure
1 · Current situation
Ties to your country
2 · Choose a destination
Criteria table
3 · Legal residency
Visa or permit
Moving and registration
4 · Actual move
Habitual life there
5 · Tax registration
TIN and certificate
6 · Previous position
End ties with your home country
Long-term maintenance
7 · Banking
Update institutions
8 · Documentation
Proof of residency
9 · Annual review
Check every year
- Evaluate your current situation: analyse the economic, financial and personal ties you retain in your home country.
- Select the right destination: use the criteria table to choose the country that best combines taxation, stability and your lifestyle.
- Apply for legal residency: request the visa or residence permit that best suits your profile (investor, digital nomad or person of independent means).
- Make the move in practice: establish your habitual life in the destination country and make sure you meet the residency criteria that apply to your situation.
- Register for tax purposes: complete the relevant tax procedures, obtain your TIN where applicable and request a tax-residency certificate if you need one and meet the requirements.
- Regularise your previous tax position: check that you no longer meet the criteria that could keep you tax resident in your home country and make the corresponding administrative notifications.
- Update your banking information: communicate your new tax residency and TIN to the institutions you use and consider the local or international accounts you need for your new arrangements.
- Keep supporting documents: retain evidence of your presence, habitual home and other documents that demonstrate your effective residence in the new country.
- Review your situation each year: confirm that you continue to meet the conditions required in your country of residence and any obligations that may remain in other territories where you have income or assets.
Your next stage: align your tax residency with your business
Optimising your tax residency allows you to manage the income you receive as an individual more efficiently. However, if you are an entrepreneur, a second fundamental part remains: the structure through which you operate your business.
Your country of residence and the jurisdiction where you incorporate a company do not have to be the same. However, the two decisions are related and must be analysed together to prevent a poor company structure from reducing the advantages you sought when expatriating.
Your next stage with Scale & Own will be to learn how to structure an international online business: which factors to analyse, where it may make sense to incorporate a company and how to coordinate it with your personal tax residency.
Next stage: structure an online business efficiently
→
← Start of the stage