I think I forgot to thank you for the compliment. Thank you!
Anyway, I was not going to respond but now people start to message me confused.
"without any residency one or more double tax treaties (DTA) will apply"
The first criterium for taxation is always national law. A DTT (not DTA) can be applied to lower the tax burden when one can proof a residency and/or permanent establishment in another contracting state. So a DTT between two contracting states ONLY applies in a situation where there is a residency and/or permanent establishment in BOTH states. It would not make sense for a government to give you a tax break when you cannot proof you are entitled to one.
So this statement is not only false. It is the complete opposite of true. You NEED residency to apply a DTT.
"without any residency those will usually fall back to citizenship - BOOM"
I do not understand this statement but it cannot be made without context. The only countries that tax on citizenship are the US and Eritrea.
All other countries tax based on the facts. Facts like residency and permanent establishment.
Also I do not really get all the references to DTT's on this forum. For most DN's making use of DTT's is very difficult.
Yes, one side can be proved. Residency. Just go and live somewhere. We call it "location A".
But the business side is more confusing. I mean, just look at the criteria (OECD MODEL CONVENTION Article 5 https://www.oecd.org/tax/treaties/1914467.pdf):
The term "permanent establishment" includes especially:
a) a place of management;
b) a branch;
c) an office;
d) a factory;
e) a workshop, and
f) a mine, an oil or gas well, a quarry or any other place of extraction of natural
Most DN's dont have (b) to (f). What they do have is (a). But this is where they are because they are most likely the director of their company. This is "location A" because that is where they are located the entire year. Or they have to fly to the supposed place of business, conduct board meetings, document all decisions made, and have a non fiscal reason why they make those decisions abroad.
But most people run their business on a continual basis, not during x amount of board meetings in another country. So it will be an interesting discussion with the tax authorities (one I would not want to have).
In addition, how could DN's proof (a) when they are travelling all the time?
That is why you see a lot of multinational avoiding taxes by using DTT's. They have the money to hire a local manager and finance (b)-(f).
Small companies and DN's working from their laptop, not so much...