Founder of Online Taxman and Entity Inc., Vincenzo Villamena helps U.S. expats handle taxes, stay compliant and plan ahead globally.
The digital nomad lifestyle has become a common path for location-independent professionals. Freelancers and entrepreneurs now work across borders, juggling clients in one country, bank accounts in another and time zones across several continents. While this mobility offers flexibility, as a tax professional, I’ve seen that many nomads lack a clear tax and legal foundation.
For those without U.S. passports, lacking a defined tax base can result in double taxation, compliance issues and attention from tax authorities. What may have worked in the past, such as avoiding 183-day thresholds, is now less effective as global enforcement and data sharing continue to expand.
Why ‘Nowhere Residency’ Doesn’t Work In 2025
Some nomads think they can keep from being taxed anywhere by traveling constantly and never staying too long in any one country. This notion, widespread on internet forums, fails to reflect how tax residency is actually determined.
Countries such as Australia, Canada and the U.K. use much broader tests that look at your center of vital interests, your habitual residence or your domicile. These evaluations go beyond travel days and also consider:
• Where your family lives
• Where your business is effectively managed
• Where your financial accounts are held
• Where your mobile phone contracts or health insurance are registered
Ignoring these factors can result in retroactive tax residency, penalties or difficulties when dealing with international banks or immigration systems.
Accidental Residency And Global Reporting
Digital nomads may become residents of a country unintentionally by renting long-term housing, registering for local services or working with contractors who create a taxable presence.
This is further complicated by the Common Reporting Standard (CRS), under which financial institutions share account data with tax authorities across participating countries. Individuals who fail to establish formal residency may still find themselves flagged by governments.
Why Non-U.S. Nomads Choose U.S. LLCs For Global Business
For non-U.S. citizens or green card holders, forming a U.S. LLC can be an efficient and legally compliant way to operate a global business.
When structured correctly, a single-member U.S. LLC owned by a non-resident and with no U.S. office, employees or effectively connected income (ECI) is generally not subject to U.S. income tax. Key benefits include:
• Credibility: International clients and platforms are likely to trust U.S. entities.
• Banking And Credit Card Processing: It is relatively easy to open U.S. bank accounts online and receive payments via credit card.
• Remote-Friendly: Banking and compliance may be managed from anywhere.
• Simplicity: Unlike many offshore jurisdictions, U.S. LLCs offer legal clarity, reputation and simpler formation and maintenance requirements.
A U.S. LLC can be a smart way to run your business, but it doesn’t replace your personal tax obligations. You still have to report and pay taxes in the country where you actually live and are considered a tax resident.
Also, foreign-owned LLCs must follow the rules on IRS Form 5472. Even if you don’t owe any U.S. taxes, you still have to file this informative return with the IRS every year.
Estonia, UAE, Panama: Are They Better Than A U.S. LLC?
Some nomads look to other jurisdictions for structuring. Each has pros and cons:
• Estonia: Its e-residency program allows non-residents to open EU companies remotely. However, distributed profits are subject to Estonian corporate tax unless you can demonstrate that management and control occur outside Estonia.
• UAE Free Zones: Companies based here still benefit from 0% corporate tax on qualifying income (and paying up to 9% tax in other cases), but recent regulations require meeting economic substance requirements, such as office space, local employees and active management in the UAE.
• Territorial Tax Countries: Countries like Panama or Georgia do not tax foreign-sourced income. They may be suitable for personal residency, but in my experience, they are less ideal for international business operations due to limited financial infrastructure and global perception.
Compared to these, a U.S. LLC often offers a balance of credibility, banking, ease of use and legal clarity when the structure matches how the business operates.
4 Steps To A Legally Compliant Global Business As A Nomad
Smart tax planning doesn’t mean evading your responsibilities. It means making choices that are well thought out and documented.
A sustainable setup includes:
1. Having a tax residency (country of residence for tax purposes), with formal documentation
2. Separating personal finances from business operations
3. Avoiding unintended permanent establishment or taxable nexus (the minimum connection a business must have with a jurisdiction before that jurisdiction can impose taxes on it)
4. Choosing a company structure that aligns with actual operations
A U.S. LLC can be an important part of this strategy, especially when paired with a personal tax residency in a country that does not tax foreign income. Still, the most effective solution depends on your citizenship, client base and travel patterns.
Digital Nomad Freedom Starts With Strategic Business Structure
Digital nomads are no longer an edge case in the global economy. But tax systems weren’t made for those who work “from home” in more than one place, without a permanent home base. This creates uncertainty, but it also offers opportunities for those who plan their tax and business setup strategically instead of taking shortcuts.
It may sound liberating to completely avoid residency, but doing so frequently carries more risk than benefit. Choosing a clear tax home, separating your personal and business life and using reliable structures like the U.S. LLC can help you stay compliant and focused on growth. Nomads who take their setup seriously are better positioned to scale their business and protect what they build.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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