Digital nomad on tourist visa with registered business - registered citizen where?

Question

So I want to become a digital nomad next March in the Philippines. I'm also working on a startup with a few Filipinos, with whom we already won Startup Weekend Manila and so far it seems promising. We're hoping to have our first potential clients for beta testing with our product in January to February (we already have the clients, just need to finish the development of the product), so hopefully there'll be small revenue shortly after this time.

If there won't be fast enough traction however, I need to freelance. That's where I am confused. If I stay in the Philippines as a tourist and I set up a company in say Hong Kong, how exactly is that possible? In theory as I'm planning to move abroad in the long term and I won't be in Germany anyway, I should sign off from my place of residence and so on, right?

But how exactly is it possible to register a company as a digital nomad if you're not really registered living as a citizen in a specific country? I'd only be on a tourist visa at least for as long until my startup has real revenue and we need to register our business, which would grant me a more "legal" visa.

Answer 1

Many (some? most?) countries do not have a concept of “registration” like Germany (and a few other countries like the Netherlands, Austria, Switzerland, Poland, Hungary, etc.) has. That's an idea you need to lose to think clearly about the issue. In countries that don't have that, you would be deemed a resident based on the length or the intent of your stay. But that's not really the main problem here.

Depending on local law, registering a corporation typically does not require you to reside or even be in the country. So it's just a matter of finding a place with convenient rules, perhaps paying someone to take care of the paperwork and you can have a legal entity to take care of your business.

That's not to say that you can do whatever you want with a tourist or visitor visa. Usually, you don't. In particular, working is often restricted so if your company is actually doing something (say producing software), you need to have the right to work (and probably pay taxes on your income) wherever you actually are whenever you perform the work. And you don't need to be “registered” or meet the criteria for residency to be breaking the law or owing taxes when working.

My guess is that if you spend time hacking for your own startup or freelancing for some clients while living in the Philippines, you would be violating the conditions of your visa (although it's also possible that they don't care, I really don't know much about the Philippines). In practice, such rules are difficult to enforce strictly and if your company, your bank and your clients are located somewhere else and you don't spend too much time in the country, you might get away with ignoring them.

See also As a digital nomad, is it possible to live such that one owes no tax obligation? for a related discussion.