Digital Nomad Tax Guide: Indian Freelancers Working from Bali, Dubai, Portugal, or Thailand
How to handle tax residency, avoid double taxation, and stay compliant when working remotely from different countries
Written by
CA Ashama Rajawat
Where do you pay taxes when you're an Indian freelancer working from Bali for 6 months? The answer depends on your tax residency status in both India and the foreign country.
Tax Residency: The Foundation
Tax residency determines which country has the right to tax your global income. You can be a resident of one country, both countries (double resident), or neither (stateless for tax purposes).
You're an Indian tax resident if:
- You stay in India for 182+ days in a financial year, OR
- You stay 60+ days this year AND 365+ days in past 4 years
Common thresholds:
- •UAE (Dubai): 183 days → resident 0% income tax!
- •Thailand: 180 days → resident (foreign income taxed if remitted to Thailand)
- •Bali (Indonesia): 183 days → resident (taxable)
- •Portugal: 183 days OR property/work ties → resident
Common Digital Nomad Scenarios
Scenario 1: Short Trips (Under 182 days abroad)
Example: Work 3 months in Bali, 2 months in Thailand, rest in India
Tax Status:
- • India: Resident (182+ days in India)
- • Bali/Thailand: Non-resident (under 183 days each)
Result: Pay tax only in India on global income. Simple!
Scenario 2: Extended Stay (6+ months abroad)
Example: Work 8 months in Portugal, 4 months in India
Tax Status:
- • India: Non-resident (under 182 days)
- • Portugal: Resident (183+ days)
Result: Pay tax in Portugal. India won't tax (non-resident). But check DTAA tie-breaker rules.
Scenario 3: Dubai/UAE (Tax Haven Strategy)
Example: 7 months in Dubai, 5 months in India
Tax Status:
- • India: Non-resident (under 182 days)
- • UAE: Resident (183+ days, 0% income tax)
Result: No income tax in UAE, no tax in India (non-resident with no India-sourced income). Legally tax-free!
Scenario 4: Constant Movement (No Single Base)
Example: 100 days India, 80 days Bali, 90 days Thailand, 95 days Europe
Tax Status:
- • India: Non-resident (under 182 days)
- • All other countries: Non-resident (under 183 days each)
Problem: You may not be a tax resident anywhere! This creates gray areas. India may still claim tax on global income if you have "permanent establishment" or strong ties.
DTAA Tie-Breaker Rules
If you qualify as a resident in BOTH India and another country, DTAA (Double Tax Avoidance Agreement) provides "tie-breaker" rules to determine single residency:
Permanent Home
Where is your permanent home? (Owned/leased property)
Centre of Vital Interests
Where are your personal/economic ties stronger? (Family, bank accounts, assets)
Habitual Abode
Where do you habitually live? (Frequency, duration of stays)
Nationality
Which country's passport do you hold?
Popular Nomad Destinations: Tax Rules
| Country | Residency Threshold | Tax on Foreign Income | Notes |
|---|---|---|---|
UAE (Dubai) | 183 days | 0% (no income tax!) | Best for tax optimization |
| Thailand | 180 days | Only if remitted to Thailand | Keep money offshore = no tax |
| Bali (Indonesia) | 183 days | Yes (5-30% progressive) | Compliance challenging |
| Portugal | 183 days | Yes (14.5-48%) | NHR regime = 10 years tax benefits |
| Mexico | 183 days | Yes (1.92-35%) | Requires RFC (tax ID) |
| Georgia | 183 days | No tax on foreign income! | Territorial tax system |
Compliance Requirements
In India (Even as Non-Resident)
- File ITR if you have India-sourced income (rental, interest, etc.)
- Disclose foreign assets in Schedule FA (if resident)
- Maintain records of days spent in India/abroad
- Keep passport stamps, flight tickets as proof
In Foreign Country (If Resident)
- Obtain tax ID (TIN/RFC/Tax number)
- File tax returns as per local law
- Declare global income (if worldwide taxation applies)
- Claim DTAA benefits if paying tax in both countries
The Dubai Strategy (0% Tax)
How to Legally Pay No Income Tax
Step 1: Become UAE Tax Resident
- • Spend 183+ days in UAE (Dubai/Abu Dhabi)
- • Get UAE residence visa (freelance permit, investor visa, etc.)
- • Obtain Tax Residency Certificate (TRC) from UAE
Step 2: Break India Residency
- • Stay less than 182 days in India per FY
- • Become Indian non-resident
- • No India tax on foreign-sourced income
Step 3: Earn Income in UAE/Globally
- • Work for foreign clients from UAE
- • Income received in UAE bank = 0% tax
- • India won't tax (you're non-resident)
Important: From Jan 2023, UAE has 9% corporate tax on business profits above AED 375,000 (~₹85 lakh). But freelancers/consultants with no mainland company license remain 0% taxed.
Record-Keeping for Digital Nomads
- ✓
Travel Log
Date-wise log of days spent in each country (use apps like TravelSpend, Nomad List)
- ✓
Passport Copies
Scan all entry/exit stamps as proof of physical presence
- ✓
Flight/Accommodation Receipts
Keep all travel bookings as supporting evidence
- ✓
Bank Statements
Show where you received income (foreign bank = strong evidence)
- ✓
Client Contracts
Prove income source is foreign, not India-based
Common Mistakes
No Tax Anywhere Myth
Assuming "I'm traveling = no tax anywhere" (you're likely still India resident)
Poor Day Tracking
Not tracking days accurately (182-day rule is strict!)
Wrong Account Usage
Breaking India residency but keeping all income in Indian accounts (may trigger taxability)
No ITR Filing
Not filing ITR in India thinking "I'm non-resident" (you may still need to file)
Conclusion
Digital nomad taxation is complex and highly fact-specific. The 182-day rule is your friend—use it strategically to optimize tax residency. Popular strategies include spending 183+ days in Dubai (0% tax) or constantly moving to stay under 182 days in India (but this creates ambiguity). Always maintain detailed travel records, understand DTAA provisions, and consult a CA specializing in international tax before making major moves. Tax optimization is legal; tax evasion is not.