In the USA, the so-called 183-day rule plays a central role in tax liability: anyone who spends more than 183 days in a state or tax territory can be considered a tax resident there and must pay income tax, capital gains tax or inheritance taxes, among other things.

Apps monitor whereabouts

The apps are intended to help Document length of stay precisely and so, not to exceed the tax thresholds. At the same time, they create protocols that can serve as evidence in the event of a tax audit.

Programs like Monaeo, TaxBird or TaxDay run unobtrusively in the background of the smartphone and continuously register the user’s location. The software automatically counts how many days someone spends in a particular state or tax jurisdiction and warns when tax limits are reached.

Regions with tax breaks are particularly attractive for investors. Puerto Rico, for example, attracts wealthy newcomers with tax exemptions on dividends and capital gains. There are even separate apps for members of relevant investor programs that monitor tax residency status.

“Tax tracking” as part of asset management

The programs were developed in the 2010s, but received significantly more attention during the corona pandemic. With the increase in remote work, it has become easier for many wealthy people to choose where they live flexibly.

Today, such applications are increasingly seen as part of the traditional wealth management toolbox, according to Fortune. The apps are usually available as a subscription and cost between ten and almost 100 dollars per month, depending on the provider.

Through automatic location recording and documentation, they make it possible to monitor tax residence in virtually real time.

5 tax tricks of the super rich in the USA

• Register residency in low-tax states
  Many wealthy people declare their primary residence in states without income tax – such as Florida, Texas or Nevada.
• Strictly monitor 183 day rule
  Special apps automatically count the days of stay so that tax liability in high-tax states such as New York is avoided.
• Take advantage of tax privileges in Puerto Rico
  Under certain conditions, investors can receive capital gains and dividends almost tax-free.
• Structuring assets via trusts
  Trusts make it possible to transfer wealth in a tax-efficient manner and reduce inheritance taxes.
• Do not realize profits for as long as possible
  Many billionaires avoid selling stocks. Instead, they take out loans against their assets – so there are no capital gains taxes.

Which applies to Germany

The tax apps described primarily relate to the US tax system. Because tax liability there depends heavily on which state someone lives in and how many days they stay there.

In Germany it works differently. Here it is primarily your place of residence or habitual residence that determines tax liability. Anyone who lives in Germany or stays here permanently is generally considered to be subject to unlimited tax liability.

Different rules also apply internationally: Even if someone moves abroad, Germany can still charge taxes – for example, on income from German sources. This means that the “app tricks” that super-rich people use to control their length of stay in the USA can only be applied to the German tax system to a very limited extent.

5 tax tricks of the super rich in Germany

• Move your residence abroad
  Countries with low taxes such as Monaco, Switzerland or Dubai are popular – often after lengthy tax planning.
• Establish family foundations
  Assets are transferred to foundations in order to secure them in the long term and reduce inheritance tax.
• Use holding structures
  Company shares are pooled via holding companies, which means that profits can be reinvested in a more tax-efficient manner.
• Use an asset management GmbH
  Capital investments are held through a GmbH in order to take advantage of tax advantages on profits.
• Trade real estate through companies
  When real estate is sold, shares are often transferred to companies that hold the buildings.