International water-dwelling house boats, and the taxes they have to pay

Question

I know that the owner of a houseboat does not have to pay property taxes, as the marinas pay these, but what about income and other similar taxes, if you live in international waters. Do you pay any taxes when you live in international waters? Thank you.

Answer 1

I have lived on international waters.  I was still obligated to pay income tax to my home country even though I worked and lived on a ship.

You are right in saying that the government cannot just drive up and say "hey -- where's our money".  However, if you are working for a landbased employer, or are making purchases on land, the government can start asking questions.  For example, I can't claim that I make $0 in income (thus paying no taxes) and then submit my mortgage payment, or make charges on my credit card as this will raise a red flag to the government as I am "living above my means".  It's the same way they catch people who make money from illegal acts.  You can't make $0 but buy a new Lexus.

You have to be a certain number of miles offshore to be in international waters.  If you are planning on parking your boat out at seas each night, and then entering the jurisdiction when it's time to go to work every morning, THIS IS NOT GOING TO WORK.  You will have to go through Customs & Immigration each time you return to your country.

In theory, yes youo could live in international waters and deke out of paying taxes. It would be illegal, but if you aren't making that much money probably the IRS/CRA won't care.  However, I would not advise this.  You will give up your right to certain rights -- in Canada, say goodbye to universal health care, in Canada and the US say goodbye to your pension.  

Remember that when you pay tax, that money comes back to you in the form of education, health care, a democratic process, roads, airports, schools, law enforcement, etc.  If you just don't want to pay tax, move to a country that doesn't have tax -- but I promise you that you will not care for their quality of life.  

Answer 2

If you are a US citizen, you are liable for taxes on all worldwide income.  Plus the state where you lived previously may not let you off the hook without showing you've set up domicile in a new locale.

Plus, depending on where your boat is registered, you may still be liable for the personal property tax on the boat itself.