How the ultrawealthy use smartphone apps to avoid millions in taxes

For high-net-worth individuals who declare residence in low- or non-tax jurisdictions such as Florida, Texas, or Puerto Rico, yet continue to circulate between New York, California, Illinois, and other high-tax states, the answer increasingly runs through software.

Most tax tracking apps were launched in the 2010s, but they gained prominence during the COVID-19 pandemic as remote work expanded dramatically. Since then, they have become increasingly integrated into the wealth management sector. These tax apps function as an additional component of the contemporary wealth-management toolkit, operationalizing tax avoidance in real time and at scale.

Available through monthly subscriptions (ranging from $99 for Monaeo to $39.99 for TaxBird and $9.99 for TaxDay after a 90-day trial) and easily downloadable from app stores, these apps make residency management accessible and routine. Through continuous location capture and automated documentation, they are reshaping the geography of offshore finance.

The Apps Running Quietly in the Background

For decades, tax avoidance and evasion for corporations and the wealthy relied on familiar pillars: secrecy jurisdictions, trusts, shell companies, complex corporate structures, and the expertise of lawyers, accountants, and wealth managers.

Offshore finance revolved around spaces such as the City of London, New York, Amsterdam, the Cayman Islands, Bermuda, Switzerland, the British Virgin Islands, Singapore, and others. These secrecy jurisdictions provided legal and regulatory arrangements that insulated wealth from disclosure, taxation, and political accountability.

Over the past decade, large-scale leaks — the Panama, Paradise, and Pandora Papers— alongside international initiatives such as the Organisation for Economic Co-operation and Development (OECD)’s Common Reporting Standard (CRS) and the Base Erosion and Profit Shifting (BEPS) framework, have tightened cross-border financial disclosure. Global tax governance and expanded information exchange have weakened bank secrecy and narrowed certain forms of regulatory arbitrage.

Yet offshore finance has not retreated; rather, it has adapted. Financial technologies have been integrated into existing wealth management structures. Optimization and data-driven regulatory arbitrage have become central to contemporary tax avoidance and offshore finance.

The Old Playbook: Shell Companies, Secrecy, and Lawyers

Recent research on the digital shadow economy shows that new financial technologies pose new challenges for tax authorities by facilitating lawful cross-border optimization.

Much of the conversation in international tax law and global financial services now focuses on artificial intelligence, blockchain, cryptocurrencies, and big data analytics. Yet geolocation software and automated residency tracking have significantly expanded and diversified how tax residence is managed, particularly within the United States.

It is important to note that residency is not a key requirement in most offshore financial centers. Rather, the common definition of offshore financial centers suggests that these spaces, variously named as tax havens, offshore financial centers, secrecy jurisdictions, fiscal paradises, and regulatory havens, served non-residents. Yet, residency, citizenship, and passports are also key services provided by some secrecy jurisdictions. Particularly, acquiring a golden passport may facilitate access to lower taxes, financial services, and protection from political accountability back home.

Unlike classic offshore financial centers, the U.S. tax system hinges heavily on residency rules. Residency, however, must be declared, not something you can obtain by traveling to a state. As a result, in recent years, several states have engaged in tax competition, offering zero state income tax or developing financial services sectors through favorable incorporation regimes, flexible trust laws, and specialized insurance structures. Nevada, South Dakota, and Wyoming, for example, have cultivated expansive trust law industries.

The Number That Governs Everything: The 183-Day Rule

Since the 19th century, Delaware has been the global center of incorporations. Oklahoma has recently become a competitive jurisdiction for international insurance. Federal initiatives such as Opportunity Zones add incentives for states to develop tax incentives that reduce capital gains and other tax obligations.

At the center of this structure sits the 183-day rule and the IRS substantial presence test, which determine whether someone qualifies as a bona fide resident of the U.S.. Spending more than 183 days in a jurisdiction can trigger income tax, capital gains tax, estate tax, and other obligations. Residency becomes a quantifiable condition, measurable, and once measurable, it becomes programmable.

Residents of U.S. unincorporated territories such as Puerto Rico and the U.S. Virgin Islands are excused from paying federal income tax on locally sourced income if they meet bona fide residency requirements. These territories have leveraged this exception to attract U.S. investors.

Puerto Rico’s Tax Pitch — and the App That Comes With It

Puerto Rico, for instance, has paired the federal exemption with local incentives, notably the Puerto Rico Incentives Code (Act 60 of 2019), which exempts passive income, dividends, and capital gains for individuals who relocate to the archipelago. The Act 20/22 Society, representing beneficiaries of these incentives, even developed a members-only day-counting app providing “real-time residency information.”

What these tax tracker apps reveal is not simply a new convenience for wealthy taxpayers. They signal a structural transformation in territorial taxation. Offshore finance has long depended on jurisdictional differences or arbitrage; what is new is the way in which that difference is now operationalized through digital infrastructure.

Tax residence is no longer only a legal status interpreted after the fact. It becomes a continuously monitored metric, managed through software that translates bodily movement into compliance and compliance into arbitrage.

Tax-residency-tracking apps signal a broader transformation in wealth management. Offshore finance depends on digital infrastructure that converts movement through space into a strategic asset. Offshore finance, once anchored on the idea of distant secrecy jurisdictions, now extends into everyday devices.

The smartphone has become part of offshore finance’s back office. Policymakers who focus exclusively on shell companies and traditional secrecy jurisdictions risk overlooking this infrastructural shift. The reconfiguration of territorial taxation is unfolding in plain sight, one GPS coordinate at a time.

The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.