So you've just gotten back from the beach and are contemplating tomorrow's slog to the office. A stray thought crosses your mind: Did you really have to leave the beach? In this networked, digitized, technology-centered world, can't we all work and live anywhere--say, the Caribbean?

Tempting. But the fantasy of a simple life on a sun-streaked island may prove more complicated than grabbing a bathing suit, packing your portable computer and developing software while gentle waters lap your toes. Turning that fantasy into reality means finding a home, establishing residency, getting a work permit and navigating tax laws that may sound generous but still have some bite.

The 700 islands of the Bahamas, for instance, offer something for nearly everyone, from nightlife and gambling on Grand Bahama Island and Nassau to the quiet and isolation of the Exumas, the southernmost islands in the chain. Moreover, the Bahamas have no direct income tax, certainly an attraction for hard- headed business executives. For example, Sir John Templeton, the mutual-fund pioneer, makes his home in Lyford Cay, a private club and community on Nassau.

The Central Intelligence Agency rates the Bahamas' domestic telephone system as "highly developed," and there are adequate international lines. Batelco, the local telephone company, runs Batelnet, the largest Internet provider, and America Online service is available.

So far, so good, especially if you intend to work or freelance for an offshore firm.

But there are complications. To be considered for permanent residency status in the Bahamas, individuals are required to have an investment in a business or in real estate of at least $500,000. A residence with pool and 80-foot dock at Treasure Cay, a gated community, was recently advertised at $1.5 million.

"To live decently here you need an income of at least $4,000 per month," said a correspondent on the Internet site

If you move only to avoid taxes, he noted that in many cases it is cheaper to pay your home country's taxes than to pay the Bahamian government in what are, in effect, indirect taxes. "Since the country imports just about everything, well, the local prices are very, very high if compared to the U.S. or Canada--at least double, sometimes triple," he said.

Moving in your furniture? The customs duty in the Bahamas is 35 percent. A stamp duty is slapped on the shipping charges as well. Bringing a car to the islands can produce an import tax of 45 percent to 65 percent of its price.

The Bahamas are not singularly expensive. In Barbados, another island with good communications and an income tax but no capital gains tax, a two- or three-bedroom house rents for $2,000 to $3,000 a month, according to Gloria Eduardo, senior tax manager at PricewaterhouseCoopers in Barbados. That does not include an idyllic site on the water.

Antigua, an island noted for its sailing opportunities, features no individual income tax for residents, no capital gains tax and no inheritance tax. You qualify for residence if you maintain a permanent home there, pay an annual levy of $20,000, and reside in Antigua and Barbuda for 30 days of every year, according to the High Commission for Antigua and Barbuda.

Homes range from $76,000 to $1 million, and the cost of living, according to the Antigua and Barbuda Embassy in Paris, is on a par with that of major European capitals.

U.S. citizens contemplating an island life, though, are especially disadvantaged. "The United States and perhaps the Philippines are the only two countries in the world which tax on the basis of citizenship and not residency," said Paul Bodner, a tax lawyer and adjunct professor of international taxation at New York University's Graduate School of Business.

That means that while the Bahamas, Bermuda and the Cayman Islands have no income tax, the Internal Revenue Service still demands its due. Americans who work abroad do get a $70,000 exclusion on their salaries. The rest of the income, though, is subject to U.S. taxes.

The U.S. government is not merely concerned about the ordinary income of citizens living and working abroad. It also demands capital gains tax on any U.S.-sourced income for 10 years. "That means if you bought Microsoft when it went public," Bodner said, "and you are still holding it and you are worth a zillion dollars and you move to the Bahamas, you must pay capital gains on U.S.-sourced income for 10 years."

Bodner, who has testified on these matters before the Joint Congressional Committee on Taxation, said many people take a risk and simply neglect to pay those U.S. taxes. "If you move offshore and you just don't report [the income], you can't be caught," he said. "You can find people who will buy that stock from you offshore. Technically, you owe U.S. tax. But there is no tax in the Bahamas . . . and there is nothing the U.S. can do about it if you are prepared not to come back" to the United States.

Indeed, for sophisticated investors who want to, say, trade Internet stocks from the islands, there are investment banks that can assist those who want to avoid paying U.S. taxes on the gains. "I can make an arrangement with an investment bank where I am not going to buy Internet stocks, but I am going to make believe I buy Internet stocks," Bodner explained.

"The investment bank creates a financial derivative [a security whose value is derived from another instrument, such as a stock price] so that when Dot Com goes up they will pay me the difference and when Dot Com goes down I pay them. If the friendly investment bank in the Bahamas is willing to do that, now I don't have any U.S.-derived income.

"But, of course," he added, "you are paying a lot of money to an investment bank."

Bodner added that U.S. tax laws put Americans at a competitive disadvantage if they are bidding for work against Canadian, French or German residents of tax-free islands. "If the American freelancer is paying income tax, then the Canadian can offer the service 15 percent or 20 percent cheaper and still make more money. The American becomes uncompetitive."

Even when Americans have equal status with everyone else--as is the case in the U.S. Virgin Islands--they may find many difficulties to overcome. Randy Blaustein, a tax lawyer for Blaustein, Greenberg in New York City, tells of a real estate entrepreneur who won a tax incentive to develop a high-tech office park in the U.S. Virgin Islands. "He wanted to attract technology companies down. The problem was, he couldn't find enough qualified technical people to live there. If you become a resident, kids are a problem because the schools are no good. The cost of living is higher. Then there is the crime problem, the hurricanes, and it costs money to come back to the States and visit relatives."

Cable & Wireless PLC, which has telecommunications operations in the Caribbean, says it is unaware of any crime problems, but it does pay workers abroad allowances for housing and children's education. "Most people like it," said Claire Brown, who is on the C&W communications staff. "But the pace can be very slow and they feel under pressure by the U.K. to deliver things."

Novelist Herman Wouk described this 30 years ago. In his novel "Don't Stop the Carnival," a couple escape the insincerity and hustle of life in the entertainment industry and depart for a mythical Caribbean island to run an inn. By the end they give up, defeated by island attitudes, lassitude and violence.

"These things always sound wonderful," said Paul Knox, a tax practitioner at PricewaterhouseCoopers in London. "But I know of people who have gone to the islands and can't adapt to the island lifestyle. They have given up in despair. . . . Little happens. It is very claustrophobic, very little privacy, and everyone knows what you are doing. You have to be cut out for it."

What kind of people are cut out for it? Miami psychologist William Samek theorized: "They are people who like to be big fish in a small pond. They are educated, they are rich--at least compared with the locals. They choose to go to a poor area. They probably can mingle with every other important person in the area. They like being seen."

Oh, well. Converting to the island life sounds like so much trouble. Maybe I'll just go sit on the porch. And dream of an ocean breeze.