Comments by "Jeremy Barlow" (@jeremybarlow2291) on "Nomad Capitalist"
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I think if I move anywhere it will be either the Algarve in Portugal, or Buenos Aires in Argentina. The most likely scenario is Portugal followed by Argentina after obtaining citizenship in Portugal, but I will probably be in Argentina some of the year on a tourist visa, Uruguay also on a tourist visa, probably a residency permit in Paraguay and probably a residency permit in Mexico with a rotation. Chile, Peru, Ecuador, Panama, Costa Rica, Colombia, and Brazil may end up in the mix some of the time too.
Why Portugal first, because if operations are structured correctly, I could probably cut social security taxes in half, despite the higher topline rates in Portugal, and reduce the income tax by as much as 90% or more.
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If you aren't thinking about a plan like the legal & accounting department at a large multi-national corporation, you are probably doing it wrong. I mean you need to worry (from an American perspective) about IP issues regarding transfers of any IP assets to a foreign company under the new rules surrounding GILTI which are designed to make it hard to expatriate a trademark, patent, copyright, or goodwill of a business. You have to look at the impacts of the offshore jurisdiction where the company is headquartered on GILTI liability now and give years from now when the rates become more punitive. You have to examine merchant account processors that will work with a given jurisdiction. You have to examine banks for the jurisdiction where the company is headquartered. You need to look at international double tax treaties with your primary market to see what jurisdictions can benefit you and how to possibly use multiple jurisdictions to get money out of a primary market without withholding and to your headquarters without a withholding from the jurisdiction you use to get money out of your primary market. You need to examine relationships potentially amongst multiple countries to make sure you can access markets other than the jurisdiction for your primary market. I say this because in this day and age most people going offshore I would assume have a business which is somewhat location independent thanks to the Internet. You need to examine payroll taxes in those various countries and local labor costs. You need to examine transfer pricing rules and controlled foreign corporation rules for jurisdictions where you may actually live, or with the trifecta approach you suggest you may need to make sure you can move between location a) b) or c) in a given time frame to avoid triggering tax residence in an undesirable location for you personally, or plan around that ever becoming an issue. Figuring out how to get company accounts is important, but so to are personal accounts for the places you want to live, which likely means residence permits are an issue too. I mean if you want to go to one jurisdiction and live in that jurisdiction and bank in that jurisdiction it may be easier, but if you want your company in one jurisdiction and you in other jurisdictions it becomes harder. If you want those two things and access to a specific target market without withholding issues regarding your customers from a given jurisdiction it is something else entirely. I mean if your target market is the US for your app or your SaaS and you want to get money out of the US without withholding taxes, that is going to take a lot of planning and probably multiple jurisdictions. You are going to be reading double tax treaties and local laws. You are also going to be looking at payment processors like a Stripe or a PayPal for jurisdictions that they freely work with and you will be looking at merchant account providers likely including high risk merchant account companies. On top of those logistics challenges you will also be looking for banks that will take your business in the approriate jurisdictions and nothing about any of this should ever seem cookie cutter to anyone. There may be solutions that are cookie cutter for certain scenarios, but a solution for a SaaS company is not going to look like a solution for an FBA company or a company that is manufacturing physical products where navigating tariffs may also become a significant issue beyond labor costs and tax implications. Let's not even get into transfer pricing and using a wholesaler to warehouse to export from the point of manufacturer take profits and resell to the import market.
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@dlukton GILTI makes it much harder, not impossible, but much harder to keep money offshore without it being taxed, so yes big multinationals with an army of attorneys and accountants will be able to take advantage of some savings, but loopholes are being closed all over the place. The biggest Irish loophole the Double Irish with the Dutch Sandwich and the Double Irish with the Single Malt was closed, and even if it weren't closed, the GILTI tax regime would bring any income taxes below 13.5% currently and 16.5% in a few years up to at least 21% for C Corps and as high as 37% for any individual owner who doesn't make a an IRC 962 election if they personally are considered a US shareholder of a controlled foreign corporation. It is making it much more complex for smaller firms, but it is making it a lot more complex for larger firms too. Between FATCA and CRS, along with the EU blacklist regime and the OECD's efforts to close loopholes and the new economic presence tests which have been adopted for sales tax and vat being pushed into the income tax realm as well, a lot of international tax planning will become increasingly complex, not just for those seeking to minimize their taxes, but also for those simply attempting to comply with increasingly complex laws when they are operating any business connected with the Internet for example. Basically the tax code is becoming an excellent way to stifle free speech.
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The fact that the ACT 20 company MUST provide services for EXPORT should not be lost in the HYPE. This is especially true in light of new Treasury Regulations which are beginning to source the income of digital sales at the point of consumption. AT LEAST for downloadable digital content, ie non-SaaS software and/or eBooks, or downloadable videos. This could dramatically hamper the potential tax benefits of the ACT 20 NOW ACT 60 loophole. Let's be honest it is a loophole and Congress is very good at plugging loopholes. What about this plug for the hole, they grant Puerto Rico statehood and it loses its tax advantaged status.
Don't get me wrong, Puerto Rico looks good, in fact, today, with the rise of CRS and FATCA, the EU blacklist and the OECD forcing its economic substance requirements on the tax favorable jurisdictions of the past, there is a lot to be said for ACT 20 and ACT 22, now ACT 60 as I understand it, but it is likely to be a short term solution. In fact, by law, IT MUST BE A SHORT TERM SOLUTION, 30 years maximum if the 10 year renewal is granted at the 20 year mark. What good does ACT 20 do for the business person who wants to sell real physical products to actual human beings? Yes, you can convert a portion of the profits from such an enterprise to service based income by providing marketing services to your physical products company, but wouldn't you rather pay the 9% corporate tax rate on the profit from selling those goods in Montenegro and not have to worry about how the income is categorized by the IRS in a dispute, and maybe pay Zero Percent on the dividends you receive for those distributions as a citizen and tax resident of St. Kitts & Nevis, or a tax resident of Panama or Malaysia receiving those dividends at your home in one of those countries where you have the option of pulling up stakes and changing your tax residency if needed to minimize your taxes, or where you have the option to move the company from Montenegro for a better deal if you find one. I mean the piece of paper creating a corporation can sit in any drawer in any country.
As long as that country gives you access to banks that let you move your money and use it freely, it doesn't matter what country the corporate articles are sitting in at the end of the day.
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In terms of obtaining a long term multiple entry visa to China the US, UK, and Canada provide that more easily than most countries. If you can obtain residence in Canada it's a little bit more than 3 years living there to obtain citizenship.
Argentina is another country with a 10 year multiple entry visa available, but Argentina has a lot of things to make you leery of obtaining their citizenship, so if you are okay with that and willing to put a couple of years in on the ground there, it's an option for a long term access via a visa.
I bring those up for people who want to maintain the US level of access.
A few other potential alternatives via the APEC Business card if you were a citizen of Peru, a little more than 2 years to naturalization, at least theoretically, Mexico, a little more than 5 years to naturalization, or Chile, a little more than 5 years on the ground to naturalization.
Also Australia and New Zealand potentially provide APEC Business Card access to China.
There are a few routes to making travel to China easier, but it's not necessarily as interesting of a place to visit as it was a decade ago.
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@TrueEarth369 Thailand has territorial tax so if you are not working and your passive income is earned outside Thailand as long as you keep it in a bank account outside of Thailand the year the dividend is paid, my understanding is the money will not be taxed because they use a remittance based system as well. Thailand has a few double tax treaties with some countries which may also prove beneficial. If you are not an American, but you have US dividend paying stocks for example, I think the Thai treaty will reduce your withholding rate in the US from 30% to 10%. In other words they may or may not be as beneficial as some other countries, but they are not bad. As I understand it, in SEA Hong Kong, Thailand, the Philippines, Malaysia, and Singapore all have a territorial tax regime. In Latin America, Uruguay, Paraguay, Nicarauga, Honduras, Panama, and Costa Rica are territorial tax jurisdictions as I understand it. To a degree, ie no CFC rules, Ecuador is as well if you are not taking money out of a company that is based overseas, but Ecuador has some exit tax risks and does tax worldwide income of individuals. St Lucia in the Caribbean along with Belize in the Anglophone world of the Caribbean are territorial tax, as is Dominican Republic in the Latin American Caribbean. Georgia in Europe/Asia depending on where you draw the line, has a personal territorial tax regime, but a worldwide tax for local companies. On the zero tax front you are looking at Turks & Caicos, the BVI, the Cayman Islands, Anguilla, -for personal income only Antigua & Barbuda, and St. Kitts & Nevis, but their management and control rules regarding corporations may bite you without proper planning. You have Monaco, St. Barthalemy -with some exceptions for zero tax options, Vanuatu as well. Then you have the Gulf states, UAE, Bahrain, Qatar, Oman, Saudi Arabia, and Kuwait, but only some have realistic residency options. If you want low tax, Barbados is good for companies, but not so much for individuals. Labuan likewise is good for companies, but I'm not as sure it works in terms of living in Malaysia. I would want advice from local tax counsel about the treatment of dividends & salary paid by a Labuan company to a resident of Malaysia.
Then you have Lump Sum tax countries or lump sum tax countries for travelers with Anguilla, Gibraltar, Malta, Switzerland, Jersey, and Guernsey in the Channel Islands. There is also a lump sum regiment for Italy, and there is a 10 year NHR in Portugal that may be zero tax if you have the right circumstances in place.
My take is with the right planning SEA provides great options for low or no tax living. If you are somewhat nomadic ie not anywhere for more than 4 months a year, then the territorial tax countries would be great and making a St. Kitts or Antigua your country of citizenship and spending a month or two there may provide you a tax residency certificate if you need it with a bank that is helpful, otherwise in the right circumstances even less time in Georgia may give you one. With the right lump sum payment like 1 month a year in Anguilla will get you.a tax certificate if you aren't in any other country more than 183 days a year. Antigua has a similar deal for non-citizens. Malta has such a deal too. Cyprus may have some non-domiciled residency benefits I haven't quite figured out yet myself.
There are a lot of ways to play it, but I will say if your business is structured properly, and you are not actively working in the business Thailand has some potential. If you are working in the business, with the right structuring Thailand could work, as long as you comply with foreign branch rules and hire enough locals to get you a work permit. But it is going to add the expense of transfer pricing studies and may be a giant PITA, although it may be worthwhile. If such a scenario is necessary, ie you working for the business, then a Labuan company in Malaysia might put you in a 3% tax bracket. The Philippines would have the same PITA regarding transfer pricing studies that Thailand would have.
Of course if you are living on portfolio income and dividend from publicly traded companies, that is a different story.
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My French ancestors were in Quebec before the French & Indian War. My Dutch ancestors were in New York when it was still New Amsterdam. My Mohawk ancestors are in no way helpful with a citizenship by descent especially since they are too small a percentage of my Great Great Grandparents to allow me to be a member of the tribe even. My Irish ancestors moved to Canada at the height of the potato famine, so that means it was my Great Great Grandparents. My Great Grandfather moved to the US & if I knew when I was a kid what I know now, I would have told my grandfather & father to claim their Canadian citizenships so that I could claim mine potentially, but they were both proud soldiers in the US Army who respectively fought in World War II, and Vietnam & the first Gulf War, so that would probably have not went over well with either of them. My maternal Great Grandparents all came to the US from Sweden early last century along with my matrilineal Great Great Grandmother who had been a doctor in Sweden. I have a relative who traced my matrilineal line in Sweden back to a Grandfather born in the 1770s who lived to see the US Revolution & the US Civil War's beginning. I can tell you all that, but as Andrew I am sure knows, Sweden's cruel ironic punchline for me is that while a Swedish mother has always been able to pass citizenship to their children, my Grandmother born in America in 1923, even if her mother never became an American citizen was born an American so unless she went to Sweden before the age of air travel and before she was 21 & opted to be Swedish, she and my mother are both American citizens. Hmmm what was happening in the world by the time my grandmother was 6 years old, a worldwide depression, hmm. As a young adult what was going on in Europe? A World War? If Sweden alters their citizenship by descent rules to allow the descendents of Grandparents born of Swedish ancestry, I'm probably Golden, but as a country that only recently recognized dual citizenship, unless I've read their citizenship by descent statute wrong, and I don't think I have, citizenship by descent for me is a cruel, cruel joke. In no small part because my ancestors were mostly in the United States before it was a country, or Canada before it was a country, left Ireland before it was a country, & well too long ago for British citizenship to apply as well. Canadian citizenship was potentially obtainable in my lifetime, but my grandfather & father would have needed to take some actions. That is a cruel irony because I could be at the Canadian border in 25 minutes & my father routinely went to the Canadian auto-racing track 40 minutes away to work on cars and even played fast pitch softball in a cross border league when I was a kid.
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