Comments by "Jeremy Barlow" (@jeremybarlow2291) on "Nomad Capitalist"
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They are most definitely upset about digital nomads in Europe, Canada, and the USA extricating themselves from the Western tax base by for Europeans and Canadians, moving to Dubai & setting up a free zone company, and either living there for a year or living briefly in a country with rules that allow them to be tax resident in a low or no tax country while living there for 2 months or less. After you are no longer in the European or Canadian tax system, until you legally become resident there again, I do not presently see the UAE chasing you down to tax you while you continue a digital nomad lifestyle seeing the world.
The US is upset that backpackers earning up to $120k a year or maybe a bit more if they utilize travel expenses appropriately and add the right income channels to their mix of strategies are escaping the US tax system to a large degree. They are far more upset that those people are using the tax savings to buy a Caribbean passport and renouncing their citizenship, but what they really hate is money is being spent by those "citizens" ie slaves, in other countries. What they really don't like now is that people because of YouTube are seeing people who grew up in their "first world countries" experiencing a better quality of life in poor "third world countries" with lower tax burdens, more to do, lower costs of living inspiring others to leave the rat race they created in their countries.
I mean the "first world" already has a labor shortage because Westerners are telling people in the "third-world" the opportunities are better or at least as good in your home country as they are in the "wealthy" countries. Those same people are seeing those same videos in their country. They have labor shortages exacerbated by the fact that a person with a laptop and an Etsy store can make up the salary or wages from their low wage job selling trinkets and trash online while working 10 hours a week.
They have the problem of many people ditching apartments and houses for life in a Van because minimalism and an unencumbered simpler life allows people to work less not only fueling a labor shortage, but also hurting the real estate investor market.
But when people begin to decide to leave for greener pastures by deploying those minimalist strategies, they know they cannot allow travel to be as easy as it has been in recent years. It is very bad for their incumbent player advantages.
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It's possible for a US person who has renounced US citizenship -preferably obtaining another citizenship first, if they hold a college degree, I would highly encourage a CBI in one of the OECS countries then using their membership in Caricom to obtain a skilled worker certificate to secure freedom of movement rights in Barbados, Belize, Trinidad & Tobogo and other Caricom countries. If that US person is a permanent resident of the US or a temporary worker under an H1B or similar visa, then by ending their residential connection with the US to use a US based LLC -preferably in one of the state corporate & income tax free states, Wyoming, Texas, Washington, Nevada for example, and have a tax free operation, if they live in the right country as a tax resident, and manage the company ie hold formal annual board meetings in the right country or countries.
I suggest the Caricom citizenship because under the US-Barbados tax treaty, holding a board meeting for a US organized company in Barbados doesn't make a company tax resident in Barbados. As long as there are no employees or contractors in the US, legal precedent in the US does not make this pass through entity subject to US tax, necessarily.
Under the US-USSR tax treaty which the US recognizes, but Georgia does not, the tax rate on even royalties from a US business to Georgia is a 0% withholding rate.
A company not managed and controlled or organized in Georgia with no permanent establishments in Georgia is not subject to tax in Georgia under Georgian law currently.
A high networth individual with $3 million in assets or over about $65k a year in income for the last three years who owns requisite property in Georgia and has a residency permit due to that property ownership can avail themselves of tax residency in Georgia by not being tax resident elsewhere and proving they have a high networth and maintain residency in Georgia.
This would give a digital nomad the ability to move rather freely. The republic of Georgia does not tax individuals on offshore income.
The US tax resident company per the US-Barbados treaty as a pass through entity under US law would only be taxable in Georgia under current US law if the pass through owner was tax resident in Georgia.
In this instance, even royalty payments typically subject to a 30% withholding rate in the US would have a 0% withholding rate under the US-USSR treaty which the US recognizes and as the owner & not the company would be considered the owner of the royalties, even some of the most difficult income to extract from the US tax free could pass tax free to a Georgian resident through this US LLC.
So long as a digital nomad in this scenario did not become tax resident elsewhere, by holding annual board meetings for the US LLC in Barbados, it would not be taxable in Barbados under the treaty or Georgia under Georgian law, but would be a foreign company as a US LLC.
It would still have nonresident reporting requirements to the IRS, but should not be a taxable entity, and as long as the nomad does no work in Georgia, they should not be taxable on the company profits in Georgia either.
The US LLC provides fairly easy access to good online transactional banking for an operating company and a Wyoming LLC provides strong asset protection both against liabilities of the company to the owner, and liabilities of the owner in regards to assets of the company with charging order protection.
This means if the owner got into a car wreck in a country where that being their fault could be costly, it would be almost impossible for a judgement creditor whose claims exceeded the nomad's liability insurance to liquidate the LLCs assets.
I bring this up, because it always makes me laugh that a US LLC is one of the best tax haven assets in the world for people who are not US citizens if they plan how to use it correctly.
In terms of US citizens reducing taxes, a C or S Corp or a foreign corporation in a zero tax jursdiction where economic substance requirements are not an issue with proper use of foreign residence exclusion, foreign earned income exclusion, per diems, health insurance deductions, health savings accounts, IRAs and 401(k)s, along with travel expenses can get a US taxpayer north of $200k a year tax free. The combination of a US C or S Corp with the right zero tax foreign entity as a subsidiary using a check the box election can be useful -if you can get banking for that zero tax entity.
The recent introduction of economic substance requirements in many zero or low tax jurisdictions to satisfy the OECD and avoid being blacklisted from participation in international bank clearing of transactions has made a lot of low or zero tax jurisdictions nearly impossible to use because bank accounts are hard to get, or economic substance requirements are costly to comply with in ways they did not used to be. There are exceptions, but if you want to be a nomad, then it is harder than ever before.
The way around this is proper planning, structuring and use of the right entity types in countries that are not on any blacklists which are easier to secure banking for than headline rate zero tax countries.
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Antigua is the CBI passport I would look at first in terms of bang for the buck. I would think about North Macedonia before Turkey because while I doubt it will ultimately join the EU, it might, but it gives you Japan. You don't get Thailand, but a Thai Elite Visa or a Thai Investor visa can take care of that. Would Turkey give you a few more countries visa free, sure, but are they countries likely to be at the top of your list of places to visit? Aside from Thailand which is not that difficult to obtain a visa for, not really. Kazakhstan? Mongolia? If you have the money to buy a CBI, you have the money and income to go to a Mexican consulate and get a Permanent Residency Permit for Mexico for your Antigua or North Macedonia passport which would put Mexico back on your list.
Now after that, Bulgaria or Portugal become appealing for getting an EU citizenship, but you need to structure your investments correctly if you are going to become tax resident in either one. They are mostly appealing for non-EU citizens. If you are already an EU citizen, having a backup citizenship like any of the Caribbean citizenships is probably a good idea in the event they ever adopt a US style citizenship based tax regime.
If you are single, then spending vacation time in any of the EU countries that offer citizenship to spouses of their citizens after a set amount of time, regardless of the location of your residence becomes appealing because your spouse potentially gives you the ability to live and work anywhere in the EU which can be helpful for structuring transactions.
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Bank accounts are the tip of the iceberg. There are also permanent establishment issues, the new economic substance test regimes, the clout to avoid banking issues or not, and the ability to benefit from double tax treaties. Where are your personnel working from is a vital question thanks to the new economic substance tests. Where is the IBC registered to operate is another question. I mean yes you are BVI corporation, but are you only authorized to do business in the BVI, or have you registered as a foreign corporation elsewhere? You haven't? Where are your personnel in the BVI, how many of them are there? Where is your managing director located? Who is that person? What ownership stake do they hold in the company? Do they have checkbook authority or are they merely a nominee director ie are they a sham?
Most of the jurisdictions which had IBCs excluding the truly territorial tax jurisdictions, ie Panama, Hong Kong and the like will tax the worldwide profits if the business is actually operating in their jurisdiction, and if you aren't, well where are you registered to do business otherwise?
It takes a lot of planning of various parts to avoid taxes as a multinational corporation which is what you personally must become to avoid taxes.
Find a video explaining the Double Irish with a Dutch Sandwich or the Double Irish with a Single Malt to begin understanding the kind of thinking that is actually involved. If you are an American add to that complexity GILTI and Subpart F, but also add to it foreign tax credits, FBAR, FATCA, and the foreign earned income exclusion. If you are in the EU -not the UK, Brexit was clearly about their overseas tax havens, but the rest of the EU, get ready for something like the US worldwide tax regime to take effect soon, and understand there are a lot of moving parts to consider.
You have to think like a multinational corporation's tax attorneys and tax consulting accountants. You need to be reading KPMG, Deloitte, and PWC reports on various countries corporate and personal income tax regimes. You need to understand how to obtain residency in favorable tax jurisdictions. You need to figure out which countries have favorable double tax treaties with the country where you situate you primary business, and which countries have regimes that will allow you to have subsidiaries with favorable transfer pricing studies to hire employees at the lowest wages and get the best performance while paying the least tax on the profits those companies must show for the services they provide to the primary company. You must figure out which country has the economic might to avoid issues with the EU blacklist. You need to figure out how to get money out of major markets with withholding regimes like the 30% tax the USA imposes on most transfers of money out of the country, except to jurisdictions who benefit from favorable double tax treaties and you must probably find such countries which have favorable double tax treaties with your primary country for your business because they likely aren't the same country.
You also need to figure out how to get proper transfer pricing studies done to make sure that the countries in question do not take issue with transfers out of their country of the profits those subsidiaries earned without taxes inside those nations being imposed.
You are going to need to understand IP licensing, loans and interest payments for this, or you are going to need to find low tax jurisdictions for this to work.
There are a million moving parts to international tax planning, and that is what Andrew is trying to say, without saying it.
You can figure this all out on your own if you are a lawyer or an accountant working at an international tax planning consultancy. If you aren't and you have the 120 IQ needed by most to complete graduate school, you can probably figure it out too, but it will take a lot of reading and research. It will probably take hiring translations for various treaties and statutes as well because there will be a lot of languages that laws and treaties you need to worry about are written in that you probably won't be able to read.
Hell there may even be treaties in effect as far as one country is concerned that another country disregards that would be a huge advantage to you which you will need to figure out how to use regardless.
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"Nothing will fundamentally change." -Joe Biden to a room full of well to do contributors.
So far the leadership in Congress and his own actions have shown his policies & their policies do not differ significantly from those of the Trump Administration.
This to me means that the destabilizing effect on democracy that the previous administration had on the United States is likely to worsen. The US has been a flawed democracy for quite some time & the failure of leadership & vision inside the United States to address the challenges facing the nation due to crony capitalism's consolidation of power & anti-competitiveness, the failure to alleviate pressures stemming from income inequality by implementing policies that will alleviate overly burdensome healthcare expenses on American business while providing better coverage for all Americans by implementing sensible employment taxes & regulation in place of the current private insurance scheme that is creating a disunity in the populace is hurting the country.
What I find interesting is that a country like Singapore, and a country like Uruguay have been able to implement a fairly low territorial tax system, while also creating systems of universal healthcare & creating an environment that has not priced most of their citizens out of the housing market either as buyers or as consumers of quality housing, yet the United States is failing in this mission with far more land, far more resources, and a highly productive people.
The reality it occurs to me is that no political leader in America has said, we can have a tax system that provides better for the basic social welfare needs of it's citizens AND costs less for both workers & business owners than our current system.
Not one political leader in the United States has said, we can provide a system of universal healthcare and have low taxes. Singapore does this with very little government spending and has some of the best healthcare in the world with a system that is universal. Uruguay's healthcare is not the enviable system that Singapore has, it isn't even as solid as it's slightly poorer South American neighbor Chile, nor fellow Latin American territorial taxed neighbor Costa Rica whose universal healthcare system, like Chile's places it ahead of the USA.
Why am I mentioning healthcare so prominently as an issue that is causing the problems in the US?
Because it is THE issue which to a large degree stifles enterprenuership in the USA. It is also one of the two leading issues that creates significant income inequality, this despite the fact that the current system which not only leaves too many people without care, costs American business FAR MORE than all of their competitors around the world.
Can the USA adopt the Singaporean healthcare system entirely today? No, it really can't because of how the current system is designed, but it can redesign the current system to transition towards a Singaporean style system over the course of two generations. It will easily take forty years to make health savings accounts the major source of payments rather than insurers, be they private or public, but it can be done.
Hell the US could adopt an entirely territorial tax system & it would probably increase revenue returns to the treasury so long as the destabilizing pressures of the poorly managed healthcare system were addressed.
Are there other issues in regards to crony capitalism that need to be dealt with to get the US on the right track, yes, but no one in either of the two main parties in the US are in any way prepared to address them because the political leadership of the country in both parties is owned by a myopic group of kleptocratic crony capitalists who are blind to the risks the failure of the US as a democracy will have on their consumer base & long term business interests.
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My plan is to get a business that earns most of its income through royalties functional, move to Portugal on a D7 visa and residence and earn an EU citizenship while benefiting from the NHR and Social Security Totalization Agreement as an American self-employed in Portugal. A royalty based business has few litigation risks, and most litigation risks that could apply would not be protected by a corporate liability shield regardless, so it is a practical way to operate in terms of tax efficiency and asset protection. After gaining Portuguese citizenship, the options for how to operate and where to live become a lot easier to deal with, especially as it opens up multiple EU jurisdictions for corporate structures and tax planning because as an EU citizen I could work as a board member in any EU country. Ireland, Hungary, and Cyprus offer some solid structuring strategies. The potential tax savings while living in Portugal may also allow enough savings to purchase a Caribbean citizenship, assuming the programs remain open. Dominica's current visa-free access is probably the most appealing as a supplement and compliment to Portugal. Securing a Skilled Worker Certification for Caricom would be part of the strategy when obtaining any Caribbean citizenship.
After obtaining Portuguese citizenship, a residence permit in Mexico, Malaysia, Thailand, the Philippines, Uruguay, Costa Rica, Barbados, or Georgia would all be likely possibilities. Cyprus, Ireland, and Malta might also be in the mix for residency.
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The one big benefit Turkey offers with it's passport is their excellent consular protection as compared with many countries. If your Turkish passport was lost in just about any country that Turkey gives you visa free, visa on arrival, of e-visa access to, it is a safe bet you could walk into a Turkish consulate and obtain assistance getting a replacement passport.
The Caricom countries that offer CBI are personally lacking in terms of consular protection, but as member states of the British Commonwealth, the UKs extensive consular protection network offers similar benefits to the Turkish embassies and consulates around the world. Interestingly enough, the UK Commonwealth's extensive network of embassies is often useful for Canadians, Australians, and New Zealand because while the CNA countries of CUNA like the US are quite selective about who they allow to visit or reside in their territories, their embassy networks are no where near as extensive as the US or the leading European powers of the UK, France, or Germany. While it is unlikely anyone would obtain citizenship by naturalization in Singapore or Malaysia, it is good to know that the extensive network or diplomatic missions those nations which do not allow dual citizenship are backstopped by the UK's nearly universal network of diplomatic missions as member states of the British Commonwealth. Like the US, the UK's network of consulates has a few minor gaps in countries that are not likely to be high on anyone's list of places to visit, but there are some gaps, but Turkey has an embassy in most of those countries.
A lot of Latin American countries where you may obtain citizenship through naturalization fairly quickly have good consular protection, but not as extensive as Turkey or the British Commonwealth provides, nor as good as the US consular protection coverage generally although the US leaves something to be desired in a few places you might suspect, but they are countries where travel on an American passport would likely be a poor decision.
Citizenship in an EU country typically provides not only an excellent travel document, but also consular protection not only from your country of citizenship, but also every other EU country in the event your home country does not have a consulate in a particular country. This means that France or Germany will likely be able to provide assistance if your home country cannot.
I believe the consular protection considerations are something people should consider when obtaining a second citizenship, but also, something to consider when planning to obtain a portfolio of passports.
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Antigua & Barbuda is also part of the Eastern Caribbean States treaty with more expansive free movement than Caricom. Caricom has free movement to more countries, but only for skilled workers -which is a select category or professions, but also college graduates with I believe at least a bachelor's degree that must be authenticated and approved for classification as a skilled worker. The Eastern Caribbean States is less countries, I believe Antigua & Barbuda, St Kitts & Nevis, St Lucia, St Vincent & the Grenadines, Grenada, and Dominica are the ECS countries. Not all Caricom members have signed or been accepted as part of the skilled workers free movement regime, but all six ECS countries are part of it, as are I believe Belize, Trinidad & Tobago, Barbados, Suriname, Guyana, Jamaica, and I believe Haiti is part of the single market, but may or may not be part of free movement, and while Montserrat is part of Caricom, as a British Overseas Territory I don't know if they are part of the single market or free movement, and the Bahamas is part of Caricom, but I don't believe it is a participant in the free movement regime.
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There may be others, and we know for sure St Lucia and Comoros, and likely Antigua & Barbuda now. Serbia seems likely, Georgia also seems likely. Morroco and Angola being available visa free leads me to believe likely Russian citizenship because your wife is both Russian and Armenian, and you have said you would not want to obtain Turkish and Armenian citizenship because of the historical conflict there, but Turkish citizenship is not out of the question with your properties there. As your adopted sisters are Russian by birth, that seems likely, but it would also mean this needs updating because the country formerly known as Zaire, now is it Congo or Democratic Republic of the Congo has added e-visa access to Russia and Turkey. I mean both Russia and Turkey have e-visa access to Mexico, and a Colombian residency permit gets you access to Mexico too, so your Colombian residency explains that, but with the changes in African access for many passports in the last few months, I suspect this needs some updating whether or not I am correct. Some countries have lost some African access and others have gained some.
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If you can work anywhere & earn that amount, move to a territorial or zero tax country where you can get residence. If you work for someone else, make sure it doesn't make them tax liable where you live. If necessary pay taxes where you are at & with savings from the Foreign Earned Income Exemption save to buy a CBI, or move to a country where you will obtain citizenship & a second passport. You may even consider moving to an EU country where you can obtain citizenship even if you must pay the tax.
Once you have a second citizenship, your options become more open. If you are working for yourself and earning that and can work anywhere, get yourself to a tax free country like the UAE, you probably can't afford the pricier zero tax countries yet.
The first plan of attack should be figuring out how to get a second citizenship. If you have access to a citizenship by descent somewhere do the work and get that citizenship. If you cannot, then figure out how good your passport must be. Do you want a Tier A or is Tier B+ or A- good enough? Is Tier C good enough?
If you want to live in the Philippines long term getting a passport from even Ecuador with no access to Europe might be good enough for you. If you will never get wealthy, Argentina might be fine, because they have talked about a global wealth tax on citizens regardless of where they live and you cannot renounce Argentine citizenship. If you want to move to a zero tax country eventually, Portugal may not be the place because of their five year tax rule when you move to a blacklist country. They will say you are a Portuguese resident regardless of physical or family ties remaining in Portugal. Luxembourg will tax you a lot while you are there, but won't chase you when you leave. Sweden will chase you. Mexico consider you a resident as a citizen even after you leave if you have a home there. You have to examine the quirks and figure out what citizenships suit you best. the reason St Kitts is so popular as a CBI is because they don't tax you even if you live there, but may tax your company under the current rules if it is managed there.
I recommend reading PWC's reports on countries to figure out the broad tax rules there or Deloitte's highlights and looking at naturalization and residency rules for countries.
You should of course examine the visa requirements for citizens of the countries you might want to obtain citizenship from and understand they change. The US now needs a visa to visit Bolivia a few months ago that was not the case. Once you have it narrowed down, examine the short list more closely by talking with immigration and tax attorneys in those countries. Many will be able to meet with you by something like Zoom, many will not, but a phone call is possible. You need to get practical advice from professionals in the jurisdiction. You will also want to speak with a US tax lawyer who is versed in international tax planning and a similar US accountant especially if you have a US based business. The 2017 tax reforms made moving existing US IP assets most businesses have offshore, more difficult in terms of tax planning for example.
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Gitlab, Buffer, Automattic, Stripe, Zapier, Bandcamp, FlexJobs, just a few companies you may have heard of that were remote only and remote first from day one. You can start billion dollar companies that never have a set physical office, a few of them are on the list and they are not the only ones.
The only thing a business needs is a bank account, the right paperwork sitting in an attorney's filing cabinet somewhere a registered agent in your jurisdiction of choice, and perhaps a mail forwarding service to receive correspondence from the state, vendors, or customers and those do not require you to do much more than sign a low cost agreement with one of hundreds of mail forwarding companies around the world or registered agent service providers.
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Whether or not you are tax resident somewhere outside the US really depends on the rules of each locality. I mean Spain is going to do everything to say you are resident there. Thailand may not consider you a tax resident even if you have lived there two years on say the Thai elite visa. You have to examine the tax residency rules of each locality and structure your lifestyle, business and assets to ensure you aren't tax resident in multiple places, preferably for Americans structured in a way where you aren't tax resident anywhere else, or if you are tax resident somewhere else, it is in a country with a double tax treaty with the US that allows you to structure your affairs to avoid US taxes, and minimize the local taxes too. The US has a lot of DTAs and several Social Security Totalization Agreements that can prove helpful. The country where you decide to become tax resident in such a scenario would be one that it would be most beneficial to have its own Double Tax Agreements with the other countries you intend to spend time in, especially ones that make it clear qualifying for residency in your first choice excludes you from residency in the other place or places.
I mean the general rule would be a short term rental in a place like an AirBNB for 3 months is less likely to make you tax resident than a year long lease you only live at for 3 months, while a place you own and live at for 1 month a year is more likely to make you tax resident than the rental, or at least maintain a tax residency.
There are a lot of broad strokes that vary by country and general rules always have exceptions. I means for Americans the other thing to think about is are you still tax domiciled in the state you lived in before you left. You may be unless you properly severe ties and establish a nona fide residency somewhere else. In some instances it may even make sense to move to an income tax free state particularly one like South Dakota that allows you to obtain a driver's license with a one night hotel stay as proof of residency and a mail forwarder before leaving to severe ties with a state that will continue to tax you like New York or California. You may also need to get rid of storage units, and property ties like a vehicle titled in those states because they want to keep taking a pound of flesh as long as they can.
Exiting the US correctly is phase one. Using the foreign earned income exclusion and foreign housing exemption and foreign tax credits is step 2 of dealing with exiting the US. Not becoming tax resident in the wrong jurisdiction is step 3, becoming tax resident in the right jurisdiction if you must is step 4.
I've looked at the broad stroke tax guides published by Deloitte and Price Waterhouse Coopers for easily 50 or 60 countries to winnow it down to a handful of countries I would even think about becoming tax resident in and amongst those you still have to decide what the tradeoffs are and if the tradeoffs are worthwhile.
I mean the Bahamas, Turks & Caicos, Cayman Islands, and the UAE all have great tax rates at 0% for the most part, but a) do you have the capital to move to them, b) do you want to live full time on a island or in the desert, c) if you can afford one and want to live there can it help you get citizenship in a reasonable period of time if you want or need an alternative passport?
Then you look at a place like Argentina, the tax rate is terrible, it is difficult to exit it's tax net. It has a wealth tax too, but you can get citizenship there in a handful of years potentially and it is relatively inexpensive with a world class city in Buenos Aires and a multitude of climates in the country.
You look at a place like Belize, and it has a mediocre passport for the most part, a tax system that can be very favorable to you, but you wouldn't want to bank there and the Cayes seem relatively safe with the Caribbean beach lifestyle as does Placencia. It takes a fairly long time to get the passport at over 6 years, but it is a relatively easy place to immigrate to, and so are some other places.
You can move to Thailand or the Philippines relatively easily, but you are unlikely to ever get citizenship in either country and if you do, they are not great passports and dual citizenship is a no go for naturalized Filipinos. If you structure your affairs correctly you are unlikely to be liable for tax in either country even if you are there almost all year. It's not impossible to become tax resident in either country, but taxes can be avoided even as a resident with proper structuring.
Mexico has a great passport, it's relatively easy to move there if you have some location independent income, you can naturalize in about 6 years or so, but taxes are extremely high in Mexico and even with a double tax treaty with the US it has a lot of tax risk for a US citizen who becomes resident there and leaving can be hard with its own exit taxes.
Portugal has the NHR which can be beneficial for taxes, but you have to structure your affairs very precisely to benefit from it and you may have exit taxes to pay when you leave on capital gains. It has a fantastic passport which you can get in six or so years of living there, but you have to structure things just right not to get hit with high tax bills if you become tax resident there. If you can afford the golden visa investment you can be resident for the purpose of pursing the citizenship and may not become tax resident, but I think that to obtain the citizenship will involve spending more time there than the minimum to maintain the golden visa, but maybe less than the 183 days in 12 months to become tax resident, but you still might be found to have Portugal as your center of interest, and if that happened on the second year you were there, no NHR for you and really high Portuguese taxes.
All of this is to say the risk reward ratio. Has to be examined for anywhere you are considering and you need to know what does and does not make you tax resident. You also need to know the incentive options available to immigrants if any. You need to figure out it you want to pursue s citizenship by naturalization and residency anywhere or save up and obtain a citizenship by investment.
I mean Dubai is an expensive place to live, but it offers a pretty great tax benefit if you can afford to become tax resident there and can structure a company properly. If you structure trips to other places during the hottest parts of it's year, you can avoid the heat and maintain a tax residency there and with the tax savings maybe buy a CBI.
Figuring out what place interest you, what the tax rules for each place are and how to avoid residency where you don't want to be resident, or become resident in a favorable jurisdiction if you want that is about doing the research. PWC and Deloitte have good resources online to start researching the taxes. Wikipedia does a good job of telling you what countries have what visa free access where to help you figure out where it might be a good place to get a second passport. The next step after that is a lot more google searching and talking with local lawyers and accountants in the countries you are interested in.
This is not a one size fits anyone process.
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I mean if you have a residence in a tax friendly place with solid banking like the Channel Islands or UAE or Switzerland and you have ties with a country such as a permanent home -that is in fact a vacation home as opposed to your true habitual abode, a d that higher tax country has a double tax treaty with the residence you want to be your primary tax home it may well make sense to have your banking in that primary tax home. You will want to have your banking there, your driver's license there, your doctor there, you will want your children if you have any enrolled in a school there, you will want to make it clear under most treaties that where you have a residence is your center of vital economic interest and your primary banking account that you pay bills from, perhaps not all of your money, but your operational accounts for you personal life at the very least ie a current account that pays your living expenses should be there especially if you are for example a citizen of the country where you have a primary residence. The tie breaker rules in Malta's Double Tax Treaties with those three even more tax friendly places will not resort to where you are a national to decide your tax residence if your center of interest is clearly in the other jurisdiction. If that jurisdiction is a solid banking jurisdiction as Switzerland, Jersey and Guernsey or the Isle of Man, and the UAE are, then baking there makes a lot of sense to secure tie breaker benefits under a tax treaty. You don't want Malta to consider you ordinary resident and domiciled there when you could have your money taxed at a zero rate in UAE or a lump sum regime at a favorable rate in Switzerland or even a capped rate in the Channel Islands that is similar to the Swiss lump sum regime.
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@steveb7600 Monaco, Bahamas, Brunei, Kuwait, Bahrain, United Arab Emirates, Bermuda, Turks & Caicos, Anguilla, Cayman Islands, British Virgin Islands, St Barths, St Kitts & Nevis, Antigua & Barbuda, Vanuatu, are the ones I can think of off the top of my head, there are at least a dozen more that can be zero tax with proper planning and structuring of your affairs, including a lot of countries with very high headline taxes, that offer great incentives for immigrant tax payers.
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If you are subject to the exit tax and likely even if you are not, your 401(k), or IRA will be taxed upon renunciation as if you cashed it all out in the date of expatriation. If it is a Roth & you are over 59 and 1/2 and have held it for five years, zero tax. If it is a traditional IRA or 401(k) it will generally be taxed as it would have been, including penalties if held less than five years or under age 59 and 1/2. If you qualified for social security so long as you are not living in one of a handful of countries that it cannot be paid to, you will collect it and it will be taxed in accordance with any double tax treaty or at the FDAP rate of 30%. If you have a pension from a private company, the same rules generally apply. Of course there are variables, and individual advice is better than someone explaining the general rules, but as I understand those are the general rules and this is not legal advice. Once you cash out the IRA or 401(k) you could invest in in a brokerage account elsewhere and that country's capital gains rules will apply and if invested in the US FDAP income ie dividends and interest will be taxed at double tax treaty rates or the standard FDAP rate of 30%. Of course Irish UCITS ETFs are a good way to get around that if you have a European brokerage account and are in a country where the 30% rate would apply, FOLLOWING EXPATRIATION. If you are still a US citizen UCITS are a bad idea because they a Passive Foreign Investment Corporations to the IRS, even if they are not strictly speaking Corporations which have penalties.
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Maybe the Philippines does what Panama did with a "Friendly Nations" Retirement Visa replacing the SRRV. I could see it catering to the South Korean military retirees that the original 35 age limit was set for especially as 37-38 is the age for the earliest US military retirees with 20 years of service. I mean the EU, US, Canada, Japan, South Korea, maybe other ASEAN member states, Australia, & New Zealand citizens being offered the visa on friendlier terms with a stricter investor-retirement visa being offered for countries they find less desirable seems likely to me to end up being the case. I can see Malaysia doing something similar with MM2H v 2.0, and Thailand following suite with a new version of it's Elite Visa with an even higher dollar requirement. I can also see each country adopting a formal Digital Nomad work visa & local tax regime for income earned or remitted into the country. My suspicion for version 2.0 of these new Friendly Nations style retirement visas would include proof of a passive annuity, overseas rental income, or overseas royalty income, in addition to the bank deposit.
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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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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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Nicaragua, Honduras, Guatemala, Costa Rica, Panama, Belize, St. Lucia and Uruguay all have territorial tax regimes. The Cayman Islands, Anguilla, the BVI, Turks and Caicos, and the Bahamas all have zero tax regimes, then Antigua and Barbuda, and St. Kitts and Nevis have zero tax personal regimes, so the tax free options in the Americas are not too shabby with the right planning.
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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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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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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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In the US, the best way to avoid the capital gains tax you presented would be to have structured the company as a C-Corp early on and held founders shares under 1202 of the code as a qualified small business, at least after 2010 when the current exemption rate was put into place. In that scenario, assuming the company stock was held 5 years, up to $10 million of gain or 10x the original basis, whichever is greater is exempt from capital gains tax assuming the company has less than $50 million in assets. Why would anyone sell a business with $50 million in assets for $12 million?
That would mean instead of paying $2.4 million in federal income tax, the seller would pay $400k in income tax under the current 20% federal capital gains rate.
Assuming arguendo the founder is a resident of a zero income tax state like Nevada, Florida, Wyoming, South Dakota, Texas, or Washington, that would be the entire tax bill due.
The 1202 provisions of the code make a C-Corp a smart move for any business owner with an exit strategy that has an eye towards selling the business.
A healthy salary can eliminate any double tax issues and given the discount presently available for dividend income on Qualified Dividends, that isn't much of an issue these days.
The C-Corp also provides additional avenues, especially for the offshore founder to greatly reduce taxes with expenses such as per diems, the FEIE, the Foreign Housing Exclusion, and other travel related business expenses, and or insurance coverage provided by the company to the founder as a means of getting money out of the company with the lowest tax impact.
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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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I think the more interesting question for an American obtaining a Caribbean CBI is how easy is it to obtain a Canadian visitor visa. I know the typical Canadian visitor visa is a multiple entry visa that allows many trips over 10 years and if you can obtain a residency permit in Mexico for your Caribbean CBI, there are enough direct flights from Mexico city to Vancouver, Toronto, and Montreal to allow you to transit to Europe from Canada without having to obtain a US visa if you can visit Canada.
I ask this because unlike obtaining a visa for the US you could at least theoretically arrange a Mexican residency permit for the CBI before renouncing and also obtain a Canadian visitor visa for the CBI before renouncing and if you can visit Canada and reside in Mexico at least part of the year, even if you cannot obtain a US B1/B2 visa or with Grenadian citizenship an E-2 nonimmigrant investor visa you could still fairly easily visit US relatives who have visa free access to Canada or Mexico in those US neighbors. Having Canada as a transit option on their 10 year multiple entry visa would not be a bad thing to have either before renouncing.
Sure Sao Paolo, Mexico City, Panama City, and St Maarten provide pretty good access to Europe, Africa, and Asia, but Toronto, Montreal, and Vancouver are not the worst places on earth to be able to transit through.
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@utube7917 Google is your first friend. Start looking at PDF files that Deloitte publishes annually for most countries. They are called Deloitte Highlights. They will be labeled by year, 2019, 2020, etc. Start looking at the Price Waterhouse Cooper's website again Google is your friend. Look up a country and withholding tax. You will find standard withholding rates on the Deloitte Highlights, but PWC's site will usually tell you country specific withholding rates. This begins showing you which countries have tax treaties with other countries. Google the two countries' names and double tax treaty. In many instances you will be able to easily find the double tax treaties of the parties. Some times they are harder to find. The IRS has them for the US. Ireland has a good collection of theirs. The Republic of Georgia does well providing text of theirs, Singapore & Hong Kong both do a good job of providing their double tax treaties. Canada does a good job of providing theirs. Countries that are unexpected tax havens are places like Malta. You should read their tax treaties, and look into information on tax residency, tax domicile and articles or videos about how it is seperated. The usual suspects locations like the Caribbean have almost all been forced by the EU blacklist & restrictions on their banks to adopt economic substance rules that make things tough. You should read a few articles on how territorial tax works & you should review how it works specifically in Panama - pay attention to how Panama's management & Control Rules work in regards to taxation. You should read or watch a video about the Double Irish with a Dutch Sandwich. You should read up on the Single Malt & realize that the EU & Ireland & Malta have implemented some rules to shut those loopholes down & read how to get around the efforts to close the loop holes. I highly recommend close scrutiny of Malta's tax treaties en masse. Google and read a few articles more academic the better about "web servers as permanent establishments." Read the OECD postion on the webserver as permanent establishments. Carefully read the permanent establishments sections of double tax treaties. Look for subtle differences. Compare Barbados US tax treaty with the Barbados Canada one closely.
Countries that could be big players in any strategy using some of the complicated structures that may need to be deployed are Singapore, Hong Kong, Malta, Ireland, Luxembourg, Barbados, Laubuan companies in Malaysia, read the Australia Malaysia treaty to see how troubling Laubuan can be to some of the Tier A countries. The UAE of course & their tax treaties. Google free zone companies & read various statutes on Georgia Free Zone & Virtual Zone companies. Google economic substance act or laws in Cayman Islands, BVI, Barbados, Anguilla, Turks & Caicos, Bahamas, Bermuda. Google how to get a bank account for an XYZ company for any country you are interested in deploying as part of a structure. Today this is often the hardest part. Getting a bank account for operations & payment. Next start thinking about work permits & residency in countries you would want to or need to operate from. I mean getting a work permit for your Thailand Representative Office of your Philippine subsidiary of your UAE holding company for your Singapore company that is managed & controlled from Malta not to mention work permits & residency visas for Malta, Thailand, & the Philippines while finding a resident director for that Singapore company who lives in Singapore could present some challenges, not to mention the costs of maintaining the UAE company. Work permits for the people you need to operate that Cayman Islands company you were thinking about may be tough after you read the economic substance laws. Do you have a university degree? That Saint Kitts citizenship may have some added benefits under the CARICOM Freedom of Movement & Establishment rules & laws. You may want to think about how big the CARICOM workforce is & the benefits of Barbados vs the Caymans if you really want that Caribbean lifestyle. You may also want to carefully read Barbados's tax residency rules for companies. Read a few of the Companies Acts in the various old school tax havens. I mean compare Bahamas & Cayman or BVI to Vanuatu. I mean what constitutes doing business where. Can you hold a board meeting their without having to register?
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Not to mention the ability for Mexicans to obtain an APEC Business traveler's card that gets visa free access to Southeast Asia, New Zealand, China, Russia, Taiwan, Japan, South Korea, Australia, Chile, and Peru, and the ability to get access under the NAFTA replacement treaty to get a special worker visa available only to Mexicans, Canadians, and Americans in each other's countries.
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I would make a bet that the Tax Fairness for Americans Abroad Act has a better chance of passing in the next 4 years than an increased tax on the wealthy. A) the Democrats will never end the Social Security cap, because it is too easy for real business owners to avoid the tax by taking their earnings in dividends, while even though loan-out companies make it relatively easy for celebrity actors, musicians, and athletes to avoid as well, it could hurt new celebrities who haven't put their financial plans in place and there is no way the Democratic Party is going to hurt their donor base B) Making a case for ending Taxation Without Representation strengthens the case to admit Puerto Rico and DC as States. The Tax Fairness for Americans Abroad Act creates a new valuable loophole for the Uber wealthy that the Democratic and Republican donor base highly support. If rates were to go up, the TFAAA would definitely be the pressure relief valve for the Uber wealthy. You would almost immediately see a Mark Cuban, a Mark Zuckerberg, and a Bill Gates dividing their time between newly acquired homes or previously owned homes in the Bahamas, St. Kitts, Guernsey, Gibraltar, Anguilla, BVI, Vanuatu, European residences, New Zealand, Australia, and South and Central America deploying your Trifecta strategy while their tax residence is an Anguilla, UAE, BVI, St. Kitts, Gibraltar, Monaco, Guernsey, Jersey, Isle of Mann or some other baseline zero tax or territorial taxed residence where they have no business holdings. I mean Singapore, Malaysia, Thailand, Panama, the Philippines all with high top line, but purely territorial taxes would be common place. New beach house construction in the Caymans would boom.
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if you travel through 85% of rural America the sea of underpopulated counties that vote Republican every election, they are already worse off than most developing nations. The same holds true in most major cities as well outside of a few pockets that have benefited from investment in the industries and technology that maintain US hegemony, ie the finance industry in NYC, the tech businesses in Austin, San Francisco, and Seattle. The entertainment industry in Los Angeles, to a lesser degree Nashville, Miami, and Atlanta, the oil industry in Dallas and Houston, and the military industrial congressional complex in Washington, DC.
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A Tiblisi fee zone company with common shares owned by the entrepreneur and preferred shares owned by an Antigua & Barbuda company looks like an interesting way to potentially avoid most taxes. It will cost a little over $5k a year in company fees and free zone license costs to keep the Georgian and Antiguan companies in good standing, but if you took a $12k a year salary from the Georgian Company, then depending on whether or not a non-resident employee of the Antiguan company is that same entrepreneur director of the Georgian Company could likely pay up to the limit the Foreign Earned Income Exclusion and it would likely cost about $8k or so to set up the structure. No one would think that the Antiguan company with a 25% corporate tax rate is saving you money, but if the Antiguan social security taxes don't apply even with annual licensing and company fees you are at 6% tax and with those Antiguan social security taxes you are still lower than just the US social security rate on a US based salary, like 12% overall, but I suspect the social security tax will not apply to such an Antiguan company. That requires more research. Of course anyone other than US taxpayers have less issues to think about here, but if structured properly an American can reduce their taxes a fair amount with this structure for a company that isn't a start-up, but isn't a really large enterprise yet either. I mean a blogger or online marketer with a solid low six figure business could save on tax while growing the company and saving up for an economic citizenship for example. Even though Georgia doesn't recognize the legitimacy of the old US-USSR Tax treaty, the US does, so operating servers through AWS won't create a permanent establishment in the US. Georgia's tax treaties with Ireland and Singapore allow a SaaS start-up to make use of AWS servers in those countries too and avoid a permanent establishment. Georgia looks very good indeed for a bootrapped start-up if you structure the company correctly and take advantage of it's free zones. If an American entrepreneur positioned themselves to be able to renounce US citizenship and travel on say a St. Kitts passport even, they could with a proper buy-sell agreement executed at the time of purchase between the Antiguan company and the Georgian Company reacquire the preferred shares and close down the Antiguan company. If the company became a big success and the entrepreneur was earning more than $200k a year they could easily take advantage of short term stays in Georgia for the purpose of tax residency coupled to the permanent residency that should be available by operating their company to travel the world quite freely without too many tax concerns, except of course spending too much time in the wrong country. If they are staying in Malaysia, Thailand, the Phillipinnes, Panama, Costa Rica, Nicaragua, other territorial tax countries, or if they move to the Caymans, BVI, Anguilla, Antigua, the Bahamas or St. Kitts, their tax free lifestyle would be very easy to maintain. I mean once they have permanent residency in Georgia there is no reason to draw a salary when they can be paid tax free with dividends from a free zone company. Upon closer inspection the Antigua plan has a problem. That problem is the lack of deductibility of salaries.
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I mean Serbia is not Schengen, Montenegro, Albania, Bulgaria, Cyprus, North Macedonia, Bosnia & Hertzegovena, Ireland, the UK, Moldova, Georgia, and in better times Ukraine are all non-Schengen parts of Europe to visit to stay out of Schengen so you do not run out of days. It's entirely possible to live nomadically in Europe as a tourist under the present rules.
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Montenegro's biggest value that I see is the fact that citizens of Montenegro are eligible for Panama's Friendly Nations Visa, so for the American who wants to renounce, and wants to run their business from Panama because its territorial tax regime is beneficial, Montengro citizenship also provides a fairly decent travel document as passports go. Does Grenada give you more Visa Free countries? Yes, but it gives you access to Vietnam relatively on par with the US, and it gives you Russia Visa Free. Grenada is a much better passport value, but If you could couple Montengro with Turkey, then Mexico, South Africa, Morrocco, Thailand, and Japan along with Mongolia and the other former Soviet Republics Turkey gives you would probably rival Grenada in terms of value as a travel document, but it also gives you a beautiful coastal region of Europe on the Adriatic and a very low tax rate of its own versus a tiny Caribbean Island nation as a potential home base. If you were building a passport portfolio that also included potential home bases Montenegro would be a useful place to be able to live. If you could combine it with Turkey, and Grenada it gives you access to most of the visa free world. Is Grenada a better cost for more access, yes, as would be most of the Caribbean CBI countries, but the ability to inexpensively add Panama via the friendly nations residency has some value I believe that the Caribbean CBI countries do not have.
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If you are earning enough "passive income" which could be dividends or distributions from your own business Portugal, Argentina, Ecuador, Costa Rica, Nicaragua, & Mexico spring to mind as departure points for residency and potential citizenships. If you are a freelancer, Germany, Spain, Croatia, or the Republic of Georgia may provide a path to residency and citizenship. If you can teach English, Japan, South Korea, Taiwan, and Thailand may provide residency permits, but the path to citizenship is much more difficult.
Figuring out how to operate a location independent business that brings in at least $2k to $3k a month is your best bet for making an exit long term.
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Serbia, Mauritius, and Malta would give you most of the world.
From a CBI perspective, the best would be Grenada, Turkey, and Malta. That would cost you north of 1.5 million.
Grenada, Turkey, and North Macedonia would give you most of the world, except UAE, Canada, USA, New Zealand, and Australia. Adding Mauritius which you could get in about 2 years plus with a $500k investment, would give you New Zealand, UAE, and more of Africa. 5 years on the ground in Barbados which is possible for a Grenada citizen if you have a college degree and get a Caricom Skilled Worker Certificate with it, would add Canada and better access to Mexico, along with the ability to go to Equatorial Guinea -basically only a few African countries, the US, UAE and Barbados have that. If while in Barbados you did a Golden Visa to Portugal, you could potentially have that and Barbados which would give you the US and Australia.
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@LoveClassicMusic0205 honestly access to Sudan, Paraguay, Morroco, Brunei, and Angola look impossible to explain without a few other countries in Africa also having access available under the current rules, so the Mexico issue is less perplexing.
It is possible that Morroco is the result of access via Schengen residency permit or an Irish residence permit. Sudan could be explained by either Turkish or St Kitts citizenship. Brunei, and Paraguay are explained by either Russia or Turkey, as is Morroco, but Angola with five passports assuming he did get Antigua makes Russia make the most sense, but also might mean Serbia is not one of the countries even though it seems really likely he obtained Serbian citizenship. The Russian nationality law would seem unlikely to be one Andrew complied with given the five year residency requirement, unless he has a good connection within the administration and was granted citizenship by exception.
I have no idea how Angola is on the list unless Turkey and Angola have ratified their agreement for reciprocal visa free travel recently, but even then Turkey has aome additional access in Africa now that is not on the list. Turkey seems to make the most sense as he does own property in Turkey despite the fact that his wife has Armenian citizenship.
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I mean if you have a lot of liquid wealth, ie you have major investment accounts, a holding company with an employment pass as a director in Malaysia via a Labuan holding company makes a lot of sense. Having enough cash in an account in Thailand to have a long term investor visa there likewise makes sense because there are no CFC rules and the new tax rules don't apply to people with the LTR investor visa as I understand it, so between a Labuan holding structure you can probably have a zero or extremely low withholding tax on your investments and virtually no personal tax in Thailand if you live there and similar treatment in Malaysia when you "work" there as a director of your holding company. You can even have non-Labuan company registered to do business in Labuan that you manage and have tax resident there which might have a better asset protection value ie a Nevis LLC, but bad tax treatment if it is considered tax resident on Nevis. You could also have that holding company owned by a Cook Islands Asset protection trust, so you can make a lot of money and pay no tax. I mean if you have enough wealth and you make an investment in the Republic of Georgia, you could divide your time between Malaysia, Thailand, and the Philippines, enjoy a very favorable cost of living, and have a very favorable tax residence in Georgia as a High Networth Individual and have to spend almost no time in Georgia.
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Mauritius also has New Zealand access. If you could combine Mauritius with St Kitts, Turkey, and North Macedonia's CBIs you have most of the places a US passport has except the CAR, Equatorial Guinea, Burkina Faso, Saudi Arabia and Kuwait and most of CUNA is lacking save the UAE, UK, and New Zealand.
If you have a college degree and a Caricom passport, spending a few years in Barbados as another add on passport gives you slightly better access to Mexico, gives you access to Canada, and gives you Equatorial Guinea too. I mean you would still be lacking CAR, Saudi Arabia and Kuwait, but you would only be lacking Australia and the US from the CUNA countries.
With how Australia has been, that may be a godsend, but if you are wealthy enough to obtain those 3 CBIs and a Mauritius Residency by Investment that became a citizenship there, getting a B1/B2 visa to the US should not be difficult if you wanted one and probably more reliable than having an ETA under the Visa Waiver Program, though maybe not as good as a Canadian passport - but then again this past year has shown that isn't what it used to be either.
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With the exception of Putin's decision to start a war that will inflate food prices because farmers in Ukraine will not be able to plant or harvest a significant percentage of the world grain harvest, politicians have virtually zero to do with inflation.
Unless you are saying their failure to regulate price gouging by corporate players is incompetence?
In a free market with very little regulation, businesses have decided to increase prices on staples because workers have decided they can earn as much working for themselves in the current environment as they made working at the low wage jobs they had before the pandemic, but what is more those workers decided a more diversified set of revenue streams made more sense than devoting their lives fo making other people's businesses successful.
If anything competent politicians increased the rate of capitalism in the market and those buddy capitalists that competent politicians crested have made it more difficult for incumbent players to compete.
The response of incumbent players to this threat to their hegemony, monopolies, and monopsonies in the market has been to raise prices to force workers to re-enter their controlled employment market, falsely blame workers who became capitalists for their woes by calling them lazy and blame increase labor costs -which are not true, as data has shown nominal real wage gains if any, for increased prices.
The reality is incumbent corporations with waning sales increased prices to hide sluggish volume, but also because they misread the changes in the market. They assumed workers had downsized their lives, when many have been better off working for themselves and working in a diversified manner.
Plenty of people who worked at a very low wage for someone else now have an online store that generates part of their income. They also have a small crypto mine in their home and trading portfolio that generates part of their income. They also DoorDash or Uber with their car from time to time. They realized that not working for someone else saved them $800 a month in child care, but that time at home with their kids also gave them time to start a YouTube Channel, Blog, or Podcast that not only replaced the income they used to earn at their old job, but meant they keep the $800 a month they used to spend because they went to an office.
The miscalcution by incumbent players that they can outlast people who replaced their old income by raising their prices to pad their bottom line is what has caused "inflation." It has nothing to do with politicians and everything to do with market capitalism and more people figuring out how to be free.
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@steven-k. BVI, Turks & Caicos, and Cayman Islands BOTC's access is not the same 180 days as Canadians and Bermudians. They also require a pre-clearance like other Visa Waiver Program participants. The Bermudians which is separate from even belonger status -Bermuda is the only one of the BOT's with 3 tiers of status the way I understand it, are eligible like Canadians to enter the US for a visit without preclearance. BOTC's of Bermuda who do not have Bermudian status -which is a possibility, have to apply for a visa to the US. There are Bermudians, then there are naturalized BOTC's of Bermuda who are belongers, but not Bermudians, then there are natural born BOTC's of Bermuda who are not belongers necessarily unless their parent's are Bermudians in which case they are not only belongers, but likely Bermudians. Then there are Permanent Resident's who are Commonwealth Citizens who if they have been in Bermuda since the 1980s may be Bermudians and are belongers, then there are Permanent Residents who are not commonwealth citizens who are potentially eligible to become belongers if they naturalize. Then there are people who might be eligible to become Permanent Residents who have a path to becoming belongers, but not Bermudians. Then there are residents with no path to permanent residency. Having actual Bermudian status which is a separate category and not merely belonger status is required for the special access to the US enjoyed by Bermudians. Unless you are married to a Bermudian or have been in Bermuda as a resident since the 1980s I do not believe there is a path to Bermudian status, but there may be a path to belonger status. It is a weird place in terms of how it's "citizenship" and nationality works. You may be a Bermuda citizen, but never become a national entitled to vote.
As for TN visa access Mexican and Canadian citizens are both eligible for those visas under the NAFTA replacement treaty that creates a special business visitor visa category for all 3 countries under the free trade agreement.
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I think Ecuador is a very interesting place because it has the potential to work very well for both low income earners & high income earners. It has a lot of interesting routes to residency & can provide a relatively quick path to citizenship for someone who wants to live there & it provides a Tier C passport with visa-free access to countries that are complimentary to most Tier A passports & many Tier B passports. It also gives Mercursor access to most of South America in the event you decided to move later & visa free access to Mexico which many Tier B passports not have. With the right EU residency permit it should make Shenzhen area travel fairly easy too, potentially. Beyond the passport, it is a fairly off the radar country too. Add to that access to the mountains, the beach, some fairly metropolitan cities, & a short flight time to the US or Canada for American & Canadian expats who want to visit family or need to return for business & it has a lot to offer. The relatively inexpensive healthcare system is also useful for the lower income expat, especially those with chronic health issues that would be financially unsustainable in the US. I think when you apply the go where YOU are treated best philosophy as you often say, individual facts & circumstances matter, & Ecuador while not completely overlooked, is definitely a country that can suit a lot of people's needs. It definitely can be useful for anyone using the Trifecta approach with multiple homes as a base of operations, & while it will tax individual income worldwide for tax residents & while it has some specific exit requirements to end tax residency, it currently has no CFC rules which would be beneficial for the business owner with a foreign corporation who lives frugally & keeps most of their income within their growing company.
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@timmyhiggins5220 It gives you the ability to live in Ireland as a non-EU citizen with a much smaller investment & in a tax advantaged way. I mean Anguilla is zero tax, BVI is zero tax, Cayman Islands is zero tax, they are all qualifying BOTC for UK citizenship, & I think Turks & Caicos which is also zero tax is too. UK citizens can also live in Jersey, Guernsey, Isle of Mann, and Gibraltar, but as a non-citizen, Ireland has some great non-dom tax advantages and the CTA rules give UK citizens the ability to live & work in Ireland. I mean there are tax favorable ways to become a citizen of an EU country with access to Ireland too, but immigration to Ireland for non-UK or EU citizen usually requires a million dollar or more investment.
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@samjordan8800 I'm not saying a country should take the deal. I'm only saying that China's policies towards a country like St. Lucia are unlikely to be adversarial. Much like US and IMF lending it would be an enslavement policy, that is without question, but Singapore has certainly shown a way to navigate towards development without foreign entanglements even for a resource poor country. The straits of Malacca were a definite advantage, but being close to US, Mexican, Canadian, and South American markets and just far south enough in the Caribbean to have only been hit by 14 hurricanes since 1850 means St. Lucia which is the only CBI country to have retained a territorial tax system after the EU pressure with the blacklist & greylist means it is the one country that I could see using Freedom of Movement under Caricom to attract a workforce to grow into a Singapore through the proper use of tax and investment policies to attract foreign entrepreneurs. If St. Lucia adopted a Virtual Zone Enterprise policy like Georgia, and gave entrepreneurs a relatively inexpensive and renewable business visa/work permit less than the price of a Caymans or UAE work permit, and more than a Cambodian annual business visa, so well below the Cayman Islands fees of potentially tens of thousands of dollars and less than the $2k for a UAE freelancer visa, but more than the $300 for a Cambodian business visa, with an income & social security tax exclusion for key employees of a company with Virtual Zone status employed pursuant to a business visa/work permit for salary & wage income of up to the US foreign earned income exclusion plus the US standard deduction & maybe adopted a Singapore like remittance policy where any money in a Virtual Zone company with a non-exempt bank account was taxed at say 10.5% until 2025 and 13.5% after 2025 to avoid GILTI, I could see digital nomads flocking to St. Lucia to build the next major tech company.
I mean it would be easy enough to do, set up a banking regulation for Virtual Zone companies that allowed them to make an exempt bank account election or a non-exempt bank account election when they open an account and you have the ultimate tax planning vehicle for digital nomads and digital expats.
If St. Lucia also enacted a Free Industrial Zone Enterprise policy like Georgia or the UAE and offered reasonably priced annually renewable licenses for those companies to allow for duty free import, assembly, re-export, or for the provision of services from those zones it could attract a fair amount of investment as the Philippines have with similar free trade zones. When those free trade zones are coupled with a corporate tax exemption and salary exemptions for key personnel holding business visas/work permits if those fees are low enough St. Lucia will attract a lot of investment and entrepreneurs. They also wouldn't need to impose much of a tax rate because a lot of US companies and US investors would opt into the exempt/non-exempt tax regime with annual remittances to avoid GILTI. I mean 10.5% of five to ten multi-million dollar companies becomes a windfall for a country like St. Lucia. Especially if 5 or 10 thousand small entrepreneurs spend $1500 a year for a work-permit/business visa and maybe another $300 a year for a Virtual Zone Enterprise License for their company with a $500 annual corporate renewal. I mean $2300 a year in fees for a small company to avoid $20k a year in taxes is a pretty good deal for someone with a successful, but small blog for example. If they can set up that St. Lucia business with a visa and work permit that allows them to also get a tax residency certificate by staying in the country for at least one month a year, it becomes really valuable for not only US digital nomads, but also European, New Zealand, Canadian, and Australian digital nomads. St. Lucia, St. Kitts & Nevis, Dominica, Grenada, and Antigua and Barbuda could all supplement their CBI programs with this kind of regime.
If they used a Singapore style rule to require a resident Secretary or a resident Director who must be present in the country for at least 183 days & if they implemented annual audit & reporting requirements like Singapore for these companies -even if they allowed for nominee resident directors or implemented minimal substance requirements like a registered office and a certain amount of spending as Malaysia has done for Labuan companies, these businesses would not run afoul of the EU substance requirements. Of course the annual licensing regime would probably provide an adequate substance in and of themselves. The policy should require a stringent KYC process for initial registration and renewal to confirm the identity of key shareholders and personnel too, but for start-ups on a budget the option of the key executive remaining in the jurisdiction on the work permit/business visa would meet most substance requirements.
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I agree, Serbia might get into fights with other countries because the Balkans always have had their ethnic beefs, but St. Lucia's neighbors are all mostly fellow Caricom members. The South and Central American countries all pretty much play nice with the islands. Cuba is a wild card potentially, bur mostly just helps other countries with Doctors since the Angolan involvement ended. Canada & Mexico leave most places alone. The EU is certainly pressuring every country to stop being tax havens, but the territorial tax in Gibraltar has gotten no guff even at 10% so St. Lucia's higher territorial tax definitely keeps them off the grey or blacklist. Most developing nations are potentially beneficiaries of China's Belt and Road policy, so if St. Lucia got on their radar it likely ends up being beneficial. For the most part the US takes advantage of the islands as tax havens and tourist destinations, but it is the only country that might bother St. Lucia realistically. It would be hard pressed to call a nation with no military a threat. Even if St. Lucia developed a set of Freeport policies that put it on par with Singapore and made it an attractive assembly point. If it then somehow used the freedom of movement under Caricom to expand it's workforce to rival Singapore which is a similar size land wise, the US would be hard pressed to sell a stable English speaking democracy with a common law system of justice integrated with a unified court for various British Overseas Territories and multiple other former British colonies that are now independent countries as a security threat. I mean if St. Lucia experienced a sudden and rapid economic growth out of nowhere to become the next Singapore and lifted much of the population of the Caricom states out of poverty in doing so, it still wouldn't be much of an economic rival for the US. It may be despised as an entry point for untaxed goods into the US market, or in this day and age more likely as a services empire, but it's not likely to be a home for companies the US or Europe would try to steal.
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