3 new Flag Theory strategies for expats living overseas

Dateline: San Jose, Costa Rica

We frequently discuss what I call my “Five Magic Words”; the concept that each of us should “go where you’re treated best”.

This idea is not only rooted in a simple understanding of human nature of how people and wealth work, but it is based on the decades-old concept of Flag Theory which tells us to diversify internationally for personal freedom and asset protection.

When it comes to living overseas as an expat, it is advisable to maintain a second residence separate from where you actually spend most of your time. This way, you can likely stay out of the tax net in the country where you actually spend most of your time.

Being treated like a tourist is always a better way to go.

When deciding on the best place to live overseas, one consideration is how long you can stay in that country as a tourist. I spend a lot of time in Malaysia, which allows westerners 90 days visa-free per entry, and practically anyone else at least 30 days visa-free.

Malaysia is one of the most easy-going countries I’ve been to. They don’t require you to fill out a bunch of stupid forms, show onward flight tickets, or hold on to some dopey exit card. You simply arrive, hand over your passport, and you’re on your way.

It’s the exact opposite of visiting the United States.

In that regard, Malaysia is an excellent place to spend time and practice Flag Theory. Mexico is also well known for its generous 180-day visa policy for US persons, and while I personally wouldn’t try it, some Mexicans claim the government doesn’t care how long you stay.

However, how long you can stay in a country is just one factor to consider. I’ve been working on several other strategies that fit in with Flag Theory.

To be fair, these are just working theories I wanted to share with you. Unlike a lot of people in this business, I’m open to your honest criticism in the comments section below. Here are three strategies I believe you can use to maximize your freedoms while living overseas…

The No Capital Cities Strategy

Personally, I love big cities. In fact, I often find myself passing up beautiful natural scenery in a new country in order to spend time in its big city. (Being a workaholic with a need for fast wifi doesn’t hurt, either).

However, several friends of mine have suggested that they avoid capital cities for one reason: a lack of freedom.

In many ways, the logic behind their avoidance of the capital city is sound. A capital is the seat of a government, and governments attract people who wish to restrict freedoms. Even in relatively free countries, governments will exert their will close to home, while letting the rest of the country and “the hinterlands” remain unpoliced.

This could mean everything from not being able to walk down the street with a drink in hand to more aggressive enforcement of traffic laws.

One visit to Washington, DC will show you to pros and cons of capital cities. On one hand, residents of capitals enjoy all of the freebies that governments provide for themselves, like free jazz concerts in perfectly manicured city parks every summer.

The price you pay for this free stuff is living amongst a bunch of power-hungry people who make a living out of dreaming up stupid new laws. If you want the best chance of being left alone, stay away from the government. (Of course, in aspiring police states, there is often nowhere to hide).

Capital cities are often less bastions of capitalism. Washington may have some venture capital activity, but it is small compared to New York and Silicon Valley. In a more stark contrast, wealth and capitalism in Hanoi pale in comparison to Ho Chi Minh City, Vietnam.

The Tax Haven Adjacent Strategy

Tax havens are the proof in the pudding that “go where you’re treated best” is only natural. People and their capital naturally gravitate to the best conditions, be that bank secrecy or zero tax policies.

However, many of the world’s tax havens have become quite expensive as a result of all of that wealth flooding in. Think about it: countries that are likely to become tax havens in the first place tend to be small and lacking in resources.

Luxembourg, Lichtenstein, Andorra, the Cayman Islands, Vanuatu, the Cook Islands, and more. Even places like Switzerland, while quite wealthy from other industries, are small compared to the countries whose citizens they have historically stored wealth for.

Now, take a huge influx of capital, small land area, and an often tropical climate and imagine what happens when people jam in there. Things get expensive.

You’d think living on an island in the middle of nowhere in the Atlantic Ocean would be an affordable proposition. But thanks to a highly sophisticated banking center, Bermuda is one of the most expensive places on earth.

Monaco, where I’m hosting a small conference for Members of The Nomad Society this April, is in a similar boat. With less than 1 square mile of land area and a booming port for mega yachts, it’s no wonder you can’t buy a broom closet for under $1 million.

Heck, even Panama – the potential “Singapore of the Americas” – feels a bit pricey. So my idea is that you shouldn’t live in a tax haven… but you should live next to one.

Instead of living in Singapore, live in Malaysia. You’ll be within arms’ reach of all of the benefits of Singapore’s highly sophisticated financial system without having to pay $10,000 a month for a nice apartment.

Instead of living in Panama, live in Colombia. You won’t get bored of the monotony of Panama City and you’ll enjoy easy access to your money when you need it.

This strategy is already practiced by many young bankers and managers all around the world. Few people who work in Gibraltar live there; they live across the border in Spain where rents are far more reasonable. Ditto for Monaco, Luxembourg, and now even Singapore, where Johor Bahru, Malaysia is becoming what I call “Singapore’s New Jersey”.

In addition to much lower prices, you’ll typically enjoy a better quality of life and more entertainment options in the larger countries neighboring tax havens. And provided the country you choose has territorial taxation, you can base your business activities in the nearby tax haven and not be taxed on a residential basis.

The Regional Influence Strategy

Every time I travel through Central America, I notice one thing: it feels a bit like the United States.

At the airport in Panama, I was instructed to take off my shoes, belt, watch, and make sure not a scrap of paper remained in my pockets. Sound familiar?

Last year in Managua, I went through a special metal detector that the security supervisor told me was a gift from the US government. While I can’t vouch for the truth of that statement, I can say that the countries south of the border have a tendency to follow the lead of the United States.

It’s part of the regional influence that they have, in effect, succumbed to. Heck, Panama has a deal to share information with the US government on wire transfers in and out of their country.

The United States is the biggest perpetrator of this type of regional influence, where the dominant country in the region attempts to get its smaller neighbors on board with its totalitarian ideals.

Just as the Soviet Union relied on satellite states to share in the misery, countries like the United States use all kinds of shady diplomatic tactics to influence their neighbors. Of course, it’s not just the United States; China and Russia have eyes on doing the same, although their reach is not nearly as wide at the moment.

Just as Fox News and company spent much of last year insisting that the Baltic states would be reclaimed by Russia any day now, countries like the United States are exerting their will on countries that need them as an ally.

In summary, if you’re looking to avoid the far reach of the United States, move far away from the United States. Countries here in Central America love their fingerprint scanners and invasive forms the same way the US does.

Likewise, if you’re sick of Russian influence, Minsk probably isn’t the place for you.

Mexico may be one of the best places within the Americas to find freedom because it is large enough (and has enough resources) to stand up for itself.

However, size isn’t the only issue; Ukraine has historically been the breadbasket of Europe and is one of the largest countries in Europe. The fact that it is a failed state neutralized its size when Russia wanted to rattle the saber.

These are the ideas I frequently discuss in my private masterminds with the entrepreneurs I help, so I’d love for you to share your thoughts on these ideas below.

Andrew Henderson
Last updated: Dec 28, 2019 at 6:14AM

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13 Comments

  1. Pete Sisco

    I hope people read this twice. I’ve been using this tactic for nine years now. It’s not just a hypothesis, it’s works and thousands of us are doing it. (Maybe millions, who are more discreet than I am. Haha!)

    Solid article, Andrew. Thanks for writing it.

    Reply
    • DavidH

      I have been reading Andrew’s posts for some time now and find them hugely entertaining. I even agree with most of them. But (you knew there was going to be a “but” didn’t you?)….

      … as Andrew says, living in a tax haven is an impractical proposition for most (especially, dare I say it, for those with families who might be a larger target audience for advice than the free and single). The following is a bit of a generalisation but here are some reasons why living in a tax haven might not only be impractical, but actually damaging to your wealth (the very thing you want to avoid, right?).

      Later in my post I will give you some ideas for a better way of running one’s affairs. Please bear with me and read on….

      Reasons why living in tax haven might NOT be your best strategy:

      1. Many might be beautiful (I lived in one – Bermuda) but many are also inaccessible and not exactly cosmopolitan places buzzing with excitement. For families, you might also not be too crazy about the standards of education in some of them (yes, there exceptions, I know)

      2. The real problem most people have is convincing their “home” jurisdiction that they are no longer tax-resident there. Spain, for example, will treat you as remaining tax-resident in Spain if you leave to live in a tax haven. If you want a really shocking example of how a government – the UK government in this case – will go to capture you as a tax resident, then please google the case of Robert Gaines-Cooper who was landed a £30m tax bill even though he had not lived in the UK for for over 30 years – he lives in the Seychelles. The UK tax authorities (successfully) argued that although he relied upon official published “advice”, the government really had not really meant that advice to be a statement of the legal position and he had not really left the UK for tax purposes. When you read his story please focus on the one thing that is rarely mentioned in the acres of press coverage: the UK tax authorities chose as their victim someone who lived in a tax haven. Tax havens do not generally have double tax treaties. A tax treaty will nearly always have a tie breaker clause that will determine where the individual is to be tax resident when the issue is a bit fuzzy. If the hapless Mr Gaines-Cooper had lived in (say) Switzerland and the UK had tried to pull this stunt this would have been his response:

      “Yes, I can see that you might think that under your revised UK tax rules I am tax resident in the UK, but you see I am also tax resident in Switzerland. Lets look at the UK-Switzerland tax treaty. Oh look- I am tax resident in Switzerland under the treaty. Now go away and leave me alone.”

      3. Many tax havens have very high entry criteria that the average person has no hope of meeting – the subject of Andrew’s blog

      4. Back to the family theme again. if you want to be international – a great investment in yourself – do your children a favour and mix things up a bit – the nomad theme is “internationalization”, right? As a personal example, I am British, my wife is Russian, our daughter was born in Amsterdam and we live in Switzerland. She speaks English, French and Russian like a native and will learn to speak fluent German at school. OK, Mandarin might be a good one to have, but 4 big languages is better than most. She has British and Russian passports, will qualify for a Swiss one and if she really tried she could probably be Dutch. You don’t really get this in most tax havens.

      5. Andrew is right – the old flag theories need to be updated. Simply saying “I live in a tax haven” or “I live nowhere” really is not strong enough to counter modern tax authorities. The best way of doing this is to play governments at their own game. Not “I live nowhere”. Instead:

      I live in country X
      Here is my residence permit (permanent residence permit, if possible)
      Here is my tax residence certificate
      My permanent home is there
      My car is registered and insured there
      I pay (some) taxes there
      I pay health insurance there
      My children go to school there
      My driving licence is from there
      I have a bank accocunt there
      Possibly: I have (some small) business there
      etc etc

      You say I am tax resident in your country simply because I have been there 300 days this tax year? Well lets see what the tax treaty between my country of residence and your country says. Oh look, I am clearly resident in my home country under the first 2 tie-breaker clauses. You have no right to tax this income. Please (in the politest way possible way), go away.

      Quick word about “living nowhere”: most countries will not accept that you have lost your tax residence simply because you have gone on a round the world cruise for 10 years. You really need to be able to say “I have left your country and I have moved to country X”. Tax authorities will simply say “you owe us tax. Pay up”. You will have no counter argument to fall back on, especially not “I live nowhere”

      I am not saying living in a tax haven is a bad idea. If its what you want ok. But if paying little or no PERSONAL tax is what you want, living in a traditional tax haven is really NOT NECESSARY. But it does require you to be international and often will require your business to be somewhere different from where you actually live. And you need advice. More about this a bit later in my post.

      Don’t believe me? Then ask yourself why the UK is full of billionaires. They come because they gain UK tax residence and the UK is especially attractive to “non-doms” because a non-dom only pays tax on UK source income (definition of non-dom is tricky but just think of
      it as “if you are not British you are almost certainly a non-dom for UK tax purposes”.

      Just a few points here about using tax havens for companies (as opposed to a base for PERSONAL living)

      There is lots and lots of misinformation on the internet – Andrew has alluded to this in other posts – that try to convince you that having a business in a tax haven is the answer to your no-tax wet dreams. It is not. For trading companies it really is very hard to use a tax
      haven effectively unless you actually base yourself there or have it truly managed for you. The reason, of course, is that companies are nearly always taxed in the country where they are resident (managed). The country of incorporation is irrelevant. (I have simplified this a
      bit to keep things brief). Form a bvi company and use it to run your online business from your “onshore” bedroom will lead you to a whole world of tax evasion pain, and potentially even jail time. The general rule of thumb here is to base passive-income businesses in tax haven (or low tax jurisdiction) because the management side can be dealt with more easily. I would need a long post to explain. Active trading income needs an onshore base and some strategies for moving it (legally) to somewhere low/no tax.

      In short: TAX AUTHORITIES HAVE CAUGHT UP WITH FLAG THEORY

      What’s the way forward? Well the elevator pitch for elements of a new flag theory is something like this (I probably need to refine this with a bit of thought. This is stream of consciousness writing):

      1. You do not have to live in a tax haven. Don’t even think of living nowhere. Ensure you have a tax residence home to counter attacks that you have become resident somewhere else (albeit inadvertently). If you are spending a lot of time somewhere else (even more than 183 days) a tax treaty will often protect you. Living in a tax haven never will. If you live in a tax haven make sure you have bullet proof advice from a professional (hint: these are often expensive. Sarcastic hint: company formation agents are not tax advisers).

      2. Base your business in a convenient onshore location. It might be the same country as your personal tax residence, in which case great, but in practice it might need to be somewhere else. It needs to be somewhere convenient in terms of commutable distance from your personal tax residence country (commutable by short, cheap plane trip counts). Andrew’s “tax haven adjacent” idea. If your business needs to be in another country make sure you are not performing business activities in the country of personal tax residence (this can trigger a permanent establishment claim by your personal residence country)

      3. If you can arrange for your business to have some IPR or similar, then consider use of tax havens and seek advice on how this can be achieved. Keep all corporate tax structures as simple as is consistent with tax efficiency. Complex is costly and leaves more avenues open
      to attack from tax authorities.

      4. Seek advice on how to move the wealth you generate from your business to your PERSONAL bank account where you are free to spend it. Depending on the jurisdiction you choose to live this might be by taking dividends but might be by having salary. Crystallizing capital gains, pensions etc are other ways but I am giving you the baby steps version.

      [I am constantly exasperated by advice that suggests that nirvana is money in an offshore bank account of a tax haven company. In my experience this is usually NOT what people want. They want money in their OWN bank account so that they can spend it. Getting money from a tax haven company to your bank account is not so straightforward. Pay a dividend? This is often, but not always, taxable where you reside. I need pages to expand on
      this. ]

      5. Pay social insurance costs to maintain health cover. Top it up with commercial health cover if you need. Ideally, so arrange your affairs that these costs are paid in a country that CAPS these charges at a modest level.

      THE NEW FLAG THEORY – WHERE TO LIVE / WHERE TO BASE YOUR BUSINESS???
      There are lots of options – literally hundreds of possible combinations. I am Europe based so mention some reasonably well known examples:

      1. Already mentioned, but live in UK as a non-dom. Bring in capital if you can and live on that so that you pay no or very little UK tax. You don’t need to be rich to do this. Have your business elsewhere in Europe. Lots of places to choose – Eastern Europe has some low corporate tax rates and low costs for running businesses. All are well served by cheap frequent fights from the UK.

      2. Ditto Ireland or Malta

      3. Portugal habitual non resident scheme.

      4. Lots more…

      The REALLY cool combinations will not be found on google.

      How about living in a HIGH TAX country but pay little or no tax? Most readers will be of a contrary disposition. How gratifying do you think it is to live in the Netherland (say) – and I am NOT talking about the 30% scheme here (google it if you don’t know what the 30% scheme is) – but pay taxes of about 10%? No tax havens involved. No complex corporate structures.

      Ditto Belgium

      Ditto Poland

      I could go on but I want to avoid providing advice that needs to be explained in detail and executed properly.

      Just a few more things:

      In Europe (and most countries in the world) tax is often not the biggest drain on the wealth you generate. This dubious prize belongs to social insurance contributions (for health cover, old age pensions etc). (Almost an) example:

      Mr X lives in Belgium and has a Belgian company. His business is doing well and he is paying himself a modest salary but Belgian taxes are

      high and kick in at a lowish amount so he is at the top tax rate. He decides to pay himself a bonus so that he can buy his wife a VW Beetle

      which costs EUR30,000. How much wealth does his company need to generate to pay him a salary sufficient to buy the VW?

      EUR134,017 !!! To keep it short, the taxes and municipal taxes total EUR63,373. bad enough. But social insurance costs (employer and employee)

      come to a staggering EUR40,644. Taxes and social insurance contributions are just under 78%. The State has been kind enough to let him keep

      22% of the wealth generated so he can buy the car. Whoever would think that a VW Beetle would cost EUR134,017?

      So…take advice on social insurance planning as well as tax planning. My curious point #5.

      Yes, I know some people believe that paying social insurance to a government is an appalling assault on their personal right to suffer an excruciating death from cancer for which they need to bankrupt themselves to pay the medical fees. Yes, I know governments use it as disguised tax. But pay some OK? Look- in Switzerland everyone must have health insurance. Not having it is against the law. There is a minimum cover that insurance companies must provide. Insurance companies, if they want to operate in Switzerland, must cover you even if you are dying of a dreadful, costly disease. And nobody is seriously accusing the Swiss of being liberal pinko socialist fairies.

      OK, this has all turned into a long rant.

      And Andrew – if you are reading this – I assume you are the moderator – happy to meet for a chat and coffee if you are in/near Switzerland, UK, or Monaco. I do not want to publish my email details for the public. Not sure how to give you my details….

      Reply
      • Pete Sisco

        Great comment, David. I agree. The fact is, it’s too much of a pain in the neck to try to operate at zero taxation. Better to pay a little in return for some form of quid pro quo, which is usually healthcare. Options abound.

        Half the task is just developing the mindset to engineer your own circumstances rather than accept what’s mandatory in the country of your birth.

        Reply
      • European Capitalist

        Thank you for this post David. It’s obvious that you’re speaking with some practical experience under your belt. You brought a few interesting points to my attention. I’m an Austrian and a passionate public stock investor. Austria has decent double taxation treaties and capital gains used to be 0% if you held a stock longer than a year. Sort of the best of both worlds. Alas – they introduced a 25% capital gains tax around 2011 and to add insult to injury they are increasing it to 27.5% next year. Last tax year I paid Austria a very high price for the privilege of residency, enough to buy me a small, cheap house in another country, and it will only get worse with the years. So the past year or so I have been researching options and it looks like a move is the easiest way to pay reasonable taxes, easier than just moving money abroad since you would need a foundation or company in the other country and that introduces an additional layer of taxation and complexity in most cases.

        I hear your argument that exotic tax havens are not always the best choice loud and clear. I don’t need a perfect 0% tax, I am willing to pay a reasonable amount for public services likes healthcare insurance, infrastructure etc, but the governments are too wasteful these days.

        In addition to the reasons you mentioned, moving to an EU country allows me to defer Austrian exit capital gains until realisation (Austria will tax me on unrealised capitals gains if/when I leave the country). If I leave outside the EU I have to pay taxes for the unrealised(!) capital gains immediately. Exotic tax havens also don’t have good (or any) double taxation agreements which usually limit the widthholding tax for dividends at source to 15%. I need a country which has a least with the USA a 15% withholding tax limit. The USA grants relief at source, most other country don’t. Without a tax treaty the USA takes a 30% cut.

        I live an hour or so from Switzerland, so this was a natural first thought since they don’t tax capital gains. However I learnt that the Swiss classify some investory as professional rather than private investor and in this case the capital gains are fully taxes. Switzerland also has a wealth tax.

        Liechtenstein is somewhat difficult to get into with various protection mechanismns in place because of its small size. Monaco is severals leagues above me, as the increased living expense would eat away any tax savings, plus it’s too flashy – I don’t have a need to show my money as a lot of people in Monaco do – I prefer to let my capital work as equity for the worlds and my own benefit.

        The UK would offer non-dom status, but I have a lot of UK stocks and I guess they would be taxable local income, rather than tax-free foreign income.

        Malta seems a perfect choice with non-dom status and double taxation treaty in place. EU country, English language common spoken, nice climate.

        I learnt of an additional choice from your post: Portugal appears to not tax capitals gains either, not sure about dividends yet. Have to read more about that.

        The case of Gaines-Cooper which you mentioned, clearly shows that any move of tax residency has to be very carefully planned.

        In your experience, where can I buy the best advice? My long time trusted tax advisor is good with Austrian tax law, but I need someone with an international view and knowledge of a lot of countries tax systems (and how they play together) to suggest the ideal solution. From my internet research I keep getting PDFs on international tax topics from the big audit firm networks, eg Deloite and PwC in particular, sometimes from KPMG.

        Reply
        • DavidH

          Hello European Capitalist,

          My answer might be a bit disappointing for you – I apologise in advance for this!

          I understand your problem of finding good international tax advice, but I will come to that in a moment.

          Firstly a few comments on your Austrian situation:

          – As you say, Austria will tax your gains upon realisation if you move to another EU country. Upon exit for non EU countries. Austria is forced into this slightly more “generous” EU tax treatment because of the EU freedom of movement rules (people, capital etc).

          – About Switzerland: if you moved to Switzerland the AUS-CH tax treaty has conditions that mean that you must leave Austria totally – no “holiday home” left behind etc. And yes, the tax authorities in CH might well consider your investing to be a professional activity. As would many/most other countries.

          – If you have a business in Austria (apart from your investment activity, I mean), please check out the exit tax criteria for the your BUSINESS with your Austrian tax advisers. I believe there might be some nasty surprises there too.

          – I would need to know your circumstances fully, but you are probably safe in assuming that capital gains on your UK assets would be taxable in the UK as a non-dom (there is an £11,000 annual CGT exemption which helps slightly).

          – UK as a non dom might be an option. But be careful, this is under attack in the UK as “unfair”. There is a minimum tax payable under many circumstances.

          Now…about finding tax advice that considers the options of several countries. You are right, it is hard to find good advice. Tax advisers tend to have enough trouble keeping up-to-date with tax in one country, let alone several. Few will have knowledge of other countries’ tax laws and possibilities – and make this their specialty. Most will never have cause to read a tax treaty, let alone the subtle interpretations they need to place on every word in such treaties.

          The big firms (plus the smaller internationally-connected firms) will give you advice by joining up advisers in the country you are leaving with advisers in the country you are going to. It will be expensive, but you will get good advice on a “2-country solution”. And also – let’s face it – legal redress if the advice was wrong. Only a few might be able to consider, for example:

          – a “3 country solution” (move your residence to country X, move all/part of your business to Country Y, and do the following things to make this a practical, workable strategy); OR

          – provide advice on the possibilities of more than one country

          The problem, you see, is that people with this knowledge are in big demand – they usually work for the large firms. So that closes most of your options.

          I would like to help you but I cannot really give you my details on this blog post because it would be an abuse of Andrew H’s business for me to tout my services using his business. He would, I am guessing, probably be slightly more amenable to the idea if we were both members. But I am not.

          One thing that you might try is to find a member/affiliate of the UK’s Chartered Institute of Taxation who holds the ADIT qualification (the Advanced Diploma in International Taxation). Look for one or more in the countries that interest you. This will at least give you someone who understands the intricacies of tax treaties! You can find them here: http://www.tax.org.uk/adit

          A few “free” tips:

          – Ireland also has a non-dom tax regime similar way to that of the UK, if that is of interest to you?

          – If you are willing to move to certain countries in Eastern Europe (but perhaps spend a lot of holiday time somewhere else – but NOT Austria), there are a some interesting possibilities. I am unwilling to say what they are and how to make them “work” for fear that what I say will be taken out of context.

          – A cryptic tip: there is a joy to be found in: (1) living in a country that taxes certain foreign income on an “exemption with progression basis” (2) placing a business/income in another country that taxes that income lightly or not at all and (3) a tax treaty between these countries that specifically mentions the tax exemption as the means of double tax relief. And in giving you this tip, I have really said far far too much!!!!

          – Slovakia – your neighbour so not so far to move – does not tax dividend income at all, which might be of some interest. Less so if capital gain is your main interest. Just be careful of the social charges that might be levied on dividend income. Not my first choice of places to live but not the last either – Bratislava has some charm, I guess. (By the way, when I was talking about Eastern Europe I was not thinking of Slovakia)

          A pity we cannot chat in person, but this is Andrew’s business not mine!

          Finally, I wish you good luck.

          Reply
          • JohnDoe

            Hi David. I got intrigued by your answer. I’m sort of convinced I understand your ‘cryptic’ structure. I’d love to connect to chat a bit more if you’d like? I have a similar mixed family and would like to settle things ‘properly’ in Europe, in terms of tax residency.

            Hope to hear from you.

            M.
            email: [email protected]

            Reply
          • Gregor

            How does Austria / EU look at EU Residents that are earning money abroad say in Thailand working remotely for US/Canadian companies and getting paid a salary by an Estonian company to a bank account outside of Austria/EU?

            Reply
          • Robert

            Hi David, You seem to know alot about the topic. I really appreciate that you don’t minimize the risks and costs of trying to set up these tax optimizations. I’m looking at owning an Ireland Ltd while managing and operating it from Belgium. I understand that you can use the “exemption with progression basis” in Belgium, but I wonder if this would also apply to an Ltd that is effectively managed from Belgium?

            Reply
      • ottavio

        it does not actually work like that, re DTAs.
        such treaties are supposed to try solving conflicts that give origin to double taxation.. but by no means eliminate such risks. There is nothing in such treaties, given their language, that solidly protects you from the risk of double taxation, in all cases where a person has real connections with both concerned countries.
        Best rule is: do not reside in a country of which you are a citizen and in which you have large business.. unless such country is a solid tax haven.

        Reply
    • Mark Peters

      This is a brilliant piece by Andrew. Agree entirely with Pete. Well said both of you!

      Reply
  2. PeacefulLife

    Excellent article.
    After reading all the comments, just a few things to note:
    1. NL does not allow dual citizenship. If you become naturalized Dutch you must renounce your other citizenship. If you are a NL citizen and you move to Canada (example) and want to become a Canadian, you must renounce your NL citizenship. Many countries like NL, Swiss, JPN etc only allow one citizenship.

    2. Slovakia. Not that cheap to live in. In fact Bratislava is more expensive to buy than Vienna.
    Life is not exciting in Slovakia. Been there a million times. Monthly health insurance is mandatory and is at the cheapest rate €57,00. Wages suck and corruption is rampant. Xenophobic as well even if you have Slovak blood. Not my first choice as one comment stated — I agree.

    3. Work around and if you are single, yes, it is much easier. Doing short stints here and there are are fine and some countries are simply too heavy in the tax cutting %.
    I think we all want to live in a place that is warm and welcome as well as safe. Our a great launchpad to travel and work around.

    Always learning!

    Reply
  3. Moscow_mule

    I was transfered by my employer to live in Russia some years ago. There are some great benefits to live in Russia, for example flat 13 % income tax rate combined with high salaries for expats in Moscow and Saint Pete. A company sponsored flat, a company car and other benefits are tax free for the employee. In some years I was able to save some 500 000 euro and I am just an ordinary guy. I admit living in
    Moscow during the political crisis between the West and Russia is not easy. The attitude towards Westeners has become unpleasant.

    Reply

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