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Andrew Henderson

Founder of Nomad Capitalist and the world’s most sought-after expert on global citizenship.

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Expat

Why expats should consider living in emerging countries

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Dateline: Belgrade, Serbia

Remember when you were in high school and you found the most popular girl attractive because that’s what you were SUPPOSED to do? Or in college when you longed to talk to the eye-rolling girl in a tight dress at the bar — or the way-too-confident dude — because it seemed like “the thing to do”?

As we wised up, we found more stable, fulfilling, and rewarding choices in mates. I believe our choice of countries as expats and perpetual travelers is no different.

One of the biggest reasons people come to me is to find legal ways to save on their taxes. This, in turn, often frees them to lead a more nomadic or international lifestyle.

It’s always interesting to see what these entrepreneurs will do with the money they save (especially the money they save on taxes), which regularly reaches high into the five- or six-figures per year.

Many entrepreneurs from the United States, Australia and other “first world” countries, initially choose overseas territorial tax countries like Thailand or Panama. Others frequently choose high-tax countries such as Spain or Italy.

I’ve noticed a common theme among many people looking to escape their home country and move overseas to save on taxes. They will repeatedly single out well-known places thought of as “paradise”, or widely popular places in Europe.

In my mind, these budding global citizens are falling for what I call “the Uncertainty Trap”.

The Uncertainty Trap

This “Uncertainty Trap” appears when you decide that you want something solely based on the uncertainty surrounding a difficult decision.

For example, ask someone who has lived in one country their entire life which country they’d move to and you’d be hard-pressed to get an answer. In most cases, the person would either have no idea which country to choose or have an unlimited number of potential ideas to choose from. In such a situation, it’s easy for people to lean toward countries they’re familiar with, rather than ones that could improve their personal and financial freedom.

Beyond the traditional developed countries in Europe, many US citizens name Central American hot spots like Costa Rica. However, they often do so for no other reason than “some blog recommended it”.

On the other hand, the perpetual traveler can easily “try on” different countries before settling on one… or never settling for one at all. Perpetual travelers can live with no formal home — or one or two “home bases” coupled with extensive traveling.

The perpetual traveler concept also allows many “prior taxpayers” to legally divide their time between several different countries as tourists without triggering residence requirements and tax obligations in any of them.

For example, I’ve written about how you could spend your entire year in Europe as a tourist by bouncing between the 28-state Schengen Area (90 days per 180), Ireland (90 days per 180), the United Kingdom (up to 180 days), and non-Schengen states like Romania, Bulgaria, Croatia, and Cyprus.

There are countless other combinations for nomads.

Heck, you could ALMOST divide your time between only two places, such as Dublin and London, London and Paris, or the very close Ljubljana, Slovenia (Schengen) and Zagreb, Croatia (non-Schengen).

The quality of life argument

Now, I do think that such “first world” countries will impose tougher immigration procedures on tourists in coming years. I’ve heard horror stories about entering the UK as a tourist (even from US citizens), and I was recently given a raised eyebrow while entering the Schengen Area through the Zurich airport.

However, I would suggest that new expats and perpetual travelers alike think beyond the traditional developed countries and focus on emerging countries for an entirely different reason than ease of immigration.

That reason is the quality of life.

I get it. The people I help and spend time with are successful and want to enjoy the fruits of their labor. I am increasingly helping extremely successful individuals with a taste for the good life, including two different business owners with $5 million or more in annual income.

The idea of living in Venice, Paris, Barcelona or (for non-Americans) Los Angeles seems sexy, romantic, and exciting — the basis for an Instagram-worthy life.

However, I would argue that many of the so-called “first world” countries are not as good for quality of life. This is particularly so for the “average Joe” with a few hundred grand in income and no desire to rent a serviced mansion or take a black car to the airport.

As an example, I spent several weeks last month in Valencia, Spain. My girlfriend wanted to surf, eat tapas, and do all of the other things that attract 20-something girls to Spain. As she is supportive of my penchant for practically unheard of countries, I was happy to oblige.

But, while Spain is a popular hangout for digital nomads (my friend Pete Sisco spent three months a year there until recently), I found it lacking.

The downside to expat-living in Spain

First of all, Spain’s not particularly awe-inspiring to look at. Yes, Valencia has a gorgeous town center with interesting architecture. However, the “trendy” neighborhood I rented an apartment in was as boring as could be. I would expect as much from Bucharest.

The real challenges, however, came from the pure fact that it was Spain, a country far past its prime.

Getting a SIM card requires a 30-minute long wait, followed by a tiresome bureaucratic procedure. Plus, there is a (comparatively) expensive fee for service far worse than you’d expect in the rest of Europe. Oh, and 4G is a privilege reserved for taxpaying citizens.

Even renting a bicycle to go to the beach is complicated and requires more waits.

Wi-fi is extremely slow (as a few of you can attest to). Whether in my home or in the office space my team rented, dropped Skype calls and intermittent service were the norm, not the exception. When the internet did work, it was a fraction of the speed of emerging world cities like Istanbul or Tbilisi where I spent the preceding months.

Planning is required to shop. Many stores close relatively early weekdays and on all day Sundays. Nothing is 24/7. (The best I found was a Taco Bell that proclaims it stays open past 1am).

Even the simple act of eating can be challenging. Restaurants shut down for hours in the mid-day to observe the long-held Spanish tradition of afternoon laziness. Try getting one of those tapas at five in the afternoon and you’ll be shown the door. When the chef is in, expect long waits to be served and to be forced to sit near the kitchen door, even when the restaurant is empty.

One of the things I’ve learned reading motivational books the last year is to let each person have his own way without judgment.

I have come to accept that doing things at a slow speed and with great bureaucracy is a hallmark of Spanish life. It’s in their blood. And that’s fine. Being slow doesn’t make them bad people.

However, I didn’t leave the United States to deal with MORE bureaucracy and LESS efficiency. My five magic words are to “go where you’re treated best”, not “go where the wine is cheapest”. As a result, Spain doesn’t really work for me.

Who needs to try?

It’s not just Spain. A friend recently spent six months in Italy, prompting near-daily outbursts about the inefficiencies and unfriendliness of every business process. From buying contact lens solution to ordering a taxi, inefficiency was the trademark.

As much as I am critical of my native United States, I’ll at least give them credit for realizing that people have a choice of where they dine, shop, and entertain themselves. As such, waiters are pleasant and free refills come quickly.

Many other “developed” countries do not share this attitude. To them, “this is Spain”, and there is no reason to ever improve anything. The only thing to be adjusted is your attitude.

What would you expect from a country that practically made collecting solar power illegal?

While I admit a slower pace is nice at times, I’m also aware that many of us can not deal with slow or intermittent internet, SIM cards that reject incoming calls from clients, and stores that are frequently out of whatever it is you need.

In this way, the emerging world often presents a greater opportunity for living; not only because it is less expensive, but also because it tries harder.

Comparing the quality of life in an emerging country

I won’t say that Serbia will ever win a global contest for restaurant service, but it’s more efficient here than in Spain. And many of the avenues in Belgrade offer a similar outdoor dining experience to summer visitors than you’d expect in many parts of Spain.

Romania has the fastest internet in Europe. In fact, it’s so fast that I jest that nearby Moldova’s internet is also fast by mere proximity. My home in Tbilisi, Georgia has 100MB/s internet as a common matter of course.

Emerging countries like Estonia and Georgia have developed efficient governments that provide services electronically rather than making people stand in lines just “because that’s how it’s done”.

Meanwhile, countries like Macedonia are so passionate about attracting foreigners that they advertise their business-friendly environment to the public. (Georgia used to do this, too.)

Here’s the thing: these emerging world countries offer scenery that is just as beautiful as that of their higher-tax counterparts.

My fondest memories of Brussels involve 30-euro Indian food meals and avoiding the stench of urine on main streets. Conversely, I spent my first trip to Montenegro thinking “this is like just like Italy, but better”.

(Of course, Montenegro is just across the sea from Italy, even though most people wouldn’t expect nearly as much from it.)

I haven’t “oohed” and “awwed” in Spain as much as I recently did driving from Tbilisi to mountainous Kazbegi on the Georgia-Russia border.

The point is, these emerging world countries feature beautiful beaches, mountains, and landscapes offering any type of scenery or climate you desire, only with less bureaucracy, faster internet, and better service.

More opportunities in emerging countries

The reality is that countries like Spain are broke. The average person can’t afford a one million euro place. Consequently, you don’t see much in the way of luxury real estate there.

I see a lot more luxury real estate for sale and rent in Budapest, Istanbul, and Riga than I do in places like Spain or Italy. In these places, buying a newspaper at the train station is an ordeal in “what’s your hurry?”. So who has time for luxury?

I’m not saying to pack your bags for Kazakhstan and never look back, but I am suggesting that being a bankrupt, high-tax country has its consequences. In parts of Western Europe, this means that store owners hire one overpaid minimum wage worker to sell you a phone or serve you coffee because they can’t afford to provide great service.

As I’m fond of saying, being socialist has consequences. Spain will remain inefficient, no doubt. Honestly, what aggressive young entrepreneur would devote great efforts to improve some inefficient part of daily life when success is met with 50% tax rates?

Who would want to build a business in a place where more than half of young people are unemployed and without hope? You’ll find very different conditions in many an emerging country.

My interest in traditional developed countries for the next year or two will be limited to tourist visits of 2-4 weeks in the few cities that do have great amenities, like Vancouver or London.

For me, these cities are acceptable for short periods because I can rent a top-flight apartment with the modern design I crave and the fast internet I need. However, I don’t see them as home bases or long-term PT destinations, partially because I don’t like renting a condo for $7,500 a month long-term, and particularly because they get boring.

For me, such cities are a bit like Las Vegas: it’s fun for a weekend, but living there would ruin it.

If you’re a young or middle-age entrepreneur, I think you’ll be pleasantly surprised to find that many emerging world cities in Europe and Asia often offer more of the life essentials and comforts you crave at a lower price point. They also often come with easy residency requirements and lower or even zero tax should you decide to live there long-term.

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