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Andrew Henderson

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Why We’re Planting More Tax-Free Flags

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This year at Nomad Capitalist Live, we talked about five types of new tax havens many of you might not have thought about. These are places that you can go to pay either zero tax or a very low tax rate.

What we shared with the audience at Nomad Capitalist Live was that there were some specific reasons why we believe that tax-free strategies will be more important. So this is what we’re going to be sharing in this article too.

Now, one of two speakers at Nomad Capitalist Live this year was Georgia’s Former President Mikheil Saakashvili.

He was the one who came in the early 2000s, and he took the number of taxes from almost two dozen and slashed it down to five or six. President Saakashvili was the one who flattened the rates. He said that you need to have people come and vote if they want their taxes to be raised or if they want to pay a low tax rate.

President Saakashvili talked about the power of getting people to agree to big sweeping changes.

How to Adapt to Changes to Get A Lower Tax Rate

The reality is that most countries all around the world have not worked that out successfully. These countries haven’t successfully implemented changes without some sort of setback from their citizens.

If you’re from a legacy brand country, this is something that you might be familiar with.

Most of these countries are too big to have that much bureaucracy. They are too committed to the status quo – whatever the case may be – to say that they’re going from extremely high taxes to a couple of low flat taxes.

That’s just not how it works, and you can’t raise that without a single hassle.

So what’s happening now is you’re seeing most countries going the opposite way.

President Saakashvili told Andrew that when he came in, the IMF and all the other organizations said that he was crazy. Nobody had tried to lower Georgia’s taxes because the country had so many problems. It was as if the country couldn’t support a lower tax rate for its citizens.

Then again, he didn’t listen, and it all worked out.

Georgia went from the 127th best place to do business and climbed up to the 8th place. Today, Georgia is one of the most capitalist countries in the world. It all worked out for the best.

Other countries have not learned that lesson.

Looking at Tax-Free Strategies to Achieve a Low Tax Rate

If you’re a trader, you are now the enemy. That’s why the government wants to raise your taxes. Although, is there still a way for you to pay a low tax rate or a lower percentage in business tax?

So what Andrew announced was that he’s putting more tax-free strategies into his portfolio.

This may be whether they’re active tax-free strategies where he’s actively going to live and do his business and hire.

It could also be a more passive investment and he’s just going to be keeping them in his back pocket.

Perhaps it’s even citizenship in a country that he doesn’t live in. Maybe that could work, but it’s there, and it’s waiting for him.

Andrew thinks this will be very important in the years to come.

He’s doing this because he believes that there will always be places where you can have a low tax rate. Not only that, though, but there are also places out there where you can go where you’re treated best.

We’ve talked about countries like Uruguay that came out and said that they weren’t going to raise their taxes.

So Andrew believes that there will always be countries like this.

The Role That Territorial Tax Regime Plays to Achieving A Low Tax Rate

Doug Casey and Andrew talked about territorial tax regimes.

It’s in Andrew’s general belief that there will always be somewhere to go to. Hence the five magic words, go where you’re treated best.

Although, what he’s trying to do with tax fees, as part of his portfolio, is to find the most secure countries. This is because, based on what we’re seeing now, there have been rumors that Costa Rica might be ditching its territorial tax regime.

So what do you do if that happens, and how do you use that to lower your tax rate?

There are other countries that have been trying to move to territorial tax regimes, but it’s sometimes too slow.

What President Saakashvili did, and why we invited him to speak, was that he made so many changes. Sure, none of us is perfect, but he made so many changes very quickly and by going against the grain. He even had the courage to go against these “special elite interests.”

You see, many countries can’t do that.

So, you can look at a tax-free country like the Cayman Islands, but then again, it’s not technically a country. However, as a jurisdiction, they’re pretty much opposed to direct taxation as a culture. This is why in the Caribbean, there’s generally a low income tax rate.

Legally Reducing Your Taxes to Achieve a Low Tax Rate

You can look at a lot of countries with zero tax, or maybe a low tax rate, and it’s now embedded into their culture.

There are places like Andorra, and it has had the misfortune of being located between two of the most aggressive taxation entities: Spain and France. So they had to get into the game of having a low income tax rate.

Although, it was so difficult for them, and it took them quite a while.

So for Andrew, tax-free means that there are no conditions.

It’s not like Portugal’s program where you can go there, and then for ten years, you get an exemption that works for some. So you should be careful because this program has holes poked all over the place.

It’s not like Chile or Uruguay, and for some of these countries, you can go and get a fixed number of years or another type of program that’s tax-free.

In the Caribbean, for example, if you run a business, there are certain things that you need to do on the corporate side. So it’s tax-free on the business side, but it may not be the same. It may not even be tax-free on the personal side. Although, is there a chance that it can lead to a low tax rate?

Checking Immigration Programs to Get a Low Tax Rate

There are a couple of countries in the citizenship by investment program that’s legitimately tax-free.

Both Antigua and Barbuda, and St Kitts and Nevis don’t have a personal income tax. Vanuatu is a program that we like a lot less, but they have no income tax now.

Plus, Andrew did St Lucia’s citizenship by investment program years ago.

Did he regret that? No.

We think St Lucia has been a great program, and it worked out very well.

If things got terrible and Andrew had to go and live somewhere, his philosophy between getting married, having a much bigger business, and just having his whole life growing as a person has evolved where St Lucia can fit a great part of his life.

As he was increasingly distancing himself from the United States, he wanted a plan to get out of the country.

Andrew put together a second passport portfolio that helped him do that.

So St Lucia played a great role. If he wanted to go and live in St Lucia, it’s a better tax situation than many countries in the world, but it’s still not perfect.

Starting to Build Your Own Second Passport Portfolio

If your goal is to have a place to live someday, going somewhere tax-free isn’t a bad idea.

During our recent Nomad Capitalist Live, we talked to one guy trying to collect all five of the Caribbean citizenships. Each one has its benefit because some offer different travel benefits, and there’s one of them right now that’s not tax-free. However, it’s the only one of the five that can get into a couple of different countries.

So we’re not saying that you shouldn’t get a second passport portfolio, but we’re saying that you should go entirely tax-free.

What we’re saying is that having tax-free citizenship where you know they’re always going to let you in if everything else falls apart is always best.

There’s some tax-free residences all over the world today.

Monaco seems rather old school, but Dubai is a great choice if you’re starting a company.

Today, we’d consider Dubai over Hong Kong and even a Caribbean jurisdiction. This is because, at the end of the day, you’re still going to deal with a lot of complexities like their free trade zones and how you’re going to set it up.

How do you adapt to these places? And it can surely take a while to get used to that.

Sure, there’s less flexibility in banking, but that can be fixed, and it can give you a residence permit.

Adapting to Countries to Achieve Your Low Tax Rate Goals

A year ago, we were looking through the roof. We felt that the prices hadn’t gone down enough.

Now the prices are going way higher.

Some of these countries may have an issue, and the UAE has enough.

Andrew believes they’ll be able to keep those tax-friendly policies for some time. By the way, when we say tax-free, you know that people might always say that they’re adding a VAT.

Although, no, we’re talking about when a seven and an eight-figure entrepreneur or investor is being taxed in a big way.

There’s income tax, capital gains tax, and there are other things that may follow that. So we would always look at a jurisdiction like that.

If you want to set up a company, we will look at collecting resident permits in places where they have great tax deals because anyone can introduce new taxes.

We’re not saying that there’s anything wrong with St Lucia, and we think if that’s part of your plan, then you should go about it.

However, it may be worth paying a little bit more to get into a tax-free country because it’s harder to introduce taxes than it is to raise them.

So knowing that you have that 0% tax and knowing that you’re locked in will give you some certainty. This will allow you to go and take more risks to grow your business faster.

Even if something changes in the next ten years, if a country introduces a mild income tax, then there’s nothing wrong with paying 5% to 10% if you like living in that place.

If you decide to make this place your home, then it wouldn’t be the end of the world. At least you can get a jump start on things now.

Plus, you have a greater level of certainty and potentially fewer filings than you would find in some territorial tax jurisdictions.

Learning the Difference Between Immigration Statuses

What you have to understand is that there’s a big difference between tax residents, permanent residents, and citizens. Although, you can accumulate those things.

You can get a residence permit in a country where you may be able to visit one to seven days per year, and you can keep that in your back pocket.

There’s a relief in knowing that you can move somewhere else. Plus, you have a tax-friendly or tax-free place already lined up.

Andrew thinks that buying a property somewhere like that can be great because properties in these places will go up.

The Cayman Islands, for example, their properties are extremely expensive because it’s the crown jewel of the Caribbean zero tax jurisdictions.

You can also go to the Bahamas, but it doesn’t function quite well. Don’t get us wrong, there’s nothing wrong with the Bahamas. However, it just doesn’t function as well as Dubai, where everything works, and people from all over the world are there.

If you don’t do the job right and you get sent home, zero tax jurisdictions are not a bad place to have an anchor. We’re not saying that you should move there. What we’re saying is that it might be worth doing something.

It doesn’t matter if it’s buying a property, starting a company, or whatever it is that you want to do that is available to you. You don’t have to move into a zero-tax jurisdiction right now, but you should have it ready.

That’s always the case, isn’t it?

We don’t have to move there right away, but the thing that we have to do is to be ready. We have to be prepared when the time comes that we eventually have to move out.

Think about it, politicians around the world are not only raising taxes in high countries. We don’t think that every country in the world will be bullied into raising its taxes. However, we believe that some changes may be coming.

The easiest way to protect yourself is to have a tax-free strategy to ensure that you’re protected and to ensure that you will have a low tax rate.


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