Your Five Flags

August 8, 2013

 

The term Perpetual Traveller (PT, Permanent Tourist or Prior Taxpayer) refers to both a lifestyle and a philosophy. Perpetual Travelers have much in common with world citizens.

 

 

“Where Liberty Is, There is My Country” Benjamin Franklin

 

 

In practical terms, Perpetual Travellers (PTs) are people who live in such a way that they are not considered a legal resident of any of the countries in which they spend time. By lacking a legal permanent residence status, they seek to avoid the legal obligations which may accompany residency, such as income and asset taxes, social security contributions, jury duty and military service. For example, while PTs may hold citizenship in one or more countries that impose taxes based solely on residency, their legal residence will most likely be in a tax haven. PTs may spend the majority of their time in other countries, never staying long enough to be considered a resident.

 

More than two decades ago, an interesting character with the nom de plume, “Bill Hill” wrote a popular escape manual for freedom advocates titled PT: The Perpetual Traveler. Hill outlined his PT ideas with a five point plan “…for those,” he said, “with courage enough to pursue freedom.” He memorably illustrated his plan with something he called “The Five Flags of Freedom.”

 

Hill wrote: “People of intelligence and wealth owe it to themselves and their descendants to have more than one flag. No one with common sense should give all their assets or allegiance to just one. An individual’s relationship with government should be a matter of choice, an option. The passport you hold and the country where you live or were born need not determine your fate forever…

 

 

The Great Wealth Migration

 

Today, millions of the wealthiest and most productive Americans are leaving home to relocate various aspects of their lives in the best possible places. They view governments as providers of facilities and services, like hotel keepers. If they offer good accommodation and make you feel comfortable and prosperous, you stay. If your government becomes too demanding or too nosey, or if a competitor offers a better deal, you can move on.

 

Some are seeking full-time residences… others find part-time tropical vacation homes where they can live like kings for $20,000 a year… while some move their businesses to slash their taxes.

 

No one government can or even should be trusted to control all your money. Experience shows us that government does not have your best interests at heart. Americans have learned with a vengeance how much politicians love to redistribute others’ wealth. In the end, they also will succeed in redistributing taxpayers. The major portion of all liquid private wealth, the smart money, already should have been moved offshore. As Bill Hill would say, it has been “re-flagged.”

 

And these days, it’s not just the wealthy jumping ship. Every day, middle-class folks are re-flagging themselves to get the government they want and to gain access to economic opportunities that no longer exist in America. Individuals can remove themselves from the control and jurisdiction of any government by acquiring dual citizenship, investing internationally and becoming human multinationals.

 

In order to accomplish this you have to arrange your assets according to the following simple outline:

 

 

Your Five Flags:  The Strategy to Live as Free as Possible

 

Flag 1: Second Passport and Citizenship: You should obtain citizenship and a second passport from a country that does not tax non-residents on their worldwide income. A territorial tax income system is the best. The U.S. taxes its citizens without regard to where they live in the world. Your second passport should be issued by a country that is unconcerned about its offshore citizens and their outside activities. It can act as the ultimate insurance policy during times of war, persecution and political upheaval.

 

Flag 2: Business Base: Where you earn your money, ideally somewhere with low corporate tax rates.

You need a place in which you can form a corporation or limited liability company and invest and earn money with minimal restrictions. This should not be where you legally reside, thus it excludes your personal fiscal domicile. Some countries grant free land, interest free loans or tax holidays to promote new local business and jobs with minimal regulation. Such places include the Cook Islands, St. Kitts & Nevis, Uruguay and Panama.

 

Flag 3: Residence and Domicile: Obviously, the best place to live is where you’re happy. But as a practical matter it also should be a place with a territorial tax system that does not tax outside income. You should live in a tax haven with good infrastructure and communication systems where wealthy, productive people can be creative, live, relax, prosper and enjoy themselves, preferably with maximum bank privacy and a stable government. Panama, Monaco, Andorra, Singapore, Hong Kong, Liechtenstein and Switzerland should be considered.

 

Flag 4: Asset Management:  Where you keep your money, ideally somewhere with low taxation of savings interest and capital gains. Your assets, securities and business affairs can be managed by proxy.  Also offshore bank account, life insurance and annuities can be arranged. Countries like Hong Kong, Panama  and Luxembourg have highly competent independent financial managers, and there is little or no taxation of non-residents or non-citizens.

 

Flag 5: Playgrounds: These are places where you physically spend time, where quality of life is a top priority. Where you spend your money, ideally somewhere with low consumption tax and VAT.

Normally, because of legal restrictions on how long one can stay without being considered a resident for tax purposes, it is necessary to have several such places, although, depending on the place, legal and political deals usually can be made if you want to stay in one place. But for tax purposes, one should avoid spending more than 90 days per year in any one country. Factors here are matters of personal choice: climate, seasons, geography, leisure activities, culture, history, security and prices.

 

Stay Away from Home To Maximize the Benefits

Governments only have power and jurisdiction over their citizens when they are within their home territory or colonies. For this reason, one generally should stay out of the country on whose passport one travels. Your major financial assets should be invisible and far away from the country in which you actually make your home. And keep your lifestyle as unremarkable and humble as possible, never flamboyant and attention-getting.

 

By using the Five Flag strategy, you too can get the most out of life. Once you have your new second passport and money enough to survive comfortably at your chosen destination, security is yours.

 

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