Offshore Series – Offshore Tax Residency

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Offshore Interview Series - Offshore Tax Residency

[With Internationalization Architect, Stephen Petith]

Warren:  Okay, everyone.  And welcome to our third and final one for now on Offshore Residency with Stephen, following on from yesterday.  It’s Warren Black from Wealth Safe and Offshore Banking and here with Stephen Petith, internationalization architect.

The last couple of videos or podcast, we’d been speaking about offshore structuring and about offshore banking.  The first one, we covered offshore banking.  We went into details as to how the world’s changed now, how we see the world changing the future, and, Stephen shared some valuable insights about the Caribbean and Nevis and even Panama, Hong Kong and places like that.

And, yesterday, brought the offshore structuring into it.  So, in line with that theme and seeing about the Caribbean and getting ready to go there myself now after being all excited, I [0:00:53] nice colorful shirt.

So, hi, Stephen, and, welcome.

Stephen:  Welcome.  Thank you, guys, and welcome, everyone else who’s listening.  And it’s good to be here and good to be informing on this very valuable topic.  And, residency is one that’s very hard to me as well because I grew up traveling around the world.  And I spent some time in the Australian Navy, and I, and, basically, every time I’ve done something I’ve somewhere for six months, and then moved.

And so, I’m a nomad at heart and, so, residency for me is, this is a topic that I enjoy.  So, yeah.  Glad to be here.  And glad to be sharing this information with your viewers and listeners.

Warren:  Excellent.  Thank you, Stephen.  Yeah, I mean, offshore residency, it’s – I’m like you, I get excited by you’re living the dream and I, even with one of my Australian companies at the moment, although I do obviously use an international structure myself, still being an Australian resident, I still have a few more limitations and so, you do.

And I’ve just had a tax notification on my tax bill for one, my company is I’m just sitting there shaking my head thinking, “Gosh, I just made a [best bill 0:02:03], then I’m doing this one.”  And I’m like no wonder, I mean, likely I make a lot of money which covers it all comfortably and more, but I was like, “Oh, my gosh.”  I mean, how much Australian businesses could even live, you just wonder, don’t you?

Stephen:  Oh, yeah.  And it’s going to I think going to get worse and worse and worse.  They’re coming after people all the time.  And it’s the smaller people who they’re coming after because they know they cannot fight back, you know, or very rarely will fight back.

So, yeah, it’s time to pack a couple of duffle bags, get that good leisure holiday destination happening, and, come and join us in the sun.

Warren:  Oh, absolutely, yeah.  I always keep pondering about it myself, and I’ve been I’m starting to travel more and more and more.  So I’m quite around like, “Yup, I’m looking at various places which really leads us into it.”  So, what’s the real benefits of offshore residency like there are so many about lifestyle, I mean, sometimes thinking about taxes and other things that really, to me, it’s about lifestyle and being a world citizen, seeing the world as your house rather than one country, would you agree?

Stephen: Exactly.  And I live by the principle of beyond borders.  I don’t like to get [hammed 0:03:13] into one little country or one little thing of.  I’ve got a personal goal to see all 206 nations of the world, which is all the UNESCO.  I’m at currently at 109.  So, you know, I’m fairly, plowing a way through that, that quiet thing.  I don’t want to live in two or three of them as well.  I love what I call living between the tropics.

So, when I look through the place where I’m going to pack my bags and spend six months or three months or whatever it is over the next time is it’s between the two tropics.  So, the sunset, the piña coladas and a great life [0:03:52] great opportunity, and it doesn’t have to cost the earth.  Everywhere from Thailand, to even here in Hong Kong, which is where my business is based, and then, [0:04:00] on the end, it’s a bit cold, as you can see, I’ve got the vest on today.

But you can have a great lifestyle at a reasonable and affordable price.  Plus not only that, you’ll experience new things, you’ll open your eyes.  To educate kids these days, the outside of a confined education system must be a wonderful thing, you know.  Travel, I reckon, is the best thing that we can ever do for kids.  Get them out there.  Get them seeing other cultures.  We’ve got all these bad media and the press at the moment about you’re a racist, you’re a misogynous, you’re this, you’re that.  That wouldn’t happen if everyone traveled, everyone saw or everyone knew, everyone talked to everyone.

So, yeah, having residency overseas, [I argue 0:04:44], is a must for people. Even if you only went and lived there for three or four months the year then come back, it’s an eye-opener and it just opens up your perspective.  But it opens up your opportunities as well.  Sitting in airport lounges, I’ve reckoned I’ve done more business sitting in airport lounges talking to other travelers and other business people that I have any networking event ever.

Warren: Really?

Stephen:  It’s going to be fantastic.

Warren:  Wow.  I love what you said about [home schooling 0:05:13] it struck a chord because we were having some problems of one of my kids.  And, like, when I say, problems, nothing like the major ones, but he wasn’t finding school too easily.  My other three kids, two of them just lost their passion for school.  So, we pulled them out and started home schooling them.  And it was a big decision.  And the first thing we discovered was how Singapore math system was the best in the world, way better than what I had in Australia.

We discovered that there are so many different curriculums if you get internationally that were miles better than what we’ve done.  One of the best home schooling experience that I gave my kids was took them to America, hired a car and just drive all around the south and everywhere and got them to learn about slavery, the Temperance Movement, everything, and write an assignment, that was their history teaching for the term.

And they were just like, “This is the best teaching every day I’d like.”  Because they were excited about it, and they were doing about it, now, went to [0:06:09] in Chattanooga, Tennessee, and I saw the big sign it was a place where it’s the first, you know, standing up for rights for black people there. And, [0:06:17] get that and they remember history and they all talk about Chattanooga, and, about the slavery and the temperance movement, and, one of the things I’ve realized in even took my kids to other places like [Tivoli 0:06:28], and [0:06:28] Spain, the culture.

Yeah, I mean, it just really opens up to a whole new way of thinking, doesn’t it?

Stephen:  Oh, [0:06:35] it does.  And, I can always remember when my parents used to take me out of school and we’re going somewhere and the school teachers and they’re all saying, “Oh, well, it’s never going to be anything if, you know, if he doesn’t get a good education.”  I’m thinking, “You know the best education I ever had was when I left school.”

You know, and this is not put teachers down because my [son 0:06:57] just don’t know any better.  But they’ve got a set of rules that they’ve got to live by.  They’ve got a set of check boxes.  And those check boxes really are still stuck in the 1960s.  We’re living in the 21st Century now, we’re living in the 2017.  The world has changed.  It’s moved on from group thing.  We’re now moving more and more into individual sort of a [careers 0:07:23].  We’re going to see a lot of more of the AI so that the automation and the augmented-reality type stuff taking over a lot of the menial paperwork job.

So, it doesn’t matter whether it’s blue collar, white collar, black collar, pink collar, the jobs are going.  And unless you are out there and you can see the opportunities and by spending time overseas, educating your kids overseas or educating yourself overseas, you’re just not going to say where these new jobs are going to pop up.

So, that’s why residency and, look, there’s, I just write before we started here, I’m just thinking here how many places around the world are there where I would look – like to live?  And I come up with a place of 21.

Warren: Wow!

Stephen:  So that’s 21 different countries around the world where you can get residency.  I know sorts of [0:08:17], you know, we’re talking from Monaco which is super high in looking at, you know, $5-million investment all the way down to the bottom end here of Nicaragua, Costa Rica, where all they want to see is that you can support yourself.  Chile –

Warren:  Right.  You know, this is great.  That actually leads me onto my next question so might as well just say that.  So, yeah, I was going to ask you what are because lifestyle comes first, before tax reasons, other things, it’s lifestyle.  You’ve got to live somewhere you love.

So, what are some great places?  What are the benefits of just maybe tell me some of the really good places like you just mentioned some there, but a bit about them like, you know, just the lifestyle and what the pictures are to give people a little bit of an idea because some people love to trip – go out and party a lot.  Some people just like a simple quiet lifestyle.  Some people like somewhere where there is access to some great infrastructure.

So, just give a bit of broad range of the 21 places, maybe some of the best six or seven, that kind of thing.

Stephen:  Yeah.  Okay.  A couple that I really like are on my list here, and I just run down that is I like the Bahamas.  Great sunset, yeah, beach.  You can get permanent residency in there but just getting a property there about USD $500,000 or $600,000 I think they want now.  It’s a bit more expensive now than it used to be.  But, you can actually just live there as a resident.  And it’s a non-tax price.  So that’s beautiful sunset.

Monaco.  Monaco, of course, is very European.  You’re going to be surrounded by the most wealthy people in the world.  Well, as I said, to get a property there, you’re looking at $5 million.  And then I want to see, you know, you’re not just a paper resident, so, you’re going to have to put some roots there.  But, why not?  It’s Monaco, it’s one of the best places in the world.

Then we’ve got Malta.  It’s a great little – it’s a rock in the middle of Mediterranean and has some great, great history.  And food, and, culture.  It’s got mixes at North Africa and Southern Italy all mixed.  You can get yourself into the [label 0:10:15] residency program there.  Walk up and see and you’re going to have limited tax.

Some of these places have no tax and small amounts of tax.  Portugal, if you spend under six months in a year, there, you’ll get away with paying no tax at all.  But once again, it’s a place that is hugely like cultural elements.  And it’s a beautiful place.  You’ve got the mountains in the north.  The beaches and stuff on the sort of the West Coast.  And you’ve got Spain one next door as well.  So you’ve got great places to go for trips.

Back into the Caribbean, we’ve got Anguilla.  What else was there?  Dominica.  One of my all-time favorites is Panama.  And, you know, that Panama has several different residency options for people.  Entrepreneurs, new-start businesses, residency, sorry, retirement, skills, foreign nation – there’s a whole heap of different levels of residency that you can get in Panama.

Belize, if you want to go under the retirement and stay in the beach, Belize is a great little place.  Retirement for a lot of these places is only 45.  It’s not – yeah.

Warren: I could retire.

Stephen:  Yeah.  It’s not [0:11:35] or 70 like it is in Australia. They say retirement’s 45.  Then we’ve got, then the Middle East. Dubai, Qatar, Bahrain.  These are great entrepreneurial destinations and places where you can get residency fairly easy.  You’ve just got to prove that you can support yourself.  If you want more permanent-style residence.  There’s no such thing as permanent residency in Dubai or most of these places.  But they’re a more a lengthy residency starter company in one of their free trade zones.  Get sponsored by a company over there and then you can live.

The Middle East is four hours to six hours from basically everywhere on earth.  It’s, you know, six on hours into Asia.  It’s five hours into Europe.  It’s five hours into Africa.  It’s they’re connected.  It’s a great place if you’re an entrepreneur.

Once you get on the Silk Road that is happening now, it’s all going to flow through there.  So these are great places if you’re an entrepreneur.

Chile has the entrepreneur and starter visas for entrepreneurs and people that want to do kick off their residency.  If you just want to retire and trade stocks and all that sort of stuff, we’ve got Vanuatu, Samoa, and a few Marshall Islands and a few of those little places in the Pacific.  Where you could just go and relax and, you know, most people would end up starting some sort of business or all that anyway.

But if you’re looking for retirement schemes, Thailand has a retirement visa for over 50s.  Malaysia has the My Second Home Program.  Singapore even has investments.  Get yourself EP or other investment programs.  Hong Kong sadly is – has stopped a lot of their residents’ programs.  It’s still possible if you want to do it via a company.

But Hong Kong you can come here after three months on most passports anyway.  And just stay so you can do all your business that you want and then go and live somewhere else.  I like Thailand.  There are places like [0:13:54] and Phuket.  Sort of the beachy-type areas.  I spent three or four months of the year down there.

The Philippines, it’s a bit tougher, but it is possible as well.  Some of the other place, I just have a look at my list here, what have I got.

Macau could do it.  It’s a fun-loving the city.  Would you want to live there [0:14:16], I wouldn’t.  But it’s just likely –

Warren:  It’s the Vegas of Asia.

Stephen:  It’s a Vegas of Asia.  It’s a great place.  Great, you know, go and have some fun.  Georgia in the Baltic States.  If you like snow.  Slovenia.  Estonia, as we mentioned the other day.  All these places have residency available [0:14:39] levels of getting into.

So, my top, if I were to pick my top 4, Panama would be definitely on my list.  Closely followed by Malta, Portugal.  If I was looking at really establishing long-term roots, Monaco.  It’s basically who you’re going to meet in Monaco is worth the investment, of the place in.  You’d be rubbing shoulders with some really, really, really talented and upmarket people.

So, they’re probably my pick at the moment.  Thailand for short-term, going for a three-month stay and that sort of stuff.  I don’t normally stay in one place for like 12 months at a time.  I set a [0:15:24] to move.  I don’t want to get caught in anyone’s trap.  So, that’s sort of – that’s a big overview.

Warren: That’s really good.  So let’s break that down more specific now.  So, let’s target first people who just want to get rich.  So, we’re going to look at people who just want to get rich, and, then, people who, like you and I, just like to move around a bit.  So, people who like to get rich and really and happy to find somewhere and stabilize and settle down and be more than six months in a particular country even be there most of the year.  What would be your top picks?  I know you’ve mentioned a couple already, that sound really good.  But like Monaco, that’s a bit more expensive.  I know in the past you’ve mentioned Costa Rica or Belize.  Maybe give me three places, just three, that your top three to settle down roots and what and the pros and cons like taxes, lifestyle, everything?

Stephen:  Okay.  My ultimate Rolls Royce one is Monaco.  It’s a full tax-free place.  It’s a European destination, here in the middle of Europe.

The pros are that it’s European, it’s tax-free.  The people you’re going to meet there are a high-class are worth the investment.

The cons are that it’s very expensive to live there.  It’s crowded.  And then you’ve also got a lot of other people that are all doing the same thing.  But, it’s a great place to live.

Then, have a look at, say, if you wanted just a straight retirement, you wanted to live by the beach, do not very much at all, Belize. On and various [0:17:00] in Belize, if you want to – you’d say you’re over 45, you get retirement fees.  It’s low cost of living.  It does have some Internet capabilities, but you wouldn’t want to run a full business from there especially out in the beaches.  The best Internet’s back in the city.  Belmopan Belize City.

But then, you’ve got the – they’re a little bit more third world-ish, so to speak.  Then, the beach or other places around.

Equally with that is the Bahamas.  So if you’re an entrepreneur doing a lot of business with the U.S., the Bahamas is a great place.  Tax-free, fairly easy to get residency.  And you can [0:17:43] that into permanent residency.  And then, it’s possible but highly, highly unlikely that you’ll get a passport at Bahamas.  But it is doable after a long time.

Warren: But internet?

Stephen: If you wanted something else at the other end, Costa Rica, of course, is a really good location.  Somewhere in this part of the world is Malaysia.  It’s not everyone’s cup of tea.  It is a strict Muslim country.  But once again, the Malaysia My Second Home program is very open.  And it’s named My Second Home for a reason.  They want you as its second home.  So they want you to come and establish there, spend eight, nine, ten months of the year there.  And then go somewhere else.  Or even only spend six months in a year, then go somewhere else.

The price of that is if you’re in the Penang or the Johor area, so the southern areas, middle to southern areas of Malaysia, you’re close to Singapore, close to Hong Kong.  So that means that you’re very easily able to, well, Kuala Lumpur as well, get to Europe, get to the U.S., get back to Australia, get to New Zealand.  So it’s very – it’s a very connected place.

So they’re probably my top picks right now.  But as I said, this depends on which one.  Do you want permanent residency?  And permanent residency is different to just having temporary residency.  So, establishing roots.  Getting yourself domiciled somewhere.  And either limited in the amount of tax you’re going to pay.  Or living in a no-tax area is something that is a lifestyle choice that [0:19:22] has to come down.

Warren: So, really now, [overlaps 0:19:27].  Yeah, so getting roots and getting settled from that’s actually good.  So you’ve mentioned Monaco is a great place but it’s expensive.  You’ve got like Belize is fantastic for beach lovers, but you – you’re running a business, you’ve got an issue there.  Bahamas is fantastic for entrepreneurs who also like the beach.  And I’m assuming Bahamas have good Internet, have they?

Stephen:  Yes, great internet.  They’re on a lot of the major channels.  There’s a lot of hedge fund guys living out there in the Bahamas.  And you’re also going to be surrounded by some interesting characters.

Warren:  Oh, yeah.  That’s the movies.  What about Caymans?  Is that for bearing roots? Or is that really just basically go and do business and [0:20:08] again?

Stephen:  The Caymans is an interesting place.  It’s tax-free for like [0:20:13].  And but it’s very expensive.  Same with the BVI.  I love the BVI because it’s the British Virgin Island.  It just conjures up such great place.  And it’s where Richard Branson owns his own island as well.

And when you go to all these places, and this is just a side note here.  I love all the stuff in the Caribbean.  They don’t actually say, “Are you a resident?” or “Are you a citizen?” They say, “Are you a belonger or a non-belonger?”

And, to me, that just puts it in a frame that we don’t care, you know, if you’re a non-belonger, you’re welcome.  But if you’re a belonger, you’re also, you know, you’re more than welcome.  We’re not putting up big signs to say, “No.”  I like the BVI, I like the British Virgin Islands.  It’s a bit more expensive than, say, the Bahamas or Belize.  Or even Anguilla or St. Kitts, any of those type of areas.

But, no, it’s good.  Cayman Islands would be a place that you would go if you’re a hedge fund manager or looking after several family-office type stuff.  And you might spend three months of the year there working with your lawyers and your strategists and all that sort of stuff.  And then go somewhere else.

As you move up through the tiers, so, if you’re a solo entrepreneur type, you’re going to be looking at different locations for cost.  But some of my clients had, you know, the high 8 and 9 figure-type guys who, to them, the cost is not an option.  And these guys move all the time.  So they will spend three months with their lawyers in the Caymans and then four months in Monaco, you know, during the [0:22:00] pro season.  And then they’ll go and spend some time in Russia or Africa or something like that because they’ve got business.

And one of the guys that I was working with for a while, his home was actually his yacht.  And his yacht was registered in the Marshall Islands.  So, he just lived on that permanently and pulled in somewhere and then sailed off and then pulled in somewhere else and sailed off.

So, there’s different lifestyle choices and different [0:22:28] for a lot of different people.

Warren:  Excellent.  So let’s say, for example, that I wanted to get roots.  And just to give you a scenario.  So again keeping the framework.  And I [0:22:40] you I just love the beach, you know, I just want to find somewhere with great beaches, great girls, great lifestyle.  You know, like [0:22:48] stuff, and that’s what I really like – I’m actually going to have somewhere I could hang out, enjoy being there, travel off another place from time to time.  But really somewhere to [base 0:22:56] myself and eventually get permanent residency.  Like and still run a business.  With somewhere like, say, Belize or Costa Rica or what would be those kind of places like for [0:23:07] of Bahamas.  Sounds like those kind of places.

Stephen:  Yeah, you’d be looking at somewhere probably in the Caribbean for that type of lifestyle.  Even Panama, getting yourself established in Panama.  Panama has some great beaches.  And then you’re only a stone’s throw away from all the other sort of other destinations that you can go to on a weekend here or week’s stay here and then come back.

Panama would be a good location for that.  And they’ve got several tiers of [phases 0:23:37] to get into.

Belize, if you just really wanted to live on the beach and rest up, Belize would be a top choice.

My number one choice, say, for, just hearing your quick case study there would be the Bahamas.  The Bahamas has everything.  It’s got people from Flip-flops to, you know, cigar-smoking, cane-wielding, top-hat smoking, you know, whiskey-drinking guys who are trying to take over the world.

So, everyone sort of fits in in there in the Bahamas.  And, it’s, you know, it’s got some great facilities and all sorts of different activities that people can do.

Warren:  That’s great.  So, thank you, Stephen.  So that’s covered off category one beautifully.  So I’m going to be covering three categories.  One is you really want roots.  Category two is our next one, which I want to, now, is a single person or a young couple or just a couple who basically they just want a residency more because they’ve lived in Australia, U.S., UK, New Zealand, [0:24:43], who refuse to let half their money go to government as hush money for extortion.  And fair bit of pay legitimate contribution but not basically [0:24:52] which is what we feel is happening to us.

So, the same time, we do want to come back to U.S., to Australia for a few months of the year from time to time to see family.  We want to go in these other places.  We just want somewhere to be resident that’s going to work for us.  So, what would be your top few choices there?  So somewhere when I want to have a residency, somewhere where I’d have to stay for like six to nine months of the year and be tied there.  I just want somewhere where they can base themselves, maybe rented an apartment or meet the basic the bare minimum criteria so I can travel around a bit.

So the first two that come to mind there is Malaysia under the My Second Home program where you could rent an apartment there quite reasonably.  Leave your stuff.  Use it as your home base and then fly off to wherever you want to go.  And that gives you [0:25:39].

The second one is Malta.  Under the Global Residency program.  So, once again, you go to the Global Residency program.  Your maximum taxation is capped at €15,000 a year.  So, sorry, it’s a minimum of €15,000 and a maximum of €15,000, if you know what I mean?  So, it’s sort of a single fee [0:26:00].  You rent an apartment.  It’s a great base.  You’re two hours from Italy.  You’re four hours or three hours from London.  So, you’re in a great location.  So, and you can sort of go.

And Malta is as long as you say you spent two, three, four months a year in Malta.  But then went and lived in Europe, as long as you didn’t get stuck under another jurisdiction’s taxing, you’re only ever going to pay whatever tax was in Malta.  So, Malta’s another choice.

Then, on the other side of the world, again, we’re looking at Panama. So, it’s basically we’ve got –

Warren:  Panama – [0:26:39] [overlaps] development.  Panama you don’t even a few months to the year from what I can see, don’t you?

Stephen: Yes, basically, you’re just going to establish something establish some sort of roots.  So, and depending on which visa that you go for.  So if you do it under the pension program, you’re going to establish yourself there this is your pension price but then you can travel.

If you do it under the entrepreneur visas where you’re establishing a small business, so you’re putting roots into Panama and then you’re seen to be contributing.  You don’t have to stay there.  You stay there for two, three, four months of the year, and then you’re off to the U.S. for two months of the year; you’re off to Europe for two or three months of the year, coming up to Asia; taking a cruise, doing whichever you want.

Now, here’s another one that is very new in gaining traction.  It’s I’m hearing a lot of retired people are doing it, so, elderly retired people.  And that is taking a long-term berth on cruise ships.

So, you’re actually, yeah, so, you probably still need a residency for your tax base.  But for being able to live somewhere, and see something different all the time, if you phoned up one of the cruise companies and said, “Look, I want to take a 12-month berth on one of your cruise ships that’s doing, you know, around-the-world or does 10 different cruises over the years,” they’d be quite happy to do that.  And they could even work out with them that, “Okay, I’d get off this cruise ship.  When it comes back to this destination, I’ll get back onto it again.”  So that’s another option for people that want to go sort of have a base for their business, and then, live a totally different lifestyle.

Cruise ships have good Internet.  You’ve got good food.  You’ve got doctors on board.  You’ve got things for the kids to do.  You’ve got shows, entertainment, plus you’d be seeing different stuff all the time.  Especially if you pick something like the Queen Mary that is doing round-the-world trips.

Warren:  I’ve heard of the ship called The World where you can actually go and buy for USD$10 million or something, an apartment on it.  And with people to become tax residence tax-free on The World, then, they just travel back and forth, have you heard of it?

Stephen:  Yes.  So, there’s a few of these things starting to pop out now that’s part of the Seasteading Movement as well as people that are thinking beyond border, they’re thinking beyond what the traditional realm of a country is.  And The World is definitely one of those.  There’s two or three other ships out there that are doing the same sort of thing.

The Seasteading Institute just started an MAU with Tahiti to build a floating city that will be basically a self-governing, non-taxing-type realm, but under the construct and the jurisdiction of Tahiti, in French Polynesia.

So, yeah, there’s other options for people that don’t want to be anchored in one place.  And this is a beautiful world.  I don’t know why you’d want to be anchored in one place.

Warren:  I agree.  And that what you’ve got me, yeah, so, really, one of the things I was going to say about that was I think people get tied down with their families, and their perceptions and when you get stuck is really the more you’d just be sovereign and sovereignty to me is everything in your life.  It becomes sovereign in making your choices, what’s right for you, rather than feeling down by partner or by expectations of kids or family.  I mean sovereignty is everything to me.

Stephen:  Oh, it is.  And personal sovereignty, which is the ultimate for any of us in this industry that are looking at this lifestyle is definitely where we are and we can have a whole show on personal sovereignty and the different parts that you could get to becoming sovereign and making sure that you’ve got everything covered.

Warren:  [0:30:44]

Stephen:  I think that’s definitely the idea.

Warren:  Oh, yeah.  Was going to say you’d be in, I think, definitely I’d mention that one at the end actually.  But the other quick thing before we go onto Category 3, I was going to say, [0:30:56], was one little trick that I found and I want to confirm if you agree with me is that, let’s say, you were in this category 2 and you only want to be in Malta for three or four months of the year or two or three months or Panama for two or three months.  It’s important you don’t let me them know that early on, on my great day – you might spend your first year spending a fair bit of time there.  But then, once you’ve done that, then, you start maybe cutting back your business.

But in the early stage, you’re going to show some continuity of the place.

Stephen:  Yes.  That is definitely sure, definitely for sure.  So if you – and this also helps cement your bona fide residence.  So you move to this place, you rent an apartment, you get it for the first six months or eight months to meet all the requirements, and some places want you to rent something for the full year.  Well, in a lot of these places, your rent, we’re only talking USD$800 a month. So you could quite [0:31:51] easily afford to rent a place all-year round.  And then, if you wanted to, Airbnb it to cover some of your costs.

There’s a whole heap of other ways of covering your costs when you’re not using it.  But, yes, establish roots there.  Join a local club; join the sailing club; join the golf club; get bank accounts.  And the more time you spend there, the easier it is to open credit cards, get banking facilities, getting home loans, getting all that other bits and pieces.  Because places like Australia now look at you when you move overseas, and they go, “Is your intention to leave Australia?” And if you’ve still got bank accounts in Australia, you’ve got your golf club memberships, you’ve got your home knitting association going, you’ve got everything there that says to the government, “No, I want to come back,” or, “No, I’m really still here,” or they’re going to say, “No, no, no, you’re an Australian. Even if you’re living overseas, I still want my tax.  I still want my bit of flesh from you.”

So, cut all those ties, establish yourself properly overseas, and this doesn’t matter who you are.  So, you first year going overseas, establish yourself somewhere, whether you’re going to stay there full time, become a bit of a nomad, whatever your situation is.

The first year is establishing yourself as a bona fide overseas resident, and getting your right residency and getting all the bits and pieces.  Because you want bank accounts to be able to transact, you want other bits and pieces. And you want a time to adjust.

What I found with one of my clients is him and his wife were they moved straight overseas, three months, they powered on and got their bank accounts, their house, their – all this and then they’re just worn out.  And now like, “No, we’re just going to stay here another six months, you know, to sit and watch the sunsets, and do not much,” and then the next year, they moved off and started doing what they would else they wanted to do.

So, yeah, I know you’re right.  So, the first year, or the first nine to twelve months should all about be establishing you’re bona fide of living in overseas.

Warren:  Yeah, you actually got me thinking about because what I tell clients because I used to work for the tax office in Australia for 10 years, and I, since then, I do a lot of international tax advice and help people with residency advice and obviously, from my years of experience, the tax office, including doing some international tax division work there, I am very aware and one of the things I tell people is I say, “In America, I own a property in America, I just sold it, mind you, but I’ve got a bank account in America, we own a couple of companies there, we’ve got a couple of [cards 0:34:33] over there, it doesn’t make me a resident of America.

So, I said, “However,” so I said, “Likewise, if you’re an Australian or, let’s say, a U.S. person and you’re moving to become a non-resident, so, you got to have some bank accounts like, let’s say, that you still keep an Australian company just to manage certain affairs over here.

Let’s say, you still keep a few basic bank accounts, that’s fine.  But, it’s when you start having [0:34:54] you still got your driver’s license, you still got all that kind of stuff, and you don’t [0:35:00] steps to actually gradually release all of that.  Then it’s a bit like me being in the U.S. getting a Social Security card, me getting a driver’s license and passport, U.S. is going to start saying, “Okay, well, Mr. Black, you are now a U.S., you know, a U.S. tax resident.”  And the question’s as to why.  So I said, “It’s all about your ties and totally become a non-resident, you’re going to start getting a driver’s license somewhere else.  You want to start getting your Medicare.  And, yeah, sure, you might keep your passport for a while because that’s understandable you’re just going to get passport overnight.  So, to me, that’s okay.  And then eventually you might be looking at other options for second or third passports.

So, it’s a process like you’re saying and you’ve got to be seen to be divesting your ties.

Stephen:  And it’s an investment.  If you’re truly wanting to do this for the right reasons, and that’s establish yourself towards the thing you’re gaining sovereignty, these are all the steps you have and it’s a plan.

I sit down and work with clients and we all do a five-year or 10-year plan.  And this is the plan over the next five years.  This is what you’re going to do and what’s going to happen.  Of course, the stuff’s going to change on the way, who knows what happens?  But, we’ll work out a plan, you know, get residency, build business, do this and you might move, you know, work to get citizenship, whatever it is.

And that’s another important point you brought up.  Everyone that I deal with and then we talked to and discuss this, it should be working towards second or third citizenships.  You can retain the Australian, you can retain your U.S. one.  Even on most U.S. people that I’m dealing with now want to get rid of it and it is a long process.  It can take up to 10 years to divorce yourself from the U.S. now.  But that could get easier on the Trump, we just don’t know.

But the second citizenship and so, and second residencies, go hand in hand.  So if you get one, you sort of want the other as well.

Warren:  That’s great.  No, brilliant.  Thank you, Steve.  That’s perfect.  So the third category of people that I want to cover briefly is one of the more difficult ones and one where you and I we’re [0:37:11] the situation with a client where you’re an Australian or U.S. or UK person, and, but they don’t really want to go to Panama or wherever you want to go the place, they want to go to Portugal because I love Portugal like with some more higher-tax country.  Or they want to go to Singapore because that’s where they want something westernized used to.  Or they say, “No, actually want to go to Spain,” or “I want to go to France,” or something like that.

So, I know we’ve got EU tax treaties which can help them we can use Malta because Malta’s in the EU in that.  How do you handle people with those kind of resident situations?  Like let’s discuss how we handle the recent client which we went through together where he was moving to live in Portugal, but we were like, “Oh, dear,” you know, Portugal is a high-tax country and they’ll slam you.  So we had to work out a way how can we utilize Malta, the EU treaties, things like that?

So what’s your advice on those kinds of residency issues or even alternate ways, you still get the same outcome.  But be a little bit more flexible.

Stephen:  Yeah.  So, And these are the real case-by-case scenarios.  Everything in sort of areas has to be done with case-by-case.  But if we have a look at some of the ones who really live in the – in Europe, and we can utilize, as I said, we can utilize Malta, so the taxation’s capped basically at €15,000 a year of what is brought back to Malta.

So, if you want to live €150,000 and then you’re going to spend and then you have a treaty bank account in Malta and all that sort of stuff, that’s fine.  Then, what you’re going to make sure is you don’t get caught up in the tax system of another jurisdiction.  So, in Europe, it’s 60, sorry, it’s six months in every 12 months.  So, if you live more than six months in every 12 months, you’re going to get caught in that local jurisdiction and have to start paying their tax.  So you don’t want to do that.

Now, the other way of doing it is making sure that you limit the amount of money that you actually earn.  It’s okay for your company to pay for your flights, your travel, your whatever.  So, it’s also about restructuring how you expense your living expenses and how you expense what you get.  And this is what we said yesterday about becoming an investor versus becoming a manager or a day-to-day operator of your business.

If you want to restructure your business so that you want to [0:39:40] only earn 1,000 or 2,000 USD or €s a month.  That’s going to bring in much pretty much put you into the base category of every tax system in the world.  So you either pay none or very, very, very little amount of tax on that minimal income.

But your company then pays for all your flights, it pays for your accommodation because it’s part of your thing.  But we’re going to make sure that company paid for accommodation is not seen as part of your wage.  And, so, there’s different jurisdiction.  So we need to look at ways that that’s done. It may be using that if you have a spouse, that we split stuff between you and your spouse to keep you as low as possible.

The other thing is if you’re in a high-income bracket, and then you want to live in Europe, move to Monaco, move to Honduras.  There’s a whole heap of place – move to Switzerland.  Even though the Swiss, when you have sort of residency there, it can be a high-taxing jurisdiction, but you can also limit the amount of tax that you pay by structuring your life and thinking totally different.


Warren:  I was going to say, so, what might be really is, suppose, the client we’d [recently 0:40:57] probably that’s not a bad example.  So, let’s say, you’ve got somebody who is particularly because, let’s say, they’ve got a wife or husband, and the wife just says, “Look, I just want Portugal, you know.  I’m happy to go along with your dream and your plan.  But, hey, I’m not just going to go and live in some exotic island in the Caribbean sipping piña coladas, watching new scantily-clad Bahaman women around you, you know.  I want to be in Portugal.  And I want to see build – I like Portugal like build a lifestyle there.”  And they’re going to stay there seven months of the year.

So, what can you do there?  I mean, a Hong Kong company I know is one option.  A Malta company may even be a better option because of the treaty.  I mean, what kind of thing you do there while being able to separate yourself enough, so that maybe you’re getting an income from those ones, but then the company’s paying because an offshore company, like, say, in Malta or Hong Kong, and that’s paying your expenses, and not going to be in Portugal because you’re involved with the company.  So, what would you say, say, is that a possibility?

Stephen:  It definitely is a possibility.  So, if you’d say I wanted to live in, and this client did, they wanted to live in Portugal.  So, yeah, go live in Portugal.  Go get your residency.

Warren:  Let’s say their income is $1 million.  Let’s say they’re making $1 million in their business and they don’t want to be in Portugal.

Stephen:  Don’t.  So, limit the amount – this is where it gets back to separating yourself from your thinking about are you a manager or are you an investor?  So even though you might be running your thing, it’s how you perceive to the tax authorities.

So, you set up the companies offshore and you might use two or three.  Hong Kong, Malta, the Malta company is basically a service company back to the Hong Kong entity which is then facing the rest of the world.  The Malta company hires you to do certain things on a consulting-type basis.  But your investment in both of them, you own both of them.

So, that income will be taxed in Portugal because you’re living there more than six months out of a 12-month period.  But, it’s limited, so, it’s €100,000 so you’re going to pay €16,000, €17,000, €20,000 in tax.  You just [0:43:07] that and pay it.  But you’re saving yourself tax on the bulk of the rest the [0:43:13] because you’re leaving that inside your companies.  You’re leaving that inside your things to reuse and the company start the pay stuff.

So, the companies [0:43:21] say, “Pay your spouse some money as well so we can split it off off that way and then use the different tax rules between Malta and Portugal.”

Warren:  I’ve got you.  So, what you’re saying is that the Hong Kong company might run your business and deal day-to-day with clients.  That might make the $1 million, it might’ve been paying Malta, let’s say, 300,000, for example, to basically run the services, if you’re a service entity to run your whole business for you.  That one been pays tax in Malta which is around 15% just on that $300,000.  €15,000 or whatever or [0:43:55] 15% it works out in the end.

That might happen to pay you some money in Portugal because the Malta company is under tax treaty, there’ll be credit anyway for the Malta tax in Portugal.

Stephen:  Exactly.

Warren:  So, by the time you finish, you’re probably end up paying 5% or 10% tax at most.

Stephen:  Yeah.  So their tax would be a lot lower.  And then what we can do is we can load up the Malta company with more expenses to reduce the amount of tax that they will pay.  And so, they’re all legitimate expenses.  They’re expenses around you traveling or you visiting different places in different jurisdictions to operate on a day-to-day basis, which is an expense for the company.

Warren:  Yeah.  Excellent.  So, lastly, Stephen, this is good.  This is [0:44:42] all three categories, I think, we’ve covered, there’s always going to be weird situations.  That’s covered 98% of people on this thing.  Last question I was going to ask you was, again, following onto the last one, what do you see in the future of offshore residency in getting any easy getting residency.  You see borders coming down more and more and [0:45:02] about [0:45:03] countries and national sovereignty becoming less and less, do you see it becoming harder?  Where do you see it going?

Stephen:  Ultimately, I see a world without borders, and everyone going back to their nomadic tribal state.  Will I see it in my lifetime?  I doubt it.  In a probably two or three generations down the track.  There’s still a lot of vested interest in borders, especially in Africa and Asia.  And a little bit in Central and South America.

The European Union was the start of trying to dissolve some of those borders with Schengen. But it was just badly managed and it’s – that’s just going to implode.  But whatever happens next, I better step in the right direction. So, yes, I see borders and passports and all that disappearing eventually.

One in [0:45:55] a five-year view.  I think the next two or three years there’s going to be a lot of focus put on economic refugees.  So, everyone now is talking about refugees from Syria and the Middle East and North Africa and all these sort of stuff.

What a lot of those are as well, yes, there is war-torn refugees, don’t get me wrong here.  But there is a lot of economic refugees mixed inside that.  There is people taking a lot of advantages that are opening up to move to have better lives.

So, we’re going to start seeing that happen in the reverse.  So, people in Europe are going to start to realize that, “Hang on a minute.  I can expatriate to the Far East and have a better life out here for a bit of lower cost of living and have more opportunities.” Or, “I can move to Asia, sorry, Central America, in the Caribbean for the same thing.  And I can take my money with me.”

So, if you’re thinking beyond the border region and open borders, you’ll find out that you’re more mobile.  So, I think we’re going to start seeing a lot more of that.

Governments will start the crackdown in some jurisdictions and open up in others.  We’re already seeing the list of countries offering economic citizenship programs, economic residency programs, long-term entrepreneur visas are growing by the day out there.  There used to only be about four economic citizenship programs.  Now there’s about seven or eight, so they’re growing.  Some of them are good, some of them are excellent, you know.

Austria’s been the number 1.  Malta’s been the easiest sort of to get, but it’s a Rolls Royce, it’s going to cost you €1.65 million at the sort of the minimum.

But, yeah, we’re going to see a lot more of this people trading and leveraging locations for whatever it is.  Countries want skills; countries want some sort of income and it doesn’t have to be taxation.  If you have a look at a lot of the successful countries in the Caribbean, they’ve realized that expats and tourists contribute a lot more to the economy than what they would with their taxation because they spend money in restaurants, they employ local people, they have people that clean their houses and drive their cars and mow their lawns and do all that sort of stuff.

So, they’re contributing a lot more into the economy which then flows back through the entire economy because it keeps getting and everyone slowly rises up.

So, as taxes come down, and the amount of freedom of movement increases, I think we’re going to see an exciting time over the next five years.

Warren:  Yeah, it’s interesting what you’re saying here because it reminds me of the original reason why many of these countries like the Caymans and the Virgin Islands are tax-free is because basically they knew that money flowing in makes economy abundant, whereas, a very narrow-minded fear-driven approach or Western country that says socials way of thinking, but if you’re not giving high taxes, we’re not going to fund our [woes 0:49:13], I mean, it just completely incorrect because when people are flowing money into a place with low taxes, they stop bringing their money back and one of the things I love what Mr. Trump is doing is how rather than saying, “We’re going to crackdown on high taxes.”  He’s going to the American businesses and saying, “Tell you what. You bring your plant back in here.  Then, we’re going to give you much better tax rates here.  And we’re going to give you these incentives.”

So, rather than the big stick approach, he’s doing a deal with them and then saying, “Now,” but then he’s saying, “Look, you do is to keep offshore when you are going to pay some taxes when you bring it back to America.”  Now like the protects us policy or not, you know, there’s arguments for and against that, at least he’s got the I like the basic concept of going back to a deal-making kind of government where like some of these tax havens have done, it’s been more about, “We’ll give you low taxes so bring in money through because then we can build our infrastructure and you can come and contribute like what Panama had done.”  You know, we give you low tax, we give you low tax, we give you residency, but in exchange, we want you to have a business here and contributing to our economy. It’s great.”

Stephen:  Well, have a look at the one right on Australia’s doorstep, Singapore.  Singapore is a huge success story.  And 1960 when it was basically a swamp, Singapore was a massive swamp in 1960.  The founder of Singapore, Lee Kuan Yew, got together and said, “Limit the tax.  We’re going to look after our citizens.  [0:50:39] people to come in the droves and contribute to our economy.

Now there are so many millionaires and billionaires living in Singapore that are just earning so much money.  I’ve got friends of mine in Singapore they live in this beautiful apartment building down there.  And, you know, a minimum apartment in the building is S$25,000 a month.  That’s in rent.  That’s how much money is and the building is full.  There’s a waiting list to get into it.

So, you know, it does work.  When you actually have a forward-thinking government that actually looks at things and says, “You know what?  We don’t need the tax that the living daylights out of our companies and our people and then I will spend more in the economy.”

The Cayman Islands and the British Virgin Islands, or the British Virgin Islands basically goes, “We make so much money off people being here and visiting us.  We don’t need to tax our locals.”

Warren: Sounds brilliant.  Thank you, Stephen.  So last I was going to say is just this whole thing, you’ve got me really thinking, “Okay, I’ll open to you so because one of the things that’s come through today, that really hit me, but I think for many people, for many people some is an issue is certainly the ability to become self-sustaining on your income outside of having a job or even a profitable business in Australia just dependent upon that or U.S., and ultimately having a sovereign business and sovereign investings that’s worldwide, are you open to doing another one of these of me just basically on basically becoming sovereign in your business, in your investments and finance just focusing but we share our common ideas together?

Stephen:  Definitely.  And I also run private weekends where I teach this to people.  So it’s going to be five – 15 people.  We go and spend some time in a resort in Bali or somewhere like that and we define the whole plan so I can bring basically what that plan is and I can bring that out to your listeners and viewers.  Yeah, happy to do so.

Warren: Let it be good.  I mean, obviously, this is going to be going to both our viewers.  So, yeah, I think it’s just, as we’re doing a few more of these, people can dive – we’ve got links on our site so we’re going to have a net with people getting client more, but I’m certain [0:53:00] myself, I wasn’t even aware you were in those.  I know that I’ve been to one of your events with Mari in the past, but I wasn’t aware that you actually did that, so, that’s really good.

Stephen:  Yeah, so they’re not cheap.  But we tend to have some fine wine and good food.  And we do, basically by the time you leave with it, you have a complete blueprint to undertake a sovereign life.  And we – by the end of it, we’d made contacts with all the lawyers, all the people around the world that we need to put into place.  And we’ve got confirmed affinity timelines and stuff like that.

So, we can go through and I can do a small overview of that for everyone here.

Warren:  That would be great, we can do that in no time.  We’ll do it one on the sovereignty one.  Then we can – part of that we can talk more about those weekends and how they work.  Yeah, well, like, I wasn’t even aware you did [them 0:53:56], so, that’s really cool.  Like just how we could do one, and I’d come myself.  It’s brilliant.  And I’d share my stuff, so, great.

Stephen: Yeah.

Warren:  Okay, thank you, Stephen.  And we’ll – thank you, everyone, and you know where to contact us and we look forward to there’s going to be more of this coming up.  So stay tuned.

Stephen: Definitely.  Thanks, guys.  Thanks, Warren.

- End of Podcast -


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