Earlier this week, I had a call with an international tax lawyer based in Australia.
Her job is to help mobile entrepreneurs, digital nomads, and permanent travelers get their taxes in order.
International taxation can be messy and complicated, and if you don’t know what you’re doing, you can easily get it wrong.
She also helps her clients incorporate businesses offshore and decide where to get physical tax residency.
She found this job after she quit her career in law to travel the world. Every other traveler she met, it seemed, had no idea how to structure their taxes or business.
How does all that work when you no longer live in your home country?
The truth is that a lot of people who travel the world, sometimes permanently, do so in the search of more freedom.
Freedom from obligations, conventional thinking, norms, government over-reach, depressing urban centers, ‘the rat race’ – you name it.
They want more out of life.
But before digital nomads became cool, there was (and still is) a whole world of freedom seekers who spent decades perfecting the art of the international life.
These people have a name – often abbreviated as PT.
PT stands for ‘permanent travelers’, but depending on the individual, it can stand for a lot more than that – prior taxpayer, permanent tourist, passing through, and many more.
PTs structure their life differently than most people, and today, I want to share with you how they do it.
The core idea of the PT lifestyle is to structure your life to be a tourist everywhere you go – so that no government has complete sovereignty over you.
This means planting ‘flags’ in countries that are best suited to each area of your life.
Today, if you live in, say, Germany, and hold all of your assets there, including your business, bank accounts, investments, house, etc. – you’re at the mercy of the German government for everything.
They can increase taxes, seize your assets, close your business and bank accounts, take away your passport, put you in jail for non-compliance, impose military service on your heirs, etc. – and if they did, there is often little you could do.
PTs structure their lives for maximum freedom and enjoyment. They go where they are treated best, and where life offers them what they want. So they divide up their life in 6 ‘flags’ that look like this:
The 1st flag is for citizenship. This means seeking out a second valuable passport so that you are never at the mercy of one government only. For example, the United States is one of only two countries in the world (the other is Eritrea) that imposes taxes on its citizens no matter where they live in the world.
Therefore, a lot of people chose to give up their American citizenship when they move abroad, and pursue one that doesn't levy taxes on its non-residents.
But second passports are valuable beyond taxes. They give you more options for visa-free travel and if a war were to break out, a country’s prospects were to deteriorate, or freedoms were to be taken away – a second passport allows you to simply move and prosper somewhere else.
The 2nd flag is for residency. This flag is about determining where you legally reside for tax purposes. For PTs, this is often a country that imposes no tax on foreign income (if they have an online business or investments) like Panama or no taxes at all like the Bahamas or Monaco.
The 3rd flag is for business. Ideally, PTs incorporate their businesses in jurisdictions that are flexible, business-friendly, and often, impose little or no taxes – like Singapore, Hong Kong, or the Marshall Islands.
The 4th flag is for assets. Most PTs hold their assets in jurisdictions that are known for the quality of their banking services and where the banks are solvent and stable. These traditionally include places like Singapore, Switzerland, Luxembourg, and Liechtenstein.
The 5th flag is for ‘playground’ – where you actually spend your time and enjoy life. These countries should ideally have low sales taxes and have the kinds of weather and activities you enjoy.
The 6th and last flag is for digital privacy – where you store, backup, and host your online life. There are a handful of countries that are popular for this and that have strong reputations for independence and freedom of speech, like Norway and Iceland.
You might think this sounds like something out of a James Bond movie. But today, more than ever, it is easy to build your life as a PT. It no longer takes millions of dollars and connections.
Anybody can jump on a plane and open a bank account in Dubai or Georgia or obtain residency in Panama.
But opportunities like these don't last forever. Countries make it attractive to do business with them for a reason and it’s all about supply and demand. Whenever they’ve achieved their objectives, they close the opportunity gap.
There was a time when you could walk into any bank in Singapore and open an account with as little as $1,000. Those days are long gone – because Singapore has attracted enormous amounts of capital.
Luckily, there are other places where PTs can thrive today. But if you’re interested in setting up your life as a PT, the time to act is now.