WEBVTT 00:00.000 --> 00:05.600 Is it possible to use offshore strategies to stay in your own country but pay zero tax? 00:06.060 --> 00:11.080 People often ask, I'd like to live in the United States but why can't I set up my company offshore 00:11.080 --> 00:14.140 and save a lot of money? And today I'm going to walk you through the process 00:14.140 --> 00:17.620 of what you need to know so you don't make a mistake. 00:21.400 --> 00:27.040 There are a lot of domestic tax advisors on YouTube, on podcasts, all over the Internet 00:27.040 --> 00:33.460 talking about things like BioRoleX and deduct it, put your money in a multi-pension plan, 00:33.600 --> 00:40.120 stuff that has often been debunked, strategies that are, I would say, if not aggressive, outright 00:40.120 --> 00:47.160 illegal, you want to be careful. And so for me, going offshore, reducing your taxes to 00:47.160 --> 00:54.780 as low as zero is a very organic way and a very, I would say, safe way of keeping more of your 00:54.780 --> 01:00.740 own money, being able to put that money back into your business and having certainty that what 01:00.740 --> 01:07.300 you are doing is correct. You move your money offshore and you follow the step two we're going 01:07.300 --> 01:12.800 to talk about today. And as long as you do those things properly and as long as you 01:13.400 --> 01:18.400 follow all the rules, there's not going to be any of these shadiness associated with a lot 01:18.400 --> 01:22.500 of the other strategies. But here's the question, can you still live in the United 01:22.500 --> 01:29.180 States, this person asking this is from the US, have the US passport, but open an LLC in one tax 01:29.180 --> 01:34.420 free jurisdiction and open the bank account in one of these countries and pay no tax? And the answer 01:34.420 --> 01:38.700 is no. There's a number of things that come into play. We've talked with these over the years, 01:39.140 --> 01:45.560 controlled foreign corporation or CFC rules, permanent establishment or PE. What you want to 01:45.560 --> 01:51.260 look at is you don't only own the business, but in many cases, you are working in the business. 01:51.260 --> 01:55.500 So you're both essentially the owner, but you're also an employee and you have to take 01:55.500 --> 02:00.200 care of both sides of the equation. And so for someone who's working in their own business that 02:00.200 --> 02:05.320 they own, they're going to have potentially a double whammy to put it in simplistic terms, 02:05.840 --> 02:12.980 tying them to their country. So what people ask about is, how do I move my assets? That's easy 02:12.980 --> 02:16.300 enough. And we'll talk about that. You set up an offshore company and any number of different 02:16.300 --> 02:21.820 jurisdictions, you get a bank account for that company, you run your business through that company. 02:22.000 --> 02:26.060 But beyond just moving your assets, you have to move, let's just say, 02:26.880 --> 02:31.920 your tokens, your rump, you have to move your rump overseas as well to really make this work. 02:32.060 --> 02:36.600 Now, we've talked before about the difference between how Starbucks or how Apple runs their 02:36.600 --> 02:42.140 tax, plenty of course they have big operations in the US, both retail and actual office space. 02:42.620 --> 02:47.260 Chances are your business is in Starbucks. If you're at the level where you have thousands or tens 02:47.260 --> 02:52.100 of thousands of employees, yes, there are more advanced strategies. We've worked with a client who 02:52.100 --> 02:57.500 had operations in 21 different countries and they were able to dramatically reduce their taxes, 02:57.500 --> 03:03.400 but they still had to pay some kind of tithe to countries like the US and Canada. So you're 03:03.400 --> 03:07.360 moving your assets and you're also moving your behind. This is where my tax friendly 03:07.360 --> 03:13.380 quadrant comes in. We've talked about this for years. On one side of the quadrant is where you're 03:13.380 --> 03:18.340 leaving and on one side is where you're going. Then on the other axis, it's you and it's your 03:18.340 --> 03:22.320 business because remember, you're an employee, but you're also the owner of the business. And so 03:22.320 --> 03:26.700 you want to figure out where you're leaving. That's the move your rump somewhere else. 03:27.020 --> 03:30.080 So if you live in the United States, where are you going to go? And I'm going to talk 03:30.080 --> 03:34.380 about specific rules for Americans in a minute. And also, where are you going to arrive? 03:34.380 --> 03:38.520 Is it going to be my trifecta method where perhaps you don't have tax residents anywhere? 03:38.680 --> 03:43.080 That's a bit more suitable for an American than other folks. Or is it going to be one place? 03:43.400 --> 03:47.160 If you decide to move to Paris nine months a year, well, they're going to taxi even worse 03:47.160 --> 03:51.600 in France and they wouldn't, the USC haven't really done much if that's the lifestyle you 03:51.600 --> 03:55.520 want, then so be it. But on the other side is where's your business leaving and where's 03:55.520 --> 03:59.560 your business arriving? And so when the question is, can I just put my LLC and some other 03:59.560 --> 04:06.640 jurisdiction? First of all, there are some countries out there, Nevis, the country of Georgia, 04:06.640 --> 04:13.160 where they do call their companies LLCs. In many cases, though, it is more equivalent to a USC 04:13.160 --> 04:19.560 corporation rather than a pass through or what an LLP, for example, the UK, they are more 04:19.560 --> 04:23.840 equivalent to an actual corporation, even though they're called LLCs. So the first thing is 04:23.840 --> 04:28.860 we want to get our terminology right and make sure that we are not applying US terminology 04:28.860 --> 04:34.140 wrongly somewhere else and getting stuck with a company that's not going to help us. So if you 04:34.140 --> 04:38.980 want to move your company overseas, yes, the first thing to do is, depending on where your company 04:38.980 --> 04:45.160 operates, set up a headquarters company in a tax friendly or I would argue tax neutral jurisdiction. 04:45.680 --> 04:51.360 So the UAE for most people no longer qualifies for that. But you still have places like Hong 04:51.360 --> 04:56.120 Kong, the British Virgin Islands, there are some lesser places like the Seychelles. Heck, 04:56.120 --> 05:01.020 there are even some very high level jurisdictions. I mean, Switzerland can be very, very low tax for 05:01.020 --> 05:06.100 certain kinds of business. We have, I think, 15 or 16 different jurisdictions that we 05:06.680 --> 05:11.520 have all the pros and cons for all the profiles for all the amateurs for depending on what kind 05:11.520 --> 05:16.500 of business you bring us, chances are you're going to go to one of those 16 or so different 05:16.500 --> 05:22.580 jurisdictions, more jurisdictions than most people actually specialize in helping you figure out 05:22.580 --> 05:28.080 with. Nomad Calculus has more choices, I believe, than anyone else, not just that we sell you over 05:28.080 --> 05:32.200 the counter like, hey, you want to believe company? All right, here you go. But actually, 05:32.240 --> 05:36.580 we help you figure out which one makes the most sense for you. Go to nomadcalculus.com 05:36.580 --> 05:39.860 slash apply if you want to learn about that. So the first step is setting up the company 05:39.860 --> 05:45.640 and then getting the bank account. Listen, bank accounts don't necessarily have to tie you 05:45.640 --> 05:51.840 to the tax system of the country. You can have US bank accounts in many circumstances, 05:51.840 --> 05:57.660 both for yourself, living overseas or as a non-American, as well as you could potentially 05:57.660 --> 06:01.780 have of a US bank will open for your foreign company. We got one or two banks that will do 06:01.780 --> 06:05.620 that under the right circumstances. You could have a US bank for your foreign corporation. 06:07.000 --> 06:10.560 And so, again, that's the kind of thing that we specialize in is having a relationship 06:10.560 --> 06:15.520 to the banks to where you're not banking in some far-flung island. There are countries 06:15.520 --> 06:19.760 where banking in the country is the kiss of death. There are other countries, in some 06:19.760 --> 06:23.800 cases, the United States falls into this category where banking there is fine. And so, 06:23.840 --> 06:27.180 if you feel comfortable banking in the United States, you may offshore your company, 06:27.500 --> 06:32.060 but not offshore your banking, right? Where the money goes is not necessarily the issue. 06:32.400 --> 06:36.360 It's generally where is the work being performed, going back to those myriad of things 06:36.360 --> 06:42.480 such as CFC, PE, and similar rules before. And so, you can easily move that company overseas, 06:42.480 --> 06:47.360 but the issue is you're going to have to go with it. And so, if you are an American, 06:48.160 --> 06:52.460 the general thing to qualify for, just to keep this simple. And I'm not giving you 06:52.920 --> 06:55.960 formal tax advice here. That's why you go to the website and 06:55.960 --> 06:59.880 learn how our team and our network can help you. But, simplistically speaking, 07:00.280 --> 07:03.980 you want to qualify for the foreign or an income exclusion, whereas you're out of the 07:03.980 --> 07:08.740 United States for roughly all but about a month every year, or you're spending a little bit 07:08.740 --> 07:12.440 more time in the United States, but you actually have one base that you're living in. 07:12.560 --> 07:15.260 And so, depending on what kind of lifestyle you want to lead, 07:15.260 --> 07:19.660 do you want to be living the life that I've led for many years? A little bit less so today, 07:19.740 --> 07:24.160 but led for many years where I'm constantly going into different places, have homes around the world, 07:24.640 --> 07:28.940 aren't necessarily spending that much time in any one given place. I did that for years. 07:29.400 --> 07:33.080 Well, Americans actually have an easier time living that lifestyle because 07:33.480 --> 07:37.480 they are always U.S. taxpayers. I'll come to that in a minute. But if you want 07:37.480 --> 07:42.100 more time in the U.S. or if you just happen to like going to one place and making that 07:42.100 --> 07:46.780 your home, then you're going to have more time in the U.S. to spend. So let's just call it between 07:46.780 --> 07:50.340 one and three months is generally the amount of time you could spend in the U.S. while 07:50.340 --> 07:55.720 offshoring your business. Americans are effectively the only country, for now at least, 07:56.040 --> 08:00.940 where you are going to pay tax on those foreign corporations, even if you're entirely 08:00.940 --> 08:05.500 running it overseas unless you meet certain criteria. If you have foreign partners, 08:05.720 --> 08:10.320 if you have a foreign spouse, there may be a way for you to reduce that tax down to zero. 08:10.320 --> 08:14.740 But no matter what, you're going to pay either somewhere probably the single or low double digits 08:14.740 --> 08:20.720 as an American due to what's called guilty now, or you could potentially pay zero. But either way, 08:20.780 --> 08:25.740 there's going to be restrictions on how you use that money. And so your company's kind of become 08:26.580 --> 08:30.720 to, again, just to be simplistic, it's going to become a bit more of a Berkshire Hathaway in 08:30.720 --> 08:33.820 many people's cases because you're going to have money that if you don't reinvest it in 08:33.820 --> 08:38.260 your business, you might invest it into buying your home overseas. And so there's a lot more 08:38.260 --> 08:42.180 to it, as you can see, than just, hey, I'm going to set up my company overseas and stay 08:42.180 --> 08:50.460 living in the United States. But in any case, you want to be out of the country where you were 08:50.460 --> 08:55.080 to be taxed in. For Americans who have, because of their passport, that tax burden that follows 08:55.080 --> 09:00.540 them no matter where they live, the goal is simply meeting the criteria on a personal level 09:00.540 --> 09:04.080 of being out of the country. And then what we've talked about before in our nomadic 09:04.080 --> 09:08.100 capitalist R&D channel is you want to make sure you don't have people who are working for 09:08.100 --> 09:13.400 you in the United States, at least doing certain kinds of jobs, sales being one that's 09:13.400 --> 09:17.820 like the kiss of death. And so what you may have is if you have operations in different 09:17.820 --> 09:20.840 countries, you have staff on the ground, you have factories, you have different things, 09:20.960 --> 09:24.220 you're going to need to have a multi-part corporate structure where that part of the 09:24.220 --> 09:28.780 structure is going to be tax-neutral. And it doesn't have to be tax-neutral. 09:29.260 --> 09:35.660 It could be 3% or 2% or 5% or 10% or you could choose to run your company through 09:35.660 --> 09:39.940 Ireland and pay 12.5%. Yes, it still is unless you're making big, big, big money. 09:40.480 --> 09:43.200 You know, you could choose to go to other places in Europe and pay 9% and 10%. 09:43.620 --> 09:47.180 There's a lot of choices out there for low tax, but my suggestion generally is 09:47.180 --> 09:51.800 take the tax burden on yourself personally. If you want to live somewhere, let's say you 09:51.800 --> 09:55.460 want to live in Ireland, have an Irish part of your structure that employs you, 09:55.520 --> 09:58.520 maybe have some other people, maybe have people in the US who want to move to 09:58.520 --> 10:01.520 Ireland or you replace them with people in Ireland, and that's a part of your 10:01.520 --> 10:07.240 structure, but keep the top part of the structure tax-neutral. And so understand 10:08.260 --> 10:13.140 where everybody works, including yourself, and where that work is what dictate things, 10:13.500 --> 10:16.900 more than just where the company's set up and more than where the banking is. 10:16.960 --> 10:20.940 And I think, again, people talk themselves out of certain advantages where you can 10:20.940 --> 10:24.440 bank in a place like the United States. Certain people may qualify that, 10:24.620 --> 10:29.260 for that certain people may not. If you come and say, hey, I want to open a company 10:29.260 --> 10:34.820 in a jurisdiction with the smallest number of rules and I'm going to be, you know, 10:34.840 --> 10:39.540 a guy floating around the world and I want to put $5,000 in my business checking or my 10:39.540 --> 10:43.300 business current account, you know, you're going to have fewer options than someone who says, 10:43.320 --> 10:47.000 I'm going to put in a couple hundred grand and keep it there when then you're going to have 10:47.000 --> 10:50.700 options like Singapore open up. And then when you get into the high six figures, 10:50.920 --> 10:55.700 Switzerland opens up and there's all kinds of options in between. So those are the things 10:55.700 --> 11:03.180 that you want to think about. Are you willing to make the move? Now, I would argue that when 11:03.180 --> 11:07.300 you make the move, your business is going to, you're going to learn things for your business 11:07.300 --> 11:12.340 as I have, where you're going to open up new markets. When we started this, I had lived outside 11:12.340 --> 11:17.920 of the United States when we, you know, switched nomadic capitalists into a services 11:17.920 --> 11:25.500 business. I'd lived outside of the US for years at that point. But the more I live 11:25.500 --> 11:29.680 the more connections I have, the more I realize, wow, there's a lot of opportunities in this country 11:29.680 --> 11:35.380 for our services. Now your business may be different, but you know, we went from having 100% of our 11:35.380 --> 11:42.260 clients pretty much back close to 10 years ago, being from US, UK, Australia, Canada, 11:42.360 --> 11:45.320 that was pretty much the whole mix. Maybe someone from Poland once in a while or something 11:45.320 --> 11:50.420 like that, to now having a very diverse number of clients to where who knows what could 11:50.420 --> 11:54.780 happen with an election or an economy or any number of things in any place in the world 11:54.780 --> 11:58.480 when you go out and actually be in the world and you're running your company 11:58.480 --> 12:02.820 as a nomadic capitalist, rather than just a guy who wants to save tax for that moving, 12:03.300 --> 12:10.020 I think that's going to actually make your business stronger. And so the key for reducing tax 12:10.020 --> 12:15.000 have a headquarters. My general suggestion, not applicable to everyone or every situation, 12:15.160 --> 12:19.700 but my general thought is keep that neutral. And that if you want to live somewhere where 12:19.700 --> 12:25.680 there's some tax obligation, you personally take the tax obligation on top of that. So again, 12:25.760 --> 12:30.040 going back to Ireland, Malta, Cyprus, if you can be a non-dominous country, you may pay some tax 12:30.040 --> 12:34.360 personally, you may have a local corporate structure to isolate the headquarters from 12:34.360 --> 12:37.600 tax from your activities and what you're doing there locally. Again, you want to get that 12:38.080 --> 12:41.600 memorandized, you want to get that documented, there's things you need to do, not just hope 12:41.600 --> 12:45.740 for the best. There's a lot of documentation you want to do from the kind of people we have 12:45.740 --> 12:51.440 on our network to make sure that you're doing things properly. But then you take on, hey, 12:51.880 --> 12:56.900 in order to live in Europe, I will pay some personal tax, but my company is still going to 12:56.900 --> 13:01.140 operate at zero. And then if we need subsidiaries to employ various people or have local 13:01.140 --> 13:04.480 operations, we'll have those and those may pay some tax on their own based on how 13:04.480 --> 13:08.680 they interact with that headquarters. Some people's companies are, I do consulting, 13:09.000 --> 13:12.920 I've got two employees, one lives in the Philippines, one lives in, you know, 13:12.920 --> 13:18.840 Belarus and, you know, our clients send us wires once a month and there's seven of 13:18.840 --> 13:23.140 them and it's pretty easy and that could be a one-part structure. Again, if you're an 13:23.140 --> 13:26.120 American you've got a disadvantage. If you're not an American, you're still going 13:26.120 --> 13:29.240 to want to move out of your country and become taxed on a resident and depending 13:29.240 --> 13:32.240 on where you're from, there may be an issue in terms of how long you can 13:32.240 --> 13:36.720 actually spend in your country. It's not as simple as the 183-day rule where 13:36.720 --> 13:41.660 you get to spend 182 days and 183 somewhere else. Most Western countries in 13:41.660 --> 13:45.580 particular have more tests to drag you into the tax net. So again, 13:45.840 --> 13:49.400 being simplistic, not tax advice given that there's how many different 13:49.400 --> 13:53.920 millions of permutations, but, you know, if you say I'm going to spend nine 13:53.920 --> 13:56.880 months outside of my country, I would say in a decent number 13:57.420 --> 14:00.700 of situations that's going to be reasonable depending on how you 14:00.700 --> 14:05.600 structure your life. And so the goal is onshore is the new 14:05.600 --> 14:08.500 offshore. We're looking at higher level jurisdictions. We're not looking for 14:08.500 --> 14:11.760 the cheapest, most flimsy jurisdiction like a Belize or something. 14:12.100 --> 14:15.100 I've seen time and time again these guys who want to sell you to go to Belize. 14:15.260 --> 14:17.740 Oh, just run your whole business through a subsidiary. 14:18.060 --> 14:21.940 Well, there's all sorts of legal risks there. There's expropriation risks. There's 14:21.940 --> 14:24.680 all a number of different things that could come from that. You want a strong 14:24.680 --> 14:29.980 topco in your organization. And so this may seem complicated, 14:30.180 --> 14:34.360 but the reality is if you make the move, move your rope. 14:34.360 --> 14:38.780 And if you move the assets, and if you're legitimately running your business 14:38.780 --> 14:42.200 as a nomad capitalist, which again I think has a lot of advantages to 14:42.200 --> 14:45.080 actually growing the business, not just keeping taxes, 14:45.620 --> 14:48.680 but actually growing it, so you're winning on both sides, 14:49.940 --> 14:52.980 it's pretty straightforward. If you meet the criteria, 14:53.480 --> 14:57.140 you save the money. If you're out of the tax net, or if you have the 14:57.140 --> 14:58.900 foreign-earned income exclusion, if you have, 14:59.220 --> 15:01.760 you know, for the Americans, for wherever you're from, if you have 15:01.760 --> 15:05.220 those things, and if you're running the business properly, and if 15:05.220 --> 15:07.820 everything's set up to employees, if everything's set up properly, 15:08.420 --> 15:12.820 well then you've got a pretty strong fortress to legally reduce your tax. 15:13.140 --> 15:15.580 And even though people who offshore that's kind of concerning, 15:16.240 --> 15:19.420 well it's really not, because it's legal. You want to do it legally, but you 15:19.420 --> 15:21.940 want to have documentation. You want to do things properly. 15:22.500 --> 15:25.880 You want to have the right people in your corner. And that's a lot easier 15:25.880 --> 15:28.780 than these guys who are telling you to go out and get a lease 15:28.780 --> 15:32.840 on your house, it's more expensive than you want, and then deduct too much of it. 15:32.960 --> 15:37.300 Not only is that inorganic, not only are you doing things in a country like the 15:37.300 --> 15:40.600 U.S. where you're incurring expenses, just so you can get write-offs, 15:41.120 --> 15:45.580 you're operating your business inorganically, but you're wasting a lot 15:45.580 --> 15:49.460 of time in the process. But what I'm seeing more and more from people is 15:50.340 --> 15:54.040 aggressive strategies. Yeah, you shouldn't be writing off your Rolexes. 15:54.220 --> 15:57.360 A lot of people probably shouldn't be writing off their private jets, 15:57.360 --> 15:59.900 especially the U.S. is more strict than some other countries, 15:59.900 --> 16:02.740 including the offshore countries that we work with in terms of 16:02.740 --> 16:05.560 what you're even allowed to write off. And so people have this idea, 16:05.700 --> 16:08.900 anything you buy could just be written off. That's not true. 16:09.280 --> 16:12.760 So it's actually a lot safer, generally speaking, to go offshore 16:12.760 --> 16:16.120 when you follow the rules, rather than trying to stay in your country 16:16.120 --> 16:19.920 and flitter around trying to figure out some way to reduce your taxes 16:19.920 --> 16:22.380 by being aggressive. I like to sleep well at night. 16:22.560 --> 16:25.640 That's why they call me the goody-two shoes of the offshore business. 16:25.640 --> 16:29.880 We do things properly. If you'd like to do that, you can go to nomadcapitalist.com 16:29.880 --> 16:33.380 slash apply, learn how we work. I've spent the last, how many years, 16:33.480 --> 16:36.720 close to 15 years at this point, building a network around the world. 16:36.820 --> 16:40.860 We've got a whole team. All they do is manage our network of experts 16:40.860 --> 16:43.620 around the world, make sure that they're still up to par, 16:43.880 --> 16:45.700 make sure they know what's changing in the world. 16:45.900 --> 16:48.560 We have more information not only on all these different jurisdictions 16:48.560 --> 16:51.660 to set up your company. We have hundreds of banks in our database 16:51.660 --> 16:54.040 that we continue to stay up to date with, 16:54.040 --> 16:56.480 where are the best banks for you personally, for your business, 16:56.800 --> 17:00.220 where are the best places to move? Call it a one-stop-shop, 17:00.460 --> 17:03.220 everything for your personal and corporate tax reduction 17:03.220 --> 17:05.920 for where you're going to get a residence. I would argue if you're an 17:05.920 --> 17:08.480 American, you want a second passport because one day you might say, 17:09.020 --> 17:11.680 if I don't even live in this country, why am I paying 10 percent? 17:11.800 --> 17:15.320 Let me bounce. You need a second passport to get out for good. 17:16.020 --> 17:20.140 All under one roof, nomadcapitalist.com slash apply. 17:21.100 --> 17:23.080 And we'd be happy to help you with this. 17:23.560 --> 17:25.840 That's the answer to living tax-free in the U.S. 17:25.900 --> 17:28.360 Yeah, if you don't make a lot of money, there's a way to do it. 17:28.520 --> 17:32.220 You can get all the different exemptions and capital gains as a retiree. 17:32.320 --> 17:34.820 I'm talking to people who are seven and eight figure entrepreneurs. 17:35.460 --> 17:36.100 That's who we help.