The idea of being able to legally be taxed nowhere on earth sounds like a pretty appealing way to
keep more of your own money. Today I'm going to tell you how you could do that, why most people
won't, and give you alternatives to how you can still dramatically lower your tax bill.
So I've been telling you for 12 years you want to live in a tax friendly country or
multiple tax friendly countries. You want to keep your options open. You want to have at least one
second citizenship. If you don't qualify through your ancestry or other means, go and make an
investment and get a passport in a matter of months, for example, from a Caribbean country.
And you'll want to always make sure that you have lots of options. And so people start to put
the puzzle pieces together and say, wow, it sounds like there's a pretty easy way that I could
just not pay tax anywhere. Here's a question from Derek. He says, say I get St. Lucia citizenship
by investment. You can do that in less than a year. It's going to cost you $200,000 now. It used to
be $100,000 way back when I did it, but they raised the price as happens with this stuff.
What if I get St. Lucia citizenship? Renounce my U.S. citizenship because the U.S. taxes
people no matter where they live. We'll talk about that more. And do your trifecta approach
in a way that I avoid triggering tax residents in any of the three? Is there something obvious?
I'm overlooking here to not have to pay tax anywhere. So let's go through that. Americans
are liable for tax no matter where they live. Now it is a bit more difficult and there's a bit
more planning involved than there was before, but you can still dramatically reduce and even
in some cases eliminate your taxes as a U.S. citizen if you live overseas. There's more
rules to follow. There's forms to file. Certain banks may not want to take you. You have some
restrictions, no doubt, but you can still dramatically reduce your taxes as an American.
The average person will not reduce it to zero. And even if you did, there would be an opportunity
cost in that you just couldn't move the money wherever you wanted. So when I renounced my U.S.
citizenship, you know, I said to myself, okay, I want to make sure I have a number
of home bases now for lifestyle purposes, for a certain comfort. And so I had more
flexibility in taking money out of my companies and not in U.S. citizen to personally be able
to go and buy property, which is a superior way to do it. Because I own a little bit of property
in a foreign company that I bought as a U.S. citizen and nobody seems to understand why.
It's a little bit of a pain every year to manage. Not a lot at this point, but it was a
little bit of explaining of why would you do this thing? Oh, to satisfy the IRS. Oh, okay.
So Americans have this extra layer. So what he's asking is, okay, let me get
into the U.S. citizenship. Now I'm no longer liable for tax. If you're Canadian, British,
Brazilian, Vietnamese, whatever, you don't have to give up your citizenship to get out
of the tax net. You just simply say, I'm going to become a non-resident for tax purposes.
And there's a process to go through, somewhat similar to the process for renouncing
citizenship, except you're just basically giving up your tax residence. I do think
other Western countries are going to follow the U.S. in the future. Australia's
personal opinion. But anyway, you get rid of the citizenship in the U.S. So now you get rid of that
tax liability. And then you get St. Lucia citizenship. Here's what people to understand is
all the other citizenships, they don't tax if you don't live there. St. Lucia citizenship
is by investment. You don't have to go. Now one thing they did do since I got St. Lucia citizenship
was you do have to do an interview. But even if you had to go there, it's one interview.
And so you're certainly not triggering tax residents there. So you will be a citizen of a
country where you were never a tax resident. Now you can use St. Lucia citizenship to move to
St. Kitts and Nevis, another country in the eastern Caribbean states. You can move to
Belize as they're kind of opening up the caracom, the Caribbean community.
Those could be tax-friendly countries. St. Lucia is not a tax-friendly country.
If you live there, you never live there. And presumably you're not going to live there.
You're getting as a passport in his case to replace the U.S. citizenship.
And so what he's saying is, okay, on the citizenship level, I have no tax obligations.
And that's correct. So that comes down to the residence level. Where do you live?
Now most people live where they're a citizen. Let's forget the U.S. for a minute. Let's take
Canada. You're born in Canada. Therefore you're a Canadian citizen. Your parents are Canadian.
You live in Canada. Everything about you is Canada. Canada, Canada, Canada.
You're not taxed because you're a citizen. You're taxed because you live there.
Whenever you leave Canada, you're off the hook as long as you go through the proper exit procedures.
And that might involve paying something. It might that be you just leave and never look back,
which is why the sooner you leave, the better. Because if there's an exit tax or a deemed
disposition or whatever they call it in your country, the more assets you have when you
leave, the more you're going to have to pay to get out. But once you're out, you're out.
And so a Canadian can keep the citizenship and move somewhere else.
But what if you don't move anyone in particular? I didn't do this for tax reasons.
I was just fascinated by the world. I've been to over 100 countries. I've learned a heck of a lot.
I've made better investments. I've made better business decisions. I've
hopefully become a more well-rounded person. I've met interesting people. I got,
as a man, celebrating a 40th birthday party coming up. I think we've got 15 different
nationalities at a 20-person table. So for me, taxes weren't the driver. But I realized
early on, hey, this could be tax advantageous. There's something to offer to the nomadic
capitalist viewer here. And so if you just want to travel around the world, theoretically,
most countries, the non-aligned countries, the global south, emerging markets, these
countries do not have entire rooms full of tax law the way the U.S. or other legacy
brand countries do. It's pretty simple. If you live here, you pay tax. Here are the rates, right?
If you'd be surprised, even in some smaller European countries, how simple the tax code is,
how simple the tax forms is. I was talking, I met a client. It was a client three or four years,
four years ago on the street. I was walking around Dublin, Ireland. He moved to Dublin,
Ireland after our work with him was done. And he said, have you seen the tax return in
Ireland? He said it's something like a child printed out from school compared to the U.S.
I thought it was a joke. This is the tax return. So the next level beyond that where just, hey,
we make it easier is we don't suck you in as easily. And so let's take Germany as an example.
Germany is very strict. If you're coming from Germany, you've got to do things so by the
book. And Germany, like many European countries, will try and find ways to suck you into the
tax system even if you have not fulfilled the days test. So people think, oh, as long as I don't
spend 183 days, they heard that somewhere. If I spend 183 days, I'm a taxpayer. Therefore,
the inverse must be true. If I spend under 183 days, I'm not a taxpayer. Wrong. Developed
countries with their rooms full of tax law have all sorts of different ways to suck you in.
Did you spend more days here than somewhere else? Do you have a car here? Do you have
available accommodation? Do you have this? Do you have that? Do the other? There's all kinds
of ways they can suck you in and they can make, we had a client once. I think he was German in
going to the UK where he had a girlfriend every weekend he'd go to the UK. And eventually,
they somehow found his address in Germany. This is back when they were both in the EU. And they
said, hey, can you prove to us you don't owe us taxes? It seems like you're coming a lot.
And I think he did. And okay, he's paying taxes in Germany. No problem. But they'll find
you. Now you look at most of the countries and this is what I always tell you. People who live in
a Western legacy brand country think there's nowhere to go. Every other country is exactly the same.
What's wrong? Just as about 120 out of 196 sovereign countries in the world are part of the
so-called non-aligned movement. They're neutral. Leave us alone. We don't have a dog in this
fight. We just want to get along with everybody. Crazy way to think, right?
Somewhat similar are just countries where it's like, why are we making things so difficult?
So for example, I have a home in Bogota, Colombia. At the time I did that, that entitled me to a
permanent residence permit. And so that was an option for me. That was an additional option.
And I spent some time there during the pandemic when that was one of the more open places
for permanent residents. Maybe not for tourists, for permanent residents. And people think, oh,
you own a home so you must be taxed there. Well, I'm not a tax resident. I don't spend a lot
of time there. I go, I check in. I see what's going on in South America. It's a base
that potentially I'll go and we'll make some Love Like a King videos coming up in the next year.
We've got a number of places in South America. We want to film Love Like a King. So I'll go to
Bogota. I'll get settled. I'll get acclimated. I'll get my wardrobe. You know, great. Here's my
home base. And then we're taking the three hour flight somewhere nearby. And then back to Bogota,
regroup all that. Nothing in that makes me a tax resident. And unlike Germany where they're
scratching and clawing and looking for ways to suck me in, it's pretty simple in a country
like that. Did you spend the 183 days or not? Now in some countries it could be 180 or it could
be a little bit different. But my point is they have far fewer conditions. And so what the trifecta
method was was when I was traveling around the world, I said, you know, if you like a certain
amount of uniformity, pick three countries in the world, spend four months in each of them.
And then your life's pretty easy. Pick one for the winter, one for the spring, whatever way
you want to do it. My idea was I like Latin America, I like, you know, parts of Europe,
and I like Asia. And I want to be part of all of them, not even for tax planning, just like,
I like knowing what's going on. I like having a connection to all parts. You know, you land in
one of these places. Oh yeah, I kind of miss Bogota. But what I realized was if all those
countries were in that, you know, kind of global south, non-aligned, you know, in this case,
just, you know, more tax flexible places, theoretically you wouldn't trigger taxes
anywhere. And I think that potentially is true. You have to really understand the tax codes of the
places you live. Columbia has a system where to maintain certain residence permits, you must spend
188 and 80 days. To become a taxpayer, you must spend 183. And we had a guy, I think he comes
to Nomad Capitalist Live every year, our four day event where we bring hundreds and hundreds
of people from around the world to get together and network and share ideas. And we do four
days of deep dive learning from our team and great speakers from around the world,
heads of state speak. And it's just a great time, lots of entertainment. We were talking about
threading the needle. You can spend 180 or 181 or 182 and don't miss. So you can live that way.
Now, if you're entirely in crypto and you don't want a bank account, maybe that can work.
The biggest challenge is if you want to bank or have a brokerage account, I mean, sometimes
they don't even say hello. The question is, where do you pay tax? And the other thing
there is, you might want to have a better tax residence than a worse tax residence. I mean,
so people who have European tax residences sometimes have more banking options than someone
who's a tax resident of a Caribbean island or an Eastern European country, for example.
And so you want to have a tax residence if you want to be in the financial system.
I mean, I suppose you could bank in like the Comoros or something where the banks,
I mean, it's beyond a mess. And they're just so unregulated and they're not part
of the information sharing. I mean, I guess you could do that. I think to a certain extent,
if you're moving large amounts of money around, you know, moving money from the Comoros to,
you know, you want to pay somebody in Singapore, the bank in Singapore is going to be like,
yeah, we got to really look at this money from the Comoros before we accept this and
you're going to have problems. So the bottom line is, thanks to what was first,
FATCA in the U.S., which all the banks and foreign financial institutions
tattled tail on Americans to the Treasury. Now there's the common reporting standard,
CRS, and a lot of countries are signed up to that. Not all of them, but, you know,
you want to have diversified banking, in my opinion. You want to have banking and some
asset havens, Singapore, Switzerland, they're all part of that, and they're going to want
to know where you pay tax. Now the answer is nowhere. That's bad. Now the one loophole
that Americans have, which is kind of cool, despite the frustration of it, is that because
you're subject to citizenship-based taxation, your tax residence is the United States,
even if you don't live there. And so banks that do accept Americans might accept someone nomadic,
where you otherwise wouldn't have a tax residence because your tax residence is the U.S. by default.
There are tax residences you could obtain by spending one, 14, 60 days. Again, the one that
you spend one day in might mean that certain banks don't want to deal with you. I mean,
Swiss banks are difficult to deal with. You've seen our nomad capitalist R&D channel. We've
talked about Singapore versus Switzerland, for example. Swiss banks are tough. They've got a lot
of requirements to throw up roadblocks. That one-day-a-year tax residence, they might not like it.
So what you might do in that case is you might do a modified trifecta, where you spend six months
in the place that you like the most that happens to be tax-friendly, and then do three months
and three months in the other two. And so you could find a country that has no CFC rules,
i.e. tax-flexible. It could be a territorial tax country. It could be a lump-sum country,
non-dumb country. Theoretically, some non-dumb countries might allow you to spend like 90 days.
You could be, you know, so one 14, 60, 90 days could be the minimum, or you could find a place you
just like, rather than spending four months there, you spend six months there. You get the tax
residence as something that's not bad as it would be in the U.S. or Germany or Canada,
but it's good. You know, if you're a tax resident of a country that doesn't have taxes,
then, you know, that's helpful when it goes to going to a bank or a brokerage and saying,
how do I pay my taxes? And so the part of this that really matters is, again, you're not going
to countries that are part of the OECD, for example. Colombia is in the OECD, and yet they are,
they have some of the lowest rates in the OECD. People don't think Colombia is a low tax, and
they're not, but they're one of the lowest tax countries in the lobbying group of countries
that bully people into raising their taxes. But, you know, generally speaking, you're not
going to the other Western countries, legacy brand countries, because they will find a way to
suck you in, just saying, hey, I spent one day in this country, but I spent four months in your
country and I have a car here. Yeah, that one day tax residence is not going to cut it
in a Western country. So this is really for people, if you really wanted to do it,
you'd have to, you know, really accept substandard banking. Brokerage accounts would be
difficult. Perhaps if you did some stuff in the U.S., they wouldn't bother you. Like if
you said, hey, I'm going to, I'm going to, you know, open a brokerage account in the U.S.
The U.S. is not part of the information sharing with the rest of the world,
but you may still have an obligation to report that somewhere else. So obviously,
we want to follow the law. But in the bottom line is this is for someone who wants to be
entirely in emerging countries that are very flexible and just simple tax regimes where,
you know, if you're there the majority of the time they tax you, and if you're not,
they don't. But again, if you want to be plugged into the global financial system,
that is the problem. So have a tax residence. This is not financial advice, but I think
that's probably what most people want. And yet if you do that, I mean, we've helped our clients,
you know, dozens of different countries. We have an entire back-end system where we're
constantly tracking changes to the industry. We have, you know, alerts that come in just
from trawling the Internet of, hey, this country's raising their taxes or this country's
raising their taxes. We have all kinds of things that just pop up in our R&D and
strategy team every single day of being on top of this stuff. So if you come to us,
we can help you put together a plan where, okay, what do you want your life to look like?
What sources does your income come from? Where should we structure your company? What kind of
business is it? I mean, there's hundreds of questions we would ask you to figure out where
you want to go and how you want to structure your life. And that's partially based on what
you want in your life. And it's partially based on what the laws are. And we will work
around that as much as possible to give you what you want. We'll also say, well,
hey, you know, you need this. Go to nomadiccomplist.com slash apply if you want our
help. It's the most holistic service. It is a one stop shop. We've got vendors and experts and
everybody you need that works with us in our extended network. We also have a great team,
again, of R&D and strategy folks that help build and execute plans. That's what we do for folks.
So the bottom line is just because you can do something doesn't mean that you should.
Having a good tax residence that still allows you to whatever amount of flexibility you want
to travel and see the world is ideal. And hey, if you don't want to travel and see the world,
there's plenty of tax residences where you can spend every single day of the year living
in that country and you'll still dramatically reduce if not even eliminate your taxes.