- Andrew Henderson
- Managing Partner of Nomad Capitalist
Bio:
Andrew Henderson is the managing partner of Nomad Capitalist and the most sought-after expert on global citizenship.
Andrew Henderson lives by five magic words: “go where you’re treated best”. Nomad Capitalist helps people to find the best places to live, bank, invest, incorporate, start a business, hire, date, and more.
After nearly a dozen years visiting and living in 100+ countries, Mr. Henderson has become an expert on the growing field of global citizenship. He is the author of “Nomad Capitalist”, a book discussing the concepts of global citizenship that anyone can apply.
Mr. Henderson is unique in that unlike other consultants who merely sell products, he lives the lifestyle he preaches, having multiple passports, homes on three continents, and international business.
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Links:
Transcript:
Charles (00:00):
In this episode of the Business of eCommerce. I talk with Andrew Henderson about how to move to a tax Haven and pay zero taxes. This is the Business of eCommerce, episode 122. Welcome to the Business of eCommerce. They show that helps eCommerce retailers start, launch and grow their eCommerce business. I’m your host, Charles Palleschi and I’m here today with Andrew Henderson. Andrew is the managing partner at nomad capitalist where he helps people find the best places to live, bank invest, incorporate, start a business higher and days. I asked Andrew on the show today to chat about how you can move to a tax Haven and pay zero taxes.
Charles (00:43):
Hey Andrew, how are you doing today?
Andrew (00:44):
Great. Great to be with you.
Charles (00:46):
Yeah. Awesome. I have you on, I’m super interested in the topic on kind of moving to a tax Haven. There’s somebody I have not actually talked to someone about before and it’s one of those things you hear but you don’t even know or at least I don’t know sometimes what it means. You hear of tax havens and you hear, you know, large companies doing this thing where they just move somewhere and pay less taxes. But I never really know, like, is that something we can do as, you know, smaller businesses or like how does this even work? So this is something you, so we’re not actually offering tax advice here.
[inaudible]
State that, but so what exactly, when you start talking about moving a business to a tax Haven, what does that mean?
Andrew (01:35):
Well, there’s actually four parts to it. I call it the, the tax friendly quadrant, right? So what people think is, Oh, you just put your company somewhere else. And you can pay less tax by just moving your company that the Cayman islands did. You sit around in Boston or Los Angeles or Sydney or whatever. It’s not quite that easy if you’re not Google or Amazon or Starbucks. But the reality is, I mean, what they, those companies have done is they have basically planted a flag of convenience in places around the world that allow them to keep more of their own money. And so what my five magic words are, are go where you’re treated best. You know, in the United States I paid North of 40% in taxes as an entrepreneur. I ran several businesses there before selling a couple and, and letting a couple go and moving overseas full time. And so now, you know, I’m able to establish my company in a place that charges basically zero tax or, or very close to it. I’m able to live overseas personally in places that don’t demand tax from me personally. And so by matching those two things up, I’m able to pay a very, very low rate of tax. And you know, people can do this, including Americans.
Charles (02:52):
So the two parts are you can put the business in one country and you physically live in another country, right? So there’s no income tax and no business tax is kind of what you’re saying.
Andrew (03:02):
Yeah. So the, what the tax friendly quadrant of the tax free quadrant is all about is where are you leaving, where are you arriving on both the personal side and the business. Again, I mean, there’s this idea that, you know, and then we could open a Billy’s company or something or it Cayman’s whatever, and you just pay zero tax while you take one trip a year to have your board meetings and believes that’s not how it works. There’s things like controlled foreign corporation rules, permanent establishment, all kinds of different rules. And so the countries don’t necessarily have to be the same. Obviously, you know, if you’re an American, you are leaving the United States and your companies probably in the United States. So both of those are leaving. Now there are certainly places like the Cayman islands, you can go and set up your business and you can live there and it’s just a tax free place.
Andrew (03:44):
The UAE, same kind of thing. However, you’re not restricted to just those places. So you might have a company in the UAE, but you might want to live where I’m at right now in Malaysia or you know, what I’ve done originally for lifestyle reasons, but it actually happens to have a an impact on your taxes. Sometimes I’ll, I’ll do what I call the trifecta, a method where I spend my time, I split my time between about three different homes over the course of the year. And so I’m not spending too much time in one place. Now that’s something I personally enjoy doing. You don’t have to do that. But for someone who wants to bounce around and spend some time in, in countries that have higher taxes, it’s a way to do that without, you know, getting stuck. So there’s lots of different permutations of it. But that’s basically how it works.
Charles (04:30):
Okay. So a lot is based on how much time throughout the year for, so tire year, how many days, weeks, months you actually spend in a particular place, right? Because certain countries is different. Roles around this where you might have to spend 12 months out of the year or one week. Is that kind of one of the things though?
Andrew (04:50):
Yeah. I mean, you know, occasionally there’s a situation where we have someone who runs a, a relatively large business and you know, they’re able to stay in the United States or something. Part of the time, a while everything else happens off shore. It’s a lot easier if the people who are running the business, if the owners, the business at least people kind of managing the business are actually fiscally overseas. And so, yeah, I mean, again, it’s leaving and it’s arriving. And I was like, I always tell people you can leave the United States or, or Australia or the UK, whatever, you could leave and spend zero days in your country, but if you go and live nine months a year in Paris, you know, now they’re going to tax you and it’s going to be even worse. Right? So you know, the amount of time that you spend outside of your own country is going to vary country to country and they’re making it more difficult all around the world.
Andrew (05:35):
I mean, so there used to be something called the 183 day rule where basically if you are in let’s say, Australia and that was your country and you were there fewer than 183 days, that that was basically open and shut. You’re not a tax resident there. Now there’s a lot more tests. There’s a lot more boxes to check. In the United States there’s, there’s a couple of different ways to go about it. You can spend anywhere from a six months all the way down to four or three or four months or all the way down to one month, depending on which lifestyle options you choose. Other countries, you know, the UK, you might spend anywhere from six weeks up to, you know, about four months. You know, so yeah, it, depending on the, the approach that you take you’re going to spend a decent amount of time workers, seas depending on the approach you take, you may need to live in one particular place. You may need to have a main home or you can just be a traveler. I mean, again, there’s many permutations, but it’s interesting to kind of design the lifestyle that you want.
Charles (06:33):
You said you’re currently in Malaysia, right?
Andrew (06:35):
I spent a good part of my time in the year in Malaysia. Yup. I’m here now.
Charles (06:39):
And are you, so you’re in a, are you an American citizen originally?
Andrew (06:44):
I am. I am a U S citizen originally. And so you go ahead.
Charles (06:49):
I’m just say, do you have to give that up or do you have to like get other citizenship? But like how does that part work?
Andrew (06:56):
Well, so let’s clarify cause maybe people don’t understand this, you know, and people when they really understand it, it’s surprising as them, the United States is effectively the only country in the world that taxes its citizens no matter where they live. So for the five years, the last I actually renounced my us citizenship in, in December of 2017. Okay. For the five years or so, four to five years preceding that, I spent very, very, very little time. I mean like literally zero days, some years, you know, six days and other year very little time in the United States yet I continued to file tax returns that looked like a small town phone book and you know, forms that reported my foreign companies and all that. And I paid very, very little and I think some years zero in tax to the United States. And so it’s possible to, to pay relatively little to the United States.
Andrew (07:48):
It’s hard to really pay zero these days, so that can be done sometimes. But you don’t have to give up your citizenship, what giving up your citizenship does. I mean for me it was much more personal reasons. I never really identified with it. I really didn’t plan to return. And so it just been something that for years I had wanted to do. And then what I saw things getting worse for ex-pats, I just decided I have other citizenships I’m out. But you don’t have to. In fact, you know, most people we work with, they don’t, it might cost you a bit more, you’re going to have a bit more planning, you’re going to have a bit more form filing. But you know, I think for a lot of folks, especially people who are the us now and they’re just moving overseas the first time, you know, they’re not going to give up their citizenship. It took me years of living overseas before I finally did it. So you don’t have to do that at all.
Charles (08:37):
Okay. Yeah, that, that’s one of the first question that came to mind is something you have to kind of jump head deep in the pool or can you just kinda, you know, try this out a little bit and it sounds like it’s pretty easy to try and you can see you just get a visa at this other country, right? That you’re going to
Andrew (08:52):
Everybody else, by the way. And if you’re an Australian, let’s take us, I don’t know if you have Australians, but you know, you, you leave us Trillia and you check all the boxes. And again, the list is, it’s gotten longer than before, but if you check the boxes you can just be out and you know, if you want to come back five years later, no problem. They’ll, they won’t tax you. They won’t require to file anything. The U S is different now. Yeah. What you need to do you know, to, to get set up in the other country depends on where you want to go. The cool thing about being a U S citizen is depending on how much time you need to spend in the U S they don’t necessarily care where you’re going. Other countries are increasingly saying, cool, you can leave. You don’t have to pay us anything, but, but where are you going to be?
Andrew (09:34):
Like, you know, where are you going? Where’s your new home? You know, do you have a driver’s license there? You know, what’s going on? The U S under many of the circumstances doesn’t really care. And so you might just choose me. What I started doing because I wanted to research and study all this stuff was I would just spend a month at a time in different countries or, or even a couple of weeks at a time and so on that you can largely just do tourist basis, right? If you want to live somewhere full time, then yeah, you might get a residence permit. You could do that by starting a business in the country, buying real estate in the country, putting money in the bank and a country show that you’ve just gotten a large enough salary. There’s, there’s many different ways to get residents permits. You could buy a citizenship in a country.
Andrew (10:17):
There’s, there’s many, many different ways to get immigration status in different countries. But again, I mean the benefit of a U S citizen or a Western citizen is, you know, if you’re using my approach of splitting your time between different places, you might even get away with just a tourist visa. Mmm, okay. Cause tourist visas are, could be weeks or even months, right? So you could actually, if you’re splitting multiple, multiple locations throughout the year, you could just have like string together a bunch of these. Yeah, I mean, so for example, I own a property in my main properties that I spend time in our in Montenegro and Malaysia, Columbia and Georgia, Georgia by the way. You get 360 days. So that’s basically, that’s a long vacation. That’s a long vacation. I bet if you left for a week or two and then came back, they wouldn’t really complain too much.
Andrew (11:08):
Malaysia, Montenegro, Columbia are all 90 days. Columbia I think is 90 per one. 80. Malaysia I think is probably more flexible. Montenegro the same. So, you know it depends on where you want to live. I have one gentleman that we helped who, you know, he likes to spend his time between the U S Germany, Spain and Portugal. So those are all pretty high tax countries. It’s a real balancing act, making sure none of them really nail him. And so we had to set that up very precisely. With a text home in his case but you know, if you’re looking to spend time in the European union or the UK, I mean they’re really strict. Australia, they’re kind of strict. If you’re looking for more of the emerging countries that I really prefer, then they’re going to be more flexible generally, especially to an American or a British person or whatever.
Charles (11:59):
Gotcha. On the business side. So let’s say someone’s listening right now, they have a us based business and they’re thinking, okay, let’s, let’s get started there first. That, you know, let’s say you own a house in the U S and it sounds like a pretty approachable way of doing it, is first moving the business, what would your thought process be on, okay, like where do you even start looking? Like, how do you make, what would that decision making process even look like?
Andrew (12:25):
Well, you know, obviously I think you want to start at, you know what are the low tax or zero tax or tax exempt jurisdictions where, you know, offshore businesses can be exempted. For example. You know, there are a number of questions that you need to ask to figure out what’s the best jurisdiction. If someone’s running a consulting business, then you can probably set up just a, a, a foreign corporation in a place like a UAE free trade zone or you know, any number of places. And you can just get a bank account somewhere for that company. And then you’d have people, why are you the money? That’s pretty straight forward. Now if you’re an American, the thing to keep in mind with consulting businesses, you have to have a business to be off shore. You can’t really have a profession.
Andrew (13:07):
So if it’s just you providing all the services, like you know, you’re a lawyer and you do all the work, it’s not really going to work. You need to have a business, right? But that can be a pretty simple structure if you’re selling stuff is I is, I know you guys are any commerce. They needed to figure out, okay how am I structuring this to where I can have, you know, my foreign company that can also have a way to process my credit cards or a place where Amazon wants to pay me or whatever the case may be. And so that gets into not necessarily more complicated, but you might need to structures. So it’s really a matter of asking yourself, you know, how do you get paid you know, how’s the money coming in? Then it’s also a matter of making sure that, you know, you deal with any connections in the United States.
Andrew (13:49):
You can sell stuff into the United States while being overseas and, and not necessarily pay us tax, but if you have a whole office of people in the U S they need to be moved or they need to be segregated and you need to do some special work to address that. So, you know, how are you getting paid? Where the employees, where’s the work being done? What kind of products are being sold? Those are all things that I would start with. I think that’s where I would start. And also understanding that the world of tax havens are changing. A lot of these smaller countries, they’ve gotten bullied by the bigger countries into getting into the tax Haven business. So the Cayman islands is still there. That’s expensive. But you know, the smaller little rinky dink jurisdictions like Billy’s say, shells, those really aren’t that effective for most people anymore.
Andrew (14:38):
You know, these kind of like zero tax, never file a report, never do anything. Who cares? We won’t check on you. It’s kind of been put out of business. So you want a company off shore that has a bit more prestige, right? You don’t want to be in some bottom of the barrel jurisdiction. You want to go somewhere with a bit of an image and a bit of heft to it. So I mentioned the UAE is one of many examples, but you know this is not some fly Island in the middle of nowhere that UAE, it’s serious country and, and I would look at that kind of place.
Charles (15:09):
Yeah. Cause my first thought that comes to mind is getting even a credit card processor to work with you. Right? Like if you’re in the U S and you work on Stripe, that’s easy. You can start that account in about two minutes. But if you are in, like you said, some small Island, I don’t, I don’t know how like if the process of we’ll even sign up with you or work with you, like that seems like more of a dicey situation. So it sounds like even that reason alone, the UAE is more, that makes more sense.
Andrew (15:34):
Yeah. Well right. So you want to make sure you’re in the right place. You can get that. I mean, you know, sometimes we put together a multi-part structures. I mean again, my thing is go where you’re treated best. And so what that means is cherry pick. Okay. You might live in a country, it’s the best country for you. For me. You know, I like living in Malaysia. Immigration is relatively straight forward. Do I want a company in Malaysia, you know, if they have a low tax jurisdiction called level one, it’s kind of a tax Haven of Malaysia. It’s not as popular or it’s not as well known, which may not necessarily be a good thing, but I choose to live here. I might choose to have the core, you know, operating, you know, the kind of the, the top company of my, of my organization being in a plastic, the UAE.
Andrew (16:15):
I may want some city areas that helped me do billing or, or related companies. And so there’s things like transfer pricing and all that that come into play. So, you know, we can get a little tricky, but yeah. Depending on what you’re selling, depending on where the customers are, I mean, you have to take all these things into account because what I do see is, you know, people will go to a guy in Panama and guess what happens when you talk to a guy in Panama, he sells you on Panama, right? And what I’ve seen is people they go up and sign up in Panama or Hong Kong, whatever. Then they can’t get a bank account. Then they can’t, you know, then they finally get the bank account, then they can’t get a merchant account. It’s just kind of a never ending spiral of problems. Whereas if you look at it holistically from day one, rather than just going into place with zero tax, zero reporting, zero, anything that sounds grim but doesn’t really work with anything else you’re doing, you know, the holistic approach I think wins.
Charles (17:05):
[Inaudible] How would it work, because you were mentioning where the employees are, but let’s say you have a physical warehouse, the physical presence in the U S or are you mostly selling into North America, that sort of thing. You working with manufacturers in the U S how would that work if you’re pretty much doing all your actual sales into the U S and even you have physical locations here? Can you still do this or are you stuck in into like a gray area though?
Andrew (17:30):
Well, I mean, we’re getting into an area where obviously we want to be very careful. We’re not giving tax advice. We’ve been very cautious.
Charles (17:37):
He’d give me a tax advice. We’ll caveat that.
Andrew (17:40):
Yeah. I mean, I, you know, here’s the thing, there’s so many different ways to look at it. Is it possible to have people doing warehousing work for you? Yes. can you sell into a market? Yes. Obviously I have the people who are our clients who are in the United States that we’re in the services business more than the goods business. There was a difference. And so there’s a different way to handle that. But can you sell stuff into a country? Sure. You know, people all around the world sell stuff into other countries. And we’ve helped people who are drop shippers, Amazon sellers, Shopify, whatever. You know, but the more I understand, the more elements you add, the more complex it becomes. Okay. I have a theory of scorched earth versus scalpel. And again, this is gonna apply to you personally. This is gonna apply to the business when I left the United States and spent zero days a year there.
Andrew (18:27):
That’s scorched earth, right? That’s like there’s no gray area that I’m not here on the business side. You know, if you can use a third party warehouse that may be preferable to buying, you know, your own warehouse and having your own guys there. I have a, I have a guy we just finished up with who has his own guys. He actually is a storefront that doubles as a warehouse for his online presence. It was more involved. We had to do, you know, more parts of the structure and kind of move money around the structure. So the more that you want to use a scalpel, the more that you want to say, well, Hey, let me keep this and Hey, this guy is going to stay there. And, Hey, you know, what about this, it becomes a bit more complicated. I’m not saying it’s not doable, but everything you know, obviously adds expense. You needed three companies instead of one. But, but certainly you can sell into countries countries with VAT. You generally need to pay VAT no matter where you’re incorporated. But, but you can sell stuff into these countries. It’s just a matter of making sure it’s done properly and making sure you have everything documented properly.
Charles (19:27):
Yeah. Okay. Cause I’ve seen several folks do this. And they either use like a drop shipper or move their goods into a three PL and they’re just paying the three pale to sell on their behalf and they live wherever. But the three PL owns their warehouse and they basically paying them for PL, you know, a service charge. So that kind of sounds like something that would make, make your life a lot easier at that point.
Andrew (19:51):
Here’s the other thing about tax. I mean, right. So I had, when I lived in the United States, one of the best firms where I live in Phoenix, Arizona, they did my taxes. I had businesses in the U S and they did a great job the minute I was overseas, they couldn’t answer the most simple of questions. I mean, foreign earned income exclusion, I had to fight them for, I don’t know how long that I qualified. They finally said, all right, fine, you qualify. They don’t know international tax. It’s a very small circle of folks who have no international tax and actually know it. And, and I’ve seen so many people who’ve come to me and I said, Hey dude, you file your form 54 71. They said, yeah, I think so. I said, go check before we do this, you know, make sure that you weren’t in compliance.
Andrew (20:28):
Oh my accountant, a mist for four years. I’ve got a $40,000 penalty we have to fight now. So, you know, sometimes you know, even people in the international tax base will agree, or sorry. Well, disagree. My preference is generally to be more conservative and you have guys who have kind of aggressive opinions. But yeah, I think the more third party stuff you can do, the better. And the more freelancers the better. All this is just kind of generic advice. But you know, when we had someone who he had a whole sales team in the U S like calling and knocking on doors, I’m like, Oh, that’s going to be, that’s going to be a real pain to deal with. I mean, again, scorched earth versus scalpel.
Charles (21:06):
Gotcha. How do you know when you’re big enough to actually make this worth it? Like is there a certain threshold where you would say, you know, you just below this, like just go and get some revenue or is this something you can apply to any size business? Like when does it become actual doable?
Andrew (21:22):
Yeah, it’s interesting question. You know, so what I do, I think a lot of people who do what I do are very analytical and they’re only focused on the numbers. For me, even more important than numbers is the human side. Right? You have to enjoy your life or else you’re not going to do it. And so my thing is, it’s not a number. It’s when is the pain of what you’re paying a greater than the pain of moving the company. So if you’re not in the six figures in, in a pretax net I’m personally probably not looking too much at it. You know, we, we say that we work with seven and eight figure entrepreneurs. Because I like to do things very carefully. I like to a very high level of service. I’m basically providing the surface that I wish existed for me where everything is handled for me.
Andrew (22:08):
You know, if someone’s making $90,000 a year in profit, they’re not going to get a good ROI with me. You know, someone’s making $1 million a year in profit, we’re going to knock it out of the park. And so I think, you know, especially if you’re an American, you gotta be in the six figures because it’s complicated to get to get professional advice. The biggest thing I see is people come to me and they think they’ve done everything correctly and I find out actually you did it all wrong and you have a $400,000 bill that you’re going to get eventually when they figure out that you’ve done it wrong. I’m seeing that multiple times. So I think really the six figures. Now the other thing to keep in mind beyond just the income tax is the capital gains tax. If you’re building a business, we just had a guy recently, someone Amazon business, I think for six or 7 million.
Andrew (22:54):
The capital gains side, that is a harder side to deal with for Americans. It can be done back to another American company. So to whomever, but you know, again, that, you know, it’s easier to exempt earned income overseas than it is capital gains tax income. So you need some more or different kind of strategies for exempting capital gains. But understand if you plan on selling your business, there’s two methods that they could use. In some cases the method is how, what’s the amount of time that you spent in the U S versus overseas. And so this is more of like important Rico thing moving to Puerto Rico where if you own the business for 10 years and you were in Puerto Rico for five, you get a 50% exclusion. Whereas in the U S correct. Yeah. Okay. So because Puerto Rico is kind of like the tax Haven for, for Americans within the United States, if you want to go overseas whether you’re, you know, an American or whether you’re from somewhere else, generally what happens when you, when you become an expat is it’s based on what’s the value of the business when you leave.
Andrew (24:02):
So I’ll give you an example. We had a guy who had a business, he called me about two years ago. We did some, we, we helped him out create a plan, businesses worth about 30 million bucks. Decided he wanted to kind of think about it. Some more, came back about a year and a half, two years later, Hey, now I’m selling the business for 50 million. What can I do? And we found some things like, okay, you can save a hundred grand here, 300 grand day or whatever, but we missed it in this opportunity to say a capital gains tax on 20 plus million dollars. And so, you know, if you’re planning on selling your business in the future, that is something to keep in mind that you want to get out as soon as possible so as not to accumulate more time in the high tax country or some not to be clocking up the value in the high tax country. So those are two things to keep in mind that you’re gonna be selling.
Charles (24:51):
So yeah. So if you’re going to, in the future, basically, if this is something that’s on the [inaudible] on the horizon, get that sooner rather than later.
Andrew (25:00):
I have a gentleman who they raised money, they raised a couple of rounds of financing and the company got away from him. It’s now worth hundreds of millions of dollars. He can’t afford to do this now.
Charles (25:09):
Hmm. Okay. Would it makes sense? It makes me think if, let’s say someone was listening and they don’t even have any corporate structure yet and they just thinking about starting, would it make sense just to do this off the bat? Like just, you know, incorporate it in wherever now and just kind of skip over, skip the in between step or is that something you wouldn’t advise?
Andrew (25:30):
I think it’s a great thing to do, but again, here’s, here’s the psychological issue, which I think is important, right? I mean you live in the United States. I lived in Arizona. If you want to do it yourself and you can, you can set up an LLC in Arizona for like 50 bucks. I mean literally you fill out the forms, you send it in with $50 you can be your own registered agent. If you live there, that’s cheap. You want to go off shore. Companies are going to cost more. And if you’re not in, if you’re going to go to someone who does the job properly rather than, you know, cheap offshore companies are us. Dot. Are you then it’s going to cost you thousands of dollars depending on where you go. Man, I’ve got a guy that came out to cost him $30,000 a year to keep his corporate structure intact.
Andrew (26:08):
Wow. Okay. I did know that that’s kind of like the Cadillac, but you know, in the UAE costs a little less and you know, maybe something else costs a little less. But again, if you’re going like a better jury, if you’re not going to believe he’s, I mean that’s the cheapest they’ll take anybody. But if you’re going to somewhere decent and it costs you money, then as an American there’s no way I’m going up shore without getting proper advice because there’s just so many things to do offshore, how to run it, how to distribute the money to yourself, how to take your salary, how to keep it, you know, how to do the filings. I mean, you know, that’s going to be not cheap. So, you know, if you’re willing to invest that money, that’s fine. I mean, if I’m starting a new business now, right.
Andrew (26:45):
And then I sold it a couple of businesses in the U S I ran others, I have cash, I’m by the cash business now. Yeah, I’m doing it correctly. But if I’m starting this business and I’ve got $1,000 in the bank, yeah. You know, I, you can certainly go overseas and you can do things like the foreign earned income exclusion. You’re not going to maximize it without a corporate structure, but something’s better than nothing. So I, you know, I think that you have to be committed to put some money into this. And so when generally in the past, from people that come to me and said they were starting a business, I often shy away from them just because I know that, you know, it’s much easier to help someone to get the job done. You know, especially with a premium service when they have the pain of having already written the check. Right. I mean, I grew up as a, as a kind of a libertarian, I was as a kid, these taxes are terrible, blah blah, blah, blah blah. It’s, it’s almost like, and forgive the Curtis, it’s almost like masturbation, right? Until you’re writing the big check, you don’t really know what the pain is.
Charles (27:47):
Got it. So yeah, it sounds like go out there and get a little revenue under your belt, pay some taxes at that point and then you’ll be kind of ready to start looking as one of those things that you go out and start like getting a big warehouse. Like it would be an example, right, of I’m going to sign any commerce business. I’m going to go out and get a a hundred thousand square foot warehouse because we’ll grow into us. And some people might write, like in some folks have the capital and they know they can scale, they’ve done it before, but if you’re just getting started it might be, you know, walk before you run sort of thing.
Andrew (28:19):
I think if you talk to it, and I love talking to older folks and I’ve had the privilege in the last a year or so, we’ve had about a dozen, you know, ultra high net worth folks come through. Most of them are a bit older, you know, and I think what they would all tell you, everyone I know who’s in their 50s and and a wealthy would say, you know, don’t buy that more than you can chew. Pay a little bit more, you know, as an insurance policy just to, to avoid sinking too much capital. Now you know, obviously what you have to make sure when I see people doing is they get, they get stuck where things are going so well and they’re so busy managing the growth, they don’t have time to do all this stuff. And so that’s why, you know, what I’ve tried to do in our business is create something where it’s like we’ll, we’ll fill out a forms for you. We’ll do as much of the lifting as possible cause you’re busy. So what you, what you, what you have to be cognizant of is okay, when you get to that level and you’re making $200,000 a year, you gotta set aside the time to make the move because otherwise you’ll be just with the, with the multi hundred million dollar company before you know it and then, you know, it’ll be too late.
Charles (29:18):
Gotcha.
Andrew (29:19):
So it’s kind of a fine line.
Charles (29:21):
Yeah. Well, okay, so let’s say, so I know you guys do this and let’s say someone’s listening, they do want to find a professional. What questions should they be asking to even make sure that talking to the right professional, right? Because I’m assuming that someone who focuses on UAE taxes, but that’s probably not the person you want to go talk. And like you said, you don’t want to talk to ya accounting in Arizona because they’re not going to help you. So how do you even go about finding someone to help you?
Andrew (29:50):
Well, you know, so what I’ve been trying to do over these last 13 years has put together this network because again, I’ve realized doing it myself, it all fits together as a puzzle. So the first thing you need to want your puzzle is you want to have a guy who is a professional in your own country for ex-pats specifically or for international. And they may be in Arizona or wherever your country is focused on international.
Charles (30:12):
If you live in the U S someone that focuses on international in the U S with you,
Andrew (30:16):
I probably know everyone who does this at a decent level and there’s not that many of them. But yeah, you want someone who’s international focused. If you’re, if you’re doing well, I mean, so there’s a number of expat tax prepares for, Hey, I live in Switzerland and have a job and I’ve got to file my tax return in the U S but there’s not much complicated. You want someone who’s really focused on business, okay. Because it’s not just a matter of filing a tax return. It’s a whole matter of structuring. Now, again, if you’re in other countries, you want someone there, the work is not going to be as much ongoing in those other countries as it is in the U S cause. Again, as long as you’re a us citizen, you’ve got obligations where someone else will just help you get out of the system and then go on your Merry way and make sure you stay out of the system.
Andrew (30:59):
Then what you also want is you want to figure out, you know, where can you go and get set up? You know, again you want to find someone, in my opinion who is more independent. If you call the lawyer in Panama, their solution’s going to be Panama and they’re going to tell you why Panama works and they don’t really care if you can get a merchant account. They don’t really care how us tax works. And so what you needed to get them doing is need to get them talking, right? Because you want to make sure whatever you’re doing in Panama or Timbuktu or Hong Kong or wherever is not running a foul of the U S and that’s the hard part. It sounds like. I mean, you’re really focusing on folks in the U S the U S tax code is so different from so many other tax codes that you want to make sure that you know, what you’re doing in one country isn’t screwing you on the other country.
Andrew (31:41):
So you need to get those two guys talking. And then, you know, let’s say your company’s in the UAE, but you’re not a resident in the UAEs then he needed to bank somewhere else. Well, now you need to make sure that, that banker’s involved in and knows what’s going on in the UAE. And then maybe the merchant account is in the U S or somewhere else and then they need to be involved. And so, you know, I would start with a tax and go from there. And then again, you also need to figure out where you’re going that’s going to solve your side of the personal tax equation. So that may be a residence permit, et cetera. If that resident’s permanent involves an investment, then again, you want to loop in the ums tax guy to make sure that you’re paying any U S tax and then investment reporting it if it’s a bank account, et cetera.
Charles (32:26):
Would you personally, would you decide on the business way to move the business first or personally? Would it move first or do you have to do that together? Is that something you can just kinda do independently one another?
Andrew (32:37):
Yeah, I mean, I do think that they should be done together and they should be taken into consideration together. I mean, again, some, plenty of people have gone in and said, Hey, I’m going to travel the world. This is what I did. You know, people think Andrew talks, he never stops talking about tax. Listen, I’m a business that we help people, you know, do this stuff and people’s complaints is, I’m paying too much in tax. But you know, my original thing when I was sitting at the Phoenician hotel at 24 years old was where do I want to live? And as I started to travel you know, you could do that. You could go out and live the digital nomad lifestyle and then as you go, you know, go back and take the the foreign earned income exclusion. For example, if you’re overseas that’s a personal exclusion on your tax return and then you can figure out the structure from there. But ideally given that you want to figure them out together because you want it to work together. And you know, the hardest thing for me is when someone says, Hey, I want to live in Spain. It’s tax planning a lot harder if you want to live full time in Spain, Spain, and exactly a low tax country. So,
Charles (33:40):
Okay. Yeah. So thinking of this all together sounds like the easiest route
Andrew (33:44):
Or, but you can throw the other way, but you can, you can, you could just live the personal lifestyle first and kind of cobble the structure together as you go. Make sure you’re not making mistakes in that case. But yeah, I think if you’re going to be serious about it, it’s good to handle as much concurrently as possible.
Charles (34:02):
Okay. Awesome. Well thank you very much. I think this is super helpful. It makes it sound a lot more approachable cause I feel like when you start, when you start talking to these terms, it sounds very kind of, I don’t know, scary and just something that’s like, I don’t know if those other people do that. We don’t, you know, not something we do. They do that. But this sounds a lot more approachable the way you’re explaining it. So thank you for that.
Andrew (34:24):
I, you know, I walk the line between, I don’t, I don’t want to make it sound like you just go in. I mean again, you don’t want to just go out and set up your company and take a flight and just hope for the best. That said, it’s a fully 100% legal. If you do it properly. There may be some forms to file or some, some account strip port or whatever you want to play. And I’m like, they call me the goody two shoes of the offshore business because so many other guys are like doing the Wolf of wall street thing or hiding out behind a Bush somewhere. That’s not what I’m doing. I like to be, you know, very upfront. But you can do it legally. You can do it properly. You want to be properly structured, especially if you’re an American night. Take it from me. Yeah, it was a pain at first. But once you get it and figure it out I like to look at what’s the 10 year return, you know, can you save a million, 2 million, 5 million in taxes, you know, to me that makes it worth it.
Charles (35:11):
So do it legally because you don’t want to end up in a Belize person. So I think that that’s good advice.
Andrew (35:16):
Or are we going towards an American person?
Charles (35:18):
Do you know what ended up in a prison period? So no prison, no presence. All right. If people want to find you, kind of learn more about you, what can I do? So
Andrew (35:25):
The probably the best place to start for someone who’s new is I wrote a book called nomad capitalist. You can find that on Amazon. We have over 1,500 articles from seven years at nomad, capitalist.com 700 videos plus on YouTube search, nomadic capitalists. And if you want to kind of dive into this we offer a service, but we are also putting together nomadic capitalist lie, which is our conference coming up in September, 2020. We’ve got some big names coming to that. So there’s lots of different places to start depending on how deep you you want to dive in. But for someone who’s brand new, I think the book is a great place to start and just immerse yourself in what’s possible. Shed some of the myths and start getting some ideas. Very cool. I will link to all that in the show notes. So thank you very much for coming on, Andrew. I appreciate it. Hey, it’s my pleasure. Great to be with you.
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