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Individuals are increasingly identifying themselves as global citizens, as reflected in a recent BBC World Service poll. What’s interesting is that BBC revealed the majority polled in emerging economies saw themselves first and foremost as global citizens rather than national citizens. By contrast, the trend in the mature, industrialized nations reflects that the majority of individuals are more inward looking and nationalistic.


And a recent United Nations report reveals that a record 232 million people are living outside the country where they were born. This means that increasingly the world’s population moves to live, work, retire or play in another country than where they were born. In 2000, the figure was only 175 million, so the momentum for global citizens is accelerating. Cheap flights, more open borders, and investment and employment opportunities, contribute to the migration.  


According to the above polls, Indonesia, Mexico, and the US and Russia, have the weakest sense of global citizenship. Unfortunately, the US’s insular perspective fits into the category of the most inward looking countries in the world. These four countries have some of the strongest sense of localism.


The Sovereign Individual, Part II


In our last newsletter, The Sovereign Individual, Part I, we noted that the ultimate objective for many is to become a sovereign individual. This means the moral or natural right to be the exclusive controller of your life. By the emails we received, it hit a raw nerve with many readers.


For some, the sovereign individual means freedom to preserve hard earned assets. For others, freedom of excessive government rules and regulations. Or freedom of travel. Or financial independence. Or privacy. Freedom of excessive taxation - or at least reasonable taxation. Or all of the above.


You might only be interested in asset protection, and individual sovereignty beyond that might not be important to you. In that case, an international trust that protects a lifetime of hard work, retirement savings, or protection against government and social risks, may be all that you need. But still, some of the attributes of the sovereign individual may still appeal to your long term planning.


As the American election unfolds, at the end of the day, many aren't sure the winner makes a significant difference. We do know that America is a very divided country, and opinions run strong. The polar extremes are becoming increasingly bitter.


The good news is that as a sovereign individual you still have the choice to take control of your life. The first step is to take responsibility for our own direction, and prepare for the worst case scenarios.


Even those with a modest amount of wealth can still protect themselves and their families from social and financial upheaval that threatens the way of life that was once the status quo as a nation.


The Sovereign Individual


Living as a sovereign individual is attainable, as noted in the last newsletter, and you can review how multiple connections to different nations come into play at this link.


The earliest book I’ve located on how to live as a sovereign individual (circa 1960s) sets forth that you should have your citizenship aligned with a nation that does not tax income earned outside the country, your businesses and investments should be located in stable, low or no tax countries, and then live or travel in countries where your personal values are respected, not outlawed.


In later books, additional nations were added by subsequent authors to separate where you make your money from the playground where you spend time. Then, with the advent of the Internet, more recent books added a virtual nation, which allow you to be in all places at the same time, or nowhere at all.


The number of nations or flags you hail to is entirely up to you. 


Your Flags Unfurled


To further identify how and why to use different nations for achieving different objectives, we next look closer at the purpose of unfurling multiple flags from multiple nations. For this example, we assume minimal or no tax, quality of life, and privacy as the main goals.


The first flag is one or more passports in neutral, respectable countries, in addition to the first passport from your native homeland. The obligation of taxation arising from the passport should be based upon residency within the  country. This means the country does not tax its citizens when residing in another country. Except for the U.S., basically all countries are residency based taxation, meaning if you don't reside there, you don't need to pay taxes on worldwide income.


The citizenship and passport should allow visa-free travel to as many other countries as possible. And because you don’t reside in this country, earn no income there, and minimize the time and connections to avoid being part of the tax regime, you wouldn’t need to file a tax return in this country. (For U.S. citizens, the additional passport also provides the opportunity to give up citizenship, if cutting all tax ties is an objective.)


The second flag is where you call home…..your 'official' residence. You may or may not actually reside in this country. But this country allows you to reside there as a legal resident without becoming part of the tax regime, or even without local citizenship. The right to live in this venue could arise by virtue of a tourist visa or temporary residency visa, without becoming a permanent or tax resident. And if you reside there, it would be a country which does not tax offshore income.


There are actually many nations that fit the definition for the second flag, as outlined in the 2nd edition of Offshore Living & Investing. In any case, so long as you don’t earn income in this country, there would be no need to file personal or business tax returns in this jurisdiction.


The third flag is where you spend time for a quality of life. This is often an important factor to the sovereign individual. If there are time limitations on how long you can stay in one jurisdiction without becoming a tax resident - or due to visa requirements - it may be necessary to have more than one quality of life playground.


It’s your choice as to where and how much time you spend, or how you vary your time between different venues. In any event, staying within the time restrictions can avoid the requirement of filing local tax returns, so long as you do not earn income in the jurisdiction.


The fourth flag is where you earn your money. If you own an existing business that can’t be moved, it may be difficult to legally avoid paying taxes in this venue. However, perhaps the business can be relocated to a low tax jurisdiction, or where plentiful business expenses can legitimately be written off against business income. And today, with inexpensive and quality telecommunications and the Internet, almost all businesses can be gradually shifted somewhere else.


It’s actually much easier than you think. If you earn income with your skills - consulting, sales and marketing, or many other service based businesses and professions - you can easily operate over the Internet.


Otherwise, for your fourth flag, choose an offshore financial center as your physical business base that requires little or no taxes against business income earned offshore. In any event, the business should be operated through a company to insulate against personal liability and to enhance asset protection.


Better yet, the company should be owned by an international trust to put another layer of protection between you and the business. Ideally, you could avoid filing business or personal income tax returns - or at least pay very minimal taxes - and avoid business permits, licenses or special dispensations, through an Internet based business in the correct jurisdiction.


The fifth flag is where you keep your savings and investments, safely locked away from where your business activity is located, and where your income is earned or spent. This nation should have a high level of respect for privacy, communications, professionalism and stability. Once upon a time you could keep cash deposits in secret numbered accounts, but those days are long gone.


Today you can keep cash deposits, stocks and bonds held in a company name you control (with your international trust owning the company), for added privacy and protection. You can control access to the money through banking relations via email, or through Internet access. Ideally, you don’t live, play or do much business in the place where your assets are located, to maintain discretion and avoid potential litigation risks.


For your fifth flag, bank privacy is important. Admittedly, with Tax Information Exchange Agreements (TIEAs) more common today, it’s harder to come by. But many low tax jurisdictions for non-residents (either personal or company accounts) offer 2% and 10% withholding tax (or less), and are excellent options.


As outlined in the second edition of Offshore Living & Investing, there are also countries that offer investments to non-residents with a 0% tax obligation. It actually works very simply for those that live part time and invest in the No. 1 tax haven…a country that will likely surprise you. 


Other nations have similar benefits for non-residents which legally avoid or minimize tax obligations to the local tax regime. Several such tax friendly jurisdictions are outlined in the book, providing good options and opportunities for better returns on investments.


The sixth flag is the Internet. This is where you operate your business; communicate with friends, family and clients; and legally move cash around as needed. At one time it didn’t really matter where your ISP (Internet Service Provider) was located, since it was basically invisible, except online.


But recently the U.S. has followed China’s lead and taken great leaps to shut down sites it doesn’t like its citizens to have access to, even when they are located outside of the U.S. Thus, using an ISP in a more user friendly country than China or the U.S. would help prevent interference with your Internet access.


To repeat: it doesn’t matter how many nations or flags you unfurl. It's only important to apply the concepts and the number that suit your objectives.


A sovereign individual by other name…


The term ‘sovereign individual’, and the lifestyle concepts attached to it, have continued to grow during recent years. As noted above, the limited number of recent books written on the subject, contains concepts that began in the early books dating back to the 1960s. In reality, a sovereign individual goes by many different names.


'Libertarianism' is a term that comes to mind. This term generally refers to the group of political philosophies which emphasize freedom, individual liberty, and voluntary association. Libertarians generally advocate a society with little or no government power. However, Libertarian schools of thought differ over the degree to which the state should be reduced, and how this should be accomplished.


Another substitute for the term ‘sovereign individual’ could be the 'internationalist' or the 'global citizen'. I personally taught my two daughters from a very young age the importance of being global citizens, to think internationally, and to be independent, sovereign individuals. Today, as young women, I am proud to see that they embrace the world.


At the end of the day, the term sovereign individual is a confluence of many different names and ideas, all linked with the basic concept of being in control of oneself; for taking personal responsibility over your life; and visualizing a world without borders.


As noted above, whether three, four, five or six flags, or more, or whatever name or precise definition you wish to peg to the term 'sovereign individual', it doesn’t really matter. It takes only as few or as many flags or nations as necessary to accomplish your personal objectives, all based upon your resources, and resourcefulness.


And you don't need baskets full of cash to become a sovereign individual


Nor do you need to be a wealthy jet-setter to accomplish these objectives.


I’ve spoken to ski bums that work and play between Vail, Colorado, U.S. in the northern hemisphere and Queenstown, New Zealand in the southern hemisphere on limited budgets, working in ski shops, skiing the mountains, and enjoying a high quality of life. They call it the ‘endless winter’.


Or another budget minded individual that owns and operates a professional photography business in Thredbo, Australia in the winter, in Bali, Indonesia in the summer, and in other venues in between during the off seasons.


Other sovereign individuals I’ve met operate more elaborate Internet businesses and professions. Still others are semi-retired professionals or business people with various levels of savings and investments.


What they all have in common is that they see the world as their home, other nationals as their distant cousins, and cherish the independence that comes with being a sovereign individual.


The downside of a sovereign individual?


For some it’s not easy to leave home. Or to travel. And some are homebodies and need the security of friends and family close by, and are reluctant to encounter new relationships. Some just lack the motivation to explore or learn something new. Some individuals have unreasonable expectations, or use the tools discussed in the 2nd edition in the wrong fashion.


And unfortunately, some will never be convinced that there are wonderful destinations across the globe offering great opportunities for better offshore living and investing. They’re satisfied that the extra effort isn’t worth it. For them, there is no place like home.


My advice to them: Stay home.


Of course implementing your planning strategy must be done timely, and correctly, particularly if legally minimizing taxes is one of your objectives. This is particularly true for U.S. citizens taxed on worldwide income without regards to residency, or where the income is earned. Unlike other nationals around the world, removing the shackles of U.S. citizenship is required first to fully benefit from all tax aspects. This is covered in greater detail in the 2nd edition of Offshore Living & Investing.


Still, today, many individuals envision the sovereign individual as their way to break free and escape. This works particularly well if you enjoy international living and a traveling lifestyle. For those with higher levels of assets, there are great opportunities for asset protection, and nil or minimal taxation.


The good news is that a multiple flag approach can be applied in various degrees for the sovereign individual to accomplish different results. Perhaps you’re one.


Follow the link for a few more tips to international planning, and complimentary past newsletters. Another good book is How to Legally Protect Your Assets, 2nd edition, found here


And of course if you are interested in a confidential review of your personal situation, use this link to begin.


Until next time……




David A Tanzer, Esq.
JD, BSc, Ph.D (Hon)

For more information visit or email to David is the author of “How to Legally Protect Your Assets” and “Offshore Living and Investing.”

David A Tanzer & Assoc., PC.

Vail, CO USA:
Tel. (970) 476-6100
Fax (720) 293-2272

Auckland, New Zealand:
Tel. (64) 9 353-1328
Fax (64) 9 353-1328

Brisbane, Australia:
Tel. (61) 7 3319 6999
Fax (61) 7 3319 6999

(Licensed to Practice Law in U.S. States & Federal Courts; (Former) Member Auckland, N.Z. District Law Society - Foreign Lawyer; & Assoc. Member Queensland Law Society, AU - Foreign Lawyer)

The comments herein are not intended to constitute a legal or tax opinion regarding any specific legal or tax issue as additional issues may exist; does not reach a conclusion with respect to any specific legal or tax issue addressed herein or any additional issues not included; and cannot be used for the purpose of avoiding legal or tax obligations or penalties with respect to issues in or outside the scope of matters discussed herein.

(c) Copyright by David A. Tanzer & Associates, P.C. All rights reserved. Except as permitted under the United States Copyright Act of 1976, as amended, and pursuant to the laws of all countries, no part hereof may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, electronic or otherwise, without the prior written permission of David A. Tanzer & Associates, P.C. Reprint in whole or part strictly prohibited unless prior written permission is granted. International Copyright protected under the Berne Convention, Universal Copyright Convention  and laws of all other Copyright protected countries, and consistent with the World Trade Organization TRIPS.

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