Expat Entrepreneurship: Benefits, Flag Theory, Requirements, My Experience, Resources
An expat entrepreneur, as opposed to a digital nomad, is an entrepreneur who moves abroad because of better business opportunities. A digital nomad is a homeless vagrant in need of a shower. I’ve lived in Chiang Mai for 4 years and you do not want to aspire to be one of these guys.
You don’t want to aspire to be an expat entrepreneur either, it’s just a short hand term I use to describe specific actions but I’m not a mark for it and neither should you be. What you should aspire to be is happy, and building a location independent business and moving offshore can definitely make you happier:
Safety: Avoiding political/economic or potential political unrest: Don’t think it can’t or won’t happen in your country. It’s happening in Venezuela right now. It happened in Russia in the 1920s. Germany in the 1940s. Korea in the 1950s. Vietnam in the 70’s. If you have money (which should be a major priority in your life) you should never be caught slipping when trouble comes to your country.
Adventure: Picking up and moving your life without a safety or a job waiting takes balls and is a definite adventure/boredom antidote
More Freedom: In Thailand you can rent a motorcycle right off the plane and roll around with no helmet, no license and park your bike on the sidewalk
The name of the game is whats called flag theory originally developed by Harry Schultz, popularized by Tim Ferriss and perfected by my man Andrew Henderson.
The five flags of freedom are:
Passport or citizenship in a country that does not tax non-resident income or control your actions.
Legal residence in a tax haven.
Business base and salary-earning in a tax haven.
Offshore bank account in a country with stable banking.
Playgrounds where you spend your money, preferably with no sales tax or VAT.
As good as it all sounds, and is in practice, it’s not for everyone. I’ve seen too many guys come out here and fail, and young man took his own life this year. The reality is you need five things before you’re ready to take your show on the road. You need to be:
You’re Over 25: With a few exceptions I can think of, being under 25, means you won’t have the income and discipline needed to win
Upper Middle Income: This means for at least the last six months you’ve had consistent income to put you in the upper middle class of your new country. For Asia, that’s 2k a month.
Solid Financial Safety Net: I’d like to see you have 20K saved before you come out. Combined with consistent revenue will leave you comfortable.
Solid Psychological Foundation: No recent history of major depression or anxiety
Have A Burning Desire For Business Success: You need to be in it to win it
I have a better quality of life in Chiang Mai than I did in Canada, without a doubt, and I don’t even like Chiang Mai that much. I’ve been here for 4 years but the last 2 have really been about not moving so I could focus on work. That’s why I’ll be off to live in the Philippines next month.
Regardless, just not having to work a job is a gift from God every day of the week. When you factor in taxes and sunshine and cheap living – it’s been a blessing.
But you don’t have to move to Asia or South America. If you’re an American spending $5,000 a month to eek out a sh*t tier living in New York, Moving to a mid size town in Florida, where there is no state tax could save you a fortune.
It only makes sense to go where you’re treated best.
That being said, taxes, residencies, visa, citizenships, corporations, offshore bank accounts is a labyrinth, It’s not that one aspect is too complex to cover, it’s the plan, with all the variables that is the nightmare.
You have to deal with:
Taxes in your home country
Taxes in your new country
Time zones for your client calls
Constantly changing visas, residences and citizenships
Getting visas to permanent residency to second citizenships
Getting a tax id
Getting bank accounts
Getting a business incorporated with a business bank account and whether to use that as your tax ID
Tunneling into new banking havens while you can still get a bank account there easily
And a thousand other things, how they intersect, and variables on top of variables
Most “digital nomads” don’t even talk about taxes because they:
Don’t make any money (except for the courses they sell to wannabe nomads)
Don’t pay taxes
My advice is:
GO PRO FROM THE GET GO
Get your tax, residency and banking structure looked at by a professional, I promise you, the structure is more complicated then you think.
When you go pro you learn:
To get accounts with CITI, HSBC and any other relevant multinationals before you leave (OCBC is good). You learn that onshore is the new offshore.
That you probably want to get a little tax to get a tax ID number so that you can open bank accounts in safe jursidictions
That you should tunnel into up and coming banking havens now before you can’t get in 5 years from now
Which residency programs are being phased out
That Cambodia doesn’t have a DTA (double taxation treaty with Canada)
And a million other things you need to know that I guarantee you don’t know and you will f*ck up
In addition to getting a consult with Andrew, if you’re Canadian like me, book an email consult with Michael Atlas, he’s fantastic. If you’re not Canadian, consult with the best expat lawyer in your country.
If you’re not making six figures yet, and can’t afford a consultation, just buy Andrew’s book, read every article he’s written, read every article I’ve written about money, get a consult with your local expat lawyer, then buy a consultation with Andrew once you’ve got your income up.
One more thing, don’t go with someone offering some cheap incorporation in some tax haven, this is not a plan, a plan has to involve every level of your financial life, residency, nationality and account for every contingency. Taxes like medicine is not the place to cheap out.