As I mentioned previously in my blog, I have discovered a way for some of you to defer taxation on your business income.  This, of course, requires an offshore asset protection strategy.  There are many details involved and lots of restrictions, but I am going to use a theoretical example to illustrate.

Joe runs a custom t-shirt company from California and sells his products all over the world through his website.  Joe has a very successful business and sells $2m per year in t-shirts with a 30% net profit margin earning $600k per year after his $100k per year salary.  After Joe takes advantage of his tax benefits, he pays 30% in tax or $180k.  That is a rather large check to write each year.

Today, Joe runs his business from Nevis.  He formed a Nevis LLC, rented a small office in Nevis to hire an administrative staff there to handle bookkeeping and customer service.  He sold his computer servers and has outsourced his server space to a firm in India.  He does all of his banking through Denmark and uses Paypal for website payments.  He has essentially severed all physical business ties in the US.  Granted, Joe still lives in California and still earns his $100k per year salary, for which he still pays his personal income tax. 

However, Joe no longer pays income tax on his $600k in net profit, saving his company $180k per year in taxes.  Joe now has reinvested his earnings into his business and expanded into a web based golf shop.  The golf shop operates on the same premise as the t-shirt shop and allows him to grow his business and his profits.

When Joe decides to repatriate some of his income from his offshore business he will certainly pay income tax on that amount.  But until that time, Joe can defer the taxation and invest his money as he sees fit in order to continue to grow his wealth. 

I understand this program doesn’t work for all of you.  In reality, it can only work for a few.  But for those few, it is a tremendous advantage.  For those of you that cannot take advantage of this, maybe it can’t be an option for your next business venture.  Certainly there are many variables to this situation and each must be individually evaluated. 

If you think this may work for you or if you have any other questions regarding your asset protection plan, contact me via email or at the number listed on our contact page.   Until next week, live well.

A few weeks ago I was  in Oslo, Norway and spent some time with some local friends.  These guys are not your typical Norwegian socialists (sorry if that offends anyone).  They are very much of the free market mindset.  These are entrepreneurs and investors.  This was my first trip to Norway and I was in for a shock.

The $11 beer and $50 pizza was a good starter.  And I don’t mean some exotic beer and pizza.  I’m talking Pizza Hut quality.  As I found out, Norway has a 200% alcohol tax because they determined citizens drank too much and wanted to eliminate this scourge of modern society, completely disregarding the concept of personal choice.  A basic Porsche 911 costs about $250,000.  A 700 square foot apartment in the city costs about $2500 per month.  Gasoline is about $9 per gallon.  And this is all created by taxation.  On top of that Norwegians pay between 35-50% income tax.  But they do have “free” healthcare.

This “free” healthcare system consists of wait times for basic procedures that can take from just a few weeks to several months before you can get an appointment.  Of course emergency care is quick, but what about an MRI?  Sure, we’ll see you in July.  They also have a great public transportation system.  But a one-way subway ticket costs about $5. 

Unfortunately this is the path I see for the US.  There are many similarities.  Norway even considers their system an improved American government.  Is this really the way we want to go in the US?  I have no interest in living in a place like Norway.  Sure their income is much higher.  A McDonald’s employee earns about $20 per hour, but a Big Mac meal costs $12.  How do they intend to attract competitive companies when the cost of doing business is so high?  Do we want to follow in those footsteps?

For one of my Norwegian friends, we were discussing a program that allows him to ‘escape’ Norway.  He sold his company a few years ago to a large tech firm in Norway.  This firm just recently sold out to a large US company and my friend’s job is now able to be done remotely.  We are looking at ways for him to invest offshore and defer his gains as well as structuring his life around a multi-flag lifestyle.  He will likely continue to work for his company in Norway earning a ridiculously high wage in Norwegian kroners, but he will move to warmer and cheaper climate where his income goes much further.  By doing this he can structure his own investment firm in one country, do his banking and investing in another, continue to earn an income in Norway, and live in another place.  There are also huge tax savings to be gained from this.  He is very interested in intelligent asset protection planning.

Now is the time for you to consider how you want to structure your life.  Maybe you won’t make such a drastic change, but you can too form your own offshore investment company and defer taxation.  You can restructure your business for maximum asset protection.  Or you can find a new country to live in.  But don’t wait until you cannot leave or you are paying $12 per gallon for gas and waiting 6 months for an MRI.  Live well.

A few weeks ago I went to the local mall here in Tartu to buy some dress clothes.  I am not what you would call a ‘suit kinda guy’.  But I was going to an investment conference in Zurich and thought the usual jeans and a t-shirt may be a bit too casual. 

Whenever I am at the malls in different countries, I enjoy looking around at what the locals spend money one.  In this mall of about 50 stores, there are 5 electronic stores and another 6 that sell mobile phones and accessories.  There are also shoe stores, clothing stores, luggage, jewelry, several food establishments, and a really nice bookstore.  Anytime I am at a mall, my thoughts go to consumption and taxation.

Lately I have been contemplating a major flaw in the US tax system.  We provide incentives for consumption and restrict production through our tax system.  Right now in the US if you put your money in a savings account you will earn less than 1% annually, not exactly a motivator to save.  And you can get a 30 year fixed mortgage on your house for 5% interest.  With money that cheap, that is a pretty good motivator to borrow.  We also have the highest corporate tax rate in the world and one of the highest personal progressive tax rates.  Companies are even taxed on dividends paid, and the investor is taxed again when he receives dividends!!!  We are taxing production and incentivizing consumption.

Contrast this with Estonia.  (Don’t get me wrong, they have their problems too, but the methodology of taxation is vastly different).  Estonian companies pay no corporate income tax!  If they retain earnings for reinvestment, there is zero tax.  Personal income is taxed at a flat 21% for all people regardless of level.  If a company pays shareholders dividends, they deduct the 21% from the dividend payment but the investor pays nothing additionally.  There is a 20% VAT (national sales tax) on all consumption.  You can borrow money at about 7% to buy a house, 20% to buy a car.  And you can earn 8% in your savings account.  The Estonian policymakers penalize you for consumption and reward you for savings.  Interesting concept…  Who do you think has a higher savings rate?

The point is the US tax system is backwards.  Just like the taxation of alcohol and cigarettes, the more you tax it, the less you get.  Do we want to keep taxing our productive activities like investing and saving money, and provide incentives for consumption?  Isn’t that what got us into this mess to begin with?

But more importantly, how do we profit from these situations and what is the implication for our asset protection planning?  Really, the options are virtually endless.  You can start by moving money into an offshore bank account and save and invest in another currency.  You can structure your business either domestically or offshore to provide you with the maximum tax advantages.  You can even move overseas to a low cost country where your money goes further.  In the near future I will discuss a couple of these strategies.

In the meantime, you should be considering how to implement your own asset protection planning strategy in order to minimize your risk and maximize your gain from this perverse tax system.  As stated before, there are several tools available to you depending on your level of wealth.  Call today for your free 30 minute consultation.

Today I want to share with you a couple of options for legally and safely getting your assets out of the US without the requirement of federal reporting.  There are really only two ways to do this.  Buy real estate or hold precious metals like gold outside of the US.  If you hold any other asset like cash, securities, private businesses, mineral rights, or anything else, the US wants to know what you are up to.  They want to know what you own, and what’s more, they want their piece. 

Real estate and precious metals are the exception here. By holding real estate or precious metals outside of the US, this gives you significant asset protection from creditors and government intervention.   To be clear though, for US citizens or residents, all worldwide income must be reported and is taxable regardless of where you live.  So if you own a beach house on the coast of Spain and rent it out for holiday, you must report the income. 

I have been recently acquainted with a man in Costa Rica who is developing a very interesting wellness resort and spa on 83 acres of forest surrounded by protected areas and a national park.  He has already built several residences, a wellness spa, a bed and breakfast, and will soon be opening several restaurants and a medical facility.  This is a great opportunity for someone looking to retire, have a second home, go on a vacation, or take advantage of investment opportunities.  Hugo, the owner, is looking for business partners to develop additional amenities like a hotel and restaurants.  With certain qualifications, Hugo has even offered to pay for your trip to check the place out.

At this point I have not visited Hugo’s place in Costa Rica.  I have read though his investment offering and I have looked extensively at his business plan.  It is very appealing.  I will be making a trip there later this year to put my boots on the ground.  I would encourage any of you that may have some interest to at least check it out.  Do your due diligence.  Hugo is even willing to pay for your  plane ticket.

Buying real estate outside of the US is a great way to hold assets and minimize your US holdings while diversifying at the same time.  As stated in previous newsletters, this is not for everyone.  If you are a small investor or business owner and uncomfortable with offshore holdings, you should just disregard this.  But for many of you reading this, you already have a vacation house, or are considering buying one, liquid investments like securities, business holdings, and are interested in ways to diversify your holdings while giving you options.  You are the ones who would benefit.

If you want to contact Hugo, please send me an email and I will forward you his contact details.  If you have further questions or would like to schedule a free 30 minute consultation, you can contact me by phone or email.  Live well.

Today I want to share with you my philosophical beliefs on capitalism and a free market in order to help you understand why asset protection planning is so important. 

Historically, capitalism has proven itself to be the only system that works efficiently, but it now seems the governments of the world are increasingly trying to regulate and tax us to the point where we give up and move to our own little Galt’s Gulch (for those of you that don’t know this term, this is from the book ‘Atlas Shrugged’ by Ayn Rand, and one of my personal favorites). 

I truly believe in the free market and it really irks me to read news headlines like “The Free Market Failure…”.  I believe this to be a myth.  We have not had a truly free market in a very long time.  The governments of the world tend to want to expand their power base and tax and regulate every sector of the market.

Fortunately, there are still opportunities to protect our assets from not only unscrupulous creditors, but also government influence.  I do not advocate tax evasion or avoidance of your financial responsibilities of any sort, but at some point, you need to realize where other parties have crossed the line and become a burden on your personal freedoms. 

In the US, we will likely reach a point soon where there will be currency controls and you won’t be allowed to move your money outside of the country and invest in world markets.  In 1933 President Roosevelt confiscated all publicly held gold and within a few short months, devalued the dollar effectively stealing the citizens’ wealth. 

We are still in the midst of the largest economic crisis in modern history and most likely there will be drastic protectionist policies put in place which will not be positive for those of you with wealth.

Entrepreneurs and investors are the growth drivers of our economy.  The creation and preservation of your wealth is what will continue to improve the prosperity of the world.  The governments’ social programs are not what the world needs for progress.  This is why asset protection planning is so crucial for economic progress in today’s world.

As a society, we need you to prosper in order to improve the living standards of all.  As the cliché goes, “a rising tide lifts all ships”.  This holds true in economics as well.  As the entrepreneurs and investors of the world increase their wealth, it improves the living standards of the whole society.

 Our firm’s mission is to provide asset protection planning that allow you to create and preserve your wealth and protect it from the two main threats of the modern world; taxes and litigation.  While not very altruistic by nature, I do want the world to prosper.  This is only achievable by allowing productive members of society to maintain and increase their wealth. 

Contact us today for your free 30 minute consultation.