How To Travel The World & Pay No Tax - Nomad Capitalist

Added: Feb 5, 2024

Global Citizenship and Opportunities

Henderson's approach to life and business is grounded in the concept of global citizenship. He shares his personal journey, starting from his birth in Cleveland, Ohio, to his current residence in Malaysia, which he considers the best value destination for someone who can work from anywhere. This transition was facilitated by his realization that one's birthplace should not limit their opportunities or dictate their entire life. Henderson also touches on the concept of cultural displacement, acknowledging that while it can be challenging, it also opens up a world of opportunities and experiences that would otherwise be unavailable.

Passports, Residency, and Citizenship

Henderson explains the differences between passports, residency, and citizenship. He outlines various ways individuals can acquire new citizenships, including through ancestry, investment, or naturalization. This process allows individuals to access better opportunities, lower taxes, and potentially a more welcoming business environment. He emphasizes the importance of legal pathways to citizenship and the benefits of holding multiple passports, which can offer more freedom and security in an increasingly complex global landscape.

The US Tax System and Its Global Reach

Henderson criticizes the US tax system for its global reach, taxing citizens no matter where they live. He contrasts this with other countries that only tax based on residency, allowing their citizens to reduce or eliminate their tax burden by moving abroad. Henderson shares his personal experience with the US exit tax, a mechanism that taxes individuals on their worldwide assets if they renounce their citizenship. This tax, he argues, can trap successful individuals, making it financially prohibitive to renounce US citizenship.

Strategies for Reducing Tax Burden

For those not ready to renounce their US citizenship, Henderson offers strategies to reduce their tax burden. He suggests incorporating businesses in zero or low-tax jurisdictions and taking advantage of tax treaties and credits to minimize taxes legally. This approach requires careful planning and compliance with both US and international tax laws but can significantly reduce the tax obligations for American entrepreneurs and investors living abroad.

Tax Planning and Expatriation

Henderson delves into the complexities of tax planning for Americans living abroad, highlighting the unique challenges posed by the US tax system's global reach. He discusses the potential financial implications of selling a business as an expatriate, emphasizing the importance of timing and valuation in minimizing exit taxes. Henderson's personal decision to expatriate was driven not only by tax considerations but also by a desire to dissociate from the political and social direction of the US. He underscores the significance of aligning one's residency and citizenship with personal values and lifestyle preferences.

The Puerto Rico Option

Henderson explores the option of moving to Puerto Rico as a tax-saving strategy for Americans, given its unique tax incentives under certain conditions. However, he cautions that genuinely benefiting from Puerto Rico's tax advantages requires substantial physical presence on the island, which may not appeal to everyone. Henderson shares his observations on the quality of life in Puerto Rico, noting that while it offers tax benefits, it may not meet everyone's expectations in terms of efficiency and lifestyle. He also touches on the challenges of dating and social life in such a context, highlighting the importance of considering personal aspects beyond financial incentives.

The Trifecta Strategy and Global Citizen Sandwich

Henderson introduces the "trifecta strategy" as a way of experiencing diverse cultures and business environments by establishing three home bases around the world. This approach allows individuals to immerse themselves in different regions, gaining unique insights and experiences. He also describes the "global citizen sandwich," a concept that involves living in a value destination like Malaysia, banking in a reputable financial center like Singapore, and investing in high-growth markets like Cambodia. This strategy exemplifies Henderson's approach to maximizing the benefits of global citizenship by strategically choosing where to live, bank, and invest.

Banking and Business in Dubai

Henderson shares his insights on Dubai as a potential destination for entrepreneurs and investors. While he acknowledges Dubai's ease of residency and zero personal tax rate, he critiques the banking system and the recent introduction of a 9% corporate tax. Henderson's experience highlights the challenges of operating a business remotely in Dubai and the evolving tax landscape that may affect expatriates and international entrepreneurs. Despite these challenges, he commends Dubai for its immigration policies and its efforts to attract global talent.

Starting the Nomad Journey

For individuals inspired by Henderson's philosophy but unsure where to start, he suggests focusing first on establishing a portable income or business. He emphasizes the importance of financial independence in facilitating a nomadic lifestyle. Henderson then explores various destinations that cater to different preferences and requirements, from the entrepreneurial ecosystem in Ireland to the laid-back lifestyle in Latin America. He also discusses the procedural aspects of obtaining residency and navigating tax implications in different countries.

Raising Children Abroad

Henderson discusses the flexibility and opportunities available for families considering raising their children abroad. He challenges the conventional notion that settling down in one's home country is the only viable option for families. Henderson highlights alternatives such as enrolling children in international schools or opting for homeschooling, which can be more feasible and enriching outside of countries with strict education regulations. He shares examples of clients and acquaintances who have successfully integrated their children into international or homeschooling environments while living abroad, emphasizing the potential for a more global and diverse education.

The Benefits of International Living for Families

Henderson further elaborates on the benefits of international living for families, not just individuals or couples. He argues that living abroad can offer unique experiences and savings opportunities, such as acquiring an additional passport or enjoying a higher quality of life at a lower cost. Henderson challenges the idea that moving abroad or adopting a nomadic lifestyle is incompatible with family life. He suggests that exposing children to different cultures and languages can be profoundly beneficial, offering anecdotes of families who have thrived in such settings.

Navigating Education Systems Abroad

Henderson addresses concerns about the quality of education abroad, comparing it to the education system in the United States. He points out that several countries, unexpectedly, outperform the US in educational metrics, challenging the assumption that the US offers the best education. Henderson encourages parents to consider the broader benefits of education abroad, including language acquisition and exposure to diverse cultures. He shares personal experiences and observations to illustrate that education quality can be superior or more suited to individual needs outside one's home country.

The Decision to Have Children Abroad

The conversation shifts to the strategic considerations for families planning to have children abroad. Henderson discusses the concept of "birth tourism," where parents choose to give birth in a country that offers favorable citizenship rights through birthright. He explains how this can provide the child with additional opportunities and freedoms, using examples from his network to highlight the practical benefits of such decisions. Henderson also touches on the legal and logistical aspects of giving birth abroad, emphasizing the importance of planning and understanding the implications for the child's and parents' future.

Challenges and Misconceptions of Living Abroad

Henderson addresses common misconceptions and challenges associated with living abroad, particularly in terms of social integration and making friends. He contrasts the experiences of living in different regions, noting that some places may offer a more welcoming environment for expatriates than others. Henderson shares personal insights into the dynamics of building relationships in various cultural contexts, suggesting that while some countries may present challenges in forming deep connections, others can offer surprisingly warm and inclusive social environments.

The Rise of the Nomadic Prepper

The discussion turns to the increasing trend of individuals seeking a nomadic lifestyle as a form of preparedness or "global prepping." Henderson observes a growing interest in having a "Plan B" in the form of alternative residencies or citizenships, driven by concerns over government restrictions, political changes, or social issues in one's home country. He highlights how recent global events, such as the COVID-19 pandemic, have accelerated this trend by exposing vulnerabilities and limitations of relying solely on one's home country for security and freedom.

Banking and Financial Considerations Abroad

Henderson delves into the complexities of banking and managing finances across different countries. He discusses the importance of diversifying one's financial assets and not relying on a single banking institution or country. Henderson shares strategies for assessing bank risk and choosing stable financial institutions in emerging markets. He also addresses the practicalities of depositing significant amounts of money in foreign banks, emphasizing the need for due diligence and understanding the regulatory environment of each country.

The Passport Bro Phenomenon

Finally, Henderson reflects on the "passport bro" phenomenon, where individuals, particularly men from Western countries, seek opportunities abroad for various reasons, including dating and cultural dissatisfaction. While acknowledging that dating can be a factor in choosing a destination, Henderson clarifies that his approach to nomadic living is more holistic, focusing on broader opportunities for personal and financial growth. He advocates for using competition in all aspects of life, including government services and social relationships, to enhance one's quality of life and achieve personal goals.