{"id":11794,"date":"2017-05-25T09:00:33","date_gmt":"2017-05-25T13:00:33","guid":{"rendered":"http:\/\/www.escapeartist.com\/?p=11794"},"modified":"2020-09-21T03:05:36","modified_gmt":"2020-09-21T08:05:36","slug":"ready-move-offshore-heres-know-youre","status":"publish","type":"post","link":"https:\/\/www.escapeartist.com\/blog\/ready-move-offshore-heres-know-youre\/","title":{"rendered":"Are you ready to move offshore? Here\u2019s how know if you\u2019re up to it"},"content":{"rendered":"

Are you ready to move offshore? Are you up to the task of taking your business offshore? Can you move you and your family out of the United States? In this article I\u2019ll look at what it takes to move offshore. <\/span><\/p>\n

I\u2019ve been helping clients move offshore since 2000. I wrote my first book on the topic in 2004 and I practice what I preach. I\u2019ve lived in 5 countries and set up businesses in 15 different nations. <\/span><\/p>\n

Over those years, I\u2019ve met many successful expats as well as those who\u2019ve given up and gone home. I can tell within 5 minutes of meeting someone if they have what it takes to move offshore. In this post, I\u2019ll try to identify the traits and considerations of a successful offshore entrepreneur or expat. <\/span><\/p>\n

There are three successful groups of expats abroad: <\/span><\/p>\n

    \n
  1. Those looking for a better life, <\/span><\/li>\n
  2. Those looking for a better return on their business (lower taxes, lower cost of labor, etc.), and <\/span><\/li>\n
  3. Those looking for adventure and a nomad or <\/span>perpetual traveler<\/span><\/a> lifestyle. <\/span><\/li>\n<\/ol>\n

    I\u2019ll look at each of these in turn, but let me start with who shouldn\u2019t bother to go offshore.<\/span><\/p>\n

    Who Should Stay Home<\/b><\/p>\n

    The most important characteristic of international business owners and those moving abroad is \u00a0attitude.<\/span><\/p>\n

    Many aspiring expats can\u2019t hack the offshore life. These are usually Americans who miss the creature comforts of home and don\u2019t have a <\/span>need<\/b> for excitement. They\u2019re from the suburbs and prefer the safety of what they know (and chain restaurants with production line food) to a life of discovery and appreciation for other cultures. <\/span><\/p>\n

    I see them speaking down to locals and telling everyone who\u2019ll listen how great the gold lined streets of their home country are. They get upset when the waitress doesn\u2019t speak English and they hope she\u2019ll understand when they talk louder. They didn\u2019t bother to learn about the culture or country they\u2019re visiting and didn\u2019t spend the time learn a few key phrases. They assume anyone who doesn\u2019t speak English is stupid. The first thing that pops in their mind when they hear Panama or Colombia is, gosh, isn\u2019t that a dangerous place?<\/span><\/p>\n

    If you look at the world through red white and blue colored glasses, you should probably just stay home. If you look out and see a great adventure and countries offering better tax and business deals than are available in the US, then moving you or your business is something to consider.<\/span><\/p>\n\n

    A Better Life Abroad<\/b><\/p>\n

    Those looking for a better life are typically retirees moving abroad on a budget. They\u2019re looking for a higher quality of life and living on their pension and IRA distributions. The most popular countries for retirees on a budget are Costa Rica, Panama, <\/span>Mexico<\/span><\/a> and Colombia. They typically stay near to their home country because they want to be able to visit family and friends. <\/span><\/p>\n

    Those who don\u2019t care about visiting home also look to the Philippines, Thailand, and Southeast Asia, where the dollar goes even further. <\/span><\/p>\n

    Retirees usually plant their first flag abroad by moving their IRA offshore or setting up a standard international bank account. You can take your IRA offshore and invest abroad by forming an IRA LLC and transferring your account into that structure. For more, see: <\/span>Here\u2019s how to take your IRA offshore in 6 steps<\/span><\/a>.<\/span><\/p>\n

    American retirees moving abroad are usually value seekers because going offshore doesn\u2019t reduce their US taxes. US citizens are taxed on their worldwide income no matter where they live. There are tax benefits available offshore, but not on capital gains. <\/span><\/p>\n

    That is to say, US citizens pay US tax on their capital gains, no matter where earned. Living in the US or in Panama makes no difference. For this reason, most high net worth retirees stay home. <\/span><\/p>\n

    There is one exception to the rule that Americans must pay US tax on their capital gains<\/span>. If you move to the US territory of Puerto Rico, spend 183 days a year on the island, and otherwise qualify for Act 22, you\u2019ll pay zero tax on your capital gain. That\u2019s right, Americans can move to Puerto Rico and pay nothing on capital gains earned from assets acquired after they become a resident of the island. <\/span><\/p>\n

    Puerto Rico is the ONLY option for Americans who wish to eliminate US tax on their capital gains. As a territory, <\/span>Puerto Rico source income<\/span><\/a> is exempted from US taxes under US tax code <\/span>section 933<\/span><\/a>. When you move to a foreign country, Federal tax law applies to you. When you move to Puerto Rico, only Puerto Rico\u2019s tax laws apply. <\/span><\/p>\n

    And we\u2019re not talking about tax deferral here\u2026 we\u2019re talking about tax free. It\u2019s not like an IRA where you must pay US tax when you take distributions. Capital gains earned by residents of Puerto Rico under Act 22 are tax free and never taxed by the US IRS should you decide to move back to the mainland. <\/span><\/p>\n

    So, moving offshore is great for those looking for a higher quality of life on a budget. Moving to Puerto Rico is the solution for high net worth investors who want to cut their US taxes. For more on Puerto Rico, see: <\/span>How to stop paying capital gains tax<\/span><\/a>.<\/span><\/p>\n

    Moving Your Business Offshore<\/b><\/p>\n

    If you\u2019re seeking lower taxes and a business friendly environment, I suggest Panama and any country with quality low cost labor that won\u2019t tax your corporate profits. Where the United States taxes its citizens on our worldwide income, there are many nations that won\u2019t tax foreign sourced income. <\/span><\/p>\n