How to Pay Zero Taxes Forever (Legally)

Summary

The speaker shares his journey of legally minimizing tax payments by leveraging different tax systems across countries. He discusses the importance of lifestyle and freedom in choosing where to live, and how it influenced his tax strategy. As a US citizen, he utilized foreign income exclusion and foreign corporations to avoid taxes. After renouncing his citizenship, he gained more control over his finances, investing globally while maintaining a low tax liability. The video highlights the benefits of living in tax-friendly countries and the impact of government policies on personal freedom and financial decisions.

Takeaways

• 💼 The speaker has legally paid very little in taxes in some years, even zero, by strategically managing their tax residence and income sources.
• 🌍 The concept of 'tax residency' varies by country, with some only taxing income earned within their borders, while others tax global income regardless of where it's earned.
• 🏖️ The speaker values lifestyle and freedom, which led them to a nomadic lifestyle and choosing countries with tax-friendly policies.
• 🏠 The speaker has homes in multiple countries and doesn't spend enough time in any one place to be considered a tax resident there, thus avoiding taxes.
• 💼 The speaker's business structure involves foreign corporations that are not distributing profits, which contributes to the low tax liability.
• 🌱 The speaker is moving towards countries with non-dom systems, lumpsum systems, or territorial systems where they pay taxes based on a fixed amount or only on local income.
• 💡 The speaker emphasizes the importance of considering the value received from taxes paid, questioning the return on investment for high-income individuals.
• 🌐 The speaker discusses the differences between Western and emerging countries' tax systems, noting that the latter often have simpler tax codes based on the number of days spent in the country.
• 🏆 The speaker suggests that living in countries with lighter government intervention can provide a sense of freedom and less adversarial relationship with authorities.
• 💰 The speaker highlights the potential for tax optimization through legal means, such as setting up businesses in jurisdictions with favorable tax laws and understanding global tax competition.

Q & A

Why did the speaker pay very little or no taxes in some years?

The speaker paid very little or no taxes in some years because they utilized legal tax strategies and structures, such as residing in countries with favorable tax systems, using foreign corporations, and not taking money out of those corporations, which led to no country claiming them as a tax resident and thus not taxing them.

What is a non-dom system in the context of taxation?

A non-dom system refers to a taxation system where individuals who are tax residents in a country but do not have their domicile there can be taxed only on income earned within that country, not on income earned abroad.

How does the speaker define 'finance, freedom, and lifestyle' in relation to taxes?

The speaker defines 'finance, freedom, and lifestyle' as the three main aspects that people consider when planning their taxes. Finance refers to lowering taxes and protecting assets, freedom is about choosing where to live and work without tax implications, and lifestyle pertains to the quality of life and personal preferences in choosing a place of residence.

Why did the speaker decide to become a 'nomad capitalist'?

The speaker became a 'nomad capitalist' to enjoy the freedom of choosing where to live and work without being constrained by high tax burdens. They wanted to take advantage of the global opportunities for lower taxes and a better lifestyle.

What is the significance of the '183 days' rule mentioned in the script?

The '183 days' rule is significant because it is a common threshold used by many countries to determine tax residency. If a person does not stay in a country for more than 183 days in a year, they may not be considered a tax resident and thus not liable for taxes in that country.

How did the speaker use foreign corporations to minimize their tax liability?

The speaker used foreign corporations to minimize tax liability by not taking money out of those corporations, thus avoiding personal income tax. They reinvested money through more complex structures, which allowed them to legally avoid paying taxes in countries where they were not physically present.

What is the difference between a territorial tax system and a residential tax system?

A territorial tax system taxes only income earned within the country's borders, while a residential tax system taxes an individual on all their worldwide income, regardless of where it is earned, as long as they are a tax resident of that country.

Why did the speaker choose Malaysia as a base for a long time?

The speaker chose Malaysia as a base due to its blend of being immigration and tax-friendly, offering a favorable environment for living and doing business. It also provided a strategic location for their lifestyle and business interests in Asia.

What are some of the strategies that the speaker suggests for legally reducing tax liability?

The speaker suggests strategies such as living in countries with territorial tax systems, using foreign corporations, not taking money out of those corporations, and structuring one's lifestyle and business in a way that minimizes tax obligations while maximizing personal freedom and lifestyle choices.

How does the speaker view the relationship between government and citizens in terms of taxation in the countries they have lived in?

The speaker perceives a difference in the relationship between government and citizens in terms of taxation, noting that in some countries they have lived, the government is less adversarial and more appreciative of taxpayers, which contrasts with their experience in the United States where they felt there was a more hostile and heavy-handed approach to taxation.