June 1, 2000- Is Leaving So Hard?
Is Leaving So Hard?
By: Professor Charles JoughinHer Britannic Majesty's Secretary of State, inside a British passport, requests and requires in the name of Her Majesty all those whom it may concern to allow the bearer to pass freely without let or hindrance. The United Nations Declaration of Rights says you can leave any country whenever you want to. But have you ever tried to leave your native country without a passport? And despite talk of freedom of movement within Europe, I have to show my passport to enter England, where I was born, while Spanish friends don't. Under European Union regulations, they just need identity cards. (Admittedly not having an identity card is one advantage of being British - but for how long?)
This authoritarian urge to control people's movements is a fairly recent development, introduced at the same time as modern "democracy" supposedly gave us more freedom. Centuries ago, traders and skilled workers like stonemasons did roam Europe "without let or hindrance." Even when you have physically left, "your" government may insist that you haven't really. Your absence is seen as a temporary aberration. You will soon come to your senses and return. So even though you have removed your assets from the clutches of "your" tax officials, and now earn your living elsewhere, they still claim the right to pry into your private affairs.
The United States, land of the free, is the least willing to let you escape. Unless you renounce American citizenship you stay on U.S. tax records forever. The Internal revenue service considers you should file tax returns indefinitely, in whatever corner of the world you live and earn your money.
The Spanish Parliament has recently passed an "EXPAT Tax" to tax its citizens on their worldwide income for 5 years after departing their motherland!
Britain insists that you mustn't spend any significant time in the U.K., for several years before you qualify as a tax exile, only returning for short holidays. If you spend even slightly more than half the year in the U.K., you are definitely considered a resident, and liable for tax. Just having a house available to stay in can make you a resident to the taxman - even if you never visit Britain. Having a mainland British bank or building society account or credit card means you haven't cut your links to the satisfaction of the tax inspector. You can be "deemed to be resident in both countries at the same time." This amazing bit of official doublethink is taken from a booklet on double taxation relief issued by the Inland Revenue.
Germany insists its citizens continue to pay tax unless they can prove they pay tax at exorbitant rates elsewhere. Denmark fines you several years' tax if you move to another country not on its approved list (most aren't), and Sweden has an immigration tax. What is the solution?
Instead of becoming a resident in a high-tax country, or in two countries at the same time, you should plan ahead to live nowhere. Living nowhere means not having any significant financial or banking records available in the countries where you live, work and play.
The first stage could be an account with a reputable bank in one of Britain's offshore tax havens: The Isle of Man, the Channel Islands or Gibraltar. You will find adverts in magazines like "Resident Abroad" and upmarket financial publications. (But if you live in Britain, be wary of banks which keep records in mainland Britain,) often you can open an account by post, if you're careful not to leave a paper trail. If you're on holiday, always look out in airports, hotels and bars for free publications aimed at Expats and business people such as "Europa Times," published in Brussels, but available throughout Europe. In the south of Spain you will find "The Reporter," "The Entertainer," and "Sur in English." Study the adverts, then go on a day trip to Gibraltar. From the north of Spain or the south of France, the independent tax haven of Andorra can be reached in a day, although you would probably want to stop overnight. Further north, visit Luxembourg, perhaps Switzerland or preferably its tiny mountain neighbour Liechtenstein, where you may not even have to leave any address in the bank's computer's - just care of the bank. Mail is then sent if you request it.
U.S. residents have a host of Caribbean tax havens like the Cayman Islands and the Bahamas to choose from, between them holding more funds than all the American banking system. But the danger is that some of them keep records in computer networks in the USA. Remember, in itself having an offshore bank account is not a criminal offence. If it were, would the British government tolerate branches of high street bank's such as NatWest and the Royal bank of Scotland in jersey or Gibraltar? You are only breaking the law if you use one of these accounts illegally.
The second stage is to obtain a second passport, which offers good visa free travel. A lot of high-tax countries have altered their tax legislation to catch wealthy citizens out and ensnare them in their fiscal net. But with more than one nationality you can reduce or even eliminate your taxes. Even most high-tax countries exempt foreigners who live there less than six months a year. Obtain a second passport and you could live in a high-tax country nearly half the year and remain tax-free as a foreigner.
A second citizenship can also put you in a position to: ¨ Invest in offshore unit trusts or mutual funds. ¨ Buy and rent out property wherever you choose without punitive taxation. ¨ Avoid electronic logging of your existing passport ¨ Take greater advantage of offshore business opportunities. ¨ Obtain employment world-wide. The very fact that a second passport opens up the additional options already mentioned is actually reason enough to obtain one, but in case you need a little more convincing... ¨
"Your" passport is in fact the property of "your" Government, which claims, and increasingly exercises, the right to confiscate it at any time. Even if you have sensibly removed the bulk of your assets to an offshore haven, they are no good to you there if you are trapped in your "home" country because your passport is no longer valid or has been confiscated. ¨ Most countries have laws, which allow them to restrict not only entry but also exit from their territory. ¨ Exchange controls can be imposed overnight - the necessary legislation is already in place in the US and many other countries. ¨ U.S. citizens are subject to tax wherever they work and live in the world. But a second passport can eliminate the need for disclosing income and assets.
If your citizenship demands fulfillment of military service contrary to your beliefs, it would pay you to have dual citizenship. ¨ If your passport allows your government to supervise your movements, monitor or control your travel in any way, or restricts your liberty to invest, borrow, or participate in any currency transactions, you are at a disadvantage. ¨ If you are not a citizen of a member state of the European Union, freedom of movement within the EU may not be an option open to you as there are now much tougher controls on non-EU nationals.
The answer to this problem could be obtaining citizenship of a country which is either already, or likely in the future to be admitted as, a member of the Union. ¨ If you wish to keep a low profile, for reasons of nationality, religion, race etc., a second passport can give you the necessary mobility you require. It could even save your life. ¨ As an Insurance policy against future economic instability, political strife or war, you should think about a second passport.
When catastrophe is imminent you've left it too late. A second passport in these circumstances would be worth its weight in diamonds.
Editors Note:If you'd like to break free from big brother, you can obtain a Central American passport with a legal name change for just US$15,000. This document offers excellent visa free travel and all documents are registered on host countries computers. Price is valid until 26 June 2000. All payments must be received in full prior to that date. Sorry no exceptions. For full details please remit US$200 (to avoid the merely curious) by credit card or WESTERN UNION and e-mail to: firstname.lastname@example.org . Place "CA document" in the subject heading.
Yours for Freedom