The 6 Flags of Flag Theory
Digital Nomads, Permanent Travelers. The new way to business is from the road (or maybe the beach). 2nd Passports and offshore banking. Singapore, Panama, Nevis. Small islands and BIG goals. Gold. PT. Monaco. Offshore Bank Accounts. Belize. Hong Kong. Helicopters. Encrypted Communication. Flag Theory.
Who is Flag Theory For?
Flag theory is utilized by those who strategically use diverse locations around the world to access privacy, freedom and business & personal prosperity.
Flag Theory is derived from Harry D Shultz’s 1964 novel titled “How to Keep Your Money and Your Freedom“. Flag Theory started with just 3 flags:
(1) a 2nd passport,
(2) a safe and secure place for your key assets external to your country of citizenship and
(3) a legal address in a tax haven.
Finding freedom, in a restrictive world.
WG Hill came up the term “Flag theory” later and added the idea that a person could be a “PT” a permanent traveler – also known as a perpetual tourist or just passing through (or now, a digital nomad), and he expanded the theory via another 2 flags:
(4) where the millionaire invests his money, and
(5) living in the playgrounds.
Flag Theory and permanent travel was once relegated to the super rich and high net worth individuals, but with the expansion of the Internet and relatively inexpensive travel, it can be accessed by anyone wanting to engage in an international strategy.
Flag Theory is the method for structuring your needs and wants (such as a bank account, company incorporation, residency, property and more) across multiple countries and jurisdictions.
Why Use Flag Theory?
If you are able to structure your life correctly by planting “flags” in specific countries, it is possible to achieve these goals:
- Legally decrease or eliminate tax
- Increase your freedom
- Reclaim your privacy
- Become impervious to lawsuits
- Generate and preserve wealth
- Find peace of mind and live in the playgrounds of the world…
Flag Theory has since been used by untold numbers of PT’s who join the offshore world in order to achieve the aforementioned goals.
PT stands for Permanent Travel, the idea that once you have planted the requisite flags, you are now free to move about the world without being a resident.
Who Was Flag Theory Created By?
Flag Theory was first created over 50 years ago by the most famous and successful investor of the time: Harry Shultz. Besides advising clients where to place their wealth, he advocated 2nd passport, setting up an offshore company, and establishing a residence in a low tax environment.
When he first wrote his book “Tax Exile” his book was nearly banned by congress. That’s because the techniques and strategies are potent, legal, and allow you to claim back your freedom from overzealous governments who want nothing but to control you.
Now, when most people hear the words “offshore company” or “avoid tax” they instantly cringe, thinking something shady is abound.
While tax, legal and financial issues are delicate and require individual, personal advice – this is no reason to ignore them, and it’s never too early to start thinking about these issues if you want to run your own business.
The truth is this: it is entirely possible to structure your life to take advantage of the tax rates in certain countries.
For instance, some countries have no personal income tax, others – like Hong Kong have no corporate tax in certain instances.
And its determining your personal situation that makes it possible for you to legally avoid tax by planning flags in each of these countries.
A road to freedom, for those willing to travel the road…
Here is an introduction to the 6 flags of Flag Theory.
Flag 1: Passport
When I meet with newly minted entrepreneurs fresh off their first “exit” the thing on the top of their mind: a 2nd passport.
That’s because when you have “Fuck You Money” – you can buy your freedom. And this is exactly what the Nouveau riche do. From the Chinese, to Middle East, to Africans, even Europeans and Americans – routinely seek out 2nd passport options.
Citizenship is an extremely polarizing subject. Many people incorrectly think that a 2nd passport is illegal. This is a myth. Ignorance, and nationalistic indoctrination, has perpetuated a stigma that somehow obtaining a 2nd passport is “grey”, or outright illegal.
This could not be further from the truth. As long as your country of origin allows for dual nationality (and almost all do) then immigrating and starting a new life where there is more freedom is a prudent and acceptable step. However, you should be careful and do your research and deal with trusted professionals.
Those who have dual nationality, or multiple passports – have a greater ability to live free. A passport controls where you travel, where you can bank, where (and if) you pay tax. Citizenship forms the base for building the rest of your life.
Best of all, it may be simpler (and cost less) then you think to get a 2nd passport.
Got Parents? If you are of European descent, there are many countries that convey citizenship to descendants via Jus Sanguinis citizenship. Italian, Hungarian, Irish, Polish, Austrian or German parents/grandparents? Welcome to the lucky sperm club.
Got Time? Have time but not a lot of money? Head down to South America and navigate the systems in Paraguay, Uruguay, Brazil, Ecuador or Argentina. $20,000 in unmarked USD deposited into a Paraguayan bank account gets you a residency and a Mercosur visa. Amigos in the right places and un poco de Español, and poof! You’re a citizen.
Got Money? Dominica, St. Kitts and Nevis and now Malta will let you buy a passport for a few hundred large.
Got Business skills? You are in high demand. New Zealand, Australia, Singapore, Ireland, and many more countries will grant you residency and eventual citizenship for investing or starting a business that provides jobs for the economy.
If you are interested in this subject and want to learn more, you can read about your options and more about flag theory at flag theory.com
And those who want to take the next step should consider applying to the FT Intel Society.
The world is a dangerous and volatile place. Life is precious, and anything but predicable or safe. Unless you take the time and effort to protect your assets and your future, ask yourself who will – your government.
Flag 2: Residency
The 2nd flag to plant is a residency in a low or no tax jurisdiction.
Surely no country can survive without taxing the income of its residents?!
When you visit country without income tax – you’d almost expect the country to be in shambles. Surely, the government isn’t able to supply for the people without tax?!
Take a stroll through Monaco (which has 0% income tax) Singapore or Hong Kong (extremely low personal tax) and you’ll see these countries aren’t searching for money.
Where you are a tax resident is an important aspect to consider when planning a business. Many people who are PT’s plan to simultaneously “live everywhere” and live nowhere. If for instance you hold an American passport – if you spend less than 30 days a year in the US each year, or you are a tax resident elsewhere – you can get over $95,000 of earned income excluded each year.
Each government has specific rules and guidelines you should come to know and become familiar with. Aussies, Brits, and South Africans have a similar system where you need to become a tax resident somewhere else (or lose your domicile). While the devil is in the details, residency is an important flag to plant if you want to dramatically decrease your tax.
The third flag of flag theory is an offshore company, placed in a jurisdiction with a low corporate tax rate. Some of the most popular jurisdictions include Hong Kong, Singapore, BVI, Belize, and Nevis.
Flag 3: Offshore Company
Offshore Company 101
Large corporations and multinational companies understand the importance corporate structure, because this can have powerful impact on the bottom line.
The media confounds and exacerbates the problem by publishing misinformation. They have created a label that anything “offshore” means something illegal or is about evading tax. This is a means of scare tactics that confounds the truth of the situation: forming an international company is completely legal, effective, and in many cases, essential.
MOST major businesses operate through offshore companies, and you too can easily and affordably plant a flag outside your own country. Setting up a company is inexpensive (oftentimes costs less than $1000) and depending on your unique circumstances, this entity can be used to attract outside funding, comply with local laws, establish a residency, and many other benefits.
A proper use of legal entities and corporate structure is essential to doing business, investing, and prospering globally in the 21st century.
By adopting a worldwide plan, you can decrease your liabilities, increase your opportunities, and achieve a priceless result: peace of mind.
Where should you form a company?
There is no “one-size-fits-all solution”, and its imperative you take the time to educate yourself and speak with experts before taking action.
I’ve written about forming a company in
When you starting dealing with laws of multiple jurisdictions (the laws become complex, due to overlaps or grey areas. It is important that you seek to understand the benefits and drawbacks for your business, and equally important to get the proper tax and legal advice when forming a legal entity.
If you are American, for instance – you have a worldwide tax burden, and if you form a foreign corporation, you have to be very careful to file the right forms to the IRS (which could include forms 5471, form 8938 for starters check with your accountant) and other forms such as form 90-22.1 to the treasury department which declare foreign bank accounts.
The penalties for non-compliance can be severe, and that’s why it is important to have proper guidance and always talk to a tax lawyer in your jurisdiction before taking action. Going offshore is great, but do it right.
You can read all your options of offshore in the books that come with you FT Society membership – with detailed breakdowns on processes and costs.
Flag 4: Assets
The first step for your fourth flag is a Bank Account in secure jurisdictions renowned for banking. Tying your offshore company to a strong bank account in a reputable jurisdiction is essential.
Internet entrepreneurs have special concerns, such as merchant accounts and payment processors.
We’d like to believe that the country in which we live is infallible, but the truth is that governments are fragile, and inept. They can, and do topple. That’s why it is important to allocate a portion of your wealth or assets in a safe haven.
Even if you don’t have much – it helps to have the structure in place so that if something goes wrong, you have an escape plan.
Ask people in Cyprus, or Greece how much they could remove from the bank on a Tuesday afternoon during the banking crisis. When governments fear the outflow of currency or inflation – they will often resort to capital controls.
This is nothing new, it has happened countless times throughout history. This is precisely why you should take responsibility for your own finances, and get at least some money in a foreign bank.
Introductions to bankers, accountants and lawyers are just some of the benefits provided to my private community of PT’s. We are a growing community of global entrepreneurs who recognize the value of internationalization.
Doing things such as obtaining an alternative citizenship, setting up an offshore company as an investment vehicle, or opening a foreign bank are prudent and worthwhile steps that will help protect your freedom and your wealth.
If you’re an entrepreneur or investor looking to internationalize your self and your wealth, you can utilize specialized knowledge and powerful information that can grant you access to guaranteed wealth and freedom, no matter what happens in the world by planting flags in different countries. One of the best ways to get this information is to subscribe to my free newsletter – or consider becoming a member of our PT community.
Flag 5: Physical Land
For the free-spirit – the world is your playground
The original flag theory had the 5th flag as a playgrounds flag – being that where we live and play. This is perhaps the most subjective category of them all, and its also not productive.
Some might enjoy scuba diving each day in Bali others might enjoy skiing down the slopes in Zermatt, Switzerland. You could even choose a temporary location even for a certain type of food, or architecture, people, shopping, entertainment, your possibilities are limited only by your environment. Change it often!
However, when you are abroad (and when you have money) inevitably you will find a place that you’d like to stay longer. You might check out the physical land in the area, because “They aren’t making any more of it…”
Due to the ownership restrictions in many countries, it’s worth examining different countries to see which may be best. The land should be productive and farmland in particular I am bullish on.
For the International Investor
The savvy investor might realize that over the coming century, there will be a dramatic demand and noticeable strain on the food supply, causing the price to increase exponentially. Owning farmland that produce the right crop has a tremendous investment potential. In Spain, (whose economy is crumbling) you can pick up land for pennies on the euro, and the government will also grant you permanent residency if you meet certain criteria.
For the Paranoid and Prepared
Physical land is a strategic flag to plant a physical fortress. It is important to choose in a country that respects land ownership rights and land with potable water, arable land, and enough gold and girls to hold out no matter what happens.
Even though we may have a base, as permanent travelers and practitioners of flag theory, we are free to move and travel when and where we choose. Many people earn money on the internet – and this is worth looking at as well.
Flag 6: Data Security
Internet protection warrants its own category, because it plays a large role in many of our lives.
All of us are frequent users of the internet, and programs are frequently capturing huge amounts of data on us, and exerting a process over our data called “data mining”.
What this means is that an algorithm is combing the internet looking for certain phrases, combinations of words and others for market research, surveillance and god knows what else.
What’s important to realize is that no one is personally watching over your shoulder, and you don’t need to run out and get a tin hat – but what you should realize is that EVERYTHING you post on the internet is saved forever, put into a system, and combed over by a machine designed to uncover specific behavior and anomalies.
Especially for internet entrepreneurs, or people who make money on the internet, this is a very important flag and deals with important aspects of your business or life you might not otherwise consider, such as server country or email hosting providers.
Learning about security is a rabbit hole that keeps going. Once you learn about the “dark web” encryption, port searching, etc. you may find yourself never wanting to stop. As computers become more and more intrinsically tied to our lives, it’s vital that we learn how we can remain private, being cognizant of when we may be being watched.
These first 6 flags are the basis for Flag Theory. If you want to master the system and take action, consider joining the FT Society.
This isn’t something you can read about online, you actually need to go there and put boots on the ground, talking to locals and ex-pats who have actually gotten a second passport, and alternative residency, or physical land.
See you on the other side…