How to Find More Personal Freedom by Diversifying Your Assets and Location
Flag Theory is the concept that you should compartmentalize your life and plant flags in different locations for each part of your life. The concept was first introduced by Harry Schlutz back in the 1970s and expanded on by WG Hill in his series of books aimed at Perpetual Travellers.
The advantage of this strategy is that if you have a problem in one jurisdiction, you will have at least four other jurisdictions where you can continue life as normal.
The principal flags, according to flag theory, are:
A Business Base
Having a solid business base is a key principle of flag theory. Your business base is where you make your money. This place should be different from the place that you stay. This should be a place where business conditions are good, and regulations are not too difficult for businesses. If you have a bricks-and-mortar business, access to good quality labor will be important too. Examples of business bases are The UK, The US, and Canada. Eastern European countries like Georgia and Serbia are good options for establishing business bases too. Always use an offshore company for your business dealings.
Passport and Citizenship
A second passport is a key tool in obtaining more freedom from your home country. While passports are tools of government control, the more of them you have, the more free you become, as one country can’t control you by restricting your movements. These should be from countries that don’t care what their citizens do outside their borders. There should be no tax or military requirements for non-residents. The passport should have good visa-free travel options and should not tax based on citizenship. Almost any European passport would be a good option to have citizenship. Caribbean countries such as Dominica and Grenada, which offer fast citizenship by investment programs, are good options too.
This is where you legally reside. It should obviously be a tax haven or at least a territorial tax country. It should have decent transport links with the rest of the world. It should be safe and secure. Places like Monaco, The Cayman Islands, Malaysia, or Thailand would work well for this flag. You should be able to easily get a residence permit to prove that you live there.
This is a crucial difference from when Schultz came up with flag theory almost 50 years ago. His opinion was that you should stay off government databases. Nowadays, you’ll likely need a residence permit for another country to prove that you’re not a taxpayer in your home country. This is crucial when opening bank accounts because of the Common Reporting Standard (CRS).
These are places where you keep your money and assets. They should have competent financial managers and not share financial information on your affairs with other countries. They should have no taxation for non-residents. You should never keep your assets in a country of which you’re a citizen or a country where you have a residence permit.
Good investment havens could be Switzerland or Singapore if you’re not a resident there. The United Kingdom was also an option for non-residents, although less so nowadays, as despite having world-class asset managers, they have introduced laws that allow them to confiscate your assets if you can’t explain how they were acquired. Keeping your assets separate from your other flags is a crucial part of flag theory.
These are places where you actually spend your time. This is the fun part of flag theory. You would stay in each for less than 120 days per year to avoid becoming a taxpayer. The whole world can be your personal playground, provided you stay in each jurisdiction for less than four months every year. Whatever activities you enjoy, you can normally find a location where it’s safe and legal to do the things you want to do.
As an example, you might have:
- Businesses producing income in London or Hong Kong
- A passport from Brazil, Malta, or Canada
- A residence permit and an address in Kuala Lumpur or Monaco
- Bank accounts in the name of your offshore companies and trusts in Singapore or Panama
- Places to hang out with friends in Buenos Aires, Bangkok, and Paris
You can create the perfect life for yourself. Free of taxes. Free of pointless bureaucracy. Free of ex-spouses.
You can keep more of your money and earn more money while traveling the world, visiting exotic locations, and making new friends.
The world is a big place. You could choose to spend winters in the southern hemisphere in places like Buenos Aires and Punta del Este. Or take advantage of business opportunities in Hong Kong or Sydney.
In the summer you might be in St Tropez or Monte Carlo.
All the time, you feel secure knowing that your assets are safely stashed away in secret locations, and nobody can touch them except you. Any litigants or ex-spouses won’t stand a chance if you organize your life like this.
Please get in touch with us to help set up your international life. We can help arrange overseas residencies, second passports, offshore companies, and tax minimization strategies so that you can legally keep more of your own money. We offer unique asset protection strategies to protect your wealth in any situation.
Discover New Asset Protection Strategies
Our Special Report, Bullet Proof Asset Protection goes into detail on Flag Theory and outlines secret strategies updated for the 2020s to help you cut your tax rate to zero and protect your assets while living an enviable lifestyle. Click here to find out more.
Five flag theory can be implemented by anybody. When you follow the principles of global flag theory, you’ll be able to live with more freedom. You cease to be dependent on any one government. In today’s uncertain times that the position anyone with assets must be in.
What is Flag theory?
Flag Theory is the concept of compartmentalizing your life so that you have a different geographical base for each aspect of your life.
What do five flags mean?
The five flags are the different aspects of your life that you have compartmentalized by geographic location. These are Business base, Citizenship base, Playgrounds, Investment base, and your legal domicile.
What does 7 Flags mean?
7 flag theory adds two additional flags to compartmentalize. This updates 5 flag theory for the 2020s. It can include online privacy and digital assets such as cryptocurrencies.