Five Flags Approach To Going Offshore

Planting Flags

“The times they are a-changin’…”

In the face of the kinds of market, economic, and political uncertainties the world is currently presenting, how can you protect yourself?

That’s the question we’re convened in Panama City this week to address. For this Emergency Offshore Summit, we’re joined by our key banking, residency, citizenship, tax, asset-protection, and offshore structures experts. With their counsel, insight, and experience, we aim to help each attendee conceive and execute his own “going-offshore” plan.

Perhaps the most important thing to understand about this offshore world, I explained in my opening remarks this morning, is that it’s forever changing.

Tax laws and treaties, residency visa requirements, opportunities for obtaining second citizenship, documentation required to open a bank account…as well as the political situations, the values of local currency, and the ease of coming and going from other parts of the world…all these things change all the time.

Just this week, for example, Panama has signed an exchange of information treaty with the United States. This has important implications for this country’s status as an offshore banking haven. It doesn’t make Panama unattractive for the would-be foreign retiree, entrepreneur, or investor (far from it), but it certainly makes this jurisdiction less interesting as a place to keep an offshore bank account.

As this very recent development highlights, any list of the World’s Top Offshore Havens is a moving target. How then can you make a plan and take action?

You’ve got to diversify.

Just as it’s smart to invest in different markets and to hold assets of different types in different currencies, so, too, are there advantages to spreading your life among different jurisdictions.

I didn’t invent this strategy, of course. It’s written of often, as the “Five Flags” plan. It’s about organizing both your time and your money to your greatest advantage, spreading your life across multiple flags (that is, countries).

In fact, when you consider the Five Flags approach in the context of your own life, you may find that you need more than five.

You could do your banking in one country (where you can feel reasonably secure your deposits are safe), reside in another (where you pay no tax), run your business in a third (where entrepreneurs are respected and incentivized) hold a passport (and maybe a second passport) elsewhere…

Have gold on deposit in one jurisdiction, keep a physical mailing address in another, and arrange for phone and fax services, again, someplace else…

No, not everyone needs this level of diversification. Again, it depends on what you’re trying to accomplish.

My point is that, to protect yourself and to maximize your opportunities, you need to remain open-minded and flexible.

Plant your flags based on your current circumstances and agendas. But don’t plant them in concrete. You might want to be able to move them around from time to time.

Kathleen Peddicord