How and where best to decentralize

Putting the “flag theory” into practice is the goal of all permanent travelers to free themselves as much as possible from one system and to have the most pleasant, cheapest, and most importantly, free life without bureaucrats and meaningless obligations.
Since my home country (Slovakia) has long since ceased to be a place where it is easy and free to do business and where censorship and enforcement of all sorts of obligations are slowly but surely setting in, where a victimless crime with zero harm to society will land you in jail for 20 years, I started planting flags outside Europe a few years ago. I’ve switched into full-on travel mode as a digital nomad, spending my time between Latin America, Europe, Africa, and Asia. During this time, I’ve come across a lot of helpful information that has helped me in the process of cutting myself off from the system, which I’m happy to share in the following article.

1 Citizenship

If you were born in the E.U., you are probably one of the few people in the world who were lucky enough to have the E.U. passport that can get you into almost any country in the world. Not everyone was lucky enough to be born in the ‘right place’ and, thanks to his ‘bad passport,’ he will probably be discriminated against for the rest of his life by the visa policies of developed countries.
Even though the E.U. is a regulatory hell with high taxes, the European passport is still one of the best globally (which can no longer be said of, for example, the American one).
Having a second passport/citizenship is always a good idea (especially if you want the legal protection of another country). As soon as you have the opportunity to get a second passport, make sure you take it. Some countries allow you to have two or even three passports which is also a good idea, especially if you travel a lot and have had to leave one passport at the embassy where they process your visa or at the hotel. You never know when it might come in handy.

If you are a U.S. citizen, a second passport is a “must” if you don’t want to be a U.S. tax slave for life (since U.S. tax liability is tied to your citizenship).

Vanuatu is probably the first/only country that directly accepts payments for citizenship in Bitcoins.

But a second citizenship/passport doesn’t help you from paying taxes – because you pay them where you have tax residency.

2 Permanent residence

The best permanent residence is in a country where you have no strings attached, where there is territorial (or no) taxation, and where you can quickly obtain tax residency. It automatically excludes all European countries where there is no territorial taxation.  In these countries, the government usurps taxes on your worldwide income and enforces many obligations associated with permanent residence (e.g., conscription, mandatory health, and social security insurance, etc.). In the image below, you can see the breakdown of countries by a method of taxation – you want permanent residency in the pale blue ones.

There are still relatively numerous countries with territorial taxation (e.g., in Central America), but all require a fairly significant investment to obtain permanent residence (Panama buying a property for USD 200,000, Uruguay for USD 380,000, Costa Rica for USD 200,000). Some countries, such as Uruguay, explicitly distinguish between permanent residency (which is trivial to obtain) and fiscal, i.e., tax residency (where the above investment or other relatively difficult conditions are required).

Of the countries that have territorial taxation (which means, among other things, 0% tax on crypto earned outside Paraguay), where it is easiest to obtain permanent residency, Paraguay comes out best.

The conditions for obtaining permanent residency in Paraguay may change in the future, so I would recommend getting permanent residence in Paraguay as soon as possible (similar to how the conditions for obtaining permanent residency in Panama changed this year, where the purchase of a $200,000 property is required). That is, if you are already granted permanent residence under certain conditions, they can’t just take it away from you once the conditions change.

3 Tax residency

Citizenship or permanent residence in a territorial taxation country may not help you if you live in the E.U. or other country with worldwide taxation. It is also a disadvantage if you have a center of interest in such a country. Therefore, I strongly recommend you not live most of your time in such a country. It means not having permanent residence there and opt-out from the local tax office. Minimize transferring large sums of money to your home country accounts and don’t use payment cards or SIM cards of your home country, and always be able to prove that you live in another country (using airline tickets, rental agreements, etc.).

You need to have tax residency in some country.

If you were in a situation where you have not lived anywhere for more than half a year, with no center of interest in any country, the issuer of your passport usurps the right to your tax residency. And you don’t want that. That’s why it is crucial to have a permanent residence in a good country (have a local I.D. card), have a bank account in that country, a driver’s license, “proof of address” (or lease agreement) – a provable center of interest.

Tax slavery is unavoidable, but you are free to choose your master.

And some have significantly better terms than the issuers of your passport.
If you don’t live anywhere for more than six months, don’t have a center of interest anywhere except Paraguay (where you have permanent residence, a driver’s license, a bank account, a provable center of interest), then your tax residency is in Paraguay. In this case, I heartily congratulate you on being the tax slave of the least greedy master (individuals in Paraguay pay 10% tax on local Paraguayan income and 0% on foreign income).

4 Offshore company

If you want to set up an offshore company, you need to ask yourself the following questions:

Where are your clients? Where is the place of performance of your services?

If you have clients in the E.U. or the U.S., be prepared for many red tapes associated with doing business in those countries – regardless of whether you have your company in the EU/US or somewhere else entirely.

Unless your business is demonstrably carried out exclusively in the E.U., it makes little sense to use a company established outside the E.U. to do business (unless you want to set up a branch or local subsidiary). Usually, you have to pay taxes in the country where your business is carried out. If your foreign company is based in a country that does not have a double taxation treaty with the country where you are doing business, prepare to pay crazy withholding taxes.

If you have a promising startup and want to invest everything you earn back into the company for the next few years, I recommend setting up an Estonian company. Although there is a high 20% profit tax, it is only applied to the company’s profit you want to take out. It means that if the money stays in the company, you can reduce your tax base in the future (which is not possible in most E.U. countries). On the other hand, if you want an E.U. company with the lowest taxes, set up a Cypriot company (12.5%), a Bulgarian company (10%), or a Hungarian company, where you can pay 9% tax on profits under certain circumstances.

Suppose the subject of your business is services that are demonstrably not performed in the E.U. but are invoiced to E.U. customers. In that case, it makes sense to set up a company in a country that has either lower or no taxes (i.e., countries that have territorial taxation) and at the same time have a signed double taxation treaty with the E.U. country where you have clients. An example of such a country is the USA (e.g., a U.S. Wyoming firm) or Panama. The U.S. has a double taxation treaty with all E.U. countries, Panama, e.g., the Czech Republic. Setting up a company in the U.S. or Panama is usually no problem. The problem is for these companies to open a bank account (see next chapter). If you require a bank account, it is better to set up a company in the E.U. Or, in Georgia, where you can pay 1-5% tax on profits under certain circumstances and where you can easily open a bank account for the company. At the same time, Georgia has signed a double taxation treaty with almost all E.U. countries. Be aware that when the volume of your services exceeds a specific value, you need to register with the country’s tax office where you have clients.

Do you need a bank account, or can you be crypto-only?

As I mentioned earlier, opening a corporate bank account is usually more complicated than setting up a foreign company. Banks are incredibly over-regulated; they log and report everything. Until you can afford it as a business, DO NOT use a bank account (because this is also the most severe privacy risk).

There are countless stable coins out there, so you can avoid the volatility of cryptocurrencies (or you can use “hedging”). And also many services that allow you to remain compatible with the “fiat” world and still conveniently pay your suppliers’ invoices by bank transfer (for example, simplecoin.eu). You’re already able to pay your employees’ salaries seamlessly in anonymous Lightning, too.

So if you can afford to operate without bank accounts, the number of countries you can do business from increases significantly. You can set up a business in a country with territorial taxation for which it is difficult, if not impossible, to open a bank account. For example, you can create a U.S. Wyoming company (because of FATCA, they will hardly open a bank account for a U.S. company in most countries). Or create a Panamanian company (it usually takes six months to open a company bank account in Panama, Panama is super bureaucratic when it comes to opening bank accounts at this time). Of course, with both companies, you need to take special care not to do business with them in the territory where you created the company – if you want to enjoy the benefits of territorial taxation. And of course, you should not then have tax residency in the countries with CFC rules (the most E.U. countries), as you may be subject to the CFC rules.

Suppose you are a non-U.S. owner of a U.S. LLC company. You are not doing business in the U.S., and you are not doing business with any U.S. company/contractor solely dependent on your business. In that case, your U.S. company pays no taxes.

Using the U.S. company by non-U.S. owners for non-US businesses with 0% taxation and no reporting in case of crypto-only companies will be changed from 2024 when the new Infrastructure Bill is enforced. Since then, all crypto transactions over 10k USD have to be reported to the IRS.

5 Bank account

Right at the outset, I would like to reiterate that:

Using a bank account is a risky thing to do in terms of protecting the privacy of your financial transactions.

So the best bank account is no bank account (just like the best regulation is no regulation).

Requiring everyone to pay in cryptocurrencies is unfortunately not always possible (so try to persuade as many people as possible to use them!).
If you are lucky enough to be a Paraguayan resident already, then feel free to open a bank account in Paraguay. Unlike most countries, Paraguay has not signed CRS snooping legislation and does not send information about its residents’ bank accounts anywhere. But Paraguayan banks may have a problem if you have exclusively foreign income (in which case you usually have lower limits, they will only issue you a debit card, not a credit card, etc.). A better solution (workable until September 2023, when Georgia starts enforcing CRS) is to open a bank account as an individual in Georgia (ideally with TBC Bank or Bank of Georgia). You can open it literally on the fly with your passport (starting next year, we at Liberation. Travel will be offering a new service of “remote” bank account opening in Georgia). You can then issue invoices as a Paraguayan individual – a tax resident of Paraguay with a bank account in Georgia. In this case, you pay only 10% tax on your profits, and the money successfully lands in your USD or EUR account in Georgia. VISA, MasterCard, and even AMEX payment cards are available for your Georgian and Paraguayan bank account. It would be best if you make sure that the work done by you as a Paraguayan resident is not done in the country that did not sign a double tax treaty agreement with Paraguay. Otherwise, there is still a threat of withholding tax. It is possible to subscribe to a private banking program (the SOLO program) for large amounts. It may be worth mentioning the largest Georgian crypto exchange Cryptal, where you can easily register, easily exchange crypto for Georgian lari or dollars, and top up your Georgian debit cards, with almost no fees. Until September 2023, when CRS in Georgia is enforced, the Cryptal exchange does not report anything to anyone. Unlike most KYC crypto exchanges, where you probably have an open account.
The CRS is also not signed by the U.S., actively pushing other countries to sign it. It means that if you are neither a resident nor a citizen of the U.S., the highest level of protection for your financial privacy over your European country will be, paradoxically, in a U.S. bank. For example, you can open a bank account in Puerto Rico (a so-called U.S. territory).

6 International health insurance

As soon as you get out of the enforced oligopoly of health insurance companies in your country, it is a good idea to become a voluntary client of an international health insurance company. Choosing international health insurance is more akin to choosing collision insurance for your new car than compulsory health insurance. You select the coverage in the countries you want medical care (the price usually doubles if you opt for the U.S.). You define the amount of coverage and the deductible you pay yourself (the higher the deductible, the lower the cost to the insured). Do you want to be covered only for expenses immediately during your hospital stay (inpatient) or also for costs related to tests such as X-rays, MRIs during one-off visits to the hospital (outpatient)? Do you also want to be covered for dental work or regular gynecological examinations? The better the program you choose, the more you will pay. Health insurance prices can range from $50 to $1,000 per month. Of course, they also depend sharply on your age (the older you are, the more expensive it will logically be). If you are flexible, you can pay inpatient cheaper insurance and use the benefits of health tourism. Get your teeth done in Paraguay (in the best dental clinic), laser eye surgery in the Czech Republic or Slovakia, complete medical check-ups in Kuala Lumpur or Bangkok with perfect access and the best price. Especially in urgent examinations and surgeries, do not wait several months for advice in your home country.
I used to use SafetyWing (they use at the backend WorldTrips, which is cheaper and faster), then I switched to IMGlobal, now I’m with Allianz Care. Many of my friends use Cigna.
A few days ago, an excellent article for digital nomads compared several of the most significant international health insurers. I believe that once you’ve mastered choosing the best collision insurance for your car, you can also master selecting the best health insurance for yourself.

7 Mobile Operator

If you want the most gigabytes for the lowest price, and in virtually every country in the world, you won’t find anything better than Google Fi. You can have the highest Unlimited Plus plan for as little as $50 a month (unlimited data with a 22GB FUP limit and unlimited SMS with no limit). If you don’t want the calls and extra data SIMs on top of your flat rate, you can opt for the Simple Unlimited program for as little as $30 per month. Google reserves the right to cancel this plan for you until you’ve been in the U.S. for at least some time.

If you want an anonymous eSIM with data, a good deal is the Silent.link, where you can get an anonymous eSIM with up to 2.2 GB of prepaid data for $9. You can pay with Bitcoin Lightning but also with Monero. In the past, I compared several anonymous data eSIMs, but the data prices there came out higher than the Silent.link.

If you only want to live in the E.U., Google Fi is probably not worth it, in which case your E.U. operator, which has good data and calls terms across the E.U., will probably suffice.

8 A place where you enjoy life

The criteria for the ‘good life’ are sharply subjective and individual.

For me, it’s great personal freedom, which means freedom of speech, no censorship, no unreasonable restrictions, no or minimal drug penalties, etc. Economic freedom is secondary in a country where I “enjoy life,” as my business is in another country and my clients are in yet another country.

Secondly, it is security. Venezuela may be super cheap, but you don’t want to live there. I have a similar feeling about Honduras (except Roatan), El Salvador, and Mexico, where the security situation has also gotten worse (but Mexico is accommodating to people who don’t want to get vaccinated or tested for COVID-19 because they don’t require any of that upon entry).

In third place is price. The E.U., and even Central European countries, are not cheap. In the E.U., you have to face various pandemic restrictions (even lockdowns) at the moment, which you can avoid if you move to the other side of the planet where it’s just summer and warm.

My favorite countries in Europe are Portugal (especially Madeira), the south of Italy, or Montenegro (when you want the sea and reasonable prices). You can lead a cheap and comfortable life with good services and quality food in Lviv, Kyiv, Sarajevo, or Belgrade. I also can’t leave out Georgia, where life has improved in the last few years, and life in Tbilisi or Batumi is excellent. By the way, my favorite country to live in is even the Czech Republic (but you don’t want to do business there, pay taxes, or interact with officials).

To enjoy these benefits it is important that you don’t live more than 6 months a year in the same country.

Otherwise, you can quickly become a tax resident there (and I hope you don’t want to support government corruption).

You can also have a great and cheap life in Southeast Asia (Thailand, Malaysia), but you need to be careful (for example, what you say) as these totalitarian countries are. As an ex-pat, you can also feel comfortable in the Philippines. However, I have stopped visiting dictatorial governments (apart from the Philippines, I have included my favorite Turkey, unfortunately).

My heartland is, of course, Latin America. If you want a safe country with beautiful seaside holidays, try Panama or Uruguay. Both countries are expensive, though. If you want something cheaper and still relatively safe, then try Nicaragua. On the other hand, if you want a cheap country with great food and quality service, I recommend Paraguay (or more precisely Asunción) or Argentina, where you can indulge in great food and service thanks to massive inflation low prices. If you have a Paraguayan cedula, you can stay in Paraguay as a resident for as long as you want, and you can also quickly move to Brazil, Uruguay, Argentina, or other Mercosur countries with it.

9 Digital assets

A digital nomad does not need movable assets because they cannot easily take them with them. He needs digital. The latter has many undeniable advantages – it is decentralized, resistant to confiscation by any state, cannot be devalued, and is easy and cheap to move.

Real estate, gold, money in the bank – all can be taken from you by states or devalued by inflation when legislation or regimes change.

Using cryptocurrencies is essential for digital nomads.

Bitcoin in Argentina will pronouncedly save a person (after they run out of USD/EUR cash), allowing them to get cheap inflationary pesos.

When traveling, I recommend having multiple hardware wallets, using strong passphrases (called “hidden wallets”), and only traveling with a wallet that you can afford to lose (and recover the closest one from seed).

Since government money is doomed to disappear in the next few years, I recommend having only as much savings in fiat as you are willing to lose. The rest is in Bitcoin, of course.

Conclusion

The life of a digital nomad decentralized in many countries may not be for everyone.

But if freedom is important in your life, being global and flexible may be the best way to fulfill it.

You can have it not only freer but also more exciting and varied.