Now that you know more about Flag Theory and its origins, it is time for you to learn about the new concept and the six flags that go with it. Just what is the new concept and how is it different from the old one?
The New concept of flag theory
The new concept of Flag Theory is still based on the same premise as the old one. It allows young business owners and entrepreneurs to make the most out of their money without having to give up a large chunk of their savings to the government.
Flag theory was originally designed for the ultra rich, which is the reason why it is so interesting to explore this topic. The new concept aims to be easier to follow for ordinary small business owners who have an open mind and just wants to grow their business, increase their freedom and legally decrease the taxes that they pay.
“But in this world nothing can be said to be certain except death and taxes.”
– Benjamin Franklin
About the six flags
The original concept had three flags, with two more flags added by WG Hill. A lot of people are going to tell you that Flag Theory is illegal. They are wrong. Strategies explained here are 100% legal. Here is everything you should know about each of the six flags:
Flag 1: Second passport
A common myth associated with getting a second passport is that it is illegal. This is not at all true. Most countries grant their natural born citizens the ability to obtain dual citizenship, making it easier for everyone involved to move to another country, start a life and eventually gain citizenship.
Each country has a different way of allowing you citizenship. For instance, many European countries offer ‘citizenship of descent’ programs that opens up the door for people whose family originates from a certain country.
In South America, some countries will give you a citizenship simply by paying a fee, and fill out some paperwork. Note that this ‘fee’ you need to pay can very substantially from country to country. If you own a business, you can kill two birds with one stone by setting up your company in a country like New Zealand, Australia, Singapore, or Ireland, and then be granted residency and eventual citizenship.
Flag 2: Residency
Seeing countries like Singapore or Hong Kong, which charge very low income tax on their residents, it really starts to make you wonder what your government is doing with all the tax money they collect. These countries know how to attract businesses, and wealth is abundant, which means that they are not after their residents’ money.
The goal of setting up residency is to lower or completely eliminate your income tax. This is why choosing countries like Monaco, Singapore, and Hong Kong makes a lot of sense.
Before choosing where you want to plant your residency flag, take the time to read about that country’s policies and talk to experts. Knowing everything there is to know will help you avoid any trouble in the future, and can help you take home more of your own money.
Flag 3: Offshore Company
Getting residency and citizenship is just one part of the job. Another important step is to establish your business in another country. If anyone has ever told you that forming an international company is illegal, they are wrong again. It is very much legal and is almost essential in some cases.
Remember to abide by the laws set by the country you are planning to establish your company in. Before you do anything, it is best to do your homework. Know the laws, know the taxes, the fees, all the red tape that needs to be crossed. Make sure your entire operation is 100% safe and by the book. What you want is to protect your assets, not get arrested because you failed to know that part of your operation is apparently illegal because you did not bother to find out.
The major Asian financial centers Hong Kong and Singapore are popular places to incorporate offshore, and also offer a sound legal framework, solid banks, and stable political conditions. Other options include certain Caribbean and Pacific Islands, such as the Cayman Islands, British Virgin Islands, or Belize.
Flag 4: Offshore Banking
Remember when you were a kid and you would store your money all over your room so that no one could find it? This is the same premise as offshore banking is based on.
Offshore Banking gives you the opportunity to keep a portion of your money safe in another bank in another jurisdiction so that you can always be sure you have it in case anything happens in your home country, be it inflation, capital controls imposed by the government, or worse.
Switzerland has traditionally been the go-to country for all kinds of offshore banking needs. However, the trend for offshore banking has also been moving east recently, more specifically to Singapore and Hong Kong. These places are the new safe havens for smart entrepreneurs and investors from around the world looking for international diversification, offering high degrees of privacy, the most solid banks in the world, and very low fees on international wire transfers.
Flag 5: Physical Land
Buying property is a milestone in most people’s life. It indicates that you are ready to settle down, have kids, and that you’re in a good financial situation. However, having physical land can be more than that.
Once you have achieved financial independence or have a location-independent source of income, you might want to go travel and experience many different places and cultures. Don’t be surprised if you then find yourself falling in love with a particular place that just feels like a home away from home.
However, before you purchase land, you have to choose wisely. Make sure you choose to buy your property in a country that respects private ownership rights, and that there is good access to enough resources like food and water. Property can be used for yourself to live in, or for you to rent out and make money that way. Many countries in Eastern Europe, as well as certain places in South-East Asia, offers affordable properties that could become extremely profitable investments over the next few years. Another increasingly popular investment is to buy high-yielding farmland in countries like Chile in South America or New Zealand.
Flag 6: Data Security
In today’s day and age, with hacker attacks and various government agencies that keep track of everything that is written online, data security is becoming increasingly important for people, and rightfully so. In fact, these algorithms and machines may even go through private emails in order to find out more about for example your earnings.
This is why the data security flag is is a very important one in flag theory. You should take the effort to learn about encryption and other ways to protect yourself from anyone who is trying to breach your data security. In some cases, you may even want to consult with professionals, who can give you advice and help you protect yourself from these dangers.
The data security flag is simply the jurisdiction where you host for example your business website online. Jurisdictions known for strong data security and privacy laws include Norway and Iceland.
International diversification is key
Proper international diversification happens when several of the flags mentioned above are combined into a tailored strategy for your specific case. There are many resources online that aim to help you with so-called offshore strategies and second passports, but bear in mind that not all of them are reputable, so make sure to do your own due diligence when researching this topic.
Flag theory, second passports, tax laws and tax treaties between countries can be complicated matters, meaning it is highly recommended to seek professional advice before taking action on your own. If you do this, Flag Theory can potentially save you lots of money while dramatically increasing your freedom in a 100% legal way.
Featured image from Shutterstock