How To Avoid Tax LEGALLY

A lot of time, money and energy is spent around the world each year by people looking to reduce their taxable income to the lowest possible figure. Some employ high level tax advisers, some set up Tax Free Offshore Companies, some try and disguise their income by engaging in all manner of questionable local tax schemes.


But there is another way…


Have you ever heard of a PT?


PT stands for Perpetual Traveller.


A Perpetual Traveller is a person who has no home, or, in legal speak, is not resident anywhere for tax purposes.


So how do you become a PT? By creating a situation where you are not resident for tax purposes anywhere.


To explain…


Most countries have a multifaceted tax residency test:

(a)   Generally speaking if you are inside a particular country for more than 6 months you would be classified as tax resident in that country and liable to declare income in, and pay tax in, that country

(b)   That said you can be resident somewhere for less than 6 months a year and still be classified as a local resident for tax purposes if you have a “substantial connection” to the country.


In determining whether you have a “substantial connection” the tax authorities would look at a range of factors including do you have a spouse from or living in that country? Do you own a residence there? Do you have children there? Do you own a car there? Do you have a bank account there? Do you own assets there? Do you have a driver’s license there? Do you have insurances there? Are you a member of a club there (eg golf club, tennis club, social club) etc etc etc.


If you want to become a PT the starting point is to create a situation where you are no longer tax resident in your home country.


How might you go about that?


To maximise the chances of being able to escape your home country’s tax system probably what you will need to do is:


  • Sell your current business (or quit your local job)
  • Sell your local home
  • Sell all your locally located assets
  • Close down your local bank accounts


Then what you do is you jump on a plane and head abroad. Once you’ve reached your next destination what you do is you send a letter to the tax office/IRS of the country you just left advising them that you’ve departed the country permanently and filed your last tax return.


In the perfect world what you then might do is spend 5 months in one country, 5 months in another country & spend a couple of months travelling.


Then you set up a tax free “Offshore” Company as your business ownership or income receiving vehicle.


It takes courage, time and effort to become non tax resident. But the rewards could be massive; (as well as living a more adventurous/exciting life) you might (LEGALLY) never have to pay income or business tax again!


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