Wealth International, Limited (trustprofessionals.com) : Where There's W.I.L., There's A Way

W.I.L. Offshore News Digest :: October 2009, Part 3

This Week’s Entries :


The writter here placed a “situations wanted” advertisement in Caretaker Gazette (which is included in the Overseas Living & Expatriation section of the WIL Resource Directory). Although he received many responses none worked out logistically. Then he saw an advertisement in a later issue for a short-term house sitting position in Costa Rica. An exchange of emails ensued and, finally, he got the job.

Here he details the resulting experience. Would he consider doing this again? “Absolutely, as long as the assignment has something about it which interests me.”

In the stress-abundant environment of construction management, where I worked for over 25 years, I found that I could escape my humdrum life through reading about faraway lands and dreaming of a cool job in an exotic country by strumming through the pages of my Caretaker Gazette subscription. As 2008 drew to a close, I once again renewed my subscription to the Gazette, and once again was dreaming about the possibilities of finding a housesitting and property caretaking position which would give me the wonderful opportunity to see some of the world.

In 2008, in order to “test the waters,” I had actually placed a Situations Wanted ad in the Gazette and received a great response from many property owners. It was really encouraging, and I nearly accepted a few of the short-term positions that were being offered to me. Unfortunately, the logistics did not work out.

Then, I was finally given another opportunity on one cold, Canadian winter day. In late February 2009, I had just received one of the Gazette’s email updates. An advertisement in Costa Rica caught my attention, so I decided to email a property owner about the short-term house sitting position.

I communicated by email an overview of qualifications, along with an introduction about me. We communicated briefly via email messages and it appeared that, because of my experience, I was now the prime candidate for the housesitting position. I was both thrilled and concerned since, finally, another of my life goals could soon become a reality.

At the same time I answered the Costa Rica ad, I had also responded to another ad that was placed by another property owner, and had commenced building a relationship through letters and plenty of questions and answers, with some folks in rural Montana. They were seeking someone who could assist them in reconstructing a wilderness lodge in Montana for the summer of 2009. Unfortunately, they needed someone who could commit a little sooner than I could insure I might be back from Costa Rica.

Those owners did not want to split their tasks and assignment into more than one agreement with more than one person.

I thought at one point I might have been able to swing coming back from Costa Rica and go directly to Montana to help them out, but it was just too tight a commitment.

It would have been unfair to ask the Montana folks to wait for a week or two while I dropped back home and said hello to everyone for a week, after being gone for to Costa Rica for few months.

For this short-term housesitting assignment in Costa Rica, I had to make my own travel arrangements. In addition, I decided to take out added insurance for medical coverage – just in case. And, before leaving Canada for Costa Rica, I also went on a regiment of added vitamins and probiotics, etc. as I did not want to risk becoming ill while down there. In the end, though, during my 8-week stay in Costa Rica, I was probably healthier there than I have been in years. The reason for this was that everything was natural and my digestive system was very happy to be consuming all of the locally produced foods, with little or no preservatives in them.

After giving me a few days to investigate and to speak with the current housesitters (who were from Canada as well), I decided to commit and purchased my airline ticket to San Jose, Costa Rica. By the end of March, I was sitting on a bus on my way to Limon, after a flight and overnight delay on the flight to Houston from Toronto. When I arrived in San Jose, Costa Rica, I boarded a bus for a nearly four hour trip to the eastern coast of Costa Rica on the Caribbean Sea. It was there that I eventually met my new friend – the owner of this lovely casa overlooking the ocean. Upon arriving, with my Spanish-English phrase book in hand and with the assistance of a wonderful senior citizen from New York who was also on that bus, I finally met the owner, D.

We left the hustle of the bus/taxi/tourist/guest arrivals and made our way through the now complete darkness to the site of what was to be my new adventure for the next two months. D made me some food, we enjoyed a few words, and I was shown my bedroom where I happily retired for my first night in Costa Rica, weary from the full day of traveling. I had heard the sound of the Caribbean Sea crashing into the shoreline all night long but I could not believe my eyes when I awoke. Upon awaking, I realized that I could lie in bed and actually watch the surf among the mesmerizing dance of the palms outlining the cliff overlooking this surreal view.

D introduced me to the two resident dogs, Cannella and her son, Blanco. Both dogs had arrived one day, got a free meal, and then decided to stay. After some breakfast I was given a tour of the property and then we went into town to pick up some groceries. All of the magnificent scenery, the tropical heat, and the cooling ocean breezes were causing a sensory overload. I knew I was in for some adventure here and I found out later that afternoon just how it would commence.

On my first afternoon on the property, D asked me to put on some long pants and shoes and join him. Join him where, I wondered? I soon found out: We were about to trek down the mountainside to clear brush and palm branches away from the power lines. Less than 24 hours in Costa Rica and I am already in the thick of the jungle, slipping and sliding down a very steep hillside with a machete in hand and an aluminum pool-cleaning pole to lift branches out of the way. Within a few hours I was now muddy, a bit scratched, a little bitten by bugs, and really happy that this was finally over.

Next, I learned to knock down coconuts, cut the top off, and drink the sweet coco-water – all during my first afternoon at the casa! There I was, in the middle of a very dense tropical jungle, on a very hot afternoon, surrounded by all sorts of trees, plants and living things I had never been so close to before, sweating and working alongside the owner, working to complete our task. I must say ... I was exhilarated by the experience.

After a few more days with the owner, he explained what he wished to be routinely checked on, learning the various methods from him personally. He seemed at ease with my taking responsibility over his casa so he left to return back to Europe. And, actually, within a few days of meeting the owner, I asked if he felt comfortable enough to want me to return – and he was.

Because of that, I had left the arrangement wide open regarding returning to this assignment. After he departed, the owner and I communicated every few days via email.

I quickly got used to the ocean surf sound lulling me to sleep each night in this paradise. I developed a routine of breakfast, exercise, completing a few chores around the casa, reviewing the property perimeter, and tending to some seedlings I planted (to eventually allow the owner to have some fresh vegetables growing right on the property).

After I completed my responsibilities, my activities included reading, photographing the local shoreline, and wandering into town to observe the local folks and photograph the architecture. I was also able to travel extensively throughout Costa Rica, visiting nearby beach communities and exploring more of that amazingly beautiful country.

Because the town where I was house sitting had the only port in Costa Rica which regularly received all of the country’s imports, it was a very busy place when the ships came in. In addition, there were tourists who came into town once or twice a week, when cruise ships would come to port. When these cruise ships came into port, the town was a flurry with activity. I actually went into town once on a civic holiday, Easter Monday and, aside from the occasional tourist wandering about, the town was almost a ghost town with hardly a person around anywhere – quite a contrast from the days when cruise ships came into port!

For those who were seeking an active nightlife, there was a social scene happening around several of the bars and a few dance clubs in town but it was not my style or my desire. Business life was hectic in town and from dawn until dusk everything was active. Folks were out and about and all over doing what citizens everywhere do: going to work, going to school, going to meet with friends, having lunch, having meals, making business deals. Of all the people I have met during my travels, I found the local Ticos to be among the most helpful and friendly.

On a typical day, I would usually rise around 7:00 a.m. and shower in cold water (no hot water in the casa). I would then lounge around for a bit and check and respond to email messages.

Next, I would wander downstairs, make a cup of coffee, and go back upstairs to spend an hour communicating with friends on a laptop computer. Then I would go back downstairs, make some breakfast, have a workout in the pool, and decide on the day at hand. What a relaxing way to start my day.

My days usually consisted of going into town for fresh groceries, making minor repairs around the house, or simply reading and enjoying the scenery and surf. Occasionally I would plan a trip into town and then board a bus for a trip to another neighboring city located down along the Caribbean coast. I would typically spend the day there, returning in the evening to my new little piece of paradise. After dinner, a drink and watching the stars, I would update my diary from the day’s events, and then go to bed. What a life!

On the whole, utilities at the casa worked just fine and were uninterrupted. I did experience a few power outages, usually for a few hours at a time, when the winds were strong or a storm blew in. In most cases, power was usually restored within a half day or so. During power outages, I would just make do and go about doing something else not requiring power! I was fortunate to have internet access, although it did go down a couple of times. It was a little distressing but, fortunately, it always came back.

As far as my food and beverages, everything was from town. I just took a hike down the driveway, with a backpack, and took a cab into town to pick up my food, groceries, and beverages. Afterward, I took a cab back to the base of the driveway – because of the steepness of the driveway; most cabs would not even attempt the drive up. I would get out, pay the fare, adjust my pack and walk back to the casa – all uphill, while carrying a very good-sized load.

On occasion, I was able to arrange for a 4-wheel drive taxi so I could then shop for more goods. The 4-wheel drive taxi could drive directly up the driveway and nearer to the casa so hauling in greater quantities was not a problem. Water was drinkable and provided municipally, by the town. While it was a little high in minerals and particles, it was potable and actually not bad. For two hours each week, on Fridays, around noon, the water actually stopped flowing.

Although there was no vehicle available for my use, it was never a problem as I either walked or relied on the always available and reliable local taxis. I found that walking much better for my health. I lost considerable weight while there and built up my endurance substantially with all the walking and hiking I did. During my travels, I have always found walking is a much better way to see the beautiful, indigenous natural settings around me.

During the two months I spent in Costa Rica, I tried to speak Spanish. I found that, as long as I made the effort, the locals seemed thrilled. I was picking it up ever so slowly. In some situations, it would have been much easier if I had a better understanding of the language.

Being in a foreign country and maintaining a luxurious residence such as the casa in Costa Rica is wonderful, although it has its own myriad of responsibilities which comes with taking care of such a place on your own. I did not receive any monetary compensation but I did have free room and board, with a view of the Caribbean Sea each night and the constant sound of the surf! The experiences I had in Costa Rica were priceless and I would do it all again in a heartbeat.

I think the most important attributes, skills, and personal traits one should possess for a housesitting or property caretaker assignment like this are flexibility, the willingness to accept change and work with it – to embrace it. One has to have a strong willingness to live life, no matter where it takes you. I also think you need to be a reasonable judge of people’s character, and ensure you are comfortable with the entire scenario. You have to determine what you can control before you book a flight. Once that is decided, just go with it and “git-r’done”!

Based on my own experiences as a housesitter in Costa Rica, I would highly recommend that others pursue similar positions. In fact, I wish my grown children would take leaves from their hectic life and do something similar to what I did. It really was a life altering experience for me and it is something that I wish I had done so many years before.

I found that to view and experience life in another culture simply makes you understand more about life in general, more about living, more about what is really important in life and more about yourself and what you are capable of. I learned that you can truly enjoy the simpler things in life, learn to be happy within yourself, and find peace in your soul without all the hype which we are subjected to ... or should I rephrase that – bombarded with ... every minute of every day. There actually is time to stop and smell the roses!

Would I consider doing this again? Absolutely, as long as the assignment has something about it which interests me. I have most recently considered taking a job in Alaska ... and, still may subconsciously be considering it! If that happens, I will let you all know about it with another article.


The places that you will probably find appealing depend on which kind of expat you are.

Interesting and fun piece from Simon Black. Are you a pioneer, expeditioner, retiree, nomad, hermit, internationalist or hedonist? After having seen thousands of expats roaming around the world over the years, Black’s interpretation is that expats fall into one of those seven categories – and chances are you probably fit one of the molds as well:

People ask me this question all the time:

“Simon, I really want to leave the country, but where should I go?”

Quite literally, there is a world of possibilities out there, each full of richness and opportunity. But as you could imagine, it depends on what kind of person you are. What would be a great expat haven for some seems like a hellish nightmare to others.

Over the years I have seen thousands of expats roaming in and out of different countries around the world. In my opinion, most expats fall into seven categories ... and chances are you probably fit one of the molds as well:

Pioneer: You are an opportunity-focused expatriate, and you are willing to relocate solely for the prospect of making a great deal of money and doing something interesting. You think nothing of charging in to an almost native, potentially dangerous environment and care nothing of dilapidated infrastructure, squalor.

You are willing to learn the local language and do not care if anyone else speaks English there ... you love the almost lawless, Wild West persona and can literally smell the money everywhere.

Expeditioner: You are a classical traveler in the mold of British merchants and explorers – you want to make the journey overseas, but you want your amenities too, complete with a triple mocha latte.

You want to storm the plains of the Serengeti ... with an armed guide. You want to see India up close and personal ... then go back to your five star hotel.

In short, you want the richness of the expat experience, but you want it to be easy and painless.

Retiree: You have had a full career and are looking for a switch ... it is not about playing golf every day (though there will be plenty of that), it is about finding a new direction in life, taking new steps, and getting energized again.

You are looking for something worthwhile to throw your time and effort into, and you want to be surrounded by like minded people who are in a similar position in life. In a way, you want to turn back the clock and find a place that reminds you of home years ago – 1950s America, for example.

Nomad: You are a permanent traveler. You roam the globe because there are simply too many amazing places to see, and abundant opportunities in each. You perhaps have a “home base” somewhere, but you do not see it for months at a time. You know people all over the world and enjoy making new connections and trying new things.

You count air miles as an asset and talk about “running down to Panama for a few days” as if you were going down the street to pick up a quart of milk at the grocery store.

Hermit: You shun contact with most of the world because they just don’t get it. You are passionate about your beliefs and are looking for a place where you can execute an agenda – growing organic food, preparing for social chaos, etc.

You are possibly interested in setting up a small community with like-minded souls, preferably away from major civilization where you can live your life without bother or interference from governments or corrupt social institutions.

Internationalist: You are a smart, educated, opportunistic professional that is a cross between the pioneer and expeditioner – you thrive on opportunity but need some basic structure to feel comfortable ... probably because you have a family or some other obligations beyond yourself.

As long as basic needs are met – safety, schools, healthcare, etc., you are happy and can focus on building a life and a new business.

Hedonist: You have been successful in life and simply want to enjoy the fruits of your efforts over the years – wine, women, whatever else seems interesting. You almost feel like a kid again, free to jump on a plane to follow your favorite team, see an old friend, or make new ones.

You pick a country because of its opportunities for pleasure, and are always willing to explore new ones.

Most people can find elements of several categories but are generally dominant in one.

... So there you have it. In all honesty, most people can find elements of several categories but are generally dominant in one.

The places that you will probably find appealing depend on which kind of expat you are. We will explore these together in future letters, and I will use these categories as a reference point from now on when I write about cities and countries.

Think about which one you are and let me know what you think. Did I miss any?


It does not offer secret bank accounts, it is not a tropical paradise ...

A little realism about Uruguary for those considering the country. It is is not a financial center. It is not a tropical paradise; there are definitely four seasons there. It seem as if you are living in the 1950s there. And for anything but basic staples be prepared for sticker shock. If you are still interested, then it might be your place.

I love Uruguay ... it is, without a doubt, one of my top five choices in Latin America – the country is clean, beautiful, and cheap, full of great wine and friendly people. But if you are considering the country as a place to live, work, or do business, there are definitely a few things you need to know:

First, Uruguay is NOT a financial center. It achieved a reputation over the years as a tax haven full of private, secret bank accounts. Not true. Sure it was a great place for wealthy Argentines to stash their cash, but frankly your 3-year old’s Piggy bank is probably safer than most Argentine banks.

By comparison, Uruguay’s banks seemed extraordinarily stable ... and because it is so close to Buenos Aires, Uruguay became the natural offshore financial center for Argentina.

There was a time when Uruguay had some level of banking secrecy and no personal income tax. This has all changed, most recently because Uruguay was temporarily placed on the OECD’s banking blacklist earlier this year.

Their Finance Minister literally jumped through hoops to have this scourge removed, and when the “blacklist” label was dropped, any remaining semblance of bank secrecy went with it.

Ironically, despite no longer having any significant benefit, many banks in Uruguay refuse to work with U.S. citizens. You will run into this a lot at many private banks – so if you are looking to open a personal account there, try Banco Republica: It is a government-owned bank with government-backed deposit insurance, and they accept U.S. customers.

The second thing you need to understand is that Uruguay is not a tropical paradise. Sure it is a lovely place, but there are definitely four seasons there – it is not Costa Rica or even Brazil where you can expect balmy weather year-round.

Third, you have to be prepared to enter a time warp ... though a lot of people are drawn to the old-timey feel of Montevideo; the entire country is so quiet and sleepy, it seems as if you were living in the 1950s.

Fourth – Punta del Este is a vibrant, happening place ... for about 3 months out of the year. From December through February, Punta swells as thousands upon thousands of visitors from around the world descend on this small town to party all night and roast all day.

The nightclubs are nonstop, the restaurants are packed, and the beaches are littered with European models and FashionTV shoots.

For the other nine months, Punta is about as happening as an average town in rural Iowa ... and pursuant to point #2 above, these are the months where the weather is slightly less than spectacular.

Fifth – Staple items like groceries are noticeably cheaper in Uruguay, at least 10% to 30% less than what you would pay in North America, Europe, or Australia. But if you are in the mood to go shopping for clothes, cars, electronics, or just about anything that has to be imported, get ready for sticker shock.

The Uruguayan government imposes stiff luxury taxes and duties on imported goods, and this includes most products beyond basic staples.

For example, rundown cars that you would not consider paying more than $5,000 for in North America might cost $10,000 to $20,000 in Uruguay; and a shiny new computer at the Punta del Este Apple store will set you back almost twice what you would pay in the U.S.

You should consider Uruguay if you fall into the internationalist, hermit, or retiree expat categories.

You can get around the stiff automobile prices by first purchasing and registering a vehicle in another country, then driving it into Uruguay as a “tourist”. This is a prime example of the multiple flags theory that I discuss frequently – having your assets registered in one country and living in another.

Overall, you should consider Uruguay if you fall into the internationalist, hermit, or retiree expat categories.

If you have any other personal experiences from Uruguay or specific questions, I would love to hear them.


Mozambique is certainly an offbeat property purchase or investment idea. It is a long way to go and check things out directly for most investors. Here is an incentive, however, according to the writer of this article: the country is “working hard” to move from a socialist to a free-market model; it has attained consistent economic growth with low inflation; and has friendly people, idyllic beaches and marine reserves, and abundant natural attractions and resources. This has led to “a rapid rise in foreign direct investment.” You do not have to be the trailblazer at this stage.

As an interesting sidelight: Foreigners cannot own land in Mozambique. How do you get around that? Set up a company incorporated and registered in Mozambique, and have the company buy the real estate. A familiar Kabuki dance-like process for owning assets that are otherwise out of reach.

Mozambique is increasingly becoming a “hot” destination for tourism and investment. After a 20-year civil war the country has made remarkable progress and is now a multi-party democracy working hard to move from a socialist to a free-market model. The country has seen consistent GDP growth, and low inflation, and this combined with its stability, friendly people and favorable location are contributing to a rapid rise in foreign direct investment.

A Portuguese-speaking country, Mozambique is situated to the north of South Africa, east of Zimbabwe and Malawi and south of Tanzania has a 2,470 kilometer coastline, bordered by the tropical Indian Ocean, providing the ideal setting for tourism. The Bazaruto and Quirimbas archipelagos are idyllic beach destinations, and Mozambique has international quality dive sites with rare marine species found in the stunning marine national parks. The country has a number of major rivers (including Zambezi, Limpopo and Rovuma) providing water for agricultural production, and ensuring fertile soils as well as hydroelectric capacity. In addition there are national parks, reserves, game concessions and forests waiting to be explored either visitors or investors. In short the country has something for everyone, and for most investment budgets!

However, Mozambique, like many countries in Africa, while attractive to investors, has a business environment which can hold pitfalls for the unwary. Return on investment is generally high so the risks can be expected to be similarly high. This report therefore provides some of the “dos and don’ts” for potential investors, particularly looking at property and tourism investment.

Mozambique’s colonial and socialist past have contributed to a number of unusual features in its overall legal framework and in particular its property legislation. All land in Mozambique is the property of the state. It cannot be bought or sold, mortgaged or otherwise transacted. Land is held based on a concession-type arrangement with contracts valid for up to 50 years, and renewable. However a quick Google search will show that there appears to be a thriving market for land, particularly in the tourism sector, in Mozambique. How is this then possible?

There are various ways to acquire land in Mozambique, each with its own merits, and we deal with the key ones below. As a precursor to everything else written here, anyone thinking of investing in Mozambique (or indeed in any legal jurisdiction with which they are not familiar) would be advised to seek reputable legal counsel with sound local knowledge. While this has cost implications, it saves time and money in the long run. Ensuring that your dream home or business is legally yours is essential! National embassies with representation in Mozambique are able to provide lists of lawyers speaking different languages, and reputable lawyers are also listed through business associations such as ACIS.

Ownership of land by foreigners:

As a general rule foreign individuals cannot own land in Mozambique, unless they can demonstrate that they have been resident for more than 10 years, and even then the issue of what happens if they subsequently leave Mozambique is subject to debate among lawyers, and has yet to be tested. Owning a company is therefore the preferred and most secure vehicle for most foreigners seeking to invest in property.

Set-up or Purchase of companies:

Ownership of a company incorporated and registered in Mozambique is a vehicle for a foreigner to obtain the work and residence permits necessary to benefit from their investment in the country, as well as to hold title to land.

Companies can either be set up from scratch or purchased. In both cases legal advice should be sought and in the case of the purchase of an existing company due diligence should be undertaken. An existing company should be able to provide compliance certificates from the tax and social security authorities, as well as operating licenses, and land, construction and environmental licenses where relevant. Purchase of an existing company, particularly if this company holds title to the land and owns the property you want to acquire, is usually the fastest method. By acquiring the company the land, property and other assets immediately and automatically transfer to the new owners.

Urban property:

As a general rule foreigners cannot own urban property. Any property which was nationalised at or after Independence cannot be owned by foreign individuals, and there continues to be a debate about the legality of majority foreign owned business (more than 50% of the shareholding belonging to non-nationals) owning such property.

However there are some properties which were never nationalised and the recent economic growth in the country has given rise to a building boom in many urban areas, meaning that these new-builds can be acquired by foreigners.

Non-urban land which has already been developed:

While land itself cannot be transacted, infrastructure and property constructed on land can be. This means that while the land under a building remains the state’s property, the building may be sold, and the land “title” for the remainder of its validity period will then move with the building to the new owner.

That being said there are a number of restrictions, the main one being that the land “title” is only conceded for the specific purpose stated in the original investment plan. So for example if you were to buy a farm which was licensed as a dairy farm, you could not then convert the property on the farm o a tourism establishment, without first applying for change of use, and for an alteration to the original “title.”

Therefore before acquiring any existing investment or development is essential to see the original investment plan for which the land was conceded and to ensure that this plan has been complied with.

Post-acquisition it is possible to apply for change of use of the property, or to apply to expand existing developments subject to application and licensing.

Urban or rural land which has not been developed or is under development:

Land concessioning takes place in three main stages, the application phase, the provisional title phase and the definitive title phase. Each has its own rules and requirements.

The application phase includes identification of the land, mapping, consultation with local communities and delimitation of the land. These procedures having been successfully completed, the applicant for the land is issued with a provisional title.

In the provisional title phase a foreigner (including majority foreign-owned company) has two years to complete the development plan on which the land concession is based. This includes obtaining additional licenses (environmental, construction and so on) and completing the actual development of the property in accordance with the plans submitted when the title was applied for. During this phase the land and proposed development are registered with the real property registry.

After the development is complete and within the two-year period, the definitive title phase can begin. At this stage the development is inspected to ensure it complies with the original development plan and definitive title, valid for up to 50 years is issued for the land. The property developed on the land is then registered with the real property registry.

Land which is under development (i.e., has its provisional title and other licenses in place), or which has been developed and definitively licensed, can be transacted. However in the case of land under development the purchaser must ensure that they complete the development as planned, within the same two-year period that relates to the original application submitted (i.e. by the vendor). Extensions can be granted to the two-year period, and applications to change the development plan are also permitted.

Key pitfalls occur where investors seek to “purchase” undeveloped land which has not yet entered the provisional licensing stage. Legally speaking and in theory, such transactions cannot take place because the land does not yet have provisional title. Therefore this land must be applied for directly from the state, not purchased from anyone. In such instances there are no guarantees that the purchaser will in fact be eventually granted the title for the development they hope to undertake.

Timeshare and holiday homes:

Fractional ownership and periodic use of property are new concepts in Mozambican law. The current legislation is cumbersome for both types of property ownership and has not yet been tested. Anyone seeking to purchase a timeshare, or develop a holiday home would be advised to seek independent legal advice, from a lawyer not associated with the property development company selling the timeshare or periodic use property, to ensure that the legal construct for ownership provides adequate protection, and that the encumbrances associated with the purchase (such as shareholding of a company) do not hold any unexpected surprises.

How much should I pay?

As mentioned before, since land itself cannot be transacted in Mozambique, land itself does not have a value. Developments on land, which can be transacted, are part of a relatively small property market. In theory the value of a development is its book value in the accounts of the company selling it, or the value registered at the real property registry in the case of purchases from individuals.

Valuation is therefore a relatively informal process and since quality developments remain relatively few, it is a seller’s market in many respects. It is worth noting that Mozambique’s property prices have been relatively unaffected by the global recession, making them an attractive investment opportunity, and in comparison with properties of a similar type in other countries Mozambique provides excellent value for money. In order to determine the value of a property it is as well to ask around in the area where the property is located, and check for similar properties for sale through agents and on the Internet.

Where to go for help:

As mentioned above the services of a good lawyer are really essential for potential investors. A lawyer can advise on all the various parameters of the proposed investment and assist in identifying the most appropriate way to go about investing, taking into account available investment benefits, tax and duty incentives and so on.

A comprehensive series of investment guides dealing with all aspects from company start-up through land, environmental and tourism licensing to tax, immigration and employment requirements are available here.

In conclusion, Mozambique is a beautiful and welcoming country, full of exciting opportunities. Investors are welcome, and while some of the requirements mentioned above may seem strange or even off-putting, an investment done the right way provides not only for a profitable venture, but also a chance to live an exciting and exotic lifestyle and contribute to the development of a wonderful country.

For more information and photos visit Paradise Property Mozambique.


Not all TIEAs are alike.

German lawyer and Certified Tax Advisor Dr. Ulrich Eder writes a regular column in Caribbean Property Magazine on offshore tax matters. This month he provides a very useful overview on Tax Information Exchange Agreements (TIEAs), where the playing field has changed substantially over the past couple of years thanks to “strong economic pressure ... and a clever exploitation of the recent financial, political and religious disruptions” by the high-tax OECD cartel.

Dr. Eder points out that these “stripped tax treaties” are “definitely a one-way street.” They supply “tax information which is beneficial only for high tax countries and denies the benefits which would result in benefits for the low tax country. In other words, in a fair negotiation no one would expect a jurisdiction in the Caribbean to sign such a stripped tax treaty. It would be similar like turkeys voting for Christmas.” But, as with the turkeys, the Caribbean jurisdictions were not given much choice in the matter: “The rich OECD countries announced to the world’s tax havens that they will be treated as tax pariahs, if they are not willing to sign. This made an offer the Caribbean can’t refuse.”

However, Dr. Eder continues, “it will not at all be the end of the tax-haven era. Instead, it will be decisive whether the coming TIEAs are negotiated in a clever way and that the offshore jurisdiction does its homework in establishing a beneficial legal environment. In that case it will remain a favorable spot for investments by honest tax payers to make use of lawful tax avoidance schemes and a tax optimized wealth management.”

How “clever” the negotiated TIEA for a given jurisdiction is can be judged using five criteria he suggests. For example, are inquiries required to be case-by-case, or are “fishing trips” allowed? Clearly there are nuances. Of course the OECD may impose a uniform “fishing trips allowed” clause on all TIEAs in the future – perhaps the next round of screw-tightening.

What counteractions are available to the privacy-seeking individual? “A TIEA is restricted to banks and other financial institutions on the one side and the ownership of companies, trusts and other legal entities on the other side. There is no information exchange regarding the ownership in other movable and immovable property. ... Investments in commercial and private property are discreet and close-lipped.” With a reorientation in that direction the new challenge is figuring out the varying legal environments pertaining to foreign land ownership.

This column tries to bridge the gap between the hardship of tax information exchanges and the chances of an adjusted legal environment. The aim is to preserve the traditional benefits from Caribbean financial centers even in an era in which banking secrecy is equalized with tax banditry.

The Rationale for Tax Information Exchange

Agreements for the avoidance of double taxation have advantages, but also downsides. The positive effect is that they assure that profits are taxed only once and not in both countries involved. This avoids a subsequent taxation of offshore profits in high tax countries and, therefore, is beneficial for Caribbean countries with tax rates down to 0%.

The country with the higher tax rate grants this benefit not for free. In return it expects the exchange of tax related information to assure that the taxpayer does not act fraudulently and hides income which is taxable in the high-tax jurisdiction. It is obvious that the low tax country has no economic interest to obtain tax information from the high tax country. It accepts such clauses to get the benefit from the avoidance of double taxation only.

Needless to say that such explanation is highly simplified and makes no claim to describe the peculiarities of double taxation. However, it shows the direction. A tax information exchange clause without the double taxation avoidance clause does not meet the economic interest of both parties.

An unbalanced information-only tax agreement results in a win-lose-situation. It provides tax information which is beneficial only for high tax countries and denies the benefits which would result in benefits for the low tax country. In other words, in a fair negotiation no one would expect a jurisdiction in the Caribbean to sign such a stripped tax treaty. It would be similar like turkeys voting for Christmas.

The motivation for signing can be explained very easily. The rich OECD countries announced to the world’s tax havens that they will be treated as tax pariahs, if they are not willing to sign. This made an offer the Caribbean can’t refuse.

Convinced by strong economic pressure of the high tax countries and a clever exploitation of the recent financial, political and religious disruptions, the low tax countries could not resist to “be committed to international standards of anti-money laundering legislation and practice, counter terrorist financing legislation and financial regulation and international efforts to combat financial crimes.” Aggressive propaganda like “the war on tax piracy” show the lack of good arguments.

These stripped tax treaties are marketed under the term Tax Information Exchange Agreement (“TIEA”). Surely they do not provide a balanced “exchange” in both directions but are definitely a one-way street.

The rush of TIEAs

The Cayman Islands signed in August 2009 its 12th TIEA with New Zealand, and moved onto the “white list” of countries that have substantially implemented the OECD’s defined tax standard. Other “good boys” are British Virgin Islands, Anguilla, Turks & Caicos and Bermuda. The press celebrates the triumph of the OECD’s efforts to end international tax competition. In fact, it might end the era of banking secrecy as a shield for tax evaders.

However, it will not at all be the end of the tax-haven era. Instead, it will be decisive whether the coming TIEAs are negotiated in a clever way and that the offshore jurisdiction does its homework in establishing a beneficial legal environment. In that case it will remain a favorable spot for investments by honest tax payers to make use of lawful tax avoidance schemes and a tax optimized wealth management. Maybe we will see a new offshore model whose time has come.

Experience will show that even under a TIEA black sheep cannot be avoided by any Caribbean country. Besides from legitimate and lawfully cross-border tax planning there will remain a wide scope of unlawful tax evasion schemes involving the Caribbean and other low tax jurisdictions. Those “in the know” will easily get round any legislation. The latter is not subject to the following explanations.

The bad and the worse TIEAs

Information exchange agreements between independent countries are not identical. They follow more or less the model convention of the OECD. These small differences can be of great importance.

Some of the new information-sharing agreements are weak. Well-advised countries benefit from tailor-made agreements instead of copying the saucy proposals made by the Paris based bureaucracy. Therefore, it is worth noting the differences and gaps which are left open for tax planning considerations. To distinguish between a hard and a soft, a strong and a weak TIEA, it is helpful to concentrate on the following five criteria:

1.) For which purpose is information exchanged? A double tax treaty is usually restricted to income taxes. Information may be requested to enforce the tax treaty only or, in addition, any tax law of the contractual country. Typically aged tax treaties have chosen the restricted exchange clause, while newly agreed tax treaties implement an extended, but not unlimited information exchange.

TIEAs are broader than double tax treaties and comprehend typically the determination, assessment, enforcement and collection of all taxes. It may cover, in addition, the investigation or prosecution of criminal tax matters. It might even go beyond this and open the door to each type of law enforcement and the application of civil and public laws, regulations and decrees.

2.) Tax information can be submitted on request or exchanged automatically. Automatically would mean, that for example any opening of a bank account, any bank transfer of a certain scope, any registration as an agent or any identification as a trustee or beneficiary would result in an information transfer. Typically the TIEA guarantees that a jurisdiction is not obliged to provide information it has not been explicitly asked for by the other jurisdiction.

In a briefing paper published by the government of the British Virgin Islands (International Affairs Secretariat) dated June 2009 it is stated: “The BVI signed a TIEA with the United States of America seven years ago in 2002 and to date the USA has made only one request for information to the BVI. The BVI has made none.” This clearly illustrates the advantage of an “on request only” limitation in the TIEA.

3.) An important issue is whether the information exchange is effectively limited to a case to case basis. Otherwise “fishing expeditions” would be possible, similar to a dragnet investigation.

Equal relevance has the minimum application requirements. The request must be specific; the nature of information being sought and a description of the specific evidence being sought must be outlined in the request. A good standard would require that the tax authorities have to name names and details, which might not be easily ascertainable.

In addition, no request for information should be allowed, that is unlikely to be relevant to the tax affairs of a given taxpayer. Such limitation is contained in either the text of the TIEA itself or in a formal letter that is exchanged upon the signing of the TIEA.

4.) If would not be unfair to restrict information requests to cases of proved tax offenders on the basis of sufficient case-by-case specification. However, the OECD model convention goes far beyond. Information has to be foreseeable relevant tax-wise only. It has to be exchanged without regard to whether the conduct being investigated would constitute a crime under the law of the requested country. There is neither a single nor a dual criminality and even not a probable cause requirement.

5.) For the tax payer, confronted with an agreed TIEA or even the vague chance that a TIEA will be concluded in the future, it is of utmost importance at which point in time such agreement will entry into force. Typically it will enter into force concerning criminal tax matters much earlier than regarding all other matters covered by the TIEA.

The Scope of Flexibility

It is not surprising if the OECD will look of the quality of the agreements rather than just counting the quantity. Twelve TIEAs is the magic number in determining whether a jurisdiction is removed from the gray list. This list contains those countries, which have announced to follow the OECD requests, but are not performing in the implementation of such statement yet.

However, a broad scope of flexibility remains possible, including alternative approaches. One of the recent and famous examples is the tax agreement between Liechtenstein and Great Britain, concluded on August 11, 2009, which has the appearance, but not the outcome of a TIEA.

Under this agreement financial institutions of Liechtenstein are required to ask British customers for proof and evidence that they are in communication with the British tax authorities. If the customer can provide the documentation to prove that the British government is aware of his tax status, then the bank can continue with its customer’s relationship.

If the customer cannot or does not want to, he has to find another offshore location to put his money. Otherwise, the Liechtenstein bank will close his account in 2015. The bottom line is that Liechtenstein will not be required in any instance to hand over names of the customers to the United Kingdom.

A Broken Business Model or a Big Chance?

Dishonest tax players might lose the ability to easily hide assets and income in Caribbean bank accounts. Honest tax players will be disgusted to see their privacy freely disclosed to an indefinite scope of persons and entities. In the worst case the game is already up for offshore financial centers.

However, from the point of view of the Caribbean location, passive income from banking activities, highly automated and computerized, has never made a substantial contribution to the development of the economy. Therefore, even if the banking business model is broken, this does not mean the end of the offshore benefits.

It is no secret that bank accounts are not the only place to put wealth out of reach and out of sight from the tax man. A TIEA is restricted to banks and other financial institutions on the one side and the ownership of companies, trusts and other legal entities on the other side. There is no information exchange regarding the ownership in other movable and immovable property. Therefore, land owners in the Caribbean are not directly affected by the TIAE.

Why shouldn’t we use this great opportunity? Investments in commercial and private property are discreet and close-lipped. They are a smart and sound investment. If the switch from a financial investment at a bank to an investment in Caribbean land and infrastructure succeeds, a bright future can be expected.

It is obviously that such switch can be successful for a certain percentage only. However, this would be overcompensated by the enormous positive side effects in comparison to a money transfer to a bank.

One clear obstacle is the lower fundability and interchangeability of land in comparison with a bank account which can be transferred very easily. This issue cannot be significantly influenced, but may be a problem merely for smaller investment amounts.

Which legal environment is required to give the stranded money a safe home? Three aspects are outlined below, other have to be discussed later:
  1. As a starting point for any structuring the traditional secrecy and confidentiality rules for bank accounts can be utilized for land ownership. There is no need for a public land register. Any independent country has the right to allow its land owners to skulk in the shadows.
  2. The right to land ownership should be opened to foreigners and foreign companies. This would make international corporate and private structures possible.
  3. The unlimited and undisturbed land ownership should be explicitly guaranteed by the national constitution. This gives the foreign investor more comfort and greatly reduces the fear of being dispossessed and expropriated.
Needless to say, these three points are just the first step in creating a legal environment which attracts bank customers to invest the funds in real estate rather than transfer it to supposed secure alternative offshore locations. Another gap in the TIEA, which might be used for a restructuring, is the perpetuation of the attorney’s rights of confidentiality and secrecy (legal privilege limitation). It should be noted as well that the requested country is typically not obliged to provide information which is neither held by its authorities nor in the possession or control of persons who are within its territorial jurisdiction.

The future of the Caribbean offshore business depends on the ability to revaluation, adjustment and assimilation. The coming years will see winners and losers in the Caribbean offshore arena.


U.S. politicians from both main parties want American wealth back onshore where they can see it, track it and tax it.

The IRS and Swiss bank UBS have reached an agreement on terms by which UBS will rat out certain U.S. customers. There may be more hurdles to jump before that agreement actually gets executed, but this article is about something else. Namely, why are so many U.S. taxpayers trying to shirk their alleged duty by hiding income and assets? The author suggests that high tax rates and the U.S. tax code’s worldwide reach register as inately unfair to many taxpayers. We agree.

He also suggests the whole anti-offshore campaign is at its root designed to deflect attention from the U.S. government’s fiscal and policy failings. “If only the rich paid their share we would not have these big deficits,” or something like that. Oldest trick in the book. Agreement point two.

Finally the author believes that the U.S. government wants American wealth back onshore “where they can see it, track it and tax it.” To do that they end up “breaching privacy rules, violating a human’s right to confidentiality and stealthily taking invasion of your privacy to a whole new level.” And will it stop at any given point? “First they strip your rights away from you, then they take what they want. It is all about control my friends – the American government wants it therefore you can’t have it.” Tic-tac-toe.

To adapt Martin Niemöller’s classic “When the Nazis came for the communists, I remained silent; I was not a communist ...” quote:

First they went after the rich;
I remained silent; I was not rich.

Then they went after the offshore account holders;
I remained silent; I had no offshore account;

Then they came after me,
because noone else had any money.

On August the 19th 2009 the IRS finally reached an agreement with the Swiss banking giant UBS for the latter to disclose the details of some 4,450 U.S. account holders believed to be using their Swiss bank accounts for tax evasion purposes. The deal was hailed as a victory by U.S. politicians from both sides of the fence as they have united in their fight to bring tax evaders to justice – but why is taxation avoidance seemingly such big business in America?

The problem is believed to be so endemic that a so-called tax amnesty was offered with a cutoff date originally of September the 23rd 2009. The Internal Revenue Service extended the deadline to October 15 stressing there would be no further postponements. This action allowed U.S. citizens at home and around the world who have previously failed to make full disclosure relating to their overseas and offshore holdings to come forward and face limited fines and reduced repercussions from the IRS.

Perhaps the question one should be asking is why Americans are seemingly driven as a nation to hide their wealth and protect their assets so aggressively. Maybe the problem Americans have is not with tax evasion but with tax rates and the far reaching nature of their policy on taxing a U.S. citizen’s worldwide income and gains regardless of where in the world the individual lives, works or retires. More annoyingly for many American expats is that any wealth earned overseas is also subject to U.S. taxation.

The Bush administration launched the tax evader witch-hunt in an attempt to deflect attention from the nation’s own failing economy. The incoming government has seemingly kept up momentum in this cat and mouse game.

There is really no doubt about it, the previous American government launched the tax evader witch-hunt in an attempt to deflect attention from the nation’s own failing economy. It whipped up hatred for those it held up as exploiting the tax system and profiting whilst others suffered in poverty in the U.S. By castigating certain pockets of wealthy society the Bush administration attempted to win the votes of the average person. By suggesting that a handful of U.S. citizens were robbing the economy of billions of dollars worth of tax income, Bush managed to redirect a certain amount of attention away from the gaping cavernous hole that he left the U.S. economy in when he finally left office.

The incoming government has seemingly kept up momentum in this cat and mouse game. They are being wily about it too, keeping their cards very close to their chest to give nothing away to benefit those who have avoided paying taxes but are unsure as to how much the government actually knows about them. In the deal signed with the Swiss government in August a sealed document was handed over that outlines the criteria by which the Swiss will have to select which American clients will have their details turned over to Washington. This document’s contents are being kept as secret as the Swiss banking system once was because Obama’s men and women do not want anyone getting wind of which criteria make a person’s activities and antics offshore of worthy note and due to an investigation and which don’t.

By holding back and displaying a poker face to the nation, the new government is forcing potential tax evaders into a game of chicken. Who will break, who will reveal their hand first? Well, as mentioned the exceptionally narrow window of amnesty has been offered by the government to allow anyone who has knowingly avoided making a full disclosure over the past 6 years to come forward. Following the end of this amnesty the government has advised that it may make known the contents of the aforementioned sealed letter. If you are a tax evader are you going to take the risk that the government knows nothing about you – or are you going to ‘fess up – it depends how big your balls are, or how big the fine will be that you are facing I suppose.

The consequences of this bi-party approach to stamping out tax avoidance has already taken a very high toll – it is alleged that the philanthropist Finn M. W. Caspersen, heir to the Beneficial Corporation fortune took his own life as a net closed in around him following allegations of serious tax avoidance for example. So is it fair to hunt down and hound those Americans who attempt to shield their wealth offshore? Well, in so doing such U.S. citizens rob directly from the mouths of the poor both in their own nation and in developing countries around the world that require support from the U.S. government – so yes, many people apparently think it is acceptable to go after tax evaders – after all they are criminals and what they are doing is high crime. But if that is true, then why do so many every day Americans go to such lengths to try and squirrel away some of their cash?

If the tax system in America was fairer, perhaps Americans would be happy to pay their taxes.

If the tax system in America was fairer, if the previous government had not bankrupted the nation and if the current government was not hell bent on implementing an unworkable healthcare reform perhaps Americans would be happy to pay their taxes. If Bush had not marched American soldiers into what may people believe was an illegal war and left them there to die in their hundreds perhaps more Americans would be willing to fund the likes of the Department of Defense with their taxes. And then if Obama had not reneged time and again on his pre-election promise not to raise taxes for Americans, again maybe fewer U.S. citizens would feel so aggrieved to the point at which they make a conscious decision to break the law and protect their own wealth and future prospects by shielding their assets overseas.

The debate is a heated one – and at the end of the day all we have to go on are the facts. The facts are that Americans evade taxation in their thousands – there are believed to be 52,000 U.S. account holders at UBS in Switzerland alone, 4,450 are facing investigation for a start. The Americans who evade taxation come from all walks of life with tax attorneys reporting in the run up to the end of the tax amnesty that they have had calls from those with millions undeclared in typical offshore tax havens, as well as from those who live and work abroad who just run a day-to-day account in another nation that they have never declared. Tax evasion is a crime; legitimate taxation optimisation is not. When you tax someone too aggressively or waste their taxation revenue, you will aggrieve them – an aggrieved taxpayer is far more likely to want to find ways to optimize and protect their fiscal position.

What the U.S. government is doing is breaching privacy rules, violating a human’s right to confidentiality and stealthily taking invasion of your privacy to a whole new level.

The fact remains however, U.S. politicians from both main parties want American wealth back onshore where they can see it, track it and tax it. They allegedly want the tax to fill in the gaping hole in the economy – although the average American had nothing to do with the nation’s fiscal collapse – and they are trying to promote the idea that if you have nothing to hide you have nothing to fear. While this is true on one level – i.e., if you have never been in the business of shoveling your millions into a numbered Swiss account – it is deflecting from the real truth on another level. What the U.S. government is doing is breaching privacy rules, violating a human’s right to confidentiality and stealthily taking invasion of your privacy to a whole new level.

Financial experts are already discussing where they believe the government will look next for a revenue boost – international hedge fund investors are likely to take the brunt – and so you see this is just the beginning. First they strip your rights away from you, then they take what they want. It is all about control my friends – the American government wants it therefore you can’t have it.


While there is no one specific law restricting the free movement of currency across US borders, America has de facto currency controls.

We have been running across David Tanzer’s articles on Caribbean Property Magazine’s “Money Pages” for some time now, and finally checked out his website. According to the “About David Tanzer” page: “Following over thirty years in law and business, David Tanzer concentrates in international planning for clients located across the USA, and around the globe. ... As a former judge and retired commercial litigation attorney, David has seen wealth exchange hands quickly for those that failed to take proper planning steps in advance of threats. ... Tanzer places emphasis on advance planning steps before a problem materializes. ... David was named a Top 100 Trial Lawyer by the American Trial Lawyers Association (ATLA). ... Ironically, today, David’s practice is mostly limited to international planning designed to help mitigate against litigation risks.”

So it is safe to conclude that Mr. Tanzer knows what of he speaks. His previous articles concerned the logistics and legalities of “going offshore” and setting up international legal structures. This piece is a more general reflection on how an individual can reclaim his/her sovereignty from the creeping – now arrived – socialism that has enveloped the United States.

Tanzer shows the reader that the U.S. already has de facto currency controls, and argues that the screws will be turned tighter soon enough. The U.S. is bankrupt and the economy is sick, so further controls are inevitable. Where is a sovereign individual to find the counterpart to Ayn Rand’s fictional “Galt’s Gulch”? It cannot be found in the physical world, even in those countries highly ranked for economic freedom. The search begins, he advises, in our minds. “It is enhanced by your long term objectives, limited only to your resourcefulness, and knowing what rules to follow.” Tanzer likes what can be accomplished via the vehicle of the international trust; we would advise people to look at other legal structures as well. He also likes dual citizenship – he himself is a U.S. and New Zealand dual citizen.

No doubt, America has many long term economic, social and political issues.

But one of the most troubling on the long list is the growing problem of currency controls against Americans conducting legitimate offshore business. We have long argued that the noose was tightening against the free movement of Americans, and their money. Not just globally, but right at home.

While there is no one specific law restricting the free movement of currency across US borders, America has “de facto” currency controls.

You read the above correctly: Today, the USA has de facto currency controls restricting Americans from conducting legitimate global business across their borders. Finally, we are not alone and others are taking notice and waiving the same warning flag.

Currency controls occurred in the 1930s in Germany, in 2003 in South Africa, currently exists today in China, and in 13 other countries around the world.

In America, currency controls began with the 1970 Bank Secrecy Act. Then came the Patriot Act and other federal banking laws that created stringent bank reporting requirements against customer activities (SARs).

It may shock you to know the number of times in just one year that your local bank reported their customers to the IRS. ... It is very significant.

In 2008 alone, the most recent IRS filings reported, there were 15,449,549 Currency Transaction Reports, 733,543 Suspicious Activity Reports (SARs), 531,763 by money service businesses (SARM), 173,345 by businesses (Form 8300) and 11,162 by casinos (SARC), plus a smaller number of numerous other reports.

On average, ever single banking day, over 72,000 suspicious activity reports and currency transactions were filed by money service businesses in America against Americans. ... 72,000 each and every day. Have we all become terrorists?

What is worse, a bank employee is prohibited from disclosing to the customer that a report was filed with the IRS. Violations of the non-disclosure reporting requirement may lead to civil and criminal penalties, including fines as great as $250,000, and five years imprisonment.

Already under specific existing tax laws, investing in foreign mutual funds creates a tax trap that can well exceed the dividends (as PFICs). And by IRS rules and regulations, the compliance burdens when investing offshore, or owning property or a business entity offshore, can be stifling for those uninformed.

The early laws were designed to hinder money launderers – and later, terrorism – but ultimately acted as a disincentive to law-abiding citizens looking to legitimately invest offshore. Today, Australia, New Zealand, the UK and other jurisdictions are following the US lead.

Furthermore, in the U.S., the Federal Treasury already requires reporting of foreign bank accounts (the FBAR), which is burdensome enough (349,667 were filed in 2008), but now under a new 2010 law U.S. citizens are also required to report annually all other types of foreign owned assets above $50,000 on their personal tax returns.

But it now gets much worse.

Now, the IRS has acquired indirect and discretionary control over offshore banks under the 2010 HIRE Act, which integrates the provisions of the Foreign Account Tax Compliance Act. These far reaching burdens will all but cut off any and all offshore banking and investment opportunities for Americans.

Read that last sentence again ... it is very significant.

The newly adopted financial and compliance burdens and expenses impacting foreign banks dealing with Americans are very dramatic and will be so great, that U.S. citizens will certainly be cut off from financial markets outside the U.S. boundaries.

From a global perspective, for Congress to attempt to regulate foreign banks from sovereign jurisdictions is arrogant and distasteful.

But worse yet for Americans, the certain spillover to non-financial investments will likely follow, since investing in real estate, stocks, bonds, and intangible assets involves U.S. citizens using a foreign bank to complete an offshore transaction, unless traveling with a suitcase full of cash across borders ... but beware that traveling with large amounts of cash creates its own set of problems.

If you doubt what I say, read the new 2010 HIRE Act for yourself (or email me for a copy) and you be the judge.

Today, your money is only a signed Executive Order away from absolute prohibition against transferring money outside the U.S., or mandating the repatriation of all offshore assets. Like lemmings, most Americans sit idly by as the U.S. goes off the cliff.

Going forward, only the most determined and forward looking individuals will be able to withdraw their assets from the U.S. system, and protect their property – and themselves – somewhere else.

At a minimum, the above should be strong motivation to take personal action now before the door is closed. Exits get crowded when everyone panics at the same time, and then it is usually too late. Already a noticeable number of U.S. citizens living overseas are turning in their U.S. passports, but they are forwarding thinking – or fortunate dual citizens by birth – and understand that a second citizenship is necessary before renouncing U.S. citizenship.

But there is hope ...

The Sovereign Retreat

No doubt, books shape the mind and our perceptions of our world. When Barack Obama was caught reading The Post American World, by Fareed Zakaria, the press made much ado over it because it offered a glimpse of what he was thinking.

But for our purposes today, those that have read Atlas Shrugged know that free markets and personal freedoms are located in a special place. That special place is free of socialist government, free of government intrusion, and free from increasingly confiscatory taxes.

Atlas Shrugged, written by Ayn Rand in 1957, is the story of an industry leader who organized a global strike with other industry leaders as the world was suffering from an onslaught of socialism. John Galt – our hero – believed that if the business leaders in every field withdrew their participation in the system and physically departed from an increasingly corrupt society, then the system of freeloaders and socialism would collapse in on itself with no one to support it.

Galt eventually persuaded people of talent to withdraw from the system and move to a secret, high-tech enclave in a hidden valley called Galt’s Gulch. The wealth creators were able to withdraw from socialism, recharge their energies, and reshape their lifestyle to what they once enjoyed, and which they hoped would again become a reality across the world.

The free market principles in Rand’s book has inspired generations of freedom seekers. It deals with timeless issues, and portrays the epic struggle between good and evil, and between individualism and collectivism. Rand re-introduces a fresh philosophy of rational self interest which supports a free market system.

The book’s core – free market thinkers vs. socialism – is the constant struggle of the individual against the collective. Throughout history the individual has generally been subservient to the group: the family, the village, the city, or the nation. And this collectivist philosophy is always underpinned by a morality of self-sacrifice preached by all religions and societies, particularly socialism.

The novel is timeless because it deals with issues that are as old as humanity, but very current in today’s evolving environment.

Importantly, the “citizens” of Galt’s Gulch were truly sovereign individuals, self-contained and autonomous persons, who were fully responsible for their own actions, and their lives. Literally, self rulers.

Today, is it possible to “leave” a corrupt system, and let it fend for itself?

The answer is surprisingly, yes. Just as in Atlas Shrugged, it is possible to join the ranks of sovereign individuals, and create a Galt’s Gulch for yourself.


Individual Sovereignty: Easy Come, Easy Go?

In a recent article authored by our good colleague Vern Jacobs, a well-respected international tax specialist, he argued that based upon Abrahamic religions, a sovereign individual is part of an inherent element of being human. That means when you were born, you were given free will by your creator.

Thereafter, that free will only became limited by the government where you choose to live, and where you consent to be governed. Therefore, you are a sovereign person from day one – the moment you are born – but your freedom is limited by the laws of the country where you continue to live.

I agree with Vern ... but there is more.

As many point out, America was originally designed two centuries ago to permit every citizen to be a sovereign person to the maximum extent possible. Taking risks – and accepting success or failure as the outcome – was part of the system that made America great. However, that system has been subverted to the point where the U.S. has clearly embarked upon a socialist state and individualism is less welcome.

In one of our recent newsletters we discussed Socialism USA Style, and how it arrived. It might surprise you that it has been in the making for decades, right at home, and is not a recent occurrence as many believe.

Moreover, the transition to socialism today is not unique to the U.S., as it permeates throughout the over-burdened Western culture worldwide, drowning in welfare and entitlements. Europe, for one, is only just coming to grips with how excessive government entitlements and aging demographics are unsustainable. Japan, the world’s second largest industrialized economy, has already experienced two lost decades for the same reasons.

Examples in the U.S. include failed policies of entitlements and welfare, outcome based education (a race to the bottom), wasteful and oversized – and still growing – government programs and spending, nationalization and bailouts of an endless number of private enterprises which were destined to fail, and more.

Today, one in seven mortgages in America are either in arrears or in foreclosure, according to the Mortgage Brokers Association. Worse yet, while the “official” U.S. unemployment rate is just below 10%, the “true” U.S. unemployment rate continues to hover at 21%, which reflects workers that have dropped out of the system, or are under-employed, according to ABA&R. The true number of unemployed in the U.S. today are more than many third world countries.

This points to the fact that U.S. consumers and the housing market – “the” major components of the U.S. economy – are far from healthy. And governments continue to respond with more central planning as remedial efforts by raising taxes, over-regulation, and excessive government planning and control, which will only make the problems worse.

Meantime, the average annual wage and benefits for U.S. government federal civilian employees average $119,982, while for the private sector $59,909, according to the CATO Institute 2009 Study. And the overwhelming number of new jobs being created are government employees, not in the private sector.

If you think the debt and social problems in little old Greece are bad, the U.S. debt is far worse and approaching an unsustainable 100% of GDP.

A tipping point in the U.S. may not be far off.

Central planning by any other name is socialism. Frederick van Hayek’s book, The Road to Serfdom, first written during the 1930s clearly sets forth the pitfalls that naturally follow socialism. It was these evils van Hayek demonstrated which reared their ugly head and brought about the failure and injustices leading up to World War I and World War II. Ronald Reagan and Margaret Thatcher in the early 1980s openly followed his free market philosophies, as they reopened the doors for a rebirth of free markets and freedoms.

But where are free market thinkers – and freedom – today?

If Not in America, Then Where?

Our first stop is the 2010 Index of Economic Freedom which ranks 179 countries across the world by economic freedom. This information is reported annually by the Heritage Foundation and the Wall Street Journal, so it is arguably a credible publication.

The top two countries for economic freedom are Hong Kong and Singapore. For what it’s worth, I have spent time in these two over-populated, small countries. Both Hong Kong and Singapore are good places to do business, but are at the whims of the Chinese government.

How ironic that a Chinese Communist variety of capitalism (a more profound level of socialism) is the fastest growing economy in the world, and tops the global list of economic freedom today by influence through these two leaders. Is there a warning to heed in this message? And are these free markets a model for a sovereign individual to embrace?

Next, ranked three and four on the 2010 Index of Economic Freedom are Australia and New Zealand. It may come as no surprise that both countries have hitched their economies to China, particularly Australia.

Many of our long time readers know that I am a multi-national citizen, and in addition to being a natural born USA citizen, I am also a New Zealand citizen. Our family has spent a considerable amount of time living in both New Zealand and Australia, in addition to the U.S. Today, I have both a Kiwi daughter and an Aussie daughter. It is a long commute to the office in Vail, Colorado, but you get used to it after a decade.

New Zealand is a small country of approximately 4 million people. The geography is diverse and breathtaking, and the Kiwis (as they are affectionately known) are staunchly independent, and at times stubborn in spite of themselves. The “No Nuke” policy means sea, land and airspace are off limits to American nuclear naval and air ships ... period.

The culture is conservative British Provincial, yet live-and-let-live prevails with alternative lifestyles. Its diverse culture is made up of approximately one-third European descent, one-third Asian, and one-third South Pacific Islanders, especially around Auckland.

Importantly, the New Zealands economy is small – very small – and depends on the shifting winds of the global economy and its nearest neighbor Australia, a three-hour jet plane ride to the northwest. If you are looking to get lost, the Land of the Long White Cloud is an interesting destination. Only recently a conservative government led by John Key was elected over a long-term socialistic government. Socialized medicine has been in place for decades, income levels are low by world comparison, and the exchange rate even lower against other global currencies.

New Zealand is a great place, odd quirks and all. For those interested in residency and citizenship with New Zealand, an entire chapter is devoted to the topic in my book Offshore Living and Investing, and in an earlier newsletter you can find here. But at the end of the day mate, New Zealand is not Galt’s Gulch.

And Australia?

Australia at times feels like the 51st U.S. state. It is very Americanized. During WWII General Douglas Macarthur came to the rescue of Australia, and Aussies decided they liked Americans better than the Brits who were not around when they needed them for military defense. Worthy of note is that his son, Alex Macarthur, now deceased, was a good friend and neighbor of mine.

Australia is enormously rich in natural resources it sells to rapidly developing China. Australia is HUGE, with most of the population of 22 million living in a ring alongside the vast stretches of beautiful long, white sandy beaches, and warm, blue oceans.

Around 200 years ago, European convicts were sent by the boat loads to Australia, with a few deranged people in charge. Notwithstanding that the founders of Australia were convicted murders, thieves, cheats, and rapists, today, Aussies are some of the nicest folks around.

To many, this is called the land of “Oz”, the “God Zone”, the “Lucky Country”, and the “Best bloody place on earth, bar none.” The irritating thing is that they may be right.

Australia was the lucky country that avoided a technical recession as the Global Financial Crisis clobbered the world. The government is now run by a socialist, Kevin Rudd, hell bent on squandering away the country’s resources, by transferring a huge budget surplus into an even larger budget deficit, seemingly overnight.

Today Rudd is busy attacking the most productive and profitable sectors of the Australian economy with new taxes. And like any socialist looking to raise more revenue, he announced recent plans to lay an additional 40% tax on top of an already heavy corporate tax burden of the resource rich sector of the economy to pay for his free spending ways, socialized medicine, and management of a Nanny State from cradle to grave.

Global financiers are fleeing Australia due to the Government’s new tax, says Andrew Forrest, Australia’s richest man.

And too, like China, Comrade Rudd is implementing an Internet filter to control and limit what Australians view.

Like many before them, it appears that the Aussies will soon come to understand what the term “hubris” means.

And like New Zealand, Australia is a wonderful place, but it is no Galt’s Gulch for the sovereign individual.

So, if free markets and freedom cannot be found in the top ranked countries for economic freedom, then where the bloody hell can it be found?

Finding Galt’s Hidden Valley

A five volume book written by W G Hill during the 1990s comes to mind as a useful beginning in which to find individual sovereignty. The core of Hill’s books is arranging your lifestyle and assets to a “Five Flags” approach.

To summarize, this consists of (1) having citizenship with a country unconcerned about what its citizens do outside its borders, (2) creating revenue in another venue other than where you live, (3) reside in a haven where individuals can be free to be creative, live, relax, and prosper, and with a high level of privacy, (4) maintain assets in still another competent jurisdiction that respects the rights to property, and with competent financial and banking advisors, and (5) having one or more “playgrounds” elsewhere where you can live the good life.

But keeping a low profile does not mean breaking the law or becoming a tax cheat. And it does not mean you need all five flags to succeed. It does, however, mean that to maximize the benefits you will need to better position yourself today for the future. For many forward thinking individuals, this is well worth the effort.

Better yet, today you can add to the above the benefits of managing your life and assets through the Internet, regardless of where you reside, where you are traveling, or where your assets are located.

Naturally, you are always subject to the laws and taxes of the country where you reside, transact business, travel, and locate your assets, but you are free to relocate yourself or your assets at will ... on a moment’s notice, if “stuff happens.” And with multiple citizenships you are free to renounce a citizenship if one country places too heavy a burden on its subjects, excuse me, I mean its citizens.

And with proper legal and tax pre-migration planning, there are even better opportunities to keep assets – and the income they generate – outside of burdensome tax regimes. Within any specific country, keeping a low profile is an effective way to have maximum personal freedom.

But beware: there is no one perfect beach, a no-fail, high yield financial advisor, or a perfect lost gulch called Secret Valley. For some, residing in Panama or Costa Rica is heaven, and for others it is shear Hell. Some investors have found a safe banking haven in Hong Kong, Singapore, or the Caymans, while others have found security with the long established conservative Swiss or Brit Bankers. And a culturally rich and diverse environment for one individual, is culture shock to another.

Where and how you create your hidden valley, is left only to you and your creative mind, operating in a complex world of diverse legal and tax rules where you choose to be governed. Getting lost can be half the fun. But there is something very liberating about being in control.

Finding Your Hidden Valley

Finding your hidden valley is more than just a virtual reality.

It begins in your mind. It is enhanced by your long term objectives, limited only to your resourcefulness, and knowing what rules to follow. For some, it is limited by money, but their ingenuity can overcome their financial handicap by selling their time, labor and skills to the highest bidder somewhere else.

And for those with measurable assets, it means planning ahead to avoid financial and tax pitfalls. The traps for some may be protecting assets in a changing world, or for others it is a concern about the political or social direction of America.

But in any event, freedom for your future begins with the choices you make today.

If you do not accept being dictated to and taxed to death by those that govern you, then why choose to do nothing? It is your choice, but only if you take responsibility and control over your life.

Setting up an international trust is an excellent way to get started ... but it must be done timely, and correctly.

To help you get started, our earlier newsletters have explored the many different aspects and benefits of what an international trust means today. Some are still confused whether offshore is legal, and what an international trust is, so we have looked into these topics as a primer to our discussions. You can too.

And for forward thinkers, we covered how to manage assets in an international trust, what international pre-planning is about, and even help to clarify complex topics of domicile, residency, and citizenship, to name only a few.

Please feel free to visit the past articles on our site, and find your hidden valley.

It may be easier than you think.

Until next time ...



Caribbean Agencies Create Partnership for Natural Disaster Management

To a large extent, many of natural disasters result from the failures of development policy to mitigate vulnerability to hazard events. Climate change, considered as the most pervasive and truly global of all issues affecting humanity, is likely to increase the incidence of natural disasters by causing extreme weather events to be more intense and to occur more frequently.

With this in mind, the Caribbean Catastrophe Risk Insurance Facility (CCRIF) and the Caribbean Disaster Emergency Response Agency (CDERA) signed a Memorandum of Understanding (MOU) formalising a partnership to facilitate capacity building and to develop strategies for mitigating the physical and socio-economic impacts of natural disasters, such as hurricanes and earthquakes, on countries in the region. ...

The objectives of the MOU are to promote the use of catastrophe risk modelling tools, to introduce new products and initiatives to assist Caribbean governments in better understanding and financing catastrophe risk exposures and to share information on real time hazard and impact information.

In his remarks, Pearson said that the CCRIF’s participation in this partnership will enable the governments in the region to access financial resources in a timely manner to jumpstart their countries’ economic recovery in the aftermath of a major catastrophe disaster.

In the past two years, the CCRIF paid out approximately US$500,000 each to Dominica and St. Lucia after an earthquake occurred in 2007, and US$6.3 million to the Turks and Caicos Islands in the aftermath of Hurricane Ike. The CCRIF continues to work on developing new products, such as an extreme rainfall coverage, that will benefit countries throughout the region.

Collymore added that the Memorandum of Understanding strengthens CDERA’s ability to implement the Hyogo Framework for Action that aims to reduce countrie’q vulnerability to natural hazards. He noted: “the MOU represents the launching of a platform to minimise the hemorrhaging of regional assets, particularly in relation to hydrometeorological hazards.”

Doug Casey on Argentina, Investing, and the Open Door

Buyers into his project are “philosophically sound.”

My inbox has been flooded lately with questions about a luxury real estate development in northern Argentina called La Estancia de Cafayate. Undoubtedly, the volume of emails is a strong indicator of the number of people thinking about expatriation.

Rather than answer the questions myself, though, I decided that it was a good occasion for me to reach out to my own network and call the man himself, Doug Casey, who is developing the project.

Doug and I spent some time chatting about the project, his thoughts on Argentina, investing, and networking with fellow expats. In full disclosure, I have absolutely no financial interest in the property whatsoever in any capacity. Furthermore, I have not purchased a lot at the property because, as a nomadic single male, I am not an ideal candidate.

For the right people, though, Cafayate is probably close to paradise. This would apply to expeditioners, retirees, hedonists, and even hermits. [See above.]

The weather and scenery are spectacular, and the amenities in the development are second to none – I have seen it with my own eyes, and Doug really did a great job putting together a first class community, right down to the cigar bar.

As I mention in the interview, though, there are a multitude of beautiful places in the world. One of the things that sets Cafayate apart is that it is a clear example of an “open door” to a fascinating and intriguing network of individuals. ...

Good News for Expat Bookworms – Google Editions Will Read on Any E-book Reader

For people living abroad, the days of muling paperbacks in your suitcase and mining the bookshelves of the local B&B may be over. Google announces that its e-book service, Google Editions, will offer books that can be read on any e-book reader ... or laptop ... or smartphone.

Google’s biggest e-book competitors – Amazon and Barnes & Noble – have systems that restrict which device you can use as an e-book reader. But Google Editions will not be device-specific. Google’s e-books will work on any computer, e-book reader, or mobile phone with a Web connection, freeing bookworms abroad from having to buy specific (and expensive) devices such as Amazon’s Kindle e-book reader.

The new Google Editions e-book store is set to launch the first half of 2010 and will initially feature 500,000 titles. Pricing structure has yet to be determined.

New Formula Shows Twice as Many Senior Americans Living in Poverty Than Previously Thought

The number of Americans living in poverty has been revised thanks to new formulas developed by the National Academy of Sciences.

The new formulas, which unlike government Census Bureau formulas take into account health, transportation, and child care costs, show 47.4 million Americans living in poverty – 7 million more than government figures.

The Census Bureau formulas have been in use since 1955 and ignore rising health care, child care, and transportation costs and fail to account for regional differences in cost of living.

When these factors are included in the NAS figures, the actual number of Americans living in poverty turns out to be 15.8%, or 1 in 6 Americans, rather than the Census Bureau’s 13.2% figure. That is a difference of an additional 7 million Americans living in poverty than Census Bureau figures indicated.

NAS statistics show seniors in much worse shape than previously thought, with nearly twice as many Americans 65 and older (18.7%) living in poverty compared to the old formula (9.7%).

The increase is almost all attributed to rising Medicare premiums, out-of-pocket health care expenses, deductibles, and a coverage gap in the prescription drug benefit.

Put those same seniors in a country with lower health care costs, and they would immediately rise above the poverty line. For example, many seniors have already moved to Mexico, Ecuador, and other Latin American countries where national health plans keep the cost of comprehensive health coverage as low as $300$400 per year. In these same countries, out-of-pocket expenses can be tiny compared to the U.S. doctor’s exams may cost just $35. Dental work and minor and major surgery can cost a third or less than in the States.