Sovereign Man: Confidential Welcome GuideWelcome+Guide.pdfmultiple flags, and become more...

Sovereign Man: Confidential Welcome Guide

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WELCOME TO SOVEREIGNMAN: CONFIDENTIAL

This service is designed for one unified, singular purpose - to provide tactical information that helps you take action, plant multiple flags, and become more self-reliant. It seems the world is divided more then ever before between those who are in tune with what’s going on worldwide and can see the writing on the wall, and those who are oblivious to the warning signs and choose to keep putting their trust and prosperity in the hands of their government for safekeeping.

Needless to say, by doing so, they’re putting themselves and their livelihoods in a precarious position of risk, fragility and reliance.

By being a member of this valued community, I know you belong to the former category.

It’s incredible to think about how much has changed in the world since we launched Sovereign Man: Confidential in 2010. Back then practically nobody else was discussing the topics we talk about, and even fewer offering unique, informed, credible solutions to the problems we face. The latter still holds true.

In the meantime we’ve seen countries go bankrupt. We’ve seen a rise in asset seizures. Cash has become criminalized. Capital controls and price controls have been set up. We’ve seen government debts going through the roof.

We’ve also seen an astonishing erosion in civil liberties. Governments are blatantly and brazenly spying on citizens now. They’ve made repeated grabs at controlling the Internet.

They passed the NDAA, authorizing military detention of US citizens on US soil. They’ve authorized assassination of their own citizens. They’ve waged numerous wars and military campaigns, from Libya to Syria to Pakistan.

It’s hard to believe when you look back over just a few recent years. But it’s all true. All of these things that we routinely discuss are not theoretical. It’s not some attention-seeking headline. It’s just truth.

And the pace has been accelerating.

The world is a big place, though, and I know without doubt that there are plenty of wonderful places out there and exciting opportunities.

For now, the trend in the West is much, much lower… it’s just a question of what form it takes. Does the US turn into Zimbabwe during its hyperinflationary period? Argentina during its millennium economic crisis? Japan during its lost 2-decades? Germany in the interwar period? Rome during the reign of Tiberius? Russia after the fall of communism?

It’s difficult to say because there is no true historical precedent. What’s happening right now is a great unwinding of a century worth of a corrupt money system, and this has not yet happened in modern times.


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The problem is that these bankrupt governments in Europe and North America are desperately clinging to the vestiges of the old system, and the more they try to fix things with bailouts and stimulus packages, the worse things get. You cannot cure debt with more debt.

Europe is dangerously close to its financial reckoning day. The US is getting much closer. Both of these necessitate a total reset of the financial system; when insolvency strikes the issuing governments of the top two currencies in the world, the system must renew itself.

Of course, with this renewal comes great turmoil… economic decay begets social upheaval, and this creates conditions for government intervention and police states.

There are a few things that are absolutely imperative to do during this time. The first is to not get emotional about it. Things change, that’s life. The US used to be #1, now it’s not.

The financial system that used to dominate the world is adjusting. The old game is over, and the rules are being reset. It’s time to acknowledge that fact and move on without any remorse or sense of loss for the way things used to be. For people paying attention, things could get much better.

The second thing to do is have a plan. Think about your assets first—diversify them, don’t rely solely on one geography.

If you have cash, consider an overseas bank account. If you hold investments, consider an offshore brokerage. If you have precious metals, think about offshore storage. If you have a business, diversify your markets internationally and consider overseas corporate registration. If you have an online enterprise, split your processing and servers overseas. If you have heirs, think about an offshore trust. If you have a retirement account, get it out of the country.

Most importantly, think about yourself and your family. Consider what you would do, specifically, if your sole source of income dried up. Learn skills that will be valuable in the future, and explore growing markets where you can add value.

If you have the means, consider overseas residency… or at least know where you would go if you would need to. Think about how your life would change in the event that basic services shut down or resources were unavailable, and then reduce those dependencies.

The third thing to do is patiently wait for the tremendous deals that will come along for individuals who are well-prepared and have protected, diversified assets and income streams. When the smoke clears, a period of crisis is followed by a period of extraordinary opportunity for those who have the resources to act.

Don’t mistake this for a message of doom. I’m an incredibly optimistic person… and I think that what’s happening right now is going to be regarded as one of the most exciting times in modern history.

Huge opportunities are coming. Many are already here. But we’re also entering a period of substantial turmoil.

Our job… our mission… at Sovereign Man is to stay ahead of this trend. And to provide the best solutions to the challenges that we face. And these are solutions that make sense… no matter what happens.


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As I’ve stated many times, a very, very important lesson throughout history shows us that in any given situation, there are winners, and there are losers. By staying ahead of the trends, we’re making sure you are in the former category.

Sometimes that means protecting what we’ve got. Sometimes it means going out and looking at places that nobody else is paying attention to in order to find the best opportunities.

This Sovereign Man: Confidential Welcome Packet constitutes years of our service and publication. I’m very pleased to present you a roll-up of our top picks for both banking and residency. There are a variety of options here, designed to cover most people’s requirements and needs.

This is a comprehensive ‘cheat sheet’, and a culmination of years of research, accumulating contacts, and boots on the ground experience from around the world.

From now on, expect to receive periodic SMC Alerts that will be delivered straight to your inbox as soon as a piece of valuable information reaches my desk, as soon as there are any important updates to make, and as soon as we conduct new boots on the ground research around the world in search of solutions that will benefit you.

These alerts will be concise and actionable, something you can review in a few minutes, and will focus on intelligence about international diversification and planting multiple flags, along with valuable global investment insight.

We’re also having monthly members-only teleconferences that are devoted to answering your questions. Look out for announcements when we’re holding these.

As part of being a member of this community you also have access to all the material that was ever produced and published in Sovereign Man: Confidential. Within the Premium Member’s community website you can find all the past information in a searchable and categorized format.

Thank you for being a member of this community. It’s a real honor for me to be making this journey with you, and I have the utmost dedication to deliver on the trust and confidence that you’ve placed with me.

In freedom,

Simon Black


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SOVEREIGN MAN CONFIDENTIAL 2015 BANKING REVIEW

The lifeblood of capitalism is capital. This is a fact. You cannot have one without the other.

More specifically, capital… ‘money’… is absolutely necessary for a society to engage in commerce.

And given that banks have for centuries been the primary stewards of capital, a healthy banking system is absolutely critical for sustainable commerce.

Yet we live in a time of epic financial conundrum. Most government in the ‘rich’ West (which guarantee banking systems) are insolvent. Most Western central banks themselves are borderline insolvent.

And the entire notion of modern fractional reserve banking is an inherently risky activity. The way it works is basically like this:

People deposit their savings in the bank.

Or, more commonly, in today’s world of electronic transactions, the bank acknowledges that it has a legal obligation to pay the depositor a certain sum on demand (a liability), and the depositor acknowledges that it has such a claim on the bank (an asset).

The bank then turns around and lends out the vast majority of that deposited money, or invests it in other financial instruments in an effort to make a profit for its shareholders.

It keeps only a small fraction of OUR money in “reserve” to hand back to depositors when they want to make a withdrawal or transfer money out. Often this reserve ratio can be as low as 1% (or less) of the bank’s total deposits.

Banks therefore rely on the statistical probability that most of their depositors will not all show up one day and demand their money back at the same time. And as a result of this presumption, the vast majority of your money simply isn’t there.

In theory, a bank would be able to borrow emergency funds, and/or begin selling its assets, in the event that there was an immediate liquidity crunch.

For example, if more than just 2 or 3% of a typical bank’s customers decided to move their money to another bank, or make a withdrawal, etc., then that bank might have to start dumping securities onto the marketplace, or even begin calling in loans.

This in itself would be problematic even if it were just a single bank. But if an ENTIRE banking system, i.e. all the banks were doing this at the same time, it would be total chaos.

Just imagine—every bank in the banking system simultaneously dumping assets—stocks, bonds, etc. If everyone is a seller and no one is a buyer, it would cause asset prices to collapse.


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Concurrently, if banks started calling in loans, then many borrowers would also likely have to start dumping assets as well in order to raise the necessary cash. This would cause an even further collapse of assets.

This is where things get really interesting. Because in addition to having very limited liquidity, many Western banks also maintain very thin levels of capitalization or solvency.

I often refer to this as a bank’s margin of safety. Just like it’s a good idea for individuals to set aside a rainy day emergency fund, a bank with a strong margin of safety has set aside substantial reserves so that, even if the value of its assets decreases substantially, the bank will still have enough assets to cover customer deposits.

Many banks have a negligible margin of safety… and very few people even realize it until it’s too late. Fact is, banks can and do go bust.

We saw this in recent times at the very core of the global financial system on Wall Street. Numerous huge US financial institutions failed during the financial crisis that erupted in 2007 and 2008.

IndyMac Bancorp, Bear Stearns, AIG, Washington Mutual, Countrywide Financial, Fannie Mae, Freddie Mac, and the big daddy of them all, Lehman Brothers, all went under or were forcibly folded into other banks.

Even today, the US financial system, as well as those of many other Western countries, especially in Europe, is very fragile. So, if you live and bank in one of these places, choosing a stronger, safer bank in another jurisdiction to park the bulk of your savings is a core tenet of the Sovereign Man ethos.

What makes a strong, sound bank?

Specifically, all else equal, if you want to maximize the chances that you never suffer the pain of losing any money in a banking crisis, you want to choose a bank with as many of the following characteristics as possible.

1. A healthy bank maintains adequate (or even excess) reserves with the central bank. And it can be instructive to look at an entire banking system’s statutory requirement for reserves.

The technical term for this is the “reserve ratio.” Some banking systems, like in Lebanon for example, impose very high reserve requirements on banks. Others are less conservative.

In the United States, reserve requirements can be as low as zero. In Canada, there is no statutory reserve requirement at all.

This means that Canadian and US banks essentially have no requirement to maintain a single penny of customer deposits on reserve. And that, ladies in gentlemen, requires that you have a LOT of trust in your bank.

2. A healthy bank holds a high percentage of its customer deposits in assets that can be redeemed instantly without major price fluctuations.

Liquidity is key. A liquid bank is able to withstand a bank run and minor panic. A liquid bank is able to honor all withdrawal requests without delay because they have the available funds on hand.

This requires that banks maintain strong reserves (see point #1). It also requires that the investments they make are liquid.


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Generally speaking, loans (mortgages, car loans, etc.) are much less liquid than, say, 3-month government bonds.

It will take a bank about one half of a second to liquidate government bonds. Loans, on the other hand, need to be recalled or collateralized in complicated transactions. They are very much NOT liquid… especially if everyone else is selling at the same time.

So a liquid bank has a fairly low “loan to deposit ratio”. The fewer loans outstanding relative to the total deposits, the more “liquid” a bank tends to be.

Low loan to deposit ratios indicate that banks have plenty of high quality liquid assets to withstand a bank run.

3. A healthy bank holds strong capital reserves on its balance sheet, so that if some of its assets go bad and become unrecoverable, the bank still has enough funds to cover its depositors and creditors.

The technical measure we look at is called the “capital adequacy ratio.” It calculates how much capital (equity, reserves, etc.) the bank has, when compared to its outstanding assets.

Let’s assume that a bank with $100 in total assets has $999 in customer deposits and $1 in capital. That $1 constitutes just 1% of its assets… meaning that if the bank’s assets were suddenly worth just 1% less, the bank would be wiped out, no longer able to pay its customers.

The greater the capital adequacy, the safer the bank.

4. A healthy bank doesn’t engage in excessively risky lending or investment behavior, so that the likelihood its assets will be impaired in the first place is low.

A good place to check this is to look at the bank’s “non performing loan (NPL) ratio”—both current and historical. And examine the bank’s business model.

You can also examine the bank’s balance sheet to see that it doesn’t invest too much in assets that are deemed to have a heavy “risk-weighting.”

A community bank that specializes in making short-term, secured mortgage loans to doctors and dentists for example, will likely be preferable to one that uses its depositors’ money to invest in penny stocks.

Now, there are all sorts of regulatory and prudential supervision standards that banks around the world are supposed to adhere to.

For example, The Bank for International Settlements (BIS) in Basel, Switzerland, which is the de facto central bank of the world’s central banks, publishes detailed rules on capital adequacy.

Most advanced economies have adopted these for their banking systems.

But each individual country’s central bank will also have its own rules and regulations on reserve, liquidity, and capital adequacy ratios that banks operating in that country must follow.

And, as with anything, some countries are stricter and more conservative than others.


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When you are shopping globally for a bank with which to do business, you have the choice to seek out those banks operating in stricter jurisdictions, and those that have the best metrics when it comes to the points above.

5. As a lesser consideration, you may also want to bank in a jurisdiction where there is some sort of government or industry-backed deposit insurance or compensation scheme—which is backed by a body that’s actually solvent, credible, and good for the money.

The reality in much of the Western world is that deposit guarantees aren’t worth much. Most of these deposit insurance schemes are undercapitalized, and the governments backing them up are insolvent. They’re simply not good for the money.

Or sometimes, they used to be good for the money… and now they’re not.

And THAT is fundamentally why we put out this report from time to time. It’s because things change.

Governments go bankrupt. Bank liquidity and capitalization levels rise and fall. And in a time when it’s foolish to simply assume away the financial strength of your bank, this data is more important than ever.

Here’s what we’re seeing around the world as we survey the banking scene at the dawn of 2015.

Andorra

This tiny principality up in the Pyrenees Mountains, sandwiched between France and Spain, remains a very solid place to bank if you can find the time to make a visit and open an account.

It’s generally not possible to open a bank account without visiting Andorra (which is absolutely gorgeous by the way, and a short trip from Barcelona).

Don’t be seduced by websites who promise they can open up an Andorran account for you without visiting. It’s against Andorran regulations.

In rare exceptions, some Andorran banks with subsidiary branches in other countries (like the Bahamas or Panama) may be able to open an account remotely if you visit those local branches.

But I promise you, it’s definitely worth the trip to Andorra, whether summer or winter (Andorra is actually an excellent skiing destination).

Andorra’s banks are very well capitalized. And they are also very liquid.

Our top suggestion is ANDBANK. It’s more of a private, wealth management bank than a retail transactional one. Accordingly, it holds a much greater percentage of its customer’s funds in cash and near cash assets, and investment products, than as loans to other customers.

The bank reported a liquidity ratio of more than 67% according to the latest numbers, and a solvency (capital ratio) of over 20%. Only the banks in Liechtenstein, covered below, are in a similar league. These are extremely high numbers.

ANDBANK accepts customers from overseas, including the United States.

They are FATCA compliant. There’s technically no minimum deposit size. But there’s an annual fee of about


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US$150 to maintain an account, so we’d suggest a minimum of at least $30,000 to keep that fee down to just 0.5%.

That said, almost everything at this bank is negotiable. They really do try to accommodate their customers’ needs, so if you have a special situation, don’t hesitate to ask.

To reach out to ANDBANK, get in touch with María Estefanía Suárez Pérez [email protected] (who was recently on maternity leave) or Kim Kampfraat at [email protected].

You can find out more about the bank here: http://www.andbank.com/en

Australia

Australia’s four largest banks remain extremely profitable by virtue of their privileged market position, due to what is effectively a government-sanctioned oligopoly.

They are also well managed and generate a much larger percentage of their profits from fixed fee income than is the case with the majority of commercial banks in other parts of the world.

Australian banks are no longer especially liquid by global standards; the nationwide loan to deposit ratio is a hefty 116%, meaning that they have more loans than they do deposits.

This also means that there is far more demand for credit (loans) in the Australian economy than the pooled savings of all Australian depositors can provide.

So Australian banks also borrow money abroad and issue bonds both at home and abroad in order to raise more funds to lend out.

System-wide, financial institutions hold just under 6% of their customer deposit liabilities in cash or cash equivalents.

Of the big four banks, ANZ, Commonwealth Bank, National Australia Bank, and Westpac, ANZ is by far and away the most liquid, with a liquidity ratio that matches the system wide one at 5.95%. The other big four banks are well below average.

The average is dragged up by some very liquid foreign banks operating in Australia, such as HSBC Bank Australia with 24% liquidity, and Australia’s biggest investment bank, Macquarie Bank, with 13% liquidity.

Australia’s big four banks are reasonably well capitalized. The big four have total capital to risk weighted assets ranging between 11.4% for Commonwealth Bank, to 12.2% for National Australia Bank. ANZ and Westpac (which is the parent of St. George Bank) both come in at 12.1% (all based on first half 2014/2015 financial year results). In other words, about 1/8th of the banks’ total risk-weighted assets could collapse in price before the equity of the banks would be in danger of being wiped out.

So, for the most part, the Australian banking system remains sound.

mailto:[email protected]



http://www.andbank.com/en


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But there is an ever-rising murmur about the unsustainable Australian housing market. And that matters, because by far the biggest risk exposure in the Australian banking system is mortgage lending.

In order to be able to afford housing, many Australians are stretching themselves, taking on larger and larger mortgages.

This may eventually end poorly if there is a significant economic downturn and consequent job losses. Just like the US subprime crisis, many overstretched mortgage borrowers would fall behind on their payments, and that presents a problem for the banks.

The banks, for their part, claim they are well aware of the risks, have stringent credit selection criteria, and are confident they can weather even the most serious property market downturn.

The truth is likely somewhere in between. And while we believe Australia remains a sound banking jurisdiction, it’s certainly not bulletproof. The other factor to consider is that the Australian dollar has entered a fairly strong downtrend.

Because the Australian economy and currency’s fortunes are closely tied to the prices it receives for its key commodity exports (iron ore, thermal and coking coal, natural gas, gold and copper, among others), the slowdown in Chinese demand and weakness in commodity prices has seen the outlook for the Aussie dollar deteriorate. Down from a high of US$1.10 in mid-2011, it is now fetching just US$0.82. And, some market forecasters predict it could hit a low of US$0.70.

(As an aside, Tim Staermose, Sovereign Man’s Chief Investment Strategist foresaw this decline years ago, and ensured subscribers to his 4th Pillar investment newsletter were made well aware of how they could protect themselves from the Aussie dollar slide, and even make significant profits by short-selling the Australian dollar.)

I mention the currency because if you bank in Australia with one of the major banks, you cannot, as a general rule, hold anything but Australian dollars in a personal bank account. The good part is that Aussie interest rates are still well above zero. You should be able to earn 2% to 3% on some accounts, depending on the bank, and whether it’s a simple checking account, or a time deposit.

You may even do a little better for a short time, as most Aussie banks offer special “honeymoon” deposit rates for several months after you sign up with them in order to attract new business. I’ve seen rates recently as high as 3.75%.

In the past, many SMC subscribers have been able to open accounts with Westpac subsidiary St. George Bank. Some did it directly with the bank. Some did it via our contact Greg Chalom at BBY Stockbroking in Sydney.

Greg Chalom | Client Advisor | BBY Limited | Level 17, 60 Margaret St Sydney NSW 2000 , Australia| Direct:+61 2 9226 0117 | Mobile: +61 410 006 363 | Fax: +61 2 9241 7019 | Email: [email protected] Greg can no longer facilitate account openings with St. George. But, he has a good relationship with the folks at ANZ Bank (See http://www.anz.com/personal/), and can help open accounts there for all kinds of entities, be it personal accounts, company accounts, or trust accounts.


http://www.anz.com/personal/


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However, Greg is a stockbroker. He doesn’t work for any of the banks. He makes no money opening bank accounts for people (though in certain circumstances his firm may earn a modest commission).

If you are interested in banking with ANZ and want Greg to help you set up an account, he therefore requires that you also open a stockbroking account with his firm, BBY, which requires a A$50,000 minimum.

It’s one of the bigger mid-tier, privately owned firms in Sydney, and is one of the only mid-tier broking companies that still does its own clearing directly on the Australian Securities Exchange.

It’s a solid firm, and a good choice for your Australian broking requirements.

An alternative is to go directly to St. George Bank: http://www.stgeorge.com.au/.

Call the hotline in Australia on: +61 13 33 30. Hit “2” at the prompt. Then say “New Account” and you should be connected to the right section.

Note, as with any call center, your call may be answered by someone who is both switched on and helpful. Or, you may get someone who’s less than knowledgeable.

If you have a bad experience on your first attempt, or they tell you it’s not possible to open an account if you are not in Australia, just hang up and try again. It’s very much possible to open an account with St. George, even if you are not a resident of Australia. The bank will open accounts over the phone for non-residents.

But there is a catch. You will not be able to make any withdrawal from your account, until you have physically visited a St. George Bank branch, and presented sufficient identification documents (usually a passport, and a driver’s license) to establish your bona fides.

That’s obviously going to involve a trip to Australia. But if you just want to salt a small sum of emergency money away overseas for a rainy day, it might still be an option worth considering.

All in all, Australia remains a reasonable jurisdiction in which to bank. You can earn some interest. The currency is weakening against the dollar, however, so take that into consideration. The banks are solid in terms of capitalization. Their liquidity could be better.

Australia has avoided a recession for 24 years now, and there have been no bank failures in modern times. The banks are well run and provide a good English-speaking service.

Australia’s government finances are in better shape than those of most rich OECD countries. And the current government is introducing all sorts of new revenue raising measures and spending cuts in an effort to balance the budget.

It’s also useful to know that the Australian government provides a deposit guarantee scheme of A$250,000 per depositor, per Authorized Deposit-Taking Institution (ADI). And, in the event of a bank failure, they’d actually be good for the money.

http://www.stgeorge.com.au/


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Chile

Like Australia, Chile’s economy has been hit hard by the cyclical downturn in commodities, in particular copper. And, as you’d expect, the Chilean peso has weakened considerably because of that.

My long-term view still is that the Chilean peso will go much higher against the US dollar. It’s inevitable due to the two governments’ fundamentals.

In the meantime, US dollar investors in particular have been presented with an incredible opportunity to fish for high quality Chilean assets on the cheap.

For the most part, the country’s banks are stodgy, conservative institutions and show no signs of difficulties due to bad loans.

That said, the Chilean banks’ conservative, stodgy nature also extends to their customer service. These banks are ‘old school’.

Do you remember the days when you used to have to dress up to go to the bank? You’d stand in line, go up to the banker with your hat in your hand, and respectfully ask to open an account?

That’s Chile.

Now, I’m going to really floor you with this next statement: most CHILEANS do not have checking accounts.

Banks here are incredibly picky—they won’t just open an account for anyone. They have a refined selection process where they really want to get to know a customer first before opening the doors.

And these doors are very difficult for non-residents of Chile to go through. That’s why I’d only recommend banking in Chile if you’re actually living, or spending significant amount of time in the country.

Chilean government finances are still very sound. The country has zero net debt.

Chilean banking system, owing to its conservative nature, is liquid and reasonably capitalized.

Banco de Chile, for example, has a liquidity ratio of nearly 15%, and capitalization of roughly 10%. The numbers are similar throughout the entire banking system, including at Santander.

Bottom line, if you live in Chile and already hold money in the country, the banks are a safe option.

If you’re already resident in Chile and are looking to establish an account, please contact us at [email protected]; if you’re not yet a resident but want to become one, please contact us at the above address as well.

Cook Islands

This small South Pacific Island nation is best known for its extremely tough asset protection laws governing Cook Islands trusts. But it’s also a great alternative banking destination.

Only four main commercial banks operate in the Cooks. They are Australia and New Zealand banking group (ANZ), Westpac Banking Corporation (Westpac), Bank of the Cook Islands (BCI), and Capital Security Bank (CSB).




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As a whole, the Cook Islands banking system is very liquid. The four banks collectively hold cash equivalents of roughly 33% of their total customer deposits.

CSB, which we have reviewed and mentioned on a number of occasions in Sovereign Man: Confidential, specializes in opening accounts for non-resident individuals and corporations. It’s also the banking arm of the Southpac Trust Company.

CSB engages in very limited lending activity. In fact, the only lending the bank does is against collateral already held at the bank by the borrower, i.e. you can borrow your own money.

Most of CSB’s clients’ deposits are not lent out at all, but instead held on deposit with other well-capitalized banks in other strong banking jurisdictions such as Singapore and Liechtenstein.

Given this very low-risk business model of not making loans, CSB’s risk-weighted capital adequacy ratio of over 13% is quite strong.

Most of CSB’s customers are non-residents of the Cook Islands who most commonly want to tuck away some rainy day money.

That said, because the bank does not generate income from loans or wild bets on securities, CSB generates its profit from charging fees. There are annual account fees, for example, that can reach several hundred dollars per year.

Wire transfer fees can also be quite high (over $100 or more). So this is not the right bank for someone who needs to do a lot of transactions; it’s more appropriate for someone who is concerned about asset protection and has at least $50,000 in a minimum deposit.

For more information, visit: https://www.capitalsecuritybank.com/

Or, contact John Evans, Operations Manager: [email protected]

There is no need to travel to the Cook Islands to open an account.

The currency in the Cook Islands is the New Zealand dollar. But you can choose to hold any one of about 25 different currencies in you account with CSB.

CSB is currently only paying 1.1% on New Zealand Dollar time deposits, and there is a 15% withholding tax for non-residents of the Cook Islands. So if you are a interested in holding New Zealand dollars and generating a better return on your cash, you might want to consider banking in New Zealand itself (see below).

Georgia

Most people probably look with a slight (or not so slight) amazement when they see we recommend banking in Georgia (the country, not the state).

The facts, however, are that Georgia has become one of the best countries in the world to do business in recent years. The economy has grown dramatically as a result, and the financial system is very safe and well capitalized.

There’s clearly a lingering perception of risk about Georgia, given that it’s still a developing country with a relatively short track record of success. With greater risk, comes greater reward, however.

https://www.capitalsecuritybank.com/



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TBC Bank, which we recommend, currently offers a 6% interest rate on an 18-month certificate of deposit (5.5% for 12 months) in US dollars, euros, or British pounds. That’s about 40-times higher that you can get in most US banks right now. It’s incredible.

If you hold cash in the local currency, you can get 9.5% for a 12-month CD. Obviously that’s a much more speculative bet.

Banks in Georgia are also very liquid and well capitalized. TBC’s cash as a percentage of total customer deposits (liquidity) is 18.5%, while it’s capital as a percentage of total assets (capitalization) is 19.3%. These are VERY strong numbers.

TBC also went public recently on the London Stock Exchange, and currently has a $600 million valuation. Its price/book value ratio is roughly 1.25, and it pays about 2.5% in dividend yields.

In other words, the stock (which is priced in US dollars) represents reasonable value. But given the 2.5% dividend yield, you’ll make more by just depositing your money at the bank.

You can find out more about TBC Bank here: http://www.tbcbank.ge/web/en/web/guest/personal-banking

You do need to make a personal visit to Georgia in order to open an account.

If you’re interested in opening an account, contact the lovely Tina Kvintradze at [email protected]

Hong Kong

Hong Kong’s banking system remains very sound by world standards.

The banks are well capitalized and also have a very low loan-to-deposit ratio by global standards, coming in at just 72% on the latest data.

They are also, in general, very liquid relative to their global peers, with typical ratios of cash and liquid assets to outstanding liabilities in the 20% to 30% range.

The main problem now is that it is very difficult for a non-resident to establish a bank account in Hong Kong.

For example, commercial banks in Hong Kong will no longer open bank accounts for most overseas companies. So if you have a Labuan company and want a Hong Kong account, you can forget it for the most part.

Hong Kong banks will generally only start banking relationships with Hong Kong companies listed in the Hong Kong company register, and they will almost certainly need a Hong Kong resident director to gain approval.

For personal accounts, it’s also become much harder in the past year or so for non-residents to establish bank accounts in Hong Kong. If you are not a Hong Kong resident with a Hong Kong Identity Card, and you cannot demonstrate very strong links to Hong Kong – for example a contract with a Hong Kong company, evidence of frequent travel to and from Hong Kong for business purposes, a son or daughter dependent on you financially studying full time in Hong Kong, or so on – the frank answer I got from the folks at HSBC and DBS etc. was that it’s unlikely they’ll approve an account application.

http://www.tbcbank.ge/web/en/web/guest/personal-banking



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Bank of China requires you to be a Hong Kong resident outright. Ditto for OCBC Wing Hang.

HSBC, Standard Chartered, Hang Seng Bank, Bank of East Asia (BEA), and DBS all now have a centralized compliance process, so that no matter what branch you go into, all your documentation gets sent to a processing center, where they will consider your case.

In most cases, you have to allow at least a week before they will grant you an answer. So, if you had been planning to hop on a plane to Hong Kong, or stopping over there for a day or two on the way to a third destination, to open a bank account (as it was possible just a few months ago), please be aware that you will almost certainly not be able to leave with a bank account already open—if at all successful.

The one bank that may still take non-Hong Kong residents in most circumstances is Citibank Hong Kong.

While we are ordinarily no fans of US banks, you must keep in mind that even though it’s a subsidiary of the US banking behemoth Citigroup, the Hong Kong operation functions as a completely separate business unit. It’s subject to Hong Kong’s own banking regulations and capital adequacy requirements, not those that apply in the USA.

So, it’s a big step up from banking with the US parent. And it would be a way to get exposure to Hong Kong dollars, and other foreign currencies, rather than US dollars.

As we’ve said before, Hong Kong dollars, by virtue of the peg with the US dollar, are a great proxy for US dollars, and with an added potential upside should the peg ever be revalued higher.

See what recently happened in Switzerland, for example, when the Swiss National Bank abandoned the franc’s ceiling to the euro: the Swiss franc jumped by 20-30% against all major currencies immediately.

For now we remain very comfortable with Hong Kong as a preferred banking destination for transactional banking.

Gold in Hong Kong

Wing Lung Bank was the odd one out here. Tim Staermose spoke to a new accounts officer there at length. She said that they will only consider a non-Hong Kong resident for an account if they are introduced by a current Wing Hang Bank account holder who has maintained an account with the bank in good standing for at least 12 months. And in the case of a company account, they will only consider Hong Kong companies with overseas resident beneficial owners if there is at least one Hong Kong resident director who has maintained an account with Wing Lung Bank for at least 12 months, or is introduced by someone who has done so.

Yet, interestingly, Wing Lung is now the only Hong Kong bank where you can still go and both buy and sell gold with no need to have an account with them. However, they only stock a limited range of gold bullion products—Canadian Maple Leaf coins, and Chinese “tael” bars. And their buy/sell spreads are MUCH wider than at other Hong Kong Banks, such as the Bank of China, and Hang Seng Bank. At Wing Lung the spread was HK$500 per 1 Oz coin. At Hang Seng and Bank of China it is typically just HK$50.


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It’s worth pointing out that for transactional banking, Hong Kong banks have some of the most competitive fees and lowest exchange rate spreads we’ve come across anywhere.

Outgoing wires via HSBC’s Internet banking platform, for example, are just HK$115 worldwide, or less than US$15.

Exchange rate spreads on the Hong Kong dollar/US dollar cross rate are as low as 0.35% with HSBC as well.

But there are some minor irritations to be aware of.

For example, Hong Kong Monetary Authority guidelines now require all Hong Kong ATM card users register for overseas ATM withdrawals, and provide a phone number to which SMS alerts can be sent in real time whenever withdrawals or transfers are made out of your account. It’s either a useful security feature, or an invasion of privacy, depending on how you look at it.

Many Hong Kong banks also moved away from the global Cirrus/Maestro/Visa/Mastercard networks in recent years and switched to the Chinese network “Union Pay.” And there are many countries where Union Pay cards simply don’t work yet. Chile, for example. And France. Speaking from firsthand experience.

For global Union Pay acceptance, see: http://en.unionpay.com/englobalization/all_globzlization/index.html

So if access to cash from ATMs while traveling is a priority for you, be sure you quiz your potential Hong Kong bank about it, and make sure they have a solution for you—usually you’ll be able to get an additional card from one of the worldwide accepted networks.

How about the “China factor”? The one wildcard that has been spoken about regarding the safety and integrity of the Hong Kong financial system is if there were to be a full-blown property market crash, recession, and banking crisis in China.

Undeniably, Hong Kong banks have been extending much larger volumes of credit to mainland Chinese entities during the past decade. Yet they still tend to be much more conservative with their lending practices than the state-owned mainland banks. And based on the numbers and scenarios that we have run, there would have to be a cataclysmic collapse in China before any of the larger Hong Kong banks would be in any danger of seeing their equity wiped out.

I don’t want to go out on a limb and say it’s impossible. But it’s probably about as likely as President Obama repealing the entire US tax code and instituting 10% flat tax instead.

http://en.unionpay.com/englobalization/all_globzlization/index.html


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Liechtenstein

Liechtenstein has long been known as one of the top asset protection and private banking jurisdictions in the world.

The country has come in line with all the major international directives and treaties for complying with anti-money laundering and tax compliance initiatives, and is rightly seen as a well-regulated, blue-chip, offshore destination.

If you are looking for a private bank, rather than a transactional bank account, I believe Liechtenstein should be on your radar. NOT ONE bank in Liechtenstein needed ANY assistance from the state during the global financial crisis. The country’s banks are generally conservative and well run.

Collectively the banks in Liechtenstein hold nearly 21 cents of capital for every $1 in assets. The global minimum standard, set by the Bank for International Settlements (BIS), is 8 cents of capital against “risk weighted” assets.

So the average bank in Liechtenstein holds more than two and a half times the recommended amount of capital. Not only that, but the average bank in Liechtenstein almost certainly has lower-than average risk assets.

Unfortunately, only a few Liechtenstein banks have gone through the trouble and expense of setting up entities that are licensed as investment advisors with the US SEC, and are thus able to take US persons as clients.

If you are a US person, we previously profiled Kaiser Partner Privatbank AG as a possible private banking solution. This is only available to customers looking to deposit US$1 million or more.

The bank has a very conservative balance sheet, with a 30% capitalization ratio and a 28% liquidity ratio. Very solid numbers.

It engages in very little lending, and only to customers who maintain significant balances of other assets at the bank. It does no proprietary trading, and makes the vast majority of its money from the custodian fees it charges clients.

For full discretionary management of your portfolio Kaiser Partner Financial Advisors charges 0.9% per annum on accounts with a total relationship balance of CHF 1 million to CHF 5 million.For accounts with a higher relationship balance, the fees will be lower.

For further information contact:

Email: [email protected] Tel: +41 44 752 51 25Web : www.kaiserpartner.com/usa For non-US persons, Raiffeisen Privatbank, is worth considering. It has a much lower minimum balance requirement (250,000 euros), and its fees are very competitive by global private banking standards. It also holds a healthy 36 cents on every dollar of client funds on hand in cash or near-cash assets. The bank has a capital to total assets ratio of 10.4%. That’s more than adequate, especially when you consider that many of the assets on Raiffeisen’s balance sheet would have a ZERO risk weighting in the widely quoted “Capital Adequacy Ratio (CAR)” as defined by the Basel guidelines of the BIS.


http://www.kaiserpartner.com/usa


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For further information, and to start the process of opening an account at Raiffeisen Privatbank in Liechtenstein, please contact:

Joerg Kunze Raiffeisen Privatbank Liechtenstein AG Vice-Director Private Banking Tel: +423 237 07 [email protected]

Note: there is CHF100,000 of deposit insurance available to all bank customers in Liechtenstein. And the government of Liechtenstein, with its zero debt position, is actually good for the money. The amount applies per client, not per account the client has.

New Zealand

The New Zealand economy has been growing more quickly in recent years, compared to the rest of the wealthy, OECD countries. As a result, the Reserve Bank of New Zealand has begun a rate-hiking cycle. The RBNZ’s official rate is now 3.5%.

This, combined with a cooling off of the previously red-hot demand for New Zealand’s main export – dairy products – has seen economic growth decelerate in recent quarters.

However, inflation remains well under control at just 1% per annum. That makes New Zealand one of the few countries in the world where you can earn a healthy real rate of interest on your savings, at least in local currency terms.

We recently covered the option for banking at ANZ in New Zealand. The minimum balance for non-resident account holders is NZ$25,000, or about USD $18,700.

You can earn 3% interest on an at-call, “Online Account.” A 120-day time deposit pays 3.75%.

The 1-year time deposit rate rises to 4.4%. Or, if you are prepared to tie your money up in a 5-year time deposit, it’s as high as 5%.

ANZ is far and away New Zealand’s biggest financial institution. It’s a wholly owned subsidiary of the Australian parent company ANZ Bank(see section on Australia above).

Like ANZ in Australia, ANZ New Zealand has a modest liquidity ratio. But it’s well capitalized. New Zealand, unlike Australia, has no government deposit insurance scheme. Like the Australian dollar, the New Zealand dollar has been in a downtrend trend against the US dollar since mid-2014. But it may have seen the worst of its slide. With interest rates on the rise, and the New Zealand dollar offering an attractive differential over US dollars, I would not be surprised to see demand for the New Zealand currency return.


http://www.raiffeisen.li


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For a long-term savings account, ANZ New Zealand would seem a sensible option.

Best of all you can open an account without having to visit the country. But you will have to meet certain identification requirements, either by having your passport, ID or driver’s license, and utility bill notarized by an authority acceptable to ANZ in your country of residence.

Or, if there is an ANZ branch in the country where you live, you can go and have your identify verified by the bank’s officers there.

For more information on how to open an account with ANZ in New Zealand, please contact:

Christine BakewellInternational Banking SpecialistTel: +64 9 589 8300Email: [email protected]

Norway

The slump in the oil price and Norwegian krone notwithstanding, Norway remains a very sound jurisdiction in which to bank. The minimum deposit required for our recommended solution is high, however, at 100,000 euros.

So, an account in Norway is best suited for people wanting to park long-term savings for a rainy day, or stash an emergency fund in an extremely safe jurisdiction and technically the strongest currency in the world.

Importantly, you can open an account in Norway without having to go there.

Norway has the biggest government surplus of any of the countries we review in this issue. Thanks to its vast oil reserves, this is set to continue for many moons to come.

In the unlikely event Norway’s banks were to get into trouble, it’s almost guaranteed the government would simply bail them out.

That’s certainly the case with the bank we recommend, DNB Bank. It’s the country’s largest banking group, and the Norwegian government is the controlling stakeholder. It’s well capitalized by global standards, with a total capital ratio of 14% and a Tier 1 capital of 12.1%. And both are trending higher.

Bank deposits in Norway are also guaranteed by the government up to a maximum of NOK 2 million per depositor. That’s roughly $260,000, or 228,000 euros at current exchange rates.

To open an account at DNB, the following documentation is required:

• Application form (it’s short, only 1 page)

• A signed copy of the bank’s terms and conditions

• A notarized copy of your passport

• A bank reference from another bank, confirming your banking relationship with them and your home address; DNB provides a form for this, you only need to send it to your other bank for their signature.



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Next, since all bank customers in Norway require a national identification number, the bank will apply for this on your behalf. As soon as you send them the documentation, they will submit the application for your ID number. It takes 4-6 weeks to process, upon which your DNB account will be open.

Again, the minimum deposit to open an account at DNB is 100,000 euros, and the account must be denominated in Norwegian kroner.

Right now, the Norwegian krona (kroner is plural) is at a 12-year low versus the US dollar. As mentioned before, it’s the safest currency in the world, however, based on the central bank’s fundamentals.

Our view on the krona is that it is one of the few currencies in the world that could really survive a financial apocalypse. In the event of a serious systemic crisis, the krona will likely be viewed as a safe haven currency, and we could see its value surge overnight (like the Swiss franc did recently).

As such, this is really a rainy day fund rather than something you would want to use for transactional banking.

The krona is likely to rebound from its multi-year low and appreciate against the US dollar in the future. Norway is a huge net creditor, thanks to its oil export surpluses. The US on the other hand is the world’s biggest debtor nation.

If you’re interested in getting started opening an account at DNB, you can email [email protected].

Singapore

Singapore’s economy is slowing. The local property market has stalled. Trade and capital flows to and from Singapore’s main trading partner, China, are not growing as strongly as they did in years gone by, and the downturn in the oil industry (Singapore is both an important trans-shipment point for crude oil and has a significant refining and petrochemical sector) is also starting to bite. Yet, the country remains an oasis of financial stability. Its banks are well supervised and regulated.

And, barring a catastrophic collapse in real estate prices, the Singapore banking system should remain among the world’s soundest.

So much money flowed into Singapore in recent years that most banks, including the three big local ones, DBS, UOB, and OCBC, have set substantial minimum opening deposit requirements if you want to do business with them.

At DBS Treasures, for example, S$350,000 is the minimum starting balance required for a personal account.

There is one option for a much smaller starting balance in Singapore, with Citibank Singapore.

We alerted you about this option a few months ago. At the time they were running a special promotion and would allow people who are not resident in Singapore to open accounts with starting balances of as little as US$10,000.

The minimum balance to avoid monthly account keeping fees (US$30) is now US$20,000. But, if you are prepared to pay the fee, you can still open an account with a smaller amount. Or if you have $20,000 to deposit, you won’t be charged the fee.




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And, you can open an account without having to travel there.

While Citibank Singapore is a subsidiary of the US parent, its client assets are subject to Singapore’s strict banking regulations and supervision. Remember, Singapore has never had a banking failure in its history.

The standard procedure to begin the account opening process is to call the bank and give them your name, telephone number, and some information on your nationality and country of residence.

One of the bank’s representatives will then call you back.

A complete list of local toll-free phone numbers for Citibank Singapore in various countries around the world, including the USA, can be found here:

https://www.citibank.com.sg/gcb/static/contact.htm?lid=SGENCBLHOLMTLContactusHOME

Citibank Singapore will accept US customers. The only proviso is that they will not offer you anything other than a plain vanilla bank account.

Due to Dodd-Frank regulations surrounding investment products, all stock trading, mutual funds, and other wealth management products that can be accessed via Citibank Singapore will be off-limits to US citizens and residents.

United States

By global standards, US banks remain mostly sub-par. We can give them strong marks for customer service (as with many American businesses). But it’s what’s under the hood that’s a concern.

Big behemoths like Bank of America, JP Morgan Chase, Citigroup, and so on, have become too large to manage. Nobody truly knows what’s buried in their balance sheets.

But, if we take things at face value, many large American banks are neither particularly liquid, nor particularly well capitalized. Nowhere is this more evident than with the Federal Reserve itself.

As of January 22, 2015, the United States Federal Reserve has total capital of roughly $57 billion on a balance sheet that totals over $4.5 trillion. This means the Fed’s ‘margin of safety’ is just 1.26%.

This is an astonishingly low level of capital, and it sets the tone for the entire US banking system.

Then there’s the FDIC—the US deposit insurance scheme, which has almost no capital backing up its “guarantee”.

And of course, backing up the entire system is the very insolvent United States government.

So bottom line, the US banking system is supported by an insolvent government, a nearly insolvent central bank, and an undercapitalized insurance scheme.

As a proxy on the US banking system, I picked… US Bank.

US Bank is really the perfect metaphor to represent the US banking system; with a $400 billion balance sheet, it’s nowhere near the size of the HUUUUGE banks like JP Morgan or Citi with their $2+ TRILLION balance sheets.

https://www.citibank.com.sg/gcb/static/contact.htm?lid=SGENCBLHOLMTLContactusHOME


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As a result, it’s not going to get the same special privileges and perks with the Fed and Treasury Department. But US Bank is much larger than a typical community bank with roughly 16 million customers and 3,000+ branches across more than half of the entire country.

It’s not just a catchy name—this bank is very representative of the American banking system.

US Bank’s total balance sheet size is $402.5 billion as of December 31, 2014, of which just $10.6 million was held in cash.

At the same time, the bank held $282.7 million in customer deposits. So that $10.6 million in cash constitutes just 3.75% liquidity. Ouch. This is exceedingly low.

The bank gets higher marks with respect to its capital levels of roughly 10%, however the only reason US Bank is even near this level is because of a taxpayer-funded bailout, and 6+ years of free money from the Federal Reserve.

In all, this doesn’t make for a particularly sound banking system. Insolvent government. Nearly insolvent central bank. Highly illiquid commercial banks.

This isn’t exactly the beacon of stability.

And when you look at the rest of this report, you’ll see that there are a number of fantastic options out there, many of which require absolutely no travel whatsoever.

Ask yourself the question: why take the risk? Why bet on an insolvent government, illiquid banks, etc. when you can earn 40x more interest abroad? Or when you can make a deposit in a strong, stable, debt-free country that has never had a banking failure without leaving town?

This is a strategy that makes sense no matter what.

If absolutely nothing happens, you won’t be worse off because you’re earning more interest abroad… or because you have a portion of your savings tucked away in a strong, stable offshore bank.

But if any single negative scenario plays out—capital controls, default, bank confiscation… or if you just end up being sued, or on the wrong side of some government agency’s “list”, then moving some savings abroad may end up being one of the best decisions you could ever make.


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SOVEREIGN MAN CONFIDENTIAL 2015 RESIDENCY REVIEW

What if I told you that you could have any type of lifestyle you desire? That you could live as free as you wanted to, in a culture and climate that fits you perfectly? That you could enjoy more business and investment opportunities with much less hassle?

All this is possible with a second citizenship. And believe it or not, it’s even possible with a second RESIDENCY.

It’s an unfortunate reality that many governments around the world treat their own citizens residing within their borders worse than they treat citizens of other countries who may be temporarily visiting or residing there.

While we talk a lot about the advantages of having a second citizenship and passport, I’m firmly of the belief that having alternative residencies is even more important on a practical level.

Establishing residency in Panama, Portugal, or the Philippines, for example, costs a tiny fraction of what economic citizenship programs can cost.

Yet a second residency in a foreign country means that you will ALWAYS have a place to go, no matter what happens. If you feel like you ever need to leave your home country, you will already have a place where you are legally entitled to live (and perhaps work).

This is a major component of having a Plan B.

More importantly, if you actually do leave your home country, you will probably find that you will have slashed your tax bill to almost nothing.

Note that US citizens living abroad are still subject to paying US taxes on worldwide income. But if you have a bona fide foreign residence, it’s possible to lower your taxes dramatically via the “Foreign Earned Income Exclusion” provision.

This is a topic we will cover in depth in an upcoming Sovereign Man: Confidential Alert. But essentially, it allows any US citizen living and working abroad to claim the first US$100,800 (for 2015 tax year) of foreign earned income, as well as certain housing, education, and even food and lodging allowances as “tax-free” income.

If you are a citizen of any other high-tax country, such as Australia, the UK, or another EU country, but you have moved overseas with no definitive plans to return, there is usually scope to qualify as “non resident” of your country of citizenship.

That means you’ll no longer be liable for tax in your country of citizenship (in most cases).

There’s no doubt about it, having a different residency to your country of citizenship, can be financially lucrative. But it can also open up a whole new world to you. And, it’s an opportunity to “opt out of the system.”


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Living as a foreign national in a place such as Malaysia, Chile, or Ireland, gives you a somewhat different status from the locals. Dare I say it—you will often be treated better than the local people. Officialdom will go easier on you in many circumstances, and if you go about it in the right way, you will have access to a far more interesting and influential circle of friends, professional contacts, and acquaintances than you otherwise might in your “home” country. If you find yourself sick and tired of the routine where you now live, or you are upset at the erosion of your economic and financial freedoms, going and living abroad – at least for a time – may be the answer.

Remember – nothing is permanent. You can always go back home.

Many members of this community have looked into moving abroad. People usually have very positive experiences. And even if they decided that moving abroad wasn’t for them, they have appreciated the experience.

Even if you don’t physically make the move, just having a second residency as part of your Plan B can make all the difference. It’s like an insurance policy.

More importantly, I would encourage you to start taking steps down this road sooner rather than later.

Residency options change frequently. They are absolutely subject to the laws of supply and demand.

The number of ‘slots’ available in any particular country tends to rise and fall over time. If the economy is doing very well and they need more workers, for example, immigration restrictions will be relaxed.

If the country is in the midst of a recession, or it’s a rather tiny country to begin with, there will be a much greater barrier to entry.

Similarly, whenever there’s a flood of people into a particular country, i.e. increased demand, the ‘price’ will go up. This means more hurdles, more hassles, and higher qualification requirements.

So it’s important to start taking these steps while the supply is high, demand is low, and the ‘price’, i.e. the qualification requirements, are still low.

With that said, I’d like to go through the list of many and varied residency options that we have covered in these pages over the years, and update you on recent developments.

There will naturally also be future Alerts dedicated to residency options in more new, and varied destinations.


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Andorra

Program: Multiple residency schemes.

Previously covered: SMC Alert August 2014 Updates:

There are two main types of residency in Andorra—“active residents” can work inside Andorra, while “passive residents” can’t. Being a passive resident still allows you to own a business that performs its activities outside of Andorra, however (like an online business). Most people choose to be passive residents.

You can become a passive resident in Andorra by (for more details, refer to the SMC Alert above):

1) Investing €400,000 in the country (€350,000 + a €50,000 bond—plus €10,000 for each dependent) and you have to spend at least 90 days per year in Andorra to maintain your residency.

2) Createing an Andorran company, which will be subject to a 10% corporate tax rate (you’ll still have to pay the €50,000 bond). At least 85% of the business (revenues) must be made outside of Andorra—otherwise you’re bumped into the “active resident” territory, which carries further tax implications.

The main update to Andorran residency is that the government (under pressure from Spain and France, among others) has passed a new Income Tax law, which was officially enacted on January 1st, 2015.

The first €24,000 of income is tax-free. The tax (IRPF) is to be levied at 5% of global income between €24,001 and €40,000. Income exceeding €40,000 is taxed at 10%. Though, there is a concession for interest income with the first €3,000 being tax-free.

However, the devil is in the details. And, in reality, many of the rules surrounding the implementation of the tax are still up in the air.

The tax is currently aimed at “active residents” (those that can work in Andorra), but may later apply to passive residents.

That said, even if you want to live in Andorra full-time and will be clearly tethered there financially, Andorra still offers a very low tax base.

The income tax law is indeed levied on worldwide income, but with very generous exemptions and allowances, which will mean very few people will pay a significant amount of tax in Andorra if properly structured.

Also note that if the person is already taxed in another country they will not be liable again in Andorra. Every major country levies more than Andorra’s maximum 10% tax, so that would typically apply regardless of any treaties or not.

It’s also important to know that the Andorran tax office is very small, with just a handful of staff, so it remains to be seen how they intend to administer this new income tax law implementation.

Bottom line: for people who like a semi-rural, peaceful lifestyle in the mountains, with gorgeous views and great skiing in winter, Andorra should definitely be on your radar as a possible second residency. Spain and France would also be on your doorstep.

https://s3.amazonaws.com/smconfidential/SMC+Alerts/SMC-Alert-20140819fno34n3.pdf


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It won’t lead to citizenship as the residency requirement is too long, and Andorrans are very picky about whom they give passports to. Nonetheless, as an emergency bolt hole or permanent relocation destination, Andorra has a lot going for it.

For help with obtaining Andorran residency, our recommended contact is Jane Whittaker of livinginandorra.com. She can be reached by email at: [email protected], or via telephone on +376 836255.

Belgium

Program: Residency, leading to permanent residency, and possibly citizenship.

Previously covered: SMC issue August 2012 Updates:

Despite an influx of wealthy French citizens seeking to escape Mr. Hollande’s punitive wealth tax, and top marginal income tax of 75%, there have so far been no major changes to Belgium’s residency rules since we last wrote about them.

Belgium remains a great option to establish residency. It gives you the opportunity to have your foot within Europe and the borderless Schengen area, effectively allowing you to live, work and do business all over Europe.

You’re not even required to spend much time in the country to maintain your Belgian residency. And after 5 years of residency you can qualify to apply for naturalization and a Belgian passport—which is among the top travel documents in the world.

The easiest way to obtain residency in Belgium is to establish a local company. After going through the application process, it takes about 3 months for a residency card to be issued, which must be renewed every two years. (A recent change in provider for these cards meant there was a backlog, but according to our contacts on the ground this has now been rectified.)

The company you form in Belgium needs to be an actual operating business, even if small-scale. There are no specific rules on the types of businesses that are sanctioned.

Belgian corporate tax is high at 33%, so it’s not a place to base a wildly profitable business or the bulk of your operations; just something to qualify for residency.

Personal taxes can be fairly high as well, but capital gains can often be tax-free. Also, foreign employees of Belgian companies don’t have to pay taxes on wages received while working outside of Belgium.

When you’ve had Belgian residency for at least 5 years, and qualify for naturalization, you simply go to your local municipality in Belgium where you’re registered and get a ‘Statement of Citizenship’. As well as fulfilling the time requirement, you also need to be able to speak some French or Dutch, and prove your ‘economic integration’—which is easy if you operate a business in Belgium and possess a professional card.

Having some property in Belgium will also help when it comes to applying for naturalization.Belgium doesn’t tax its non-resident citizens—so after you obtain Belgian citizenship you can withdraw your residency in the country and not be liable for any further tax to Belgium.


https://s3.amazonaws.com/smconfidential/issues/SMC201208f20psn7.pdf


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Belgium is a great option and if you have the means, ultimately what you can get, on top of European residency, is an extremely good passport.

For more detailed information, please refer to the August 2012 edition of Sovereign Man: Confidential.

Or contact our recommended contact to help you obtain Belgian residency, Emmanuel Ruchat: [email protected] (+32 497 410 348).

Chile (Best Option)

Program: Multiple residency schemes, including rentista visa and investor visa, leading to permanent residency, then citizenship.

Previously covered: SMC Alert November 2014 Updates:

For now, obtaining residency in Chile remains straightforward, and there have been no recent changes to the rules or regulations.

The first step is to obtain temporary residency, which can be done in a number of ways. We typically recommend the ‘rentista’ route, which essentially means that you have to demonstrate the economic means to support yourself.

This could be through some sort of pension, dividends, interest income, real estate rental income, or even just a lump sum of cash in the bank. There are also options for investors, students, and employees hired by a Chilean company.

It’s a fairly straightforward process, but I wasn’t happy with the quality of the service / pricing that was being provided in the country. So, last year we launched our own in-house service to help SMC members obtain residency in Chile.

For most of the visas we recommend, after just one year of temporary residency you can apply for permanent residency.

We’ve written extensively about this before—the primary requirement to qualify to apply for permanent residency in Chile is that you cannot be absent from the country for more than 180 days in a one-year period starting from the date that your temporary residency permit is issued.

So let’s assume they stamp your passport with the residency visa on March 10, 2015. In order to be able to apply for permanent residency, you have until March 9, 2016 to spend 185-days in the country.

At this point, you can qualify to apply for permanent residency. This used to take 90-days. Now there’s a huge backlog (more on this below), so it’s taking six months.

Once you obtain permanent residency, you only need to spend one day in the country within a 365-day period in order to maintain it. (Specifically, you cannot be absent from the country for more than 365 days straight unless you get a waiver from a Chilean consulate.)



https://s3.amazonaws.com/smconfidential/SMC+Alerts/SMC-Alert-20141122nfl4cwz.pdf


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After 5 years of total residency (1 year of temporary and 4 years of permanent residency) you will be eligible to apply for Chilean naturalization (and obtain a Chilean passport). See our most recent SMC Alert from last November (link above) for full details of all you need to know about residency and naturalization in Chile. There have been no changes to any of the laws or procedures. Not yet.

But as I have reiterated numerous times, I fully expect that as the demand for residency and naturalization in Chile will rise dramatically. Again, it comes down to supply and demand.

The government will at some point begin tightening the screws and making it more difficult.

A Chilean passport is now one of the most valuable in the world. Right now it’s easy to obtain residency provided that you can spend six months in the country during your first year of residency.

And, as a place to be, it’s a really lovely option to spend half a year. If you time it right (and you’re from the northern hemisphere), you can have your residency approved just in time to miss winter up north, and enjoy consecutive summers.

(Welcome to my life!)

Once you qualify to apply for permanent residency, you need not live in Chile any longer, if you don’t want to. So it’s quite flexible.

If approved for a Chilean passport, you will be able to travel to most places in the world visa-free.

I would submit that a Chilean passport is actually more valuable than a US passport—you can travel to the US and Europe visa-free, but also places like Russia and various countries in South America where Americans still require a visa.

This is what ultimately makes Chile the BEST option: It’s easy and inexpensive to obtain residency. You only need to spend six months in the country. And in five years you can apply for naturalization and a tier-1 passport.

You can read more about the immigration rules about Naturalization in Chile in this SMC Alert.

To get started on this, you can contact both Francisco della Maggiora <[email protected]> and Ángeles Santos <[email protected]> at Della Maggiora Eyzaguirre Abogados in Santiago.

https://s3.amazonaws.com/smconfidential/SMC+Alerts/SMC-Alert-20141122nfl4cwz.pdf


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Estonia

Program: Establishing residency by establishing a business / and digital “residency”

Previously covered: SMC Alert October 2014 Updates:

The residency visa requirements in Estonia remain as previously covered a few months ago. In short, it’s possible to acquire residency by establishing an Estonian company. You’ll have to invest a minimum of €16,000 in paid-up capital in the company if you’re a sole proprietor, or €65,000 if you’re creating a corporate structure.

You’ll also need to provide a business plan and financial forecasts for the next two years. That can all be done in English. Importantly—you do NOT have to employ any Estonian citizens in order to qualify for residency.

For more details about the process, refer to the SMC Alert above from October last year. The main change since then is that it’s gotten a little cheaper in US dollar terms, as the euro has fallen by about 10%. It took US$1.27 to buy one euro back when we published our last alert on Estonian residency. It now takes just US$1.14. So, given that there are certain minimum investments and fees you must pay in euros, the savings are not insignificant.

To recap, you might wish to obtain residency in Estonia for any number of reasons, including:

• It’s a member of both the EU and Schengen Area, so once you’ve got residency, you can travel, live and work almost anywhere in Europe without hassle.

• Everything is digital – and fast. Estonia is one of the most wired countries on the planet.

• Estonia is relatively inexpensive, especially by European standards. You can have a high quality of life for not a lot of money.

• Corporate taxes can be as low as 0%. Yes, ZERO. (If you reinvest all the profits in your business.)

• English proficiency is very strong.

The major drawback with Estonia for most people will be the weather: although it can be up to 30°C/ 86°F in the summer – with 19 hours of sunlight – winter is severe. Daytime temperatures in January hover around -5°C/ 23°F, with strong winds and little daylight.

But, if you are an Estonian resident, remember that you can freely roam about the entire Schengen area, indefinitely. So if the Estonian winter isn’t for you, you can easily park yourself in southern Spain or Portugal for a few months.

It’s not much different to temporarily moving from North Dakota or Michigan, to Florida or Arizona.

In a new development, Estonia has gone forward with extending its “digital residency” system to foreigners the world over. Economist editor Edward Lucas recently received the country’s first non-Estonian ID.EE.

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To recap: the “e-resident” system is an extension of Estonia’s mandatory, robust and long-running national program for Estonian citizens that backs up an authenticated, encrypted and secure electronic ID card with biometric data.

Very little personal data is stored on the card itself, but the card is used for everything from voting to setting up a company, to buying French fries. The government claims that there have been no security breaches over the decade-long life of the program.

In October, Estonia voted to allow foreigners to create an Estonian cyber identity recognized by both governments and enterprise. So, even without being Estonian, or living or working in Estonia, you can take advantage of the ID (minus the alleged voting perks).

As an SMC reader, such an ID system probably means little to you. It might even irk you. As you know, I’m a privacy guy, so it definitely doesn’t thrill me.

That said, if you establish legal residency in Estonia, you would be rolled into the program anyway.

And if you want to apply for residency by starting an Estonian-based business (which we talked about in the previous alert, cited above), then by creating your ID.EE, you’ll be able to get much of the admin done from outside the country, quickly and efficiently.

You’ll be able to open an Estonian bank account and, say, an online marketing company in minutes, from your home computer.

One caveat: you’ll still have to travel to Estonia to record your biometrics with the police. But it’s possible that by the end of 2015, you’ll only have to go to your nearest Estonian embassy.

If you’d like to become an Estonian e-resident, you can glean more information here:

https://e-estonia.com/e-residents/about/

Ireland

Program: Establishing residency via investments / High Potential Start-Up Scheme (HPSU)

Previously covered: November 2012 (residency via investments), November 2014 (residency via HPSU) Updates:

The residency by investment scheme in Ireland, launched in 2012, grants residency status based on one of four paths:

1) Make a one-off minimum donation (or “endowment” as the Irish government’s literature refers to it) of €500,000 (about $570,000) to a public project benefitting the arts, sports, health or education. You will not get your money back. (Update: Now, if you team up with four other investors in a consortium, each person in the group needs only invest €400,000 to qualify for the program.)

https://e-estonia.com/e-residents/about/

https://s3.amazonaws.com/smconfidential/issues/SMC201211jb92yv3.pdf

https://s3.amazonaws.com/smconfidential/issues/SMC201211jb92yv3.pdf

https://s3.amazonaws.com/smconfidential/SMC+Alerts/SMC-Alert-20141115kjg34f.pdf


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2) Make an aggregate investment of €1 million ($1.14 million) in venture capital funding for a new Irish business. (Update: the Enterprise Investment now only requires a minimum investment of €500,000 in either a single Irish enterprise, or spread over a number of them, for a minimum of three years.)

3) Make a €2 million ($2.28 million) investment in a 5-year, low-yielding “immigrant investor bond.” NOTE: The amount has since been lowered to €1 million. The interest rate in the bond was last reported as just 1%.

4) Make a €1 million ($1.14 million) mixed investment that consists of €500,000 (NOTE: now €450,000) in property and of €500,000 in government securities (now the Immigrant Investor Bond, above). If you buy property owned by Ireland’s bad bank, the National Assets Management Agency (NAMA, where the government parked most of the bad real estate developer and land speculator loans during the 2008 crisis), then a single €1 million investment in a distressed property may suffice.

There are also two new paths to Irish residency by investment:

5) Investment Fund: Invest a minimum of €500,000 in an approved investment fund for a minimum of three years.

6) REIT: A minimum investment of €2 million in any Irish REIT (Real Estate Investment Trust) that is listed on the Irish Stock Exchange. Alternatively, the €2 million investment may be spread across a number of different Irish REITs.

(One benefit: “to eliminate the double layer of taxation which typically hinders the holding of property through a company, a REIT is exempt from corporation tax on qualifying profits from rental property.”) You must hold the REIT investment for 3 years and then can divest no more than 50% of it after year 3 and no more than a further 25% after year 4. After five years, you can take it all out.

Aside from these changes, the biggest update is that investors must now establish a minimum net worth of €2 million. So, this is only for those who are already fairly wealthy. The Irish government is also going to dig into the past twelve months of your financial activities in order to prove said net worth.

The good news, as you can see, is that some of the minimum investment amounts have been lowered. This is likely due to the fact that, as of 2013, only 31 visas had been granted under the investor and startup schemes. (2014 numbers have not yet been made available.)

Those numbers potentially could mean less competition and fewer bottlenecks. They could also mean, however, that the programs will be scrapped entirely if more interest isn’t generated. Either way, if you are interested in Ireland, the time to investigate is now.

New option: The High-Potential Start-Up (HPSU) track to Irish Residency.

We covered this in detail in the SMC Alert we published in November 2014 (link above).

We would like to stress again that, contrary to the published information online, the Irish government has reduced the “access to funding” requirement for any HPSU application to only €50,000 for the first applicant (and €30,000 for each subsequent applicant in the same start-up) and not €75,000 as it was before. The old, higher figure remains widely published.

You can see the Startup Entrepreneur application form here.

http://inis.gov.ie/en/INIS/APPLICATION%20FOR%20ENTREPRENEUR%20PROGRAMME.pdf/Files/APPLICATION%20FOR%20ENTREPRENEUR%20PROGRAMME.pdf


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To briefly recap, this visa is by far the lowest-cost entry for investment-led residency in the EU. The catch is you have to have a business that is less than six years old, or be willing to start a new business, and locate it in Ireland. It must also meet the Irish government’s definitions of a HPSU.

To qualify, your business must meet these main two criteria (as well as other lesser criteria):

1. Introduce a new or innovative product or service to global markets, i.e. it should be an export business2. Be able to, within 3-4 years, create 10 jobs in Ireland and see €1 million in sales.

The company must be led by an experienced management team, and headquartered and controlled in Ireland. One area the Irish government cuts you some slack is that there are no immediate requirements for hiring local talent, or meeting short term revenue or profit figures. They recognize it takes several years for most fledgling businesses to find their wings.

Ireland, and Dublin in particular, is renowned for being a start-up hub. It’s English speaking. There is a deep and skilled talent pool. Corporate tax rates in Ireland are among the lowest in the OECD at just 12.5%, and there are all sorts of tax incentives, allowances, and government support structures for entrepreneurs and start-ups.

So while personal tax rates in Ireland can be quite high, the country has much to recommend it for the right candidate, who can avail of the HPSU residency program, and seek residency in the EU that way.

If you are interested, we strongly suggest you retain legal counsel to help you through the application process. All applications are vigorously reviewed by the governments agencies responsible, and it behooves you to get things right.

Our recommended legal contact is:

Alan O’Driscoll, PartnerFlynn O’DriscollBusiness LawyersNo. 1 Grants Row, Lwr. Mount Street, Dublin 2Ireland

Web: www.fod.ie Tel: +353 1 6424260Email: [email protected]

Like the other Residency by Investment options for Ireland, the government has not exactly been swamped with applications. On the latest information we’ve been able to glean, in all just 35 applications have been made under the HPSU visa program since it came into being in 2012. Twenty were approved. Ten were rejected. Two are still pending. Three were withdrawn.

http://www.fod.ie



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Lithuania

Program: Residency via starting a Lithuanian corporation.

Previously covered: SMC Alert October 2014 (from page 12 onwards)

Updates:

As predicted, Lithuania has indeed made its residency requirements stricter. It has increased its required paid-up capital to form a company (to qualify for residency) by an order of magnitude, from €3,000 to €30,000.

And now you must also hire Lithuanian employees – three, to be exact – and pay them minimum wage, plus benefits.

That adds up to at least $325 per employee per month in wages, plus 40% on top of that in compulsory social security contributions.

And, most likely you would not be paying your employees minimum wage at all. So, the costs begin to add up.

Lithuania still remains a solid option, however, for someone who wants to establish an operating business that would benefit from having an educated and relatively inexpensive workforce, with access to the European market.

If you want to get European residency via the company route, then you’ll have to decide which one works best for your situation—Andorra, Estonia, Ireland, Lithuania or Spain.

Malaysia

Program: Malaysia My Second Home (MM2H) visa program

Previously covered: SMC Alert November 2013; SMC issue May 2013

Updates:

Malaysia My Second Home (MM2H) is one of the easiest residency programs out there. It’s also an established program with a long track record.

Essentially – there are two separate sets of criteria depending on your age:

• If you’re under 50, you have to prove liquid net assets worth at least RM (Malaysian ringgit) 500,000 (~$138,000), as well as monthly income from outside of Malaysia of at least RM10,000 (~$2,750).

• If you are over 50, you have to prove liquid net assets worth at least RM350,000 (~$96,500), as well as monthly income from outside of Malaysia of at least RM10,000.

• If you are over 50 and retired, you can also qualify with a monthly pension from outside of Malaysia of RM10,000.

https://s3.amazonaws.com/smconfidential/SMC+Alerts/SMC-Alert-20141020dgovlsqz.pdf

https://s3.amazonaws.com/smconfidential/SMC+Alerts/SMC-Alert-20131119.pdf

https://s3.amazonaws.com/smconfidential/issues/SMC201305brez8hi8bno.pdf


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The main new development in Malaysia affecting those on the MM2H visa track is that the country will be introducing a 6% Goods & Services Tax (GST) on April 1st, 2015.

Whereas a new Malaysia My Second Home Visa holder could previously import one motor vehicle from his country of citizenship or previous country of domicile into Malaysia tax-free, or purchase one tax free in Malaysia, if it was built or assembled there, this will no longer apply. A 6% GST will be due.

Nothing else specific has recently changed regarding the eligibility criteria or application procedures for the MM2H visa.

They remain as we covered in full in the SMC issue published in May 2013, and again in an Alert in November 2013. However, with the recent decline in the value of the Malaysian ringgit, versus the US dollar, in US dollar terms, the minimum financial hurdles to apply for the program have become easier to meet.

The MM2H visa is a (maximum) 10-year, multiple-entry visa for Malaysia that allows the applicant (and his or her approved dependents) to come and go from Malaysia as they please, and spend as little or as much time there as they like. The visa can be renewed every 10 years, or whenever your passport expires.

Applicants over the age of 50 are allowed to do up to 20 hours a week of part-time work in Malaysia, and provided you meet all the other requisite requirements and obtain the necessary approvals, you could also own or operate a local business on this visa. But, it does not lead to permanent residency or citizenship in any form. Your application can be easily handled yourself via the comprehensive, and user-friendly website at: http://www.mm2h.gov.my/index.php/en/

Full contact details:

Malaysia My Second HomeMinistry of Tourism and CultureLevel 1, No. 2, Tower 1, Jalan P5/6, Presint 562200 W.P. PutrajayaMalaysia

Tel: +603 8891 7424/27/34/39Fax: +603 8891 7415Email: [email protected]

Or, if you prefer, you can go through one of the licensed agents. A full list appears here:

http://www.mm2h.gov.my/index.php/en/our-agents/list-of-registered-agents

Our preferred agent, who is based in Singapore, is: Nasser Aboobakar ([email protected]). Nasser can also help you buy Malaysian property.

Once fully approved, if you are under 50, you must place a fixed deposit of at least RM300,000 (~$82,500) in a Malaysian bank.

Applying for the Malaysia My Second Home Visa, could thus be an effective way to kill two birds with one stone and get yourself an offshore bank account with minimum difficulty.

http://www.mm2h.gov.my/index.php/en/

http://www.mm2h.gov.my/index.php/en/


http://www.mm2h.gov.my/index.php/en/our-agents/list-of-registered-agents



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You are be able to open an offshore bank account with a local Malaysian branch of any major international bank such as HSBC, Standard Chartered, UOB, etc.

You must maintain that balance for at least 12 months.

From the second year onward, over the course of your residency, you can withdraw up to RM150,000 (~$41,300) of the money to meet approved expenses, such as housing, medical care, and so forth, in Malaysia. But you must maintain a minimum balance of RM150,000 throughout the remainder of your residency under the program.

If you are over 50, you can EITHER place a time deposit of RM150,000 in a Malaysian bank, or show government approved pension income of at least RM10,000 a month and then have no other obligations.

In other words, if you’re over 50 and have a monthly pension of at least RM10,000 per month (about $2,750), then you don’t have to invest a single penny in Malaysia. So this is a very reasonable, cost effective second residency program.

With the new 6% GST, it may become slightly more expensive to live in Malaysia. However, given the ridiculously low living costs in Malaysia to begin with, even after the introduction of the GST, it will be a very cost-effective place to live.

Plus, some 900 basic food items, and 2,300 medicine items will not attract GST. Nor will rent.

Malaysia will not seek to tax you on your overseas income, whether it is a pension, investment or employment income, while you are resident in Malaysia on this visa. Malaysia also has a comprehensive series of double-taxation agreements with more than 60 countries.

So, it’s quite possible to avoid having to pay tax in your country of origin as well, under many circumstances. All in all, the Malaysia My Second Home residency program ticks an awful lot of boxes, and we would recommend that you at least look at it.

At the very least, it’s a great back-up plan to have in your pocket, in case things head south where you are living now.

Panama (Easiest Option)

Program: Permanent Residency for Nationals of Specific Countries. Also colloquially known as the “Friendly nations residency program.”

Previously covered: SMC Alert December 2013; Update on Panamanian residency - SMC issue August 2012

Updates:

There has been some confusion of late regarding Panama’s residency laws, due to a change in Panama’s government.

In the fourth quarter last year, Panama’s new President, Juan Carlos Varela, announced that he was terminating a fast-track immigration scheme called Melting Pot (Crisol de Razas).

https://s3.amazonaws.com/smconfidential/SMC+Alerts/SMC-Alert-20131220fla43men9co.pdf

https://s3.amazonaws.com/smconfidential/issues/SMC201208f20psn7.pdf


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We’ve received questions about whether this decree affects another fast-track immigration option, called Permanent Residency for Nationals of Specific Countries (Residente Permanente en Calidad de Extranjeros Nacionales de Paises Especificos).

It does not. Varela’s announcement only terminates a program that affected illegal aliens in Panama, who would apply at immigration “fairs” to live and work in the country for a certain number of years.

The program we wrote about in the past is still intact.

It eases permanent residency requirements for citizens of specific listed countries (originally 22 countries, now more than twice that many) with friendly, professional, economic and investment relations with Panama. The only requirement is that you demonstrate some degree of economic activity in Panama—which you can do easily by setting up a Panamanian company.

Citizens of the following countries are eligible for Panamanian residency under this program:

Andorra, Argentina, Australia, Austria, Brazil, Belgium, Canada, Chile, Costa Rica, Croatia, Cyprus, The Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, Ireland, Israel, Japan, Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Monaco, Montenegro, Netherlands, New Zealand, Norway, Poland, Portugal, San Marino, Serbia, Singapore, Spain, Slovakia, South Africa, Sweden, Switzerland, Taiwan, UK, Uruguay and USA.

The fast-track program grants immediate residence and a cédula, a national ID card, to qualifying foreign nationals and their dependent spouses and minor children (children 18-25 can qualify if they are students).

After five years, you can apply for full citizenship. However, don’t expect that to be an easy process. It’s certainly possible to obtain Panamanian citizenship via naturalization. But, it’s not easy or straightforward to navigate the bureaucratic process. Proficiency in Spanish, and some knowledge of Panamanian history are also officially required.

The friendly nations residency program also has made it much easier to set up a business or get a job in Panama as a foreigner. That said, our legal sources on the ground tell us that changes to the requirements could indeed occur in the next year or so.

I often tell you that when countries offer immigration schemes, you have to jump on them if you’re interested, because those programs often have a short window of opportunity to enter. As people pour in, the locals often feel slighted, and begin to lobby their politicians to stem the flow.

Given that the time-line for approval of your visa under this program in Panama can easily run to as long as 6 months, and will require two visits to the country: once to apply, and once to collect your documents, don’t delay if you are interested.

As I wrote in 2013, “the main caveat with Panama is that this option is probably time-sensitive. President Martinelli will be out of office soon, and it’s possible that his decree will be unwound with the next administration.”

And indeed, although the new leader, President Varela, has so far kept the program going, it makes sense to get started with it sooner rather than later, just in case those expected amendments render you ineligible.

One of the big advantages of Panamanian residency is that the country has a strictly territorial tax system.


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In other words, even if you decide to actually live in Panama – and remember, there is no requirement to do so, as you need only spend 24 hours in Panama each year to maintain your residency – you will NOT BE TAXED on your overseas income.

The only income ever taxed in Panama is money that is earned directly on Panamanian soil from Panamanian sources.

Our recommended contact for shepherding through your application for Panamanian residency is my old friend Julio Quijano, partner at Quijano & Associates, which is one of the most prominent law firms in Panama.

His firm has handled similar applications for hundreds of people in the past. While they are not the cheapest, they are among the most proficient, trustworthy and candid. They also provide a turnkey service, and can organize everything from your hotel reservations, to incorporating a company in Panama, opening a bank account, and accompanying you to the immigration department.

You can contact Julio at: [email protected]

I would estimate the total cost, with trips to Panama, associated legal fees, and the requirement to demonstrate some degree of economic activity in Panama via your Panamanian corporation will run to roughly between $10,000 and $20,000, depending on whether you leave any money in the corporation afterwards, and how lavish your travel budget is, and where you are flying in from.

Again, our view is that Panama is the easiest option. You don’t technically need to spend time in the country in order to maintain permanent residency. And it’s very fast and simple to obtain.

Philippines (Honorable Mention)

Program: Philippines Special Retiree Resident Visa (SRRV)

Previously Covered: SMC Alert December 2013, and interview from January 2014

Update:

The Philippines Special Retiree Resident Visa (SRRV) program remains one of the cheapest, easiest, and fastest options anywhere in the world for those who are at least 35 years of age to obtain an alternative residency.

For the basic, SRRV “Smile” visa, you will need to have $20,000 (in some circumstances this could be lowered to $10,000, or even $1,500) available to be deposited in an authorized Philippine bank under the program for the duration of your visa’s eligibility.

The visa, once issued, can be held for as long as you like, but must be renewed annually. And, there is no requirement to actually live in the Philippines at any time, should you choose not to.

You will need to visit at least once a year to renew your visa, though I expect they will probably lift this requirement eventually and/or make it remotely renewable either online or through a consulate.

To obtain the visa you will also need a couple of thousand dollars for the various application fees, medical


https://s3.amazonaws.com/smconfidential/SMC+Alerts/SMC-Alert-20131230baba.pdf

https://s3.amazonaws.com/smconfidential/SMC+Alerts/SMC-Alert-20140107nana.pdf


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examination expenses, and probably at least a few thousand dollars for your initial trip out to the Philippines to apply – for your airfare, accommodation, and living costs on the ground. You should be able to get the visa applied for and approved within a 2-3 week period, as long as there are no major holidays during your visit. That means avoiding Easter, or “Holy Week” as it’s called in the Philippines. I’d also avoid the late November to mid-January Christmas and end-of year period, when things can grind to a halt.

Anyone that can make the required $20,000 deposit, is over age 35, is in decent health, and has a clean criminal record, should be able to get this residency visa.

That’s why I say it’s one of the cheapest and easiest in the world. And, you get the lion’s share of your money back when you decide you no longer want to participate in the program. (There are some modest annual administration fees that erode your capital slightly.)

There are actually 4 sub-categories of SRRV available, and, depending on your own unique circumstances, it could be even cheaper.

Uniquely, the Philippines is one of the few countries that actively encourages ailing or disabled retirees to come to its shores.

There is a specific SRRV category called the “Human Touch” SRRV, available. This applies if you can demonstrate:

1. a “pre-existing, non-contagious condition” that requires medical care and treatment

2. a monthly income (from a pension, or accident compensation payment, or whatever is relevant to your case) of $1,500,

3. and submit a fixed deposit of $10,000, or half the usual $20,000 amount needed under the basic “Smile” SRRV category.

For anyone with an ailing relative, this is something that may be worth considering. Medical care in the Philippines is generally inexpensive compared to many western countries, and can be of a high standard. Filipino nurses can be found working all over the world, and are highly regarded.

For all categories, the application process is streamlined. It’s all clearly outlined on the Philippine Department of Tourism’s Retirement Authority’s dedicated SRRV website: http://www.pra.gov.ph/

And there’s even an online application form to get you started.

The language of government and commerce in the Philippines is English. So you should have no problem making yourself understood, and handling your application on your own.

The Philippine Retirement Authority’s (PRA) office is conveniently located in Citibank Plaza, right in the heart of the Makati CBD (Central Business District) near all the major hotels.

Speaking from first hand experience, the staff at the PRA office in Makati is extremely friendly and eager to help.

So, provided you can meet the financial qualifications, and have your paperwork in order, this is a visa that is both easy and painless to acquire.

A standard 3-week, visa-free tourist visit to the Philippines, which passport holders of most nationalities will

http://www.pra.gov.ph/


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qualify for, should be long enough for you to go there and get it all accomplished.

In a new development, if you happen to a be over 50 years old and a retired member of the United States Armed Forces that served in the Philippines as part of your active duty, the financial qualification needed to obtain an SRRV in the Philippines is drastically reduced to just $1,500.

It is now in line with the requirement for “former Filipino citizens” and former “diplomatic representatives from foreign countries” who were posted to the Philippines during their careers.

If you served in the US armed forces in the Philippines for part of your career, and have a valid DD214 form, you can qualify for this concession.

While you could engage the services of one of the many PRA-authorized marketers for the SRRV visa program, speaking objectively, I really don’t think there is any need.

You can accomplish the whole process with minimum fuss yourself by going directly to the PRA:

PHILIPPINE RETIREMENT AUTHORITY (MAIN OFFICE) 29/F Citibank Tower 8741 Paseo de Roxas Makati City 1227 Philippines Tel. No. : +632.848.1412 to 16; Fax No.: +632.848.7106; +632.8481411 Email: [email protected]

If you prefer not to hang around in the middle of Manila for a few weeks while they sort our your visa, there are also several satellite offices where you can apply around the country, in Baguio, Cebu City, Clark/Subic, and Davao City. (Though I can’t vouch personally for them.)

Details can be found here: http://www.pra.gov.ph/main/contactus.

Or, you could combine your application with a holiday in the Philippines, and set off for some R&R on one of the country’s 7,000 islands once you’ve dropped off your passport and your paperwork in Makati.

For first time visitors to the country, I’d recommend using Philippine Retirement Authority’s “greet & assist” service, whereby they’ll meet you at the airport and provide you with any assistance you may need: http://www.pra.gov.ph/main/greet_assist?page=1.

Once you have your residency there are no real taxation consequences, even if you decide to become a full-time resident of the Philippines.

You are not permitted to work in the Philippines on this visa. And, the Philippines will not seek to tax you on your overseas pension or annuity income, even if you remit it to the country.

The only tax you’d face would be on investment income derived in the Philippines. And this is usually levied as a withholding tax by the bank or financial institution paying it. So, there is no requirement to file any tax returns or anything like that.


http://www.pra.gov.ph/main/contactus

http://www.pra.gov.ph/main/greet_assist?page=1

http://www.pra.gov.ph/main/greet_assist?page=1


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As a first step to “get your feet wet” with an overseas residency, I think the Philippines is very sensible, low-cost solution for many people, with a very affordable cost of living.

Even a US citizen collecting Social Security or living off their retirement funds or investments and claiming the Foreign Earned Income Exclusion could effectively live in the Philippines completely tax-free.

Portugal

Program: Golden Visa

Previously covered: SMC Alert August 2014

Updates:

Back in November, a flurry of reports and rumors suggested that due to a corruption scandal Portugal was ending its Golden Visa program, which grants residency permits to non-EU citizens who invest in property, or make other investments in Portugal.

Our sources tell us that the program is not ending, and that, in fact, the number of applications continues to increase.

But the program is bruised. So if you have been thinking about acting, now is a good time to dive in, before further controversy potentially derails the program.

The gist of the controversy centers on alleged corruption among a small group government officials administering the scheme. “Operation Labyrinth” (governments love Bourne-type names) involved 60 raids on November 13th, 2014.

Investigators charged that applicants were purchasing property for far less than the requisite €500,000, and that officials were pocketing the difference.

The raids sparked the resignation of Miguel Macedo, the country’s interior minister.

Corruption in government?! You’re kidding. Never before has it existed. Right.

My personal opinion: Portugal’s Golden Visa program has over the past two years brought in more than a billion dollars to the country’s foundering economy and stagnant real estate market… and this vexes other EU member states who are competing for the same economic boost.

In fact, the EU Parliament this year approved a non-binding resolution more or less expressing disgust at putting a “price tag” on EU citizenship.

So, it appears that there’s some sniffing of noses going on among the high and mighty in Brussels, especially as about 80% of the 2,000-odd Golden Visas that Portugal has issued to date have gone to Chinese nationals. And the second-largest group of recipients is Russians.

The corruption investigations will involve months of legal wrangling and could receive a good deal of press. So again, although Vice-Premier Paulo Portas has gone on record to say that ending the program would be a “mistake,” further controversy cannot be ruled out.

https://s3.amazonaws.com/smconfidential/SMC+Alerts/SMC-Alert-20140805pg3ribdf.pdf


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It’s still a good program for allowing residency and visa-free travel within the 26-member Schengen Zone and European Economic Area. So my advice is get in now if you’re interested.

According to our legal contact, Raquel Cuba Martins, real estate investment continues to be the most popular avenue for obtaining the Golden visa (vs. direct investment in government bonds) by an order of magnitude.

Right now, the Portuguese real estate market is not as cheap as Spain’s, but it remains more stable. If you were to go with the Golden Visa program in Portugal and invest the requisite €500,000 in a well-chosen property, my best guess is that you are unlikely to lose money on a resale of your property, and that you will most likely make at least some gains.

So, with EU residency thrown into the mix, for the right person, it would still seem a decent option.

In another important update, the TAXATION status you can enjoy if you actually want to spend most of your time in Portugal may also soon become even more advantageous.

Portugal already has a generous, so-called, Non-Habitual Residents Tax Regime (NHR). This is a 10-year tax residency regime for foreigners who live in Portugal, whether permanently or temporarily.

Unlike the Golden Visa, it does not require an investment and was created to attract highly qualified talent, pensioners, and high net worth individuals to Portugal. You can actually apply under this regime simultaneously to holding the Portugal Golden Visa.

Under this regime, eligible residents can enjoy a 20% flat tax rate on income derived in Portugal; a complete tax exemption on foreign-source income; pay no wealth tax in Portugal; and receive a 100% gift and inheritance tax exemption when gifting money to spouses, children and parents.

The Portuguese government is also considering extending this tax exemption to capital gains and investment income.

In other words, if you are living off investment income, Portugal could potentially become a zero-tax haven.

In order to qualify as a “non-habitual resident,” a (former) Portuguese national or a foreign individual having the right to live in Portugal must become a tax resident of Portugal. They can not have been tax-resident of Portugal for at least the prior 5 years.

To be deemed resident for tax purposes in Portugal, the individual must:

• Either spend more than 182 days per year in the country;

• Or, have a place of abode in Portugal as at December 31st each year. This could be a property that the taxpayer owns, or rented accommodation that the tax payer uses in Portugal.

This NHR tax regime can be easily combined to your advantage with residency under the Golden Visa. Once you have your Golden Visa, to obtain non habitual resident status you must apply for it. The Portuguese tax authorities will grant you the status for 10 years, with the first year being until March 31st of the year following the year in which you take up Portuguese residency.


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In order to apply, all that is required is for you to file a request and a statement to the effect that you were not resident for tax purposes in Portugal during the preceeding 5 years. In some circumstances the tax authorities in Portugal may request a tax residence certificate, or other relevant proof, from your previous country of tax residence.

It may take as long as 6 months to get approval, but the application of the law is retrocative to the beginning of the tax year in which you applied. You can qualify for this tax regime in Portugal if you are a skilled professional, an entrepreneur, an investor, or a pensioner. See the list of (some of the) eligble occupations below.

For more assistance and information on the Non Habitual Tax Residency and how you could potentially combine it with Golden Visa residency, you can contact our recommended Portuguese tax advisor at SRS Legal:

Jose Pedroso de [email protected]+351 21 313 2599.

Clearly, Portugal offers an attractive residency option, and could potentially even help lower your tax bills.

For help on the Golden Visa application, and how to go about it, we suggest you contact:

SRS Advogados Raquel Cuba Martins +351 21 313 2041 [email protected] http://www.srslegal.pt/en/

• Archaeologists• Architects• Auditors• Biologists• Company directors and managers• Computer programmers• Data processing and

hosting specialists• Dentists• Designers• Engineers

• Geologists• Investors• IT consultants• IT professionals• IT specialists (other)• Life sciences specialists• Medical doctors• Musicians• Journalists and other

information professionals • Painters (artistic)

• Psychologists• Scientific researchers• Sculptors• Singers• Tax consultants• Theatre, ballet, cinema, radio and

TV performers.• University teachers• Web developers and designers


http://www.srslegal.pt/en/


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Spain

Program: Golden Visa; Non-Lucrative Visa

Previously covered: SMC Alert September 2014 Updates:

Thus far, Spain doesn’t seem to have experienced residual fallout from the Golden Visa controversy brewing in neighboring Portugal. In fact, the Spanish might be hoping that the controversy boosts its own Golden Visa numbers, which have tallied below expectations.

Only about 300 people have signed on to Spain’s Golden Visa program since October 2013, or an average of less than one per day. Between October 2012 and December 2014 in Portugal, however, 1,936 residence permits for main investors were granted, as were 2,878 for family members.

As I said in our SMC Alert on Portugal, of the two countries, Portugal is currently the more stable and offers better tax advantages. Spain’s Golden Visa program also isn’t even two years old yet, which means the “automatic” renewals that are supposed to happen after two years have yet to occur. I’m not 100% confident in the robustness of this program.

Spain, however, continues to boast far cheaper real estate than Portugal, with a lower purchase tax (7% in Spain vs. 11% in Portugal).

And the Golden Visa track that doesn’t involve real estate – starting a business – still doesn’t spell out exactly how much money you have to invest. So instead of spending €500,000 on a piece of property, in Portugal, you could still theoretically invest a fraction of that in a business in Spain and walk away with residency (see the dedicated SMC Alert above for details).

But, make sure to speak to our legal contact listed in our SMC Alert, Cristian Balcells, to ensure you structure your business in a way that keeps your obligations low.

Cristian Balcells Balcells Group +34 619 49 31 31Paseo de Gracia 95 , 1 º -1 ª08008 [email protected]

Non-Lucrative / Non-profit Visa

For my money, this is still the better option if you want Spanish residency. It’s cheaper than the Golden Visa and has been around for longer.

It’s a good choice for retirees, or for those of independent means who can prove a monthly income (from outside of Spain) of €2,130 (about $2,500 at today’s low exchange rate) + €532 (about $ 610) for each dependent family member.

Since we published our last Alert on this, there have been no updates to this law. Cristian Balcells is the go-to guy to help you apply for this visa.

https://s3.amazonaws.com/smconfidential/SMC+Alerts/SMC-Alert-20140905nf3nf3r.pdf



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Full details on how to do so are in our previous SMC Alert (link above). Note—you must apply at a Spanish diplomatic mission in your country of residency, and NOT in Spain.

Again, the attractions of Spain, in addition to the excellent climate, at this point in time, center on the genuinely cheap real estate deals and housing that you can find if you are willing to do the legwork.

The hangover from the housing bubble in the 2000s is still very much present. And with the euro collapsing from 1.27 to 1.14 since we last covered Spain, the bargains have only got bigger for those with dollars to spend.

Singapore

Program: Employment Pass, Entrepass, Personalized Employment Pass (PEP), Permanent Residency

Previously covered: Various SMC Alerts since 2010 Updates:

While more difficult than it used to be 2 or 3 years ago, it is still possible to obtain residency, and even “permanent” residency (which isn’t really permanent at all, but rather allows you a 5-year period of residency before having to reapply) in Singapore.

The main thing that has changed since we last covered residency in Singapore is that the government has increased the minimum monthly income thresholds candidates require to apply for the “Employment Pass.”

While the headline number is fixed income of just S$3,300 per month, in practice the Ministry of Manpower, at its discretion, requires significantly higher salaries than that for more experienced and senior people.

I am told (unofficially) that S$8,000/month is a more realistic salary number that will meet with approval from the authorities, if you are an experienced (5+ years) professional.

But, unusually for Singapore, which is almost always a beacon of transparency, the new regulations are simply not 100% clear-cut. Each application is considered individually on its merits.

In fairness, the government is very efficient at handling applications, and they are usually also very reasonable and willing to work with the employer, where there is a clearly demonstrated demand for a non-Singaporean national to fill the position.

To be eligible to apply, in addition to good educational qualifications and relevant job experience, you will need to have a job offer in Singapore from a Singapore-based company.

And the company will have to have run local advertisements for the position that you are looking to fill for a period of at least 14 days, and considered Singaporean candidates for the role first, before they can apply on your behalf for an Employment Pass.

You can get full details, as well as run a “Self Assessment” tool to see whether you would stand a chance of qualifying for Singapore residency on an Employment Pass here: http://beta.mom.gov.sg/passes-and-permits/employment-pass

If you are a high-income earner, who drew a minimum monthly salary of at least S$18,000 a month in your current, or

http://beta.mom.gov.sg/passes-and-permits/employment-pass


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most recent job outside of Singapore, which cannot have ended more than 6 months ago, you can still apply for a one-off “Personalized Employment Pass (PEP)” in Singapore, which is valid for 3 years, but cannot be renewed.

See here: http://beta.mom.gov.sg/passes-and-permits/personalised-employment-pass

There is also still a way in under the “Entrepass” program, which is aimed at people wanting to start, or relocate fledgling (less than 6 months old) businesses to Singapore. But unless you have some specific patents, or I.P., or are backed by a Singapore-government approved venture or angel capitalist organization you are going to find the approval process for the Entrepass difficult.

Gone are the days when you could start a pub or a restaurant, and get residency as an entrepreneur in Singapore. The government now wants to project a certain image, and drive the economy up the value chain. So it’s become much more picky about who it lets in. You can find out more about Entrepass here: http://beta.mom.gov.sg/passes-and-permits/entrepass

The other areas in which the Singapore government has tightened up are for semi-skilled workers and unskilled workers, where employers now face quotas, and typically have to pay a levy to the government for each non-Singaporean that they hire. The government did this in the face of a backlash from the local populace, as evidenced by the ruling People’s Action Party’s poorest ever showing in Singapore’s (largely rubber-stamp) elections last they were held.

But the fact remains that Singapore is reliant on foreign labor and entrepreneurs to some degree to keep its economy humming. And I don’t rule out that the immigration requirements will be relaxed again at some time in the future.

For what it’s worth, since the government’s move to make hiring foreign workers more difficult, many of my friends in Singapore lament the drastic decline in the levels of staffing and customer service at many establishments. Nonetheless, Singapore is very much still open for business. And if you are a highly educated citizen of a western country, and have a job offer, or a solid idea for a start-up business in a “knowledge” industry, then obtaining residency in Singapore is still definitely possible.

Again, the best place to begin your search is at the Ministry of Manpower’s website. The Singapore government is very user-friendly and efficient, and there is really no need to go to an employment agency in the first instance. However, our long-time friends at Rikvin Group in Singapore will be happy to assist you with all your Singapore residency, employment, and company formation requirements. Be sure you tell them you were referred by Sovereign Man for the best possible service and pricing.

http://www.rikvin.com/

On a final note, permanent residency and citizenship in Singapore (unless you are married to a Singaporean citizen) has become much more difficult to obtain. The numbers speak for themselves. Despite an increasing level of applications, from a high of 79,000 in 2008, in each of the years since, less than 30,000 applicants have been approved for permanent residency status.

Rivkin has a good information resource on Singapore permanent residency here, for those who may be thinking longer term: http://www.rikvin.com/learn/singapore-immigration-options/i-love-singapore-how-can-i-stay/.

http://beta.mom.gov.sg/passes-and-permits/personalised-employment-pass

http://beta.mom.gov.sg/passes-and-permits/entrepass

http://www.rikvin.com/

http://www.rikvin.com/learn/singapore-immigration-options/i-love-singapore-how-can-i-stay/

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