Asset Protection BLOG - Mark Nestmann

Six Top Expatriation Myths

If you're a U.S. citizen or permanent resident, the U.S. government has assigned itself the right to tax your income, no matter where you live.  I sometimes tell U.S. clients that even if they jumped in the Starship Enterprise and traveled to the Delta Quadrant (30,000 light years away from earth at its closest point), they would still be subject to U.S. tax!

In response to the ridiculous—but unfortunately very real—presumption that U.S. citizens must pay income tax wherever they live, an increasing number of U.S. citizens are giving up their U.S. nationality.  Yes, it's a big step, and it means you no longer have the legal rights and privileges of a U.S. citizen.  You can't vote, for instance, and you no longer have the automatic right to live in the United States.  But this process of expatriation is the only way U.S. citizens can permanently sever the obligation to pay tax on non-U.S. income.

However, there are also a number of myths—many of them propagated over the Internet—about expatriation.  I'll be discussing these myths—and debunking them—in one of my presentations at The Sovereign Society's upcoming Offshore Advantage Academy event in Cabo San Lucas, Nov. 3-6, 2010. 

Here's a preview:

Myth #1: "Only a tiny number of people expatriate each year." 

It's true: the "official" number of people who take this admittedly radical step is tiny—only a few hundred annually.  The Treasury Department is supposed to publish their names in the Federal Register each quarter.  But the real numbers are much higher. 

One especially busy U.S. consulate in Switzerland expatriates three people daily with appointments booked a year in advance.  That comes to close to 1,000 expatriations annually—just from a single consulate. 

Another reason the official numbers are so low may be that the law mandating Federal Register reporting by the Treasury Department applies only to "covered expatriates."  These are individuals who have a net worth over $2 million, or who meet other criteria making them potentially subject to an exit tax.  However, none of the covered expatriates my firm has helped expatriate has had their name published in the Federal Register. 

I think the government doesn't want you to know that the number of people expatriating is exploding.  And it's willing to "cook the books" to make sure the information doesn't get out.

Myth #2: "You have to pay an exit tax on your net worth when you expatriate"

I was at a dinner meeting a few months ago where I was introduced to an elderly gentleman who insisted that anyone who expatriated would automatically forfeit 15% of his or her net worth.

When I asked him for a legal citation to this "fact," he simply repeated his assertion.  He also mentioned that he was a major contributor to the organization sponsoring the event we were attending.  That no doubt earned him some brownie points at this organization, but it doesn't make his assertion correct.

The fact is that the exit tax now imposed on U.S. expatriates only applies if you're a covered expatriate.  And even if you are, the exit tax only applies to unrealized gains that exceed $627,000. 

There's no exit tax on your net worth simply because you've expatriated.  Of course, that may change in the years ahead if Congress decides to put the screws to expatriates in some future law.

Myth #3: "You can only spend 30 days/year in the USA."
 
Another misconception is that if you expatriate you can only spend 30 days each year in the United States without becoming subject to U.S. tax on your worldwide income. 

This myth actually has some basis in fact, because it was true under an old law that was abolished in 2008.  And it still applies if you expatriated between 2004 and 2008.  But no longer.  Now expatriates are treated the same as any other non-resident alien (NRA).  In general, a non-resident alien can spend an average of 120 days/year in the USA without becoming subject to tax on his or her worldwide income.  This period can be extended in some circumstances.

Myth #4: "If you expatriate you can't come back."

There's another rumor that once you expatriate you can never return to the United States.  That's hogwash, although again there's a small basis in fact to the rumor. 

In 1996, Congress enacted the so-called Reed amendment to the Immigration and Nationality Act.  The amendment gives the Attorney General the discretion to deny entry into the United States to a former U.S. citizen who renounced U.S. citizenship in order to avoid U.S. taxation.  

Other categories of "excluded persons" are those with communicable diseases or other health conditions; those convicted of crimes involving moral turpitude or illegal drugs or with multiple criminal convictions; prostitutes; spies; terrorists; and draft evaders.

After Congress enacted the Reed Amendment, commentators criticized it for violating US treaties and possibly the US Constitution as well.   And nearly 15 years after its original enactment, regulations under this provision have not been issued, and its power has never officially been invoked. 

"Tax motivation" is no longer a factor in determining the status of a covered expatriate.  For this reason, the Reed Amendment may no longer be relevant, particularly since it has been so long since its enactment, with no regulations in place to enforce it. 

Given this history, it may be safe to assume that one can safely give up U.S. citizenship with no fear of future exclusion, particularly if you choose an expatriation option other than formal renunciation. 

Myth #5: "Expatriates lose Social Security benefits"

Again…not true!  No restrictions exist on Social Security payments sent to non-citizens in most cases.  The only significant restrictions are if you live in a country upon which the U.S. government has imposed trade or financial restrictions; e.g., Cuba, North Korea, or Iran. 

However, if you're not a U.S. citizen, depending on where you live, there may be a withholding tax of as much as 30% on the first 85% of your monthly payment.  This percentage may be reduced or eliminated if there's a tax treaty between the United States and your residence country. 

Myth #6: "Expatriates are automatically targeted for reprisals by the IRS"

Thank goodness this myth is false.  There is no IRS vendetta against expatriates.  Quite the opposite!  The IRS has much easier pickings going after people still living in the United States, with substantial U.S. assets.  It can use its resources more efficiently than to harass former U.S. citizens not living in the United States and with minimal or no U.S. assets or activities. 

Indeed the act of expatriation stops the clock on all future IRS obligations.  You still have obligations to pay past taxes, but the statute of limitations for collections eventually runs out assuming you've filed all relevant returns for tax years prior to expatriation.

Is Expatriation for You?

Exploding expatriation myths is just one part of the presentation I'll be making on this topic in Cabo San Lucas.I'll also be discussing:

• The best options for second citizenship and passport for prospective expatriates
• How to size up an offshore jurisdiction as a prospective low-tax residential haven.
• Tax planning for prospective expatriates with family members remaining in the United States…

…And much more. 

You won't want to miss it.  For more information on this event, click here:

See you in Cabo!

Copyright © 2010 by Mark Nestmann

P.S. To learn more about expatriation, check out my BILLIONAIRE'S LOOPHOLE report in the bookstore on my Web site, http://www.nestmann.com.

Could Your Offshore Jurisdiction Go Bankrupt? [Part II]

In Part 1 of this column, I described some of the financial challenges affecting numerous offshore jurisdictions, particularly current or former colonies of the United Kingdom.

But it’s not only English-speaking offshore jurisdictions that face serious financial challenges.  And in many cases, these jurisdictions are considering—and implementing—new laws and regulations that adversely impact non-resident investors.  Here’s a rundown of what to expect in the months ahead:

Non-English Speaking Jurisdictions Face Problems, Too

It's not only U.K. territories that face significant revenue shortfalls.

Uruguay is a great example.  If you’re legally resident in Uruguay, you pay tax only on your Uruguay-source income.  This policy has made Uruguay a popular destination for well-heeled expats.

However, last May, the government introduced legislation that would tax residents of Uruguay on their worldwide income.  The law would also impose a wealth tax on all offshore assets.  Needless to say, taking up residence in Uruguay looks less attractive than it once did, although the government now says foreigners who come to retire in Uruguay won't be affected.

Other popular low-tax jurisdictions facing significant revenue shortfalls include the Cook Islands and Dubai.

Cuba—the Sleeping Caribbean Giant

In the midst of this economic uncertainty, don't forget about the largest island in the Caribbean—Cuba.

Right now, with their offshore sectors in tatters, tourism is the major revenue stream for Caribbean offshore centers.  And in this economic crisis, tourism has fallen sharply.  Those tourists that still show up don't spend as much.  

But what happens to the Caribbean tourism industry when the U.S. Congress ends longstanding economic sanctions against Cuba?  There's broad support for this measure among U.S. farm and business groups.  It's going to happen, perhaps very soon. And when it does, U.S. tourists will find a new and exotic vacation haven beckoning them only ninety miles from Key West.

The Caribbean Tourism Association predicts that if the U.S. government drops all travel restrictions against Cuba, more than one million U.S. tourists would visit the island annually.  That's one million tourists who may not have the time, energy, or money to visit more remote Caribbean jurisdictions.  The impact on these islands' economies will be severe.

How Will Offshore Jurisdictions React?

The most politically expedient stance for cash-strapped offshore jurisdictions is to loot the assets of foreign investors who don't vote.  In order of increasing severity, such measures could include:

• Imposing personal and corporate tax on worldwide income.
• Confiscation of local assets in companies and trusts deemed "dormant." Last week, the Cayman Islands enacted legislation mandating this outcome.
• Restrictions or taxes on outgoing funds transfers.
• Forced dilution of shareholder equity in local companies.

What can you do to protect your investments against the increasing likelihood of less favorable tax, regulatory, and asset protection provisions in financially challenged offshore jurisdictions? In the August issue of The Sovereign Individual I’ll outline six strategies to protect yourself from these outcomes.  Just click here to begin your risk-free membership.

The unprecedented challenges now facing the offshore world aren't going away.  Make sure you're prepared for the unexpected!

Copyright © 2010 by Mark Nestmann

Could Your Offshore Jurisdiction Go Bankrupt? [Part I]

Offshore centers now face a perfect financial storm.  In more prosperous times, revenues from the offshore sector, along with tourism, helped fuel these countries' economies.  Their governments emulated more developed nations by borrowing heavily to build up their infrastructure.  They also bought votes with social programs and bloated government payrolls. 

When the global economy tanked, tourist revenues fell, along with revenues from their offshore sectors.  But the social programs and bloated payrolls remained.

Blame Offshore Tax Havens! (Again)

The economic crisis also led to worldwide drop in tax revenues, with the biggest losers big industrialized countries like the United States.  Politicians in these countries found a convenient scapegoat to blame for falling tax revenues: dozens of mostly tiny offshore centers. 

Using the economic crisis, the world’s richest and most powerful governments had the perfect opportunity to achieve a long-term goal: forcing offshore jurisdictions to enforce their tax laws.  They acted through non-governmental organizations they control, such as the Organization for Economic Cooperation and Development (OECD).  The OECD has the authority to issue supposedly non-binding "best practices" guidelines.  And, the OECD now decrees that “best practices” meant becoming tax collectors on behalf of these rich and powerful governments. 

The one-two punch of the global financial crisis and the OECD vendetta has led to unprecedented economic challenges for offshore centers.  Some—Gibraltar, Hong Kong and Singapore, for instance—remain in relatively good shape financially.  Others, particularly in the Caribbean, are having a hard time paying their bills.  The British press, for instance, refers to the Cayman Islands as "bankrupt." 

Could offshore jurisdictions facing the worst challenges actually declare bankruptcy?  Not if they can reduce spending, or qualify for additional loans.  A condition of additional lending, however, may be to impose direct taxes, such as personal and corporate income taxes.

Here's a rundown of where the offshore financial crisis now stands.

U.K. Government Declares War on English-Speaking Offshore Centers

It was once official U.K. policy to encourage responsible growth in the offshore sectors of its current and former colonies.  But, starting in the late 1990s, the U.K. government began to dismantle the offshore sectors of its former empire. 

It was easiest in U.K. overseas territories, where the U.K. Parliament has the authority to enact binding legislation.  In those territories, the British Foreign Office simply threatened legislation that would force those governments to enforce foreign tax laws.  To avoid that politically unpopular outcome, the overseas territories enacted the demanded laws on their own.

The most recent crackdown began in 2008, when the U.K. government commissioned an independent review, led by former Treasury official Michael Foot of its overseas territories and "Crown dependencies" with offshore sectors. 

The Foot Report observed that the global financial crisis had led to significant financial hardships:

The impact has been pronounced in Anguilla, the Cayman Islands and the Turks and Caicos Islands resulting in depleted public sector cash reserves. Bermuda and the British Virgin Islands have also experienced a decline in government income, but the impact has been less severe. Revenues have held up better in the crown dependencies [Jersey, Guernsey, and the Isle of Man] and Gibraltar.

The report recommended that those jurisdictions facing depleted treasuries should consider spending cuts and imposing direct taxes.  Foot suggested that any bailout by the U.K. government be contingent on a viable recovery plan, which presumably could include direct taxes.

Nowhere did the report state the most obvious possible recommendation: that the OECD back off and let these islands play by the same set of rules the OECD gives its own members.

Indeed, many OECD jurisdictions are themselves offshore centers: notably, Luxembourg, Switzerland, the United Kingdom, and the United States (the world's largest tax haven for non-U.S. resident investors).

The reality is that London is using the global financial crisis to undermine the low-tax regimes in place by arguing that the territories need to "broaden their tax base."

Hardball Politics

Just to make sure the remnants of its colonial empire got the message, the U.K. government has imposed much tougher standards for loans and loan guarantees. 

In 2009, the Cayman government, facing an $82 million budget deficit, appealed to its colonial masters in London for permission to borrow $310 million from banks.  Despite the fact that commercial banks had already approved the loans, the British Foreign Office said "no."  

The Cayman government then commissioned a team to conduct an independent review of the islands' fiscal challenges.  The review’s key recommendations were to cut government spending and to privatize most government-run enterprises. 

Reaction was swift and furious against the plan.  The Cayman government refuses to make significant spending cuts.  This makes an eventually bailout likely, with unfavorable terms in respect to direct taxes.  The government has also recently enacted legislation that authorizes confiscation of local assets in “dormant” companies and trusts.

What other offshore jurisdictions face problems?  And how are offshore jurisdictions reacting to the perfect financial storm they now face?  Stay tuned for Part II in my next blog entry.

Copyright © 2010 by Mark Nestmann

Buying Property and Casualty Insurance Abroad

Those of us living in the United States take property and casualty insurance for granted.

But if you move abroad, you’ll quickly discover that coverage on your property may not be available.  If it is available, it may be more expensive and contain more exclusions than a U.S. policy.

For instance, friends of mine who live part of each year in Spain told me a few years ago that they couldn’t purchase any property insurance on their beachfront condo near Barcelona.  They’ve now found a policy, but at a cost well above what they pay for comparable property in Scottsdale.

I asked my friend and business partner “P. T. Freeman,” how difficult it was to obtain property insurance for a single-family home he and his family live in on a Caribbean island.  Here’s what he told me:

In preparation for a vacation, and as well as for the onset of hurricane season, I recently paid up my insurance premiums on my residence and reread my insurance policies.  I noticed a clause in my homeowners insurance that reads:

"Notwithstanding anything herein contained to the contrary, it is hereby declared and agreed that if the premises described in the Schedule hereto shall be left uninhabited for seven or more consecutive days or night, this policy shall cease to apply to Jewellery, Watches, Trinkets, Personal Ornaments, Furs, Gold & Silver, and electrical fixtures/electronic items therein, but if any such property is removed to a Safe Deposit Bank, or other inhabited place .... it shall be covered while there for not more than thirty days in any one period of insurance within twelve calendar months."

Despite these exclusions, I pay a hefty premium for these policies over comparable coverage in the United States.  For instance, my friend and colleague Mark Nestmann pays only about 50% of this premium for his residence in Phoenix with similar coverage. 

With this issue in mind, I contacted the claims manager of the insurance company and he invited me to his office to discuss this matter.  During the discussion, he noted that there has never been a claim filed against this policy, but that as a policyholder, I should act as a prudent insured taking all necessary precautions.  Apparently, the “necessary precautions” include removing most valuable items from the home upon any period of prolonged absence. 

The manager also hinted that the exclusion clause could be interpreted in different ways.  At the end of our discussion, we agreed that I would remove all jewelry; however the electric/electronic and the other items could remain behind, provided I set my alarm and asked somebody to come and check on the house every three days or so.

The moral of the story is when you resettle abroad, different laws and jurisprudence come into play.  If your policy is written in a foreign language, pay to have a competent translator translate it into English.  If you have questions, talk them over with the company that sold you the policy. That way you can avoid unpleasant surprises if you ever need to make a claim.

Copyright © 2010 by Mark Nestmann

The Tax Hazards of a U.S. Passport

By P. T. Freeman

(P.T. Freeman is a pseudonym for a friend and business associate who is a former U.S. citizen.)

Recently, I was having a conversation with a friend of mine who is a journalist here in the Caribbean.  While she grew up in the islands, she was born in Florida. During my friend’s early childhood, her mother divorced and relocated to the Caribbean.  Subsequently, her mother remarried and the husband formally adopted my friend as his legal daughter.

In the course of our conversation, my friend mentioned that she had just re-discovered her long-lost U.S. passport in a drawer at her mother's home.  It had expired a few years ago.  In the intervening years, she had visited the United States several times, but using another passport.  This is a serious violation of U.S. law, because U.S. citizens must always use their U.S. passport to cross U.S. borders.  However, because her stepfather’s last name appears on my friend’s Caribbean passport, no "alarm bells" were ever triggered when she crossed a U.S. border.

But, this was just the beginning of my friend’s problems. I asked her is she was still filing U.S. tax returns.  “No,” she replied. “I left the United States when I was a child.  Why would I have to file tax returns there when I’ve never worked there or even lived there since childhood?”

I patiently explained that the United States requires its citizens to pay tax on their worldwide income, no matter where they live.  I also told her that she possibly faced a long prison sentence for not disclosing each year the existence of all bank accounts she held outside the United States with an aggregate value exceeding $10,000. And I mentioned that while she could make an appointment to give up her U.S. passport at a local U.S. consulate, she would continue to be subject to these taxes and criminal sanctions for all past years.  She could be arrested and taken into custody anytime she visits the United States!

Her response was a mixture of horror and disbelief.  After a few minutes, she replied "well, screw 'em!  They can keep their damn passport." 

I doubt that the Department of State will collect any passport renewal fees from this young lady!  But even if she formally gives up U.S. citizenship and “expatriates,” that still won’t eliminate her past tax or reporting obligations.  She needs legal representation in the United States to deal with these obligations, and it won’t come cheaply.

The moral of this story is that if you are a U.S. citizen, no matter where you live, you must file a U.S. tax return each year. You must also disclose details of every “bank, securities or ‘other’ financial account” to the U.S. Treasury each year, if their aggregate value exceeds $10,000 on Form TD F 90-22.1.  Incidentally, the information on the TD F form may be shared with virtually any government or police agency anywhere in the world!

Being a former U.S. citizen, I am no longer subject to these unreasonable and frankly dictatorial requirements.  Nor am I subject to U.S. jurisdiction, except to the extent of my U.S. investments, or when I visit the United States. 

That’s true freedom, and the essence of being a “sovereign individual.”

Encryption Works!

If you use a technology called "encryption" properly, not even the government can read the information on your computer.

With encryption software, no one but you and your intended recipient can read your e-mail messages, text messages, instant messages, etc.  You can even encrypt your entire hard disk to protect everything on your PC from prying eyes.

Occasionally I encounter naysayers who tell me I'm wrong.  "The FBI, CIA, or NSA can unlock any type of encryption," they say.  "Relying on encryption just raises your profile." 

I'm not a computer expert, and I certainly don't know what capabilities the FBI and U.S. intelligence agencies have to decrypt encrypted information.  But in at least one case, even the FBI couldn't decipher data on a PC protected by an encryption program called "TrueCrypt."

In July 2008, Brazilian federal police seized a computer owned by a banker named Daniel Dantas.  The seizure occurred in connection with Dantas' arrest for money laundering, tax evasion and racketeering. 

In the meantime, police were trying to decrypt Dantas hard disks, and getting nowhere.  They turned to the FBI for assistance in late 2008.  After trying to break the code for more than a year, the FBI returned the hard drives to Brazilian police earlier this year, with the encryption intact.  The programs Dantas used to encrypt the hard drive were TrueCrypt and another, unspecified encryption program.

Apparently investigators were unable to get past the passphrase that appears when a PC's entire hard disk is encrypted.  To break the password, both Brazilian authorities and the FBI used a "dictionary" attack.  This involves successively trying all the words in a list, often taken from a dictionary or simple variations of words in a dictionary.  Dictionary attacks often succeed because many PC users employ short, easy-to-remember passphrases.  Obviously, Dantas was more sophisticated than most computer users.

However, Dantas wasn't as successful staying out of jail.  Although his data remains securely encrypted, in December 2008, he was convicted of attempted bribery of a police officer and sentenced to 10 years in prison.  In this case, at least, Dantas would have done better to rely on technology than on human greed.

Copyright © 2010 by Mark Nestmann

Living in the Caribbean as an Expat

What's it like living on a small island as an expat?  You're an outsider; you may have different colored skin from the natives; and you may not even speak the same language.  My friend and colleague P.T. Freeman gives you the benefit of his 10 years of experience living as a former U.S. citizen in the Caribbean.

After I acquired a second citizenship, gave up U.S. citizenship, and settled in the islands, I found some aspects of life were easier there than in the United States.  Others were more difficult.

One key difference is in the simple act of shopping for clothing, household goods, and groceries—almost everything.  You'll find fewer brands to select from.  For instance, since most food items are imported, you may be able to find Lays potato chips in the grocery store, but perhaps not Tostitos.  Don’t expect stores to be open 24 hours a day, either.  Very few are, and some islands restrict the hours stores can operate.

Nor can you expect to live anonymously on a small island, the way you can in a big city like New York or Los Angeles.  First of all, as a foreigner you will stick out like a sore thumb!  Second, you will have to register your residential address with the police and other government agencies.  Only after you have registration documents in hand will you be able to sign up for utilities and open a bank account.  You may also need to demonstrate that your immigration status gives you the right to live on the island.

Lastly, don't expect that the people you deal with—especially in the government—to do things promptly.  As in many countries, Caribbean people—and especially bureaucrats—don't like confrontation.  They may make promises they can't keep, provide deadlines they have no intention of honoring, etc.  A small example is if someone from the phone company promises to let you know when you can expect to have your phone installed.  You won't ever hear back from anyone.  You have to contact them every day and ask when the phone will be installed.  In my case it took eight months until I received telephone service!

If this sounds like "sour grapes," it's not.  I don't regret for one moment my decision to leave the United States.  I don't miss the everyday indignities and privacy invasions I suffered living in my native land.  Except for banks, hotels and some government offices, there is no 24-hour camera surveillance where I now live.  The police don't dress up in Ninja costumes and invade people's homes with guns drawn.  The concept of "civil asset forfeiture" where the government can seize everything you own without even accusing you of a crime is unknown.  Indeed, unless you're suspected of committing a serious criminal offense, you're unlikely to come into personal contact with the police at all. 

Most of all, I really feel free.  I can express my opinion, travel without being questioned as to where I was or where I'm going, and invest anywhere in the world without being told, "Sorry, we don't accept U.S. clients." 

And, if I want to return to visit family and friends in the United States, I simply show the friendly customs agent at the U.S. border my Dominica passport with the U.S. visa sticker.  But it's always nice going home…to the islands.

Copyright © 2010 by Mark Nestmann

When Cameras are Outlawed, Only Outlaws will Have Cameras!

If you witness police misconduct and record it as a video on your phone or camera, you won't be welcomed as a hero.  In several U.S. states, you could be subject to a long prison sentence. 

In recent years, dozens of videos documenting police misconduct have been posted on YouTube.  But prosecutors haven't generally punished the offending cops.  Increasingly, they're arresting the individuals who posted the videos.

The charge?  Illegal wiretapping.  Yes, wiretapping—what the NSA does with impunity and without a warrant is illegal for us to do when we witness police abuse.

At least two states—Massachusetts and Illinois—make it illegal to record any on-duty police officer in any situation.  It doesn't matter if the officer is in the process of beating someone to death.  It doesn't matter if the recording is in your own home, and the police have just busted down your door in an illegal search.  If you record the interaction, you can go to prison. 

In ten other states, "all parties" must consent in order for a private person to make a recording of a conversation or personal encounter.  Since a police officer acting abusively isn't likely to give you permission to record the event, if you do so, you could be violating the wiretap statute—and be subject to a long prison sentence. 

In Illinois, for instance, a street artist recorded his own arrest for selling artwork without a peddler's license.  He now faces up to 15 years in prison.

Arresting police whistleblowers is a nationwide trend.  And the courts approve.  For instance, the Massachusetts Supreme Court upheld the conviction of a man arrested for recording a police encounter.  Defendant Michael Hyde used the recording to file a harassment complaint against police.  Instead, he was convicted of illegal wiretapping.  While he was sentenced to only six months of probation, he could have faced a much longer prison term.

Cameras, in effect, are like guns.  Point a gun at a police officer and you'll be arrested.  Point a camera at a police officer and you'll be charged—and likely convicted—of illegal wiretapping.

The fact that wiretapping laws are being used against private citizens is richly ironic, because they were enacted to protect citizens against government oppression.  These cases turn that notion on its head because those trying to protect themselves or others from official misconduct ends up being prosecuted.

Since we’re living in a surveillance society where the government continuously monitors our finances, our communications, and our movements, shouldn't we have the right to turn the tables and, in effect, "watch the watchers?"  Yes, but police and the courts disagree.

Copyright © 2010 by Mark Nestmann

Island Politics

One reason people tell me for leaving the United States to live overseas is because they’re tired of politics.

But when you relocate to another country, you’re don’t leave politics behind.  Indeed, according to my friend and colleague P.T. Freeman, who lives on an island in the Caribbean, if you move to a smaller jurisdiction, you’ll find local politics are taken very passionately and seriously. 

What's more, says P.T., politics are very personal, not unlike "small town America".  Local residents vote for the person who will grant them access to opportunities: a government job, a permit, or a contract. 

Voters don’t really care how candidates stand on the issues.  The candidate can be a communist, a socialist, a fascist, or anything in-between.  What matters is access.
In the islands, most civil servants are political appointees.  If they campaign for the winning candidate and party, they’re rewarded with a government job.  This is extremely important in poorer island jurisdictions with high unemployment rates. 

What happens if the candidate and party that you supported doesn't win?  Expect to be punished.  The permit, job or contract that you seek will be denied.

As an outsider, the best advice I can give to Americans or anyone else from larger and more cosmopolitan countries that choose to settle in small jurisdictions is to maintain friendly relations with all political parties.  Don’t get too close to any particular candidate whether or not they’re part of the government.  If you do, you’ll eventually be punished by the opposition.

Finally—don’t take anything a candidate says seriously.  Promises of economic development, socialistic solidarity, or jobs for the unemployed are just that—promises.  All that really matters is access.

Dealing with island politics—just another strategy to becoming a sovereign individual!

Copyright (c) 2010 by Mark Nestmann

No Visa? With "Visa on Arrival," There's No Problem

For the last few years our clients have traveled to dozens of countries with passports issued by the Commonwealth of Dominica.  And while you can't travel to as many countries without a visa with a Dominica passport as you can with, say, a U.S. passport, in many cases that poses no impediment to international travel.  The secret is a little-known system (at least to U.S. travelers) called "visa on arrival."

Here's how the system works in many countries, especially in Asia.  Upon arrival of your international flight, all passengers are directed to passport control.  Just before you arrive, you will see an office or desk marked "Visas."  If you haven't already obtained a visa at a consulate or embassy, this is where you can obtain one. 

To obtain your visa on arrival, all you need to do is to complete a form, present one or two passport-sized photos, and pay a nominal fee—generally $50 or less.  (If you travel to other countries extensively, you'll learn to carry a dozen or so spare passport-sized photos with you.)  This entire process takes only a few minutes, although if you're at the back of the line, you may need to wait a little longer. When completed, the visa clerk will affix a sticker to one of the visa pages in your passport.  You then proceed to passport control.

Our clients have used the visa-on-arrival system in many countries with their Dominican passport, including Vietnam, Laos, Jordan, Myanmar, Bangladesh, Timor Leste, and other countries too numerous to name.  Other countries, such as Panama and the Dominican Republic require a tourist card.  Again, you can purchase this card at the visa desk or even from your airline carrier. 

All you need to do to use this system is to find out in advance what the visa requirements are for the country or countries you plan to visit a few weeks in advance of your visit.  Often, you can find this information on an airline Web site.

The easy availability of visa-on-arrival or tourist cards greatly increases the number of countries you can travel to on your Dominica passport without needing to make advance arrangements with consulates.  And all that's required to use this system is a few minutes time on the Internet—and of course, a valid passport, such as one from the Commonwealth of Dominica.

(To learn more about the how you can obtain "economic citizenship" and a passport from the Commonwealth of Dominica, send an email to me at info@nestmann.com).