Why Go Overseas?
I’m traveling in the United States this week. The visit is reminding me that, in fact, this is one of the easiest places in the world to live and spend time. You might wonder understandably: Why do anything offshore in the first place? Easier, surely, just to stay put.
Overregulation, overreach, invasions of privacy, and poor government stewardship of the people’s money are four reasons to consider voting with your feet and your finances and relocating yourself and your assets somewhere else right now.
However, I’d say that going offshore is better approached as an opportunity rather than an escape. Or, put another way, this isn’t a political decision. It’s a practical one.
In that context, what’s the real advantage of the Five Flags ideas I report on?
Diversification. It’s the key to success in all things, from personal happiness to a healthy portfolio. And you don’t have to go physically offshore, not immediately and maybe not ever, to reap the benefits.
That said, having a residence permit that allows you to stay in another country indefinitely should you decide you’d like to can be a good idea even if you have no intention right now of moving yourself anywhere. A backup residency, as I think of it, keeps your options open down the line. Many countries allow you to obtain legal residency without having to be resident full-time or even most of the time to maintain your residency status.
Furthermore, setting up residency in another country now can allow you to start the clock ticking toward a second citizenship down the road, and a second citizenship can open even more doors. An EU passport, for example, gives you the right to work and live in any of the 28 member states. A Panama passport would allow you to work in protected professions and to own protected businesses (retail, specifically) in that country.
That’s you. What about your assets?
Moving part or all of your business, if you have one, offshore can make it possible to defer taxes, helping your business to grow faster. Maybe it would also mean less regulation. It definitely would allow you to protect the business from the most litigious population on earth (that is, Americans).
Your nonbusiness assets, including your IRA or equivalent, can be protected offshore, as well. Moving some or all of your assets offshore accomplishes two things. The first is asset protection (with the help of holding companies and/or trusts). The second benefit of taking nonbusiness assets offshore may not seem as important but is. I’m thinking of the broader range of investments you then have access to. Your offshore investment options through an onshore broker are limited to those companies willing to go through all the SEC hoops to get listed on a U.S. market. Outside the States, you have tens of thousands more mutual fund and stock options.
“Lief, I am a proud owner of a Los Islotes lot and have bought several other investments through your recommendations. Your sales team has been great, and I hope to meet you on our next trip to Panama City in July. We tried to meet the last two times I was in Panama City, but our schedules did not jibe. I did get a tour of your offices, and they are nice.
“Anyway, I wanted to address the information you’ve been writing regarding the Panama Friendly Nations residency. I and my family are going through the process of getting our residency in Panama through this program. I read a lot about it from you guys before applying and you kept saying it was an ‘immediate’ residency option. Please know that it does not grant immediate permanent residency nor an immediate cedula. The process is not hard, but it is not as instant as it is being portrayed.
“I started the process for me (not with my wife and son) in April 2014, and a temporary carnet was issued within a few days of starting the process. I received my permanent residency the Monday of Thanksgiving week (end of November 2014). My cedula was approved and ready as of the second week of January 2015. I still needed to fly down and get my picture taken for it. I plan on being there at the end of July to get the cedula.
“For my wife and son, the process was a little faster as I was already a permanent resident of Panama when their applications were submitted (Thanksgiving week 2014). They received their temporary carnet on Thanksgiving Day 2014. Their permanent residency was just approved the first Monday of February 2015. They will get their permanent residency in July, when I get my cedula. My wife’s will take about a month or two after she gets her permanent residency card issued.
“From that point on, we have to come to Panama once every two years. After five years of having our permanent residency, we would then be allowed to apply for naturalization and obtain a second citizenship.
“This whole process was skillfully completed by our attorney, whom your office recommended. She (and her staff) are great.
“I hope this helps in explaining exactly how the program works, with accurate timelines, from a family that is actually going through the process.”
Thanks for the feedback. It’s much appreciated, and I’m glad to hear your residency process is proving painless.
However, I think there’s a misunderstanding to do with my use of the word “immediate.” When I say “immediate” in this context, I’m referring to the fact that this residency option in Panama grants you get permanent resident status immediately upon approval. The only other visa option in Panama where this is the case is the pensionado program. For all other visas, you are granted temporary residency at first that then has to be renewed.
When Kathleen and I first moved to Panama, we applied for residency under the reforestation visa program. We were granted only temporary residency at first. It took a year of temporary residency renewals before our permanent status was approved, meaning a lot of time-consuming and costly (each renewal required another fee) trips to immigration. The Friendly Nations visa option allows you to avoid all of that.