Perpetual traveler
Encyclopedia
The term perpetual traveller (PT, permanent tourist or prior taxpayer) refers to both a lifestyle and a philosophy.
By lacking a legal permanent residence status, they seek to avoid the legal obligations which may accompany residency, such as income and asset tax
es, social security contributions, jury duty
and military service
.
For example, while PTs may hold citizenship in one or more countries that impose taxes based solely on residency, their legal residence will most likely be in a tax haven
. PTs may spend the majority of their time in other countries, never staying long enough to be considered a resident.
. It is possible for a non-national to live for several months, and in some cases even own property, in many countries without becoming a legal tax resident
and therefore eliminating paying income tax
.
For example, most European countries allow tourists to spend up to three months (and in some cases six months) in the country without being considered a resident or being required to file a local tax return
.
Similarly, it is possible to spend up to 122 days each year in the United States
without being considered a resident—or being required to file a US tax return. This workaround is applicable only for non-US citizens who are not permanent residents and earn no income in the United States.
In general PTs can, by moving between countries on a regular basis, be able to legally reduce or eliminate their tax
burden. Other PTs may adopt this lifestyle for self-ownership
reasons, seeking to be free from government authority, interference and "The System
".
Besides the aforementioned economic reasons, some people become PTs from philosophical or existential reasons, feeling unable and/or unwilling to commit to residency.
Whether to minimize governmental interference (via taxes or otherwise), or to maximize privacy, the theory proposes that you arrange for each of the following to be in a separate country:
s, in that they see themselves as untethered to any one nation. Many PTs align themselves closely with the libertarian
or anarchist
schools of thought, which advocate individual sovereignty
- sovereignty vested in the individual rather than in nation states.
differentiate between living overseas and traveling
Background
In practical terms, perpetual travellers (PTs) are people who live in such a way that they are not considered a legal resident of any of the countries in which they spend time.By lacking a legal permanent residence status, they seek to avoid the legal obligations which may accompany residency, such as income and asset tax
Tax
To tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...
es, social security contributions, jury duty
Jury
A jury is a sworn body of people convened to render an impartial verdict officially submitted to them by a court, or to set a penalty or judgment. Modern juries tend to be found in courts to ascertain the guilt, or lack thereof, in a crime. In Anglophone jurisdictions, the verdict may be guilty,...
and military service
Military service
Military service, in its simplest sense, is service by an individual or group in an army or other militia, whether as a chosen job or as a result of an involuntary draft . Some nations require a specific amount of military service from every citizen...
.
For example, while PTs may hold citizenship in one or more countries that impose taxes based solely on residency, their legal residence will most likely be in a tax haven
Tax haven
A tax haven is a state or a country or territory where certain taxes are levied at a low rate or not at all while offering due process, good governance and a low corruption rate....
. PTs may spend the majority of their time in other countries, never staying long enough to be considered a resident.
Rationale
Some PTs are wealthy individuals whose primary motivation is tax avoidanceTax avoidance and tax evasion
Tax noncompliance describes a range of activities that are unfavorable to a state's tax system. These include tax avoidance, which refers to reducing taxes by legal means, and tax evasion which refers to the criminal non-payment of tax liabilities....
. It is possible for a non-national to live for several months, and in some cases even own property, in many countries without becoming a legal tax resident
Tax residence
Definitions of residence for tax purposes vary considerably from state to state. For individuals, physical presence in a state is an important factor. Some states also determine residency of an individual by reference to a variety of other factors, such as the ownership of a home or availability...
and therefore eliminating paying income tax
Income tax
An income tax is a tax levied on the income of individuals or businesses . Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate...
.
For example, most European countries allow tourists to spend up to three months (and in some cases six months) in the country without being considered a resident or being required to file a local tax return
Tax
To tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...
.
Similarly, it is possible to spend up to 122 days each year in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
without being considered a resident—or being required to file a US tax return. This workaround is applicable only for non-US citizens who are not permanent residents and earn no income in the United States.
In general PTs can, by moving between countries on a regular basis, be able to legally reduce or eliminate their tax
Tax
To tax is to impose a financial charge or other levy upon a taxpayer by a state or the functional equivalent of a state such that failure to pay is punishable by law. Taxes are also imposed by many subnational entities...
burden. Other PTs may adopt this lifestyle for self-ownership
Self-ownership
Self-ownership is the concept of property in one's own person, expressed as the moral or natural right of a person to be the exclusive controller of his own body and life. According to G...
reasons, seeking to be free from government authority, interference and "The System
Government
Government refers to the legislators, administrators, and arbitrators in the administrative bureaucracy who control a state at a given time, and to the system of government by which they are organized...
".
Besides the aforementioned economic reasons, some people become PTs from philosophical or existential reasons, feeling unable and/or unwilling to commit to residency.
Five Flag Theory
Perpetual travellers may attempt to organize their affairs around the "Five Flags" theory, arranging for different facets of their lives to fall under the jurisdiction of separate countries or flags. This is W.G. Hill's own "2 flag" extension of investment advisor Harry Schultz's original "Three Flags" approach.Whether to minimize governmental interference (via taxes or otherwise), or to maximize privacy, the theory proposes that you arrange for each of the following to be in a separate country:
- PassportPassportA passport is a document, issued by a national government, which certifies, for the purpose of international travel, the identity and nationality of its holder. The elements of identity are name, date of birth, sex, and place of birth....
and CitizenshipCitizenshipCitizenship is the state of being a citizen of a particular social, political, national, or human resource community. Citizenship status, under social contract theory, carries with it both rights and responsibilities...
- in a country that does not tax money earned outside the country or control actions. - LegalLawLaw is a system of rules and guidelines which are enforced through social institutions to govern behavior, wherever possible. It shapes politics, economics and society in numerous ways and serves as a social mediator of relations between people. Contract law regulates everything from buying a bus...
ResidenceTax residenceDefinitions of residence for tax purposes vary considerably from state to state. For individuals, physical presence in a state is an important factor. Some states also determine residency of an individual by reference to a variety of other factors, such as the ownership of a home or availability...
- in a tax havenTax havenA tax haven is a state or a country or territory where certain taxes are levied at a low rate or not at all while offering due process, good governance and a low corruption rate....
. - Business Base - where you earn your money, ideally somewhere with low Corporate taxCorporate taxMany countries impose corporate tax or company tax on the income or capital of some types of legal entities. A similar tax may be imposed at state or lower levels. The taxes may also be referred to as income tax or capital tax. Entities treated as partnerships are generally not taxed at the...
rates. - AssetAssetIn financial accounting, assets are economic resources. Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset...
Haven - where you keep your money, ideally somewhere with low taxation of savings interest and capital gains. - Playgrounds - where you spend your money, ideally somewhere with low consumption taxConsumption taxA consumption tax is a tax on spending on goods and services. The tax base of such a tax is the money spent on consumption. Consumption taxes are usually indirect, such as a sales tax or a value added tax...
and VATValue added taxA value added tax or value-added tax is a form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the "value added" to a product, material or service, from an accounting point of view, by this stage of its...
.
Three Flag Theory
The general basis of the Three Flag Theory is:- Have your citizenship somewhere that does not tax income earned outside the country.
- Have your businesses and speculations in stable, low or no tax countries.
- Live as a tourist in countries where what you do for a living is valued, not outlawed.
Philosophy
On the surface, perpetual travelers have some things in common with world citizenWorld citizen
World citizen has a variety of similar meanings, often referring to a person who disapproves of traditional geopolitical divisions derived from national citizenship....
s, in that they see themselves as untethered to any one nation. Many PTs align themselves closely with the libertarian
Libertarianism
Libertarianism, in the strictest sense, is the political philosophy that holds individual liberty as the basic moral principle of society. In the broadest sense, it is any political philosophy which approximates this view...
or anarchist
Anarchism
Anarchism is generally defined as the political philosophy which holds the state to be undesirable, unnecessary, and harmful, or alternatively as opposing authority in the conduct of human relations...
schools of thought, which advocate individual sovereignty
Self-ownership
Self-ownership is the concept of property in one's own person, expressed as the moral or natural right of a person to be the exclusive controller of his own body and life. According to G...
- sovereignty vested in the individual rather than in nation states.
External links
- PT FAQs Some answers to commonly asked PT questions
- The PT Concept - information on "three flag theory" and becoming a Permanent Tourist
- PTshamrock Website Another site for information
- IRS Publication 519 IRS document explaining the "Substantial Presence Test"
differentiate between living overseas and traveling