JS 85: Bitcoin & Doing Business in Puerto Rico with Nick Giambruno Senior Editor at Casey Research

November 26th, 2014 by Jason | Comments Off on JS 85: Bitcoin & Doing Business in Puerto Rico with Nick Giambruno Senior Editor at Casey Research

faculty_giambruno

 

Nick Giambruno has lived in Europe, worked in the Middle East, and knows the ins and outs of Puerto Rico’s tax benefits. This is the second time he’s talked to Jason about Puerto Rico and shares some great insight on how Jason’s US citizens can take advantage of Puerto Rico’s laws. Jason and Nick also talk about Bitcoin and US global income tax on today’s show.

Key Takeaways:
2:40 – You can move your business to Puerto Rico to get great tax benefits. Nick explains how you can do this in this segment.
9:30 – You don’t have to move to Puerto Rico to take advantage of Puerto Rican tax benefits, but if you do, you can receive extra benefits as well.
11:00 – Puerto Rico doesn’t want you to just setup an entity on their soil, they want you to employ Puerto Ricans as well.
13:10 – Virgin Islands verse Puerto Rico? Nick explains the difference and why Puerto Rico is better.
17:15 – Jason and Nick both love the concept of Bitcoin, but they don’t see how it’ll work without the support of the central banking system.
24:00 – Jason talks about the possibilities of making Bitcoin illegal and what that would mean.
26:30 – Nick does a quick overview of what it means to move to Puerto Rico for those who are interested.
32:45 – Jason and Nick talk about global income tax. Jason says people think if they have a US passport, they’d get US government protection, but that’s simply not true.
36:22 – Final thoughts? Nick says if you can structure your business to take advantage of Puerto Rican tax benefits, then do it!

 

Tweetables:
“If you can structure your life and your business so that you can take advantage of these tax incentives, it’s a total no-brainier.”

“If you can make it work for yourself, it is life changing and you can effectively double your income.”

“The point is that these tax benefits were designed to help boost Puerto Rico’s economy in the most practical way possible.”

 

Mentioned In This Episode:
http://www.internationalman.com/articles/puerto-ricos-tax-incentives

 

Transcript

Jason Hartman:
It’s my pleasure Nick Giambruno back to the show. He was on before a while back talking about the incredible tax benefits offer by, what some people call, our 51st state and that is Puerto Rico. If you are an American citizen listening and if you want to basically get some incredible tax benefits, almost a get-out-of-tax free pass almost, not quite, but almost, and still retain your American citizenship, this is quite possibly the best way to do it, but you know, a lot of people listening aren’t interested in actually moving to Puerto Rico, so one of the other options that I wanted to invite Nick to talk about today is the idea of moving one’s business to Puerto Rico or setting up a new business in Puerto Rico, particularly talk about it from that angle.

We have a prior show which explores in depth moving to Puerto Rico, so that’s not going to be our focus. If you want that focus on the physical move, go back and listen to that episode. You can just check the website for it and find it there.

Nick, welcome back, how are you?

Nick Giambruno:
Doing great, Jason. Thanks for having me.

Jason:
Good, good to have you back. So, a lot of people listening have small businesses or they wanna start a small business and some have larger businesses too. You know, maybe an interim way to take advantage of these incredible tax benefits is to either start a business or move a business to Puerto Rico, right?

Nick:
Oh certainly, it has to be a specific type of business though. It has to be a service business and that service has to be preformed in Puerto Rico for clients outside of Puerto Rico and as long as it can simply do that, it can qualify, yes.

Jason:
Okay, so, a lot of people have virtual businesses now-a-days, internet-orientated business, can it work for them?

Nick:
Oh, yeah, it’s perfect for that especially if you’re delivering content over the internet whether it’s ebooks or you’re selling courses or what have you, if the service can be preformed in Puerto Rico and it’s for clients outside of Puerto Rico, then it can qualify. So, if that’s the case in your writing research or whoever is preforming that service, if they’re doing that in Puerto Rico with a Puerto Rican company and selling it to clients outside of Puerto Rico, they can qualify for the benefit.

The benefit is a 4% corporate tax that’s taken out of a withholding as a distribution to owners. There’s no other taxes, there’s no other state taxes, there’s no other federal taxes, it’s just a 4% tax and the owners don’t have to live in Puerto Rico and I think that’s what you wanted to get at earlier. So, yes, owners can live outside of Puerto Rico, but still benefit from this program certainly.

Jason:
So, it sounds like what the government is trying to do and this is really a US federal government thing more than it is a Puerto Rico thing, right?

Nick:
Yeah, well, how you should think of this is that 90% of your compliance issues and problems are going to come from the US side, the federal side, the IRS, and 10% of your compliance issues are going to come from the local Puerto Rico government. Meeting the local Puerto Rico government’s requirements are fairly simple. It’s the big US federal government is the one you have to be careful about.

But, people look at this and say, this is simply too good to be true and that’s, you know, I admit I thought the same thing too when I first heard of it, but I’ve looked into this very deeply and it’s part of a series of economic programs that the US federal government and Puerto Rico have done going back decades.

This is not by fly-by-night thing. Puerto Rico has incentivized businesses with tax incentives to come to the island for a very long time, you know, notably in the past with tech companies and pharmaceutical companies and now they’ve expanded it to the certain service business, but also as we talked about in the first show, investors who have moved to Puerto Rico too.

Jason:
So, it sounds like really the goal is to increase exports, in a sense, from Puerto Rico. You say, as a service business, the service has to be preformed in Puerto Rico for people outside of Puerto Rico.

Nick:
Precisely, yes. That’s the idea. They don’t want people coming down there and taking away from the local economy, but if they go down and preforming services for people non-Puerto Ricans, you’re not contributing to the economy and they wanna incentivize that.

Jason:
Alright, so let’s dissect this a little bit more. Let’s take my business for an example. So in my business, I record many, many podcasts. One of my companies is a publisher and podcast producer, another one is a real estate investment company, and, I mean, I have workers in..all over the place. You know, all over the US certainly and occasionally some in foreign countries, but not so much, mostly US based, but in every state, so I guess we’d have to allocate how much of that service comes from Puerto Rico, right?

Nick:
You would and that’s going to be a job for a tax professional. That’s not necessarily a simple or a straight forward case. I can give you a simple or straight forward case, because Peter Schiff is doing a similar thing. He’s moved his asset management business to Puerto Rico, but he has not personally moved himself there, but as the owner of that asset management business, he can still benefit for it. He’s got these group of people that used to located in California who run his asset management business and manage money and so forth and he’s moved them to Puerto Rico, so he’s got a handful of employees in Puerto Rico managing funds for non-Puerto Ricans essentially.

Now, as an owner of this company..he’s formed a new Puerto Rican company that does his asset management and as an owner of this company, Peter, while still living in the mainland US, really I think it can be anyway, but specifically he’s in the mainland US, he can receive a distribution from this Puerto Rican company and that can qualify as what is known as a qualified dividend in most circumstances, of course. You’ll have to have a tax guy look at each individual circumstance, but generally speaking it will most likely qualify for a qualified dividend, these distributions to non-resident owners from Puerto Rican companies.

Now, a qualified dividend is taxed differently than a normal dividend. It’s not taxed ordinary income. A qualified dividend is taxed as kind of a long-term capital gains, so it’s like top 20% plus this Obama Care 3.8%. Now, that’s the difference between about 24% there from that distribution versus from what you normally have to pay for higher tax rate on the ordinary income, so from a 40% on your ordinary income on the top bracket on the federal level, you can reduce that to about 24% with this Puerto Rican company giving you a qualified dividend and you don’t have to live there.

There are other ways, but that’s one way a non-resident owner of a Puerto Rican company can benefit from these programs.

Jason:
So, Nick, that’s fantastic. In that method that you mentioned and maybe we’ll explore some more too, but in that mention or in that method, how much do you save? What’s the net savings potential there?

Nick:
It also depends on the state, so you can’t really reduce your state tax, that’s going to be determined by the way you live. That’s kind of a natural thing. It’s going to reduce your federal tax from 40% to around 24% on that. Your distribution is not going to be taxed like a dividend, which wouldn’t be taxed, kind of like ordinary income, it’s going to be taxed at the qualified dividend rate, which is essentially a long-term capital gain.

So, if you were actually move to Puerto Rico and take a distribution from your Puerto Rican company, it’ll be a completely tax free, but most people..you know, some people can move and that’s fantastic and they can get even more benefits, but if you don’t move and you meet certain circumstances that can give you a qualified dividend, then you’re going to have to have a tax guy look at your individual cases to determine that, but most people can get it. You can reduce your taxation on this distribution from, you know, like I said the ordinary income rate to this qualified dividend rate, which is preferential.

Jason:
It most definitely is. It most definitely is. So, Nick, I mean, what you really have to do is you gotta have, you gotta employ Puerto Rican workers or at least, American, well, I guess, that’s sort of American a debatable term in this case because, *Laughter*, it’s a US territory. You gotta employ people in Puerto Rico who are doing work for you there, you could’ve..you can bring them, say in Peter Schiff’s example, from California and they can come there, but you know, that’s sort of a bit of a tough hurdle.

I mean, I guess it’s not like setting up an entity, you know, I have entities in several jurisdictions and, you know, it’s not super hard to do that. You setup an entity, you have a registry agent, you have all the legal compliance stuff that your lawyer tells you you have to do, and that’s great, but here, you really have to have a real, you know, like an operation there, right?

Nick:
Yes, that’s correct. That’s also the point of it. They don’t want people just setting up entities, they want people stimulating the economy and boosting the economy and that’s why they have the requirement there. I think that, yeah, it is a higher hurdle, but it also…

Jason:
Yeah, I mean, look at Delaware for example.

Nick:
Precisely, yeah.

Jason:
I call Delaware the state of mailboxes, because you got all these corporations registered there. *Laughter*. I’m sure Microsoft is registered there. That’s the example I was just going to use. They’re not really there, you know, they’re like this ghost corporations, right.

Nick:
Yeah, because if they did that, Puerto Rico’s not getting any benefit out of that. There’s..

Jason:
Well, they get the state fees. That’s all they do.

Nick:
They do, yeah, they do. The point here is that these were designed to help boost their economy in the most practical way possible using these incentives. You know, they’ve used these incentives for decades, so that could have helped them marginally, but they figured they could get more bang for their buck by requiring this and I think that’s a good thing, because people can’t just look at this and say, “Oh, this is just another BVI. This is just another Delaware with a bunch of mailbox companies.” People have to go and really contribute to the economy and if you have the right kind of business and it works for you, you can also realize tax benefits that are impossible anywhere else short of renunciation.

Jason:
Yeah, okay, good. They really are unbelievable and the renunciation of one’s citizenship is a pretty big deal and something you wanna think very carefully about. Okay, so you mentioned BVI, the British Virgin Islands, and let’s talk about the Virgin Islands, either set. After you were on before, some people said to me, “Well, Jason, isn’t that the same thing that’s going on the Virgin Islands? You can get the same deal as you can in Puerto Rico, right?” And I didn’t really know the answer to that, maybe you do.

Nick:
Yeah, it’s similar, but here’s the deal..

Jason:
I mean, no one’s talking about it, I don’t read about that anywhere.

Nick:
Yeah, we cover it a little bit in our videos, in the premium videos, but here’s the difference – yes, it is similar, but the bar to participate in the US Virgin Island program is much higher. You have to go through more considerably expensive setting up legal entities and hiring accountants and so forth. Really, it doesn’t make sense for people who aren’t very high-net worth individuals in a nutshell.

Puerto Rico is different in that the bar to participate is much lower. You know, you just need to have the service business, it’s relatively straight forward, and you don’t even need a…if you’re an investor you can just move there and obtain these benefits, but another main difference between the US Virgin Islands and Puerto Rico is that you have to move your business.

So, if you’re going to move your business, you much rather move it to Puerto Rico because Puerto Rico their business infrastructure…comparing Puerto Rico and the Virgin Islands in terms of business infrastructure and so forth, there is no comparison. Puerto Rico is huge in terms of how it’s developed. It’s not just some tiny island where it’s a couple of mailboxes and dock slips. It’s a big island with business infrastructure, lawyers, accountants that are trained in the same universities as most US lawyers and accountants, so it’s got that business infrastructure that the Virgin Islands doesn’t have.

Jason:
Yeah, I would agree with that. I’ve been to Puerto Rico. I think I’ve been there three times now, maybe four, I don’t know, maybe three or four times I think just as recently as a year and a half ago I was in Puerto Rico. I would agree. It is much more developed than many Caribbean type places, for sure, and that’s attractive because you wanna have that infrastructure there. What was the first method, what did you call it, the qualified dividend?

Nick:
Yes, there’s two real ways that a non-resident or basically an owner of a Puerto Rican company who is living in the US mainland can benefit from these programs. The first way is that qualified dividend method that I described where you get a distribution from your company that’s taxed about a 24% rate compared to the top federal ordinary income rate of 40%. So, that’s about a 16% reduction. You know, it lowers your taxes by 16% in that case.

The other a non-resident owner can benefit is if the company builds up a bunch of retained earnings and the company can grow that way, then also, if you decide to move there one day, the non-resident can build up..Say they can’t move to Puerto Rico right away, that’s fine, but they can open business there and the business can generate earners and so forth and then, you know accumulate earners, and then a few years later if the owner decides to move to Puerto Rico, he can take a tax free distribution from his company that had been operating there.

Now, you can’t just get like a distribution and then leave the next day, that’s something you wanna talk to a CPA about, about how long, you know, they’re going to have to look at your individual case and determine how long you’d have to stay there in case that could get challenged by the IRS, you wanna have your basis covered. So, that’s the other way you can do it.

Jason:
Okay, okay good. What’s the name for that?

Nick:
Well, that’s not really a name..

Jason:
I wanna give everything a name, so we know we talked about this one. That’s A, that’s B, *Laughter*. Yeah, right.

Nick:
You can just cash out on your retainer, you know.

Jason:
Yeah, I think real estate people if they wanna cash out, the Bitcoin speculator, gambler people, who, by the way, I think have been disappointed to say the least. *Laughter*. You know, I always say, Nick, I wanna be wrong about Bitcoin. I hope I’m wrong, but I don’t think I’m wrong. I don’t think anything without the support of the central banking cartel and the governments will have a chance at being super significant, but I hope I’m wrong about that. I just want to put that on record again. I would like to be wrong, for once. *Laughter*.

Nick:
Yeah, I agree with your analysis. It would be nice to see some sort of, you know, some sort of money that is that not controlled, an alternative currency that is de-centralized. I like the concept.

Jason:
I love the concept, but it’s not going to happen. *Laughter*. In my opinion.

Nick:
It just seems, well, we’re kind of getting off track, it just seems like it’s value comes from it’s uses and medium from exchange, but it’s use as a medium of exchange kind of depends on its use as a function of its store value, which is very volatile.

Jason:
Yeah, I know we are off a little track here, but the reason why I brought it up is one of my friends who was way up on Bitcoin, you know, he had a big capital gain, he was going to move to Puerto Rico, cash it out, and then take the gain while he was a resident and save a lot of money on taxes, so it was similar to what you were talking about, but just to finish the thought on the Bitcoin and, you can have the last work if you want it, but what people have to realize is that an alternative currency, even gold, Bitcoin, Litecoin, KayneWestCoin, KayneCoin, *Laughter*, you know, any of these Dogecoin, any of these things, any thing that competes, silver, anything that competes with the central banking cartel and the government or, well, governments around the world I should say, must realize there are competing literally, bar none, most powerful forces known to mankind.

These are the most powerful forces on earth. They have armies, they have aircraft carriers, they have laws that they can make, they can imprison you, they can kill you, they can all sorts of things, and all they have to do is enact a law and edict by fiat and just say, “This is illegal.” Of course, they’ll find a reason and they’ll say it’s under the disguise of, you know, protecting us from terrorism or drug trafficking or some illegal activity because a couple of exchanges go under and, you know, some crook steals their money and, you know, it’s always, of course, for own good, right? *Laughter*.

Nick:
Yeah, that’s the excuse. I agree with your analysis again. What kind of gives me pause is that I look at something like BitTorrent, which is very similar in the sense that it’s a de-centralized peer-to-peer network, kind of like grew out from Napster, which they were able to shut down Napster, because it was centralized, but BitTorrent, BitTorrent has existed over..

Jason:
De-centralized.

Nick:
It’s de-centralized and they’ve done exactly what you’ve said, they’ve declared, you know, basically it illegal, they’ve tried to shut it down, they’ve put all of their energy into doing it and they can’t do it after 10 years they’ve been trying to shut down. Like, the Pirate Bay for example. That one site is up, you know, anybody can go to that and they’ve been trying to shut down that website, everything short of invading Sweden. *Laughter*.

Jason:
*Laughter*.

Nick:
For the past 10 years. So, maybe there is a glimmer of hope in that sense. But, you also look at encryption too. At this point they can’t crack encryption. I was just hearing the FBI director, in the radio in a cab I was riding in the other day, he was complaining how these new iPhones and Android phones have encryption and they can’t break it and he was angry about that. So, there are technologies that I think are beyond the reach of the state at this point.

No body knows what the future is going to bring, but looking at BitTorrent as an example gives me a little bit of a crack of hope that maybe we can have a technology that emerges that is beyond their ability to crush, so I think it’s an open question and just one thing going back to talking about your friend, he couldn’t go there if he had a bunch of unrealized capital gains and just decided to cash out. T

The gain only counts, it’s calculated for different asset classes, but Bitcoin is regularly traded so it’s easy to determine it’s market price, so the gain, the only gain would count..let’s just assume he moved to Puerto Rico and he attained the tax benefits and he sold the Bitcoin at some point, the only gain that would count for the tax benefits would be the gain from the day he moved there from the day he sold.

Jason:
Ooh, yeah.

Nick:
If it was already appreciated, it wouldn’t count. It has to be from the point you become a resident to the point you sell, so if you already have a bunch of, like, stuff at a low cost basis it’s appreciated considerably, you can’t just move to Puerto Rico and sell it, but it all depends where and when that gain happened.

Jason:
Yeah, that’s a good point. He thought he could. He never ended up moving and Bitcoin went down the tube, so there we are. This story has yet to be finished, so we’ll see where it goes. But yeah, I totally agree with you. I love the de-centralized model. I think it’s great. So, my counter to your point Bitcoin and this is an interesting discussion, so I don’t think we’re boring the listeners because, you know, this is important.

Currency or, I should say, money, which is better than currency of course. Things that have intrinsic value, you know, currency and money, they’re like the air we breath. They’re like the whole context in which we live, so when you compare it to Pirate Bay and BitTorrent and things like this, granted, yeah, someone could download a pirated movie or, you know, I found one of my educational products on there and I was kind of upset about it, but didn’t do anything about it. So, listeners, you can go find Jason Hartman’s real estate investing course somewhere on one of those sites and get it for free! *Laughter*. There you go.

That isn’t as, you know, by any means as major as an impact in our lives as what we trade in, the basis for our economies, and that’s why it’s so important that the government and central banking cartel to control that, because when you control that, in essence, you control a lot of the aspects of a population.

I would counter to your point, which was a very good point, by the way, my friend, Mike, makes the same point and I’m wholeheartedly in an agreement. I love it, but if you look at drug trafficking, it’s de-centralized and it’s illegal and they can’t stop it, okay, so I’m with you there, but you’re certainly not going to go around trading everyday in Heroin, you know? It’s just not a very viable system. It’s too risky to do that. So, if they made Bitcoin illegal and if you engage in an transaction, I mean, every time you engage in a transaction, you’d risk, you know, punishment or prison, that would be horrific, right, and that’s what they could do, couldn’t they?

Nick:
Yeah, no, that’s absolutely true. Yeah. They hold the power that they wield over currency, like you said, the power that they wield over currency they hold very tightly and, yeah, that’s the source of their power is their ability..I guess the US in that sense, the ability to create the world’s reserve of currency out of nothing is almost like the power of God.

Jason:
It is, it is the power of God. They’re not going to give that up easily.

Nick:
No, no, they’re not going to give that up easily. So, no, I agree with you.

Jason:
Interesting. We’ll see how it goes. I can’t wait how this story unfolds, but I’m not a big buyer. I own one Bitcoin. *Laughter*.

Nick:
I wished I would have bought more. I installed the thing on my laptop when it was 5 bucks and I just didn’t…I didn’t buy any, I really wished I would have, but no, I didn’t buy any.

Jason:
I’m sure many people felt that way in the Tulip craze too, you know, awhile back. *Laughter*.

Nick:
Yeah, yeah.

Jason:
..And see how that one worked out, right?

Nick:
Exactly.

Jason:
So, don’t feel too bad. Okay, back to Puerto Rico. I mean, this is just a tremendous opportunity and I gotta tell you, it’s pretty enticing to me like it is to a lot of people. So, any thing else on the business? Did you have another way, you talked about two different methods, I wanted to give them little pet names, but we didn’t for the second one at least. Is there another method you wanna mention?

Nick:
That is about it. Unless you wanna move to Puerto Rico, then you can benefit substantially move, but in terms of if you don’t want to move Puerto Rico yourself, but you wanna move your business there, those are the two ways you can benefit as far as I know.

Jason:
Yeah, absolutely. Very cool, very good point. You know, just to entice people and get them interested in going back and listening to that prior episode we recorded, which was fantastic, can you just give a quick review before you go on the benefits on moving or the qualifying to move..what constitutes as move, how long do you have to be there to earn stuff, just a quickie little review.

Nick:
Well, there’s two aspects to the new Puerto Rican tax incentives that came out in late 2012. One is for individuals. This is called the individual’s investors act. This is act 22. This gives Puerto Rican residents, if you move to Puerto Rico and obtain this act 22…well, let me just rewind a little bit, these benefits are enshrined as legally binding contracts. They’re are essentially decrees, personalized decrees and Puerto Rico is a part of the US court system, so these are…you know, say what you will about the US court system, it certainly better than most Latin American court systems and so these contracts that you are given enshrined your tax benefits for a certain amount of years, usually 20 years and it can be extended as well within a US court system, so it gives you certainty that the Puerto Rican..This is how they structure these benefits so that people aren’t worried that the next Puerto Rican can come in and cancel these benefits.

They can cancel these benefits for new people, but they’re going to have to abridge these contract rights with existing people to cancel their benefits, probably not going to happen. So, that’s the first thing to understand is that when you obtain these benefits, they’re enshrined in a legally binding contract you have with the Puerto Rican government. So, going back to the two types of incentive programs, the first one is for individual investors and this allows for a..it eliminates taxation on investment incomes.

So, you pay no capital gains tax, you pay no dividend or interest tax. The key there is that it has to be Puerto Rican sourced income, so that gets a little bit complicated stuff, determining the sources of income. The nice thing is the capital gains is determined, the source of it, excuse me, is determined by your residency except in certain cases like in real estate. You can’t sell a house in New York while you’re a resident of Puerto Rico and cont that as Puerto Rican sourced income, but you can sell stocks in a US brokerage like Fidelity or E-Trade or Scottrade account from Puerto Rico and that counts as Puerto Rican sourced income.

Dividends and interest are a little bit trickier, that is sourced by where the payer is domicile, so if it’s Walmart paying a dividend, it’s going to be not Puerto Rican sourced income, but there are ways around this and if you have significant investment income, you can talk to a CPA or, you know, we list some of these professional resources lawyers and tax accountants in our course and you can find that at InternationalMan.Com in the Puerto Rico section. We list these guys that we’ve worked with and they can structure for you a mutual fund, for example.

So, if you have a lot of investment income, dividends, and interest that are coming to you, realistically, you’re not going to find many Puerto Rican sourced on their own dividends and interested unless you get a CED at Puerto Rican bank, but that’s not going to pay very much, but let’s just say you’ve got a lot of investment income, you can create a structure. You can create a Puerto Rican mutual fund and that mutual fund can absorb all of the investment income you have and then pay you a distribution and that distribution would then be a Puerto Rico sourced income and eligible for the zero % dividend tax that Puerto Rico has.

Now, there’s also there’s also companies like Deutsche Bank and a couple of other mutual funds down there that have local branches in Puerto Rico that have setup mutual funds for this purpose of generating Puerto Rico sourced income. Really, Peter Schiff is setting up a similar thing where he is making up a fund from his asset management company in Puerto Rico that’s specifically for these people who are looking for yield, tax-free yield, that’s kind of complicated, but you can do it if you have enough investment income, but the main benefit there is for people for capital gains, because that’s determined by where you’re sitting, where you’re a residency is and that’s just perfect for, like, day-traders, for hedge fund guys, it’s perfect for private equity guys, and all sorts of other trades.

So that’s the individual side. And then, the other side of the tax incentives is for business. It’s for service businesses like we’re talking about before. Now, the service business has to preform a service in Puerto Rico for clients outside of Puerto Rico. It has to be an exported service and as long as it does that and meets some other requirements, it’s eligible for a 4% top corporate tax rate that’s taxed when you give distribution to owners. It’s like a withholding tax.

So, that’s it. There’s no federal tax, there’s no state tax, it’s just this 4% tax on distribution to owners, which is pretty nice when you consider the corporate tax structure in the mainland US, which is probably the worst in the developed world. In a nutshell, those are the two benefits.

Now, let me just real quick explain while they’re unique. They’re unique because Americans can find these benefits no where else. America is the only country in the world, well actually there’s one other one, but they don’t really county and I’ll tell you way, that taxes its non-resident citizens on their global income. If you were Canadian, Jason, you could just move to the Cayman Islands.

Jason:
And it’ll be done, yeah, yeah.

Nick:
Yeah, you’d be done. As an American, you’re not. You’re liable to file and pay taxes, even if you leave and never step foot in the United States ever again and..

Jason:
Isn’t that mind boggling?

Nick:
It’s terrible. It really is..It’s come full circle since, you know, the revolution in 1776 and, you know, the people who got upset about a little tax on the tea.

Jason:
And, interestingly, you know, people might think, well, even if I live abroad, I wanna be a US citizen because the US government will protect me. You know, I could go to an embassy, I’d get help. If I get in trouble, they’d rescue me. Well, look at North Korea, okay. The Obama administration is like, virtually ignored, at least that’s the perception I have, these 3 or 4 citizens they have there who, you know, the one kid, granted he was an idiot. The 26 year old kid who just got 6 years hard labor, but you know, gosh, he was an idiot just in his way of talking. He was only talking. Okay. He didn’t do anything, he didn’t hurt anybody. You know? This guy, you know, who left a bible, I mean, where’s our government helping those people?

Nick:
Yeah, I have a personal story too. I used to live in the Middle East and I was in Lebanon in 2006 when the war broke out and they had to evacuate all the Americans during that war and we were evacuated to Cypress, actually, and during that they wanted to charge us a fee. They wanted to charge us to get evacuated. *Laughter*. What they did is they chartered some like transport ships that normal transport like automobiles. They’re not nice ships, but they still wanted to charge us the equivalent of airfare to get us out there, which, you know, I kind of understand that, but then I also think, “Why the hell am I paying my global tax? What am I global income being taxed for?” You know, what service am I getting and they’re charging me for this too.

Another disturbing thing too, I don’t know, maybe you have a different opinion, but you know those guys that got beheaded in Iraq with ISIS. Their families wanted to pay a ransom to get their loved ones home and the administration essentially threaten them with prosecution saying no you can’t pay the ransom.

Jason:
Oh because, because they would paying..they would be giving money to a terrorist organization.

Nick:
Yeah, yeah.

Jason:
Oh my god. That is real conflict. That is unbelievable.

Nick:
That’s sickening, so I mean I think of it it as, like, if that was my brother, I don’t care, I’ll go to prison if that saves his life.

Jason:
You know, that’s a really interesting and scary concept, because, you know, if someone has, you know a lot of corporate execs and so forth have kidnapping and ransom insurance. So, you know, your insurance company would use that as an excuse not to pay, because they would say, well, you know, you got kidnapped by a terrorist organization and who the heck knows! They could label any organization a terrorist organization, right?

Nick:
Oh sure.

Jason:
And then, they’d said, well, the US government prohibits us from paying your ransom. Well, what the heck did they have insurance for? You know? Yeah.. Wow.

Nick:
That’s totally true, but you know, you look at European countries, you know, like the Spanish, the Italians, the French who are kidnapped too, they all got out, but I mean, people may disagree on whether it’s right to pay a ransom or not, but I guess when the shoe is on the other foot and it’s your actual loved one who is in harm’s way it’s a different story, but they didn’t get prosecuted. The Europeans didn’t get prosecuted when they did that too, so..it’s an interesting side story.

Jason:
Hmm, yeah, very interesting. Okay, Nick, you’ve done some great work here and produced a phenomenal report on Puerto Rico and that’s excellent, just give out your website one more time.

Nick:
Yeah, sure, if people want to find out more about Puerto Rico stuff, we just put out a free video that we did with Peter Schiff that details a lot of it and you can find that at www.InternationalMan.com and you just click on Puerto Rico and you will find it there.

Jason:
Excellent. Well, Nick, thank you so much for joining us today and just any closing thoughts on this or anything else you want people to know before you go?

Nick:
Well, sure, if you can structure your life and your business so that you can take advantage of these tax incentives, I think it’s a total no-brainier. These are advantages that are so huge and so unique, really you can’t find them anywhere else in the world, so if you can do that, this is..and I don’t like to use this word because I think people overuse it and it’s cliche, but it is life-changing. If you can make it work for yourself, it is life changing and that you can effectively double your income and grow your..if you think of the compounding effects of doubling your income over and over and over for decades, it’s almost incomprehensible of how much that can improve your life.

Jason:
Fantastic. Well, good stuff. Nick, thanks for joining us.

Nick:
Yeah, thank you, Jason.

 

Pete Schiff

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