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The term perpetual traveler (PT, permanent tourist or prior taxpayer) refers to both a lifestyle and a philosophy.
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[edit]Background
In practical terms, perpetual travelers (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 taxes, jury duty and military service.
For example, while PT's 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.
[edit]Rationale
Some PT's are wealthy individuals whose primary motivation is tax avoidance. It is possible for a non-national to live for several months, and in some cases even own property, in many countries without payingincome 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 PT's can, by moving between countries on a regular basis -- be able to legally reduce or eliminate their tax burden. Other PT's and itinerants may adopt this lifestyle for primarily self-ownership reasons, seeking to be free from government authority, interference and "The System".
[edit]Five Flag Theory
Perpetual travelers may attempt to organize their affairs around the "Five Flags" theory[1][2][3], 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:
- Passport and Citizenship - in a country that does not tax money earned outside the country.
- Legal Residence - in a tax haven.
- Business Base - where you earn your money, ideally somewhere with low Corporate tax rates.
- 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 tax and VAT.
[edit]Three Flag Theory
The general basis of the Three Flag Theory is:
- Your citizenship must be somewhere that does not tax income earned outside the country.
- Your businesses and speculations must be done in stable, low or no tax countries.
- Live as a tourist in countries where what you do for a living is valued, not outlawed.
[edit]Philosophy
On the surface, perpetual travelers have some things in common with world citizens, in that they see themselves as untethered to any one nation. Many PT's align themselves closely with the libertarian oranarchist schools of thought, which advocate individual sovereignty - sovereignty vested in the individual rather than in nation states.
