W.G. Hill’s book “Perpetual Tourist”, introduced a way of thinking about international living that has influenced thousands of readers since that time. His proposed Five Flags Theory offered a compartmentalized lifestyle to be aspired to by free thinkers everywhere. By 2006, a sixth flag had been added. The sixth flag was based upon the expanding internet and and its addition helped to synchronize the implementation of the other five flags.
The idea behind the concept is that a person should attempt to become invisible to avoid government control over his or her life. Big brother should not know who you are, where you live, where your money comes from, how you spend it, and where you spend your play time.
This conceptual lifestyle has most frequently been proposed for those who wish to retain control over their life and finances, and like the idea of living abroad. It has been especially recommended for the wealthy who want to retain their wealth and has been more commonly implemented by them.
Few people ever completely live the six flags lifestyle, but many choose to live parts of it. For this reason, I am introducing it to prospective expatriates who might not already be aware of the perpetual tourist concept. Basically, the five or six flags refer to aspects of the lifestyle which are distributed among different countries.
The first flag relates to your citizenship or passport. The premise is that a person should hold a passport to a country that does not tax the worldwide earning of the owner, does not tell its citizens where they can and where they can not go, and does not try to police their morals. This first flag can be a difficult one for a U.S. citizen to carry out unless they are willing to renounce their citizenship; a step never to be taken lightly.
The second flag relates to your residence base. This is your official legal residence even if you spend little or no time there. The idea is that it should be a tax haven, and should not tax any income earned abroad. Your choice most likely would be based on your financial status. The wealthy can choose any country that qualifies whereas a less heeled individual might have to choose a lower budget base like the Turks and Caicos or Panama.
The third flag relates to your playgrounds. This may be more than one place and coincides with where you physically spend most of your time. This is where the idea of a perpetual tourist becomes important. Many countries have legal restrictions on how long you can reside without becoming or applying for citizenship. So, your playgrounds may encompass several countries in which you spend several months a year.
The fourth flag relates to your business base. It is here where you earn your money. This is a flag that can readily be used by most businessmen. You incorporate in an offshore tax free country, have all your company administrative and financial transactions done there, while selling your products to a worldwide market. You can be living somewhere else, and still legally be operating through this legal structure.
The fifth flag relates to where you invest and keep your assets. This should never be where you physically reside, and should be a country that maintains a high degree of privacy. The location or locations where you keep your assets should not be in the same country in which they are earned or spent. This may not be as desirable or as necessary for individuals with few assets, but as Benjamin Franklin said: “A penny saved is a penny earned”.
The sixth flag (added in 2006) relates to having an electronic haven is cyberspace. The idea here is that your internet presence should be based in a location where the internet is not taxed or regulated, and should not emanate from only one location. You servers should be set up as to be invisible to all. You want the appearance and safety of a non-physical base, i.e., physically invisible, but present everywhere.
The average retiree living abroad is not likely to need or use all of the six flags in their expatriate living. But the idea of being a perpetual tourist, which implies at least using some of these “flags”, makes being aware of their existence worthwhile. With today’s ever changing political and economic environment, you never know when you too might need to use some of these strategies.
Dr. Lamar Ross has a special interest in training individuals for expatriate living and providing information on unique travel destinations. He is an author, educator, photographer, internet entrepreneur, and international traveler. He has lived in the United States, Mexico, Puerto Rico, and India and has traveled extensively in 29 different countries. He plans to spend more time in Panama in the coming years. He speaks both English and Spanish fluently and has a basic ability in several other languages. For more information on expatriate living, check out the blog Expatriate Traveler Notes