Does the Five Flags Theory and PT Lifestyle Still Work?

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A number of readers have been asking me recently about the PT and Five Flags Theory lifestyle.

PT can stand for any number of things including “Perpetual Traveler”, “Permanent Tourist” or even “Previous Taxpayer”.

 from Peter Macfarlane 

The idea behind these theories is that smart, freedom-seeking individuals should not be bound in their allegiances to just one government. But do these theories have a practical application in real life?  In other words, do they work?

There also seems to be some confusion about the number of flags: The ‘Three Flags Theory’ of Harry Schultz, the ‘Five Flags Theory’ of the W.G. Hill series, publicized last year by Neil Strauss in his bestselling book Emergency… or the ‘Six Flags Theory’ of Bye Bye Big Brother?

 

What useful purpose does a government serve?

Most people accept the institution of government because it has always been there; they have always assumed it was essential. People do not question its existence, much less its right to exist.

The various flags theories are all about achieving freedom by not having one single government controlling you. Most countries treat foreigners far better than their own citizens. So the idea is to be a foreigner wherever you go – hence the ‘Permanent Tourist’ tag. You also achieve privacy, because no government will have access to the full picture of you.

In general ‘PTs’ can, by moving between countries on a regular basis, legally reduce or eliminate their tax burden. Many, however, adopt this lifestyle primarily for self-ownership or freedom reasons – checking out of “The System”.

Either goal is achieved by simply using different governments, or flags, for different parts of your life. At its simplest, the theory works well with three flags:

  • 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 – your business havens.
  • Live as a tourist in countries where what you esteem is valued, not outlawed. These countries are known as Playgrounds.

Back in the 1980s, author Dr W.G. Hill and the Scope International publishing house produced a series of books such as The Passport Report, PT1, PT2 and Banking in Silence in which the original three flags were increased to five flags, by adding an additional ‘asset haven’ – a money management or offshore banking center, independent of the business flag – and a ‘residence’ flag in a tax haven where you have official residence.

Note that this is a paper or ‘official’ residence and is not necessarily where you physically spend your time. I wrote recently about residence and citizenship in the Dominican Republic for example – it’s ideal for this purpose, since you are allowed to be gone for up to a year at a time and still qualify as a resident.

Finally, in 2005, an anonymous author under the name of Grandpa wrote a new three volume update named Bye Bye Big Brother. In this, he added the sixth flag of cyberspace – a kind of virtual country which binds the other five flags together.

If you’re interested, get more information on the Survival Podcast forum.

Anyhow, having cleared up the confusion about the number of flags, the big question is, does it actually work?

It certainly does. Not only do I live this lifestyle myself, but I know plenty of other people who do too. However, I don’t know anyone who follows the rules absolutely. I think this was a set of rules made up for people who don’t like rules! Most people tend to interpret it in their own ways, picking and choosing the bits they like best.

When people first hear of the PT theory, they think it sounds difficult, complicated or expensive. It’s not.

Most people don’t decide to become PTs overnight.
Think of it as a gradual process – little by little, you might open a bank account offshore (asset haven), buy real estate or spend time overseas (the playground) and expand your business by diversifying internationally (business haven.) Apply for a residence in a tax haven that can lead to a second passport, use the internet (sixth flag – cyberspace) and before you know it you are a fully fledged PT.

So this is certainly more than just an interesting theory to bear in mind, it is truly the foundation of what we teach and how we live.

 

A number of readers have recently been asking about the ‘Perpetual Traveler’ or ‘Permanent Tourist’ theories. The idea behind these theories is that smart, freedom-seeking individuals should not be bound in their allegiances to just one government. But do these theories have a practical application in real life? In other words, do they work?

There also seems to be some confusion about the number of flags: The ‘Three Flags Theory’ of Harry Schultz, the ‘Five Flags Theory’ of the W.G. Hill series, publicized last year by Neil Strauss in his bestselling book Emergency… or the ‘Six Flags Theory’ of Bye Bye Big Brother?

What useful purpose does a government serve? Most people accept the institution of government because it has always been there; they have always assumed it was essential. People do not question its existence, much less its right to exist.

The various flags theories are all about achieving freedom by not having one single government controlling you. Most countries treat foreigners far better than their own citizens. So the idea is to be a foreigner wherever you go – hence the ‘Permanent Tourist’ tag. You also achieve privacy, because no government will have access to the full picture of you.

In general ‘PTs’ can, by moving between countries on a regular basis, legally reduce or eliminate their tax burden. Many, however, adopt this lifestyle primarily self-ownership or freedom reasons – checking out of “The System”.

Either goal is achieved by simply using different governments, or flags, for different parts of your life. At its simplest, the theory works well with three flags:

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 – your business havens.

Live as a tourist in countries where what you esteem is valued, not outlawed. These countries are known as Playgrounds.

Back in the 1980s, author Dr W.G. Hill and the Scope International publishing house produced a series of books such as The Passport Report, PT1, PT2 and Banking in Silence in which the original three flags were increased to five flags, by adding an additional ‘asset haven’ – a money management or offshore banking center, independent of the business flag – and a ‘residence’ flag in a tax haven where you have official residence. Note that this is a paper or ‘official’ residence and is not necessarily where you physically spend your time.

Finally, in 2005, an anonymous author under the name of Grandpa wrote a new three volume update named Bye Bye Big Brother. In this, he added the sixth flag of cyberspace – a kind of virtual country which binds the other five flags together.

If your interested, check out our Critique of the PT Five Flags Theory which explains this in more depth. There’s also more information on the Survival Podcast forum.

So having cleared up the confusion about the number of flags, the big question is, does it actually work?

It certainly does. Not only do I live this lifestyle myself, but I know plenty of other people who do too. However, I don’t know anyone who follows the rules absolutely. I think this was a set of rules made up for people who don’t like rules! Most people tend to interpret it in their own ways, picking and choosing the bits they like best.

When people first hear of the PT theory, they think it sounds difficult, complicated or expensive. It’s not.

Most people don’t decide to become Pts overnight. Think of it as a gradual process – little by little, you might open a bank account offshore (asset haven), buy real estate or spend time overseas (the playground) and expand your business by diversifying internationally (business haven.) Apply for a residence in a tax haven that can lead to a second passport, use the internet (sixth flag – cyberspace) and before you know it you are a fully fledged PT.

So this is certainly an interesting theory to bear in mind. If you would like to learn more about it, browse the Q Wealth website, and why not sign up for our free five part course ‘Secrets of the Super Rich’ which covers these ideas in more depth? There is no obligation, no spam, and you a free to unsubscribe at any time…

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10 thoughts on “Does the Five Flags Theory and PT Lifestyle Still Work?”

  1. Families can do it too. I have been a PT for 16 years, running an international business based in a tax haven, using outsourced worked to negate staffing costs and living between 3 countries. The issue of having a young family (needing schools etc) can be answered by adding a 7th flag, the 'onshore' element of your life, which would presumably be managed by your partner. I ran this way for 8 years in a European country where a limited amount of tax was payable by my partner, but minimal compared to being fully onshore. In Thailnd there are just such families who school there own children, but within a 'structure' of a communal school so kids still interact with others daily. If this is of interest look up Chiang Mai self schooling, i dont have kids so no first hand experience but have friends out there who do it very well.

    • I have a US based business with a branch in Canada. We mfg in the Philippines china india and Mexico. I am a US citizen. My home is in the US. Give me an example of how I can set up the five flags?

      • Greg, This is an excellent question…thanks for asking it.

        It's a difficult question though…at least it is without speaking to you and getting a lot more information about the nature of your business and getting a feel for your preferences as to multitude of factors that come into play when setting something like this up. What are your priorities and goals?

        In broad strokes though, I can see that you would need to concentrate foremost on diversifying out of the US both physically and financially (see my latest blog post on doing just that http://goo.gl/9LjGA ).

        Right now your citizenship, residence, and (presumably) the place you spend most of your time are all the same place. This needs some work. It's important to remember that the countries you choose for citizenship and residence do not need to be the same. You are choosing these jurisdictions based on what they have to offer you – what is their competitive advantage?

        Your business is US based, there may not be much that can be done about that unless you are an ecommerce business (or could become one!). Even if not you still have many choices.

        You could certainly diversify out of the dollar and into some higher service banking (again in the jurisdiction that works best for your situation).

        I want to communicate to you that you have lots of options but this is not the place to discuss them – or really even comment further without knowing more. If you are not already, I would encourage you to become a Q Wealth Member – this comes with a host of benefits including an initial email consultation where we could really dig into the nuts and bolts and give you an accurate framework to act on.

        Let our service department help you if you have any questions about membership and setting up the included consultation at [email protected]

        Thanks

  2. It's better to do this BEFORE you get a family, young people like myself should be told about this type of option.

    I'm so glad I ended up in a situation that pushed me towards researching this type of stuff and saves me headaches down the road.

    I really think the emphasis here should be for small business owners as we are a large population and how not just tax but REGULATIONS are so much better in certain areas. I'd prefer higher taxes if it meant less regulations but unfortunately usually with higher taxes comes higher regulations.

  3. I just run across this forum, and I’m curious.
    I’m a citizen of Portugal. If I go from (European) country to country, never spending more than 183 days in each and no family or economic ties to any, I don’t have to pay tax on my worldwide income?
    Or do I have to set up residence in a tax haven first?
    Thank you in advance.

  4. I’m going down this road, but I’m starting to think that registering a business is not necessary, even though I already registered a company in a no-tax country. I feel though that I will let it die next year, and not renew its license.

    I think that the residence is the most important element. If I get residence in a country that doesn’t tax worldwide income or doesn’t tax income, why do I need a company? For example, if I’m a resident of Vanuatu, which doesn’t have personal income tax, I can just get payments from my customers in Mexico into a personal account in Switzerland, or a PayPal, and I can save all the headaches that come with offshore companies –lawyers, bank accounts– plus, of course, the costs.

    Then, with residence in Vanuatu and clients outside, getting paid in safe, stable countries like Switzerland, taxes are gone –no need for a company–.

    Is there anything wrong with this reasoning? Maybe I’m missing something?

    • Thank you so much for leaving your very interesting comment. We are so sorry about the delay in getting back to you. Let me send you an email with some options in how you can get in touch with our experts. They will be better equipped to answer your questions and then help you with a strategic road map. Thank you again for thinking of us!

  5. Hello, any updates to this in 2019? Does it still work as big brother is slowly clamping down on all our personal freedoms and privacy, with ID chips soon to be implanted in everyone, face recognition at airports, and the OECD CRS rules for exchanging tax information between countries?

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