Ask HN: Is it worth to move to another country for 1mil$?
Lets say you made it. You always wanted to be independent. Your cooperate job sucked. So you started your amazing side project. It took off.
What was previously fun requires now serious decisions. Your life. Should you resign from you boring job, although it makes now somehow a bit fun. Should you hire people. Should you change anything at all.
But maybe the most urgent decision would be: 1) Staying where you are. Paying 45% Tax rate. With rather bad regulatory conditions 2) Moving to a business friendly and tax friendly country like Switzerland. Paying 10% Tax.
What would you do?
PS: Some of my own thoughts. I never would go away to Swiss for a raise from 100k -> 200k. But it is somehow more difficult when we are talking about millions. Especially when I have the feeling that my government doesn't spend the taxes well.
Not sure yet what I would do with one million more, but guess something like starting a new company or helping parents and so on. To be honest kind ofparalyzed regarding this since there seem to be no rational solution. Moving to a new Country could really suck. Especially since friends and family would be somewhere else. On the other hand. Just doing it for a year would result in multiple millions of net worth. It could also be a nice experience - but not sure about it. So really struggling. You're clearly making a nice chunk of change already if tax-avoidance alone will net you $1mm extra. This plan seems very "Panama Papers"-y and unnecessarily greedy to me. I can understand if your government is highly corrupt or something, but it seems distasteful to me to take advantage of the strong safety net, schools, etc. that are funded by a high tax rate, then once you've become successful to try and dodge your responsibility to give back to that same society. Just my 2 cents -- you do you. Thanks for the answer. I really don't have any moral issues with my liability to the government. As I said not satisfied with their work. Some regulations are killing business. And what I'm doing is highly unregulated. So they didn't do their homework.
But in the end it is actually for me a more personal decision. Yes you could say greedy. But greedy is also an optimization algorithm. My experience is that corrupt governments don't exist in isolation. Lack of personal safety usually comes with it. It would be reason enough alone to leave in my opinion. Income taxes didn’t really exist prior to the 20th century. The state has swelled in size since then, with predictably violent outcomes. It would be one thing if the money was spent in a responsible way that benefitted all members of society, but we all know that isn’t true. I wouldn’t feel bad about moving to escape a tax burden at all. Getting used to a new country isn’t that difficult, in my experience, and you’re always a short plane ride away from your origin country. I have the tee-shirt. 1. If you haven't done so already, you need to immerse yourself for 3 months+ in the target country in order to understand the lifestyle, the people, the culture, the weather... 2. You have a successful side project. If there is room for growth, you just need to wait a bit longer to achieve the magical 1m. 3. Depending on your personality, you may become a bit of a liability to your current employers. Having an independent income changes your perspective from a decision making perspective because ultimately the success of the company is no longer tied to putting bread on the table. 4. Life is short. Money comes and goes. Work out what would make you happy (not necessarily an easy thing to dow), and then work towards that goal. You are lucky, you have an amazing opportunity, don't squander it! Thanks a lot for the tee-shirt. Actually one of the best answers here. Especially point (1.). You are completely right, I should wait till things calm down regarding covid and then should at least visit Zurich one time. Guess right now might be the wrong time to think about it. This question really consumed already so much mental power... I think the value of living in another country is really about personal choices and that is way more than money. Also I keep thinking that the disruption of moving the company, legal and personal challenges there and etc are REALLY going to hit your productivity / momentum. If you're looking at a million dollars, do you chose to take a big disruption at that point? I think there's a lot more to consider here than how you frame it. I'm not sure the outcomes here is as simple as tax rate. Yes exactly. But the risk is on both sides:
- moving away -> New environment. Productivity goes down.
- staying -> Risk of regulatory uncertainty. Could take even years till taxes are exactly determined. I guess it depends on how you're measuring 'regulatory uncertainty'. I'm not sure trying to predict that is a reason to take the hit for moving when you're facing a million dollars. There do not exists clear regulations. So you can't tell exactly how taxes will be calculated. Also you can end up by other regulatory laws that will just make things more difficult. As said somewhere else, I saw companies liquidated themselves in as similar area. Created a holding. Moved then to an other country (of course less regulated). Actually that is sad that this is happening. Having moved away for money in the past I wouldn't do it again, human connection is hard to buy, family is hard to move, and friendships tougher to make the later in life. I assume you're moving away from the US, if not, my comment content may not matter. But going through the same moving away thought exercise personally, one consideration (esp as one gets older in the US), is the degree to which your personal wealth is at risk from medical financial exposure over some major medical issue. The odds increase as your age does. It's possible to be somewhat protected from this in the US, but it takes a lot of very careful reading of health insurance documents, some considerations as to losing that insurance if you're getting it from an employer, as well as maybe putting into place added layers of insurance. In addition, some studies point to not only worse care in the US if you aren't in upper incomes, and living in the right regions, but also that even with the higher levels healthcare in the US that come with wealth, the outcomes can be lower than what median care quality in leading EU nations provides. I'm not sure the studies are fully conclusive, but that's two healthcare factors that you haven't mentioned, that I thought over when looking at moving away. Well, assuming your project really takes off and you do have $1M, you could live (half a year +1 day) in country 1, and the remaining (half a year -1 day) in your country each year. You'd pay what, 10-15k per year in extra rent in the second residence? Probably acceptable if you have 1M. That way you're "clean" when it comes to taxes, and don't have the downside of leaving everything behind. Easier said than done of course. (Implicit assumption you're the boss of your thing, so you can work remotely as you want.) As others said, getting new friends in a new place (especially abroad) when you're, say, over 30, is really tough. > I never would go away to Swiss for a raise from 100k -> 200k. But it is somehow more difficult when we are talking about millions. This makes sense to me. When you've got a buffer that big, you can start to think in terms of living off your interest/investments. A higher tax level can deplete your wealth's ability to provide for you indefinitely. I can understand that losing this is a big deal. > What would you do? I prioritise the welfare and happiness of family and dependents. I'd stay put. I'd say do whatever you would enjoy. You might as well stay where you are and endure the taxes and regulation if the rest of your life is enjoyable. It sounds like even at 45% tax, you will be making more than you do now. On the other side of this, you might find yourself disagreeing with your government. It might make you happier to move to a government that more closely matches your ideals. If you are settled with friends and family it is not worth it to upend your whole life to move. You will never have that back. I speak from experience.
IMHO if you have a nascent business, focus on growing and ignore all else. It's not worth it to worry about taxes today. I would only move if this helps the business grow. Actually it would help to grow the business. Especially there is regulatory uncertainty regarding what I'm doing in my country. Saw already few companies in a similar area liquidated themselves and moved away. Maybe they just wanted to save taxes, but I highly doubt it. I'm not in this area. But here is some example what could theoretically happen: You're starting a twitter clone and the Government says you are responsible for every post on your platform. You get sued and you are done.
Right now this wouldn't kill me since I could always move on. But it could cost a lot and possible give a huge setback. What's a year in a new place. Unless it gets in the way of other plans, I've never been the one to shy away from a new view expanding experience. You know you can make new friends as well as keeping old relationships alive. You could invite friends to visit or live with you for a bit. To be completely honest, it's the regulatory environment that worries me. Taxes asides, it might be worth it to move just to have a place with better laws for businesses. And honestly, above one million, the taxes you save will more than pay for airfare to spend time in your country. Exactly that is what worries me most. Even lawyers tell they don't know how it would be played out in the long term. Worst case would be: Being taxed very high and then forced to move to an other country. I want to move away, I could move away, but I have a teenager who's still incredibly integrated into my daily/weekly life (we live where his mother lives), so I'm not going anywhere for the foreseeable future. Yes, this is my answer regarding $. It is a nice problem to have in 2020. The only advise that I have to give is: money are means to an end, not an end in itself. The urge for adventure is a valid reason for change, making more money without purpose is not. I want to thank everyone for the answers here. Really appreciate the open and honest discussion on hackernews. It helped to see things more clearly. Thanks a lot again and stay healthy! why not create a company in tax friendly country and transfer all your business to it. work as a CEO/Remote emplotee of it,Get healthy base salary as fixed income from it ,whatever else you need can be given to you as business expense and allowance.
all money lays in the company with lower tax jurisdiction. Doesn't work or very difficult to do. CFC rules. Doable with many proxies in tax-heaven who acts like the real company board, holds virtual meetings etc. They create all required paper trails which can comfortably bypass CFC restrictions. So if it is in the gray zone, then not sure I'm willing to take the risk. We had here some lawsuits where people had to pay huge penalties. Even prison is possible. Have been thinking about openning a company in Gibraltar. Best case would be 10% cooperate tax + 25 % tax on dividend. So you are a bit better of compared to a tax rate of 45%. More important would be a hedge against the regulatory risks. As you said you need a managing director and maybe some employees. Have you done something like this or could you provide some more info's? Of course it should be legal! hell yes its worth it. you may not make this much money forever. imagine what that 1m will compound to when youre older. it really is alot. but in the end its a personal decision that only you can make. Yes, why stay in a place that will charge you more and more and where the population may go "tax the rich" or such. Once you enter into a higher level of wealth, you need to protect it. Now it depends where and how you structure your business. Allocation of preservation of wealth is a human goal. If your business relies entirely on revenue, then in any regard you will be taxed - so it would help to find a satellite country that has a lower tax rate for revenue. It also helps in case of any nasty liability lawsuits down the road for warranty or sheer incompetence/negligence. Having money/resources in a different part of the world, different from your customer base can shield your wealth greatly because requires more cash upfront from those with cause to sue. Easy to sue locally/nationally, but internationally, need to bankroll multiple people and outside of directly government intervention, you're pretty much safe and have alot of "time". If income is by capital gains, it's entirely different and depends mostly how property/rights are treated/respected where you are. Especially taxes and how swaps/transfers are taxed. Also differs if it is entirely Intellectual property as well. Local government rules for IP matter, and are not severely punished internationally, but you want to be able to protect and protest it, so local satellite offices are needed to ensure compliance. Depends which market of course. So we covered general SAAS/Revenue, Capital Gains and IP. -- For your regular job, to resign and hire people. You can and should hire people along the way no matter what. Whether it'd be a virtual assistant/secretary or someone to organize - and then onboard more and more people that know your product/what you do/can contribute. You need to create departments and silos that push more into marketing, sales, reputation and general support. Marketing should be a profit center, support is usually a cost center - but you need to scale client acquisition and work. Automation is great, but, you can't automate everything and after a while you will get overloaded/overtaxed on day to day stuff, you'll just want to slink back some days and do nothing - but what if your main client/highest billing client has an issue, or wants 1:1 time, how do you react to that? What procedures do you ave in place for day to day matters as it's operations and makes business easier. So, change in the form of creating structure and procedure. Resign when you have a good runway, your forecast is all green and you have a proven history of salary/income from this side project that rivals or exceeds your main day job. If you do - your time now becomes twice as valuable. I would of course try to see how long you can maintain double dipping working for someone else/yourself, but it'd come a point where you want the immediate time relief of just focusing on yourself/your project - this should be when you have a team in place and people to delegate and savings/cushion/runway of 2-4 years, be liberal or conservative, but, how you structure your personal day to day also matters highly. Time, becomes expensive. The experience is great, and many people do it, from digital nomads (ugh, right?) to just talented people in general - there is no rule, per se that you must form a business where you live/reside, and many countries welcome the foreign influx of cash/assets in their country, but at that same time it also depends highly on that country's reputation, human rights, your rights, corruption and ease of doing business which are all recorded and known index's. Some country's have langauge and country barriers - China and Japan welcome foreigners to start corporations, but one is very friendly and has great programs for entrepreneurs with rights guaranteed (Japan) but suffer from culture and language barrier (Japanese, Hanko, Holidays, Politeness and I won't say dislike foreigners, but unless you have friends, can make some things harder.) vs another, China, that you have no property rights, ease of doing business is easy with cash, but wiring/fiscal currency controls, IP controls, and general distrust of media/government alongside culture and language barriers make it hard. Cheap labor though. Taxation in Japan/CN is also pretty fun, but that's another topic I won't get into -- Estonia makes it sound easy too. Southeast Asia in general is also fun but it's a conversation worth having once you have a proven business model and history of revenue that a 20% reduction in taxes, matters. Because 20% reduction of $0 is still, $0. I pay 55-58 percent taxes in Belgium. Im pretty happy with how our system works and what they provide. But I do know they could easily get this number down if they would just do everything more efficiently. Never gonna move for it though. Don't you feel sometimes that the amount of tax you're paying is not equivalent to what you are getting in return in terms of infrastructure, education or healthcare ? I guess the bigger the wealth, the less you rely on whatever the government does with the taxes. What you're interested in at that point is how does the government treat people like you (financially), high taxes? more regulation? etc etc. First, taxes paid isn't wasted money. It's (theoretically) going to those who need it. Tax havens, along with other tax avoidance schemes, are pretty popular with the rich, which means governments are on the lookout for them. It's not as easy as you think. For example, if you're American, leaving for a year doesn't do a whole lot. Second, countries are locked down now but even after this pandemic is over, your limit is 90 days. If you're from a Schengen EU country you can get a residence in Monaco and just spend your time traveling. But again, I've heard that if you've ever paid taxes in France, for example, it might not be possible. There are cruise ships that exist for this purpose. Spending a year surrounded by those kinds of people would seem like a special sort of hell, to me, personally. If you can live abroad, generally, that's a great experience. Leaving family and friends can be a big cost for some people but if you can do it, it's recommended. Traveling is like meeting someone, living there for a couple months is like dating them, and longer is like moving in with them: you get to know them intimately, all of their idiosyncrasies and it influences you in ways you can't avoid. You end up being a different person, usually for the better. Like with everything, it's different per person. I always say: don't do anything just for money if you can help it -- and you usually can. "First, taxes paid isn't wasted money. It's (theoretically) going to those who need it." Considering the GAO reports that over $100 Billion is wasted by the federal government annually, I find it hard to truly believe that it is going to those who need it (how's need even defined anyways?). The OP also states that he doesn't believe the money is being used properly. That is $300 per person, which is a small fraction of the overall budget. It can still make a difference in people's lives, especially to the poorest people. "I don't believe the Fire Department is being as efficient as they can be, therefore I won't chip in my portion to help fund them." That's puerile and childish. You're not being principled, you're being greedy. You don't like its efficiencies? Help fix it. You don't want any of its services? Let's see how long you last without them, especially the police and military protecting that wealth. It's all a social contract and you don't get the services but get to opt out of paying for them because you got more and realized that you're a greedy, shitty little scumbag. He's not saying that he wants to get the services without paying. He's saying he wants to move to another country to keep more of his money. If you can pay 10% for the same services (or the level of services that you want) in one country, but it would cost your 45% in your current country, then why not switch? There's nothing wrong with that. You're still paying your share under the social contract. He already got the services all his life.
Or do you think he could have started his company without education, infrastructure and security? That is a point of course. I'm thankful for the education I got here. No question. On the other hand I already payed a lot of taxes. And my father retired few years ago and is treated really bad after he worked more then 20 years. Actually he is treated like he never worked at all. So that is what I mean regarding tax policy. In my opinion you can't say someone isn't paying his fair share if he pay lets say 400k on a 10% rate. He is still contributing much more then the average and I think he should not be treated like a "criminal". Another option might be to just move the company, so you only pay the higher income tax in the money you draw from the company.
But i know it's easy to talk about ethics if it's not your own money. Not that easy. CFC rules. Actually if you want be in control it is very difficult to make it legal. I didn't mean to be judgmental. It's your decision. Thanks a lot! Yes, guess a hard one as well. You're assuming his education was publically funded - it might not have been. Can you say that he required the infrastructure or security to be successful? So you're saying that immigration/emigration should be illegal? I believe people should be able to move if they want to if they follow the process. It's important that people can live under a government that they support and believe to be the best one for them. It sounds like he has been paying his taxes all these years. So he has been contributing his fair share. Don't forget, him leaving means one fewer person for the government to provide services for. Knowing that healthcare costs increase as one gets older, this could be a large amount if healthcare is something his taxes cover. Honestly, the logic that he owes society money for the past services is pretty convoluted. The government isn't keeping a tab of what people owe if they ever make more money. When then, would someone have paid their dues to society to earn the freedom to move? The people currently making money are paying current taxes. Are the kids in school paying taxes? No, it's the property owners, some of whom might not even have kids. Tax schemes are designed to collect the amount that society needs as an aggregate. They try to be logical or socially acceptable in how they are collected. Society has not implemented a tax scheme saying you owe more for previous services because your income went up. They could, but they haven't. I once made that decision, to move away to another city for 4 years. So can definitely agree that it is one of the best experiences to move away, at least once. On the other hand not sure if I would be ready to settle down for example in Zurich. Also, governments lookout for you. So basically if you start a business in my country and are then not satisfied, it becomes much more difficult to move away. You will have to pay a tax on the liquidation value of your company. Actually I never dealt with this stuff and was surprised about all the laws around this topic. "don't do anything just for money if you can help it -- and you usually can." Can't agree more. Been always my mindset as well. It changed a bit to be honest as I'm thinking about paying multiple millions in taxes that can be avoided just by moving to another city. Especially since the Government actually wasn't able to provide a good and fair regulatory framework. So there is a non-zero risk that they could kill the company. It's funny that you chose Zurich for your example. It's a city I've lived in for many years and I think I can honestly say it's one of the great cities in the world. Safe, clean, and gorgeous. The language is really hard to learn, even if you know German, and almost impossible to sound like a local. It's also almost impossible to make friends except for expats here and there. So you're always an outsider in a town where they really don't care for outsiders. Otherwise, it's lovely. Someone else said it well: spend several months checking out any potential candidate location. Talk to expats. You'll get a really good idea of what it's like to live there. It was just most convenient choice. Good airport connection and as you said it's rating is quite high. Guess the language would be the most annoying thing. Other choices would be Malta or Cyprus regarding taxes, but they are far away and I think the cultural match would be in Swiss higher. If you like mountains, snow, skiing and hiking: do Zurich. If you like beaches, heat, and small French towns: do Monaco. (IMO) Like others recommended here, if you don't want to give the money in taxes why not start a foundation with as much money as you can supply and support political change? You could become a national hero.