A perpetual traveler (PT) is also referred to as prior taxpayer or permanent tourist. A perpetual traveler is someone who strategizes his life in such a way that he is not considered a resident by law in of any of the countries where he spends his time or operates from. The lack of a legal permanent residence status helps them evade legal obligations associated with residencies like social security contributions, income tax, asset tax, military service and jury duty.
A perpetual traveler generally obtains the citizenship of a country where the citizens are only taxed for the money earned in that country and on the other hand he obtains his legal residence in a tax haven. As the name indicates a perpetual traveler travels permanently hopping from one country to another, their assets are spread out and protected. They do not stay in any country for long enough to be termed as a resident, and this facilitates evasion of tax, increase in personal freedom and civic duty avoidance. The perpetual traveler idea is also termed as a “Late capitalist nomadism.”
Perpetual travelers remain a tourist everywhere they go. They are diversified in their business, residency, assets and digital footprint. They are lifestyle design masters. They consider different countries as service providers. They carefully choose the best place to travel to, live in, keep their savings, get healthcare services and run their businesses.
Perpetual Traveler & Flag Theory
The perpetual traveler concept has been represented as a flag theory first initiated as the three flag theory by Harry D. Schultz and later modified to a five flag theory. Here is the perpetual traveler blueprint- the five flag theory that suggests that each of the following flags should map to a separate country:
- Citizenship and passport: A PT places this flag in a country that does not tax the money you earn outside that country.
- Asset Haven: Perpetual travelers place their assets in a country where tax rates are low on capital gains and passive income.
- Business Base: A PT makes a country with low corporate tax rates as his business base.
- Legal Residence: A Perpetual traveler obtains the legal residency of a country where taxes are levied at a low rate.
- Playgrounds: Playgrounds refer to places or countries where PTs choose to spend their money because that country has very low consumption taxes.
So basically a PT lives in one place, works in the second place and keeps his money in a third place skillfully evading tax completely or paying negligible tax.