The term perpetual traveler (PT, permanent tourist or prior taxpayer) refers to both a lifestyle and a philosophy.
Contents |
Background
In practical terms, perpetual travelers 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. In this way, they seek to avoid the legal obligations which may accompany residency, such as 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. They may spend the majority of their time in other countries, never staying long enough to be considered a resident.
Tax avoidance
It is possible to live for several months, and in some cases even own property, in many countries without paying income tax. For example, one can 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. Note that this is not the same as legal residency. Visas are obtainable for longer than 122 days and a green card permits indefinite stays. Some PT's are wealthy individuals whose primary motivation is tax avoidance. By exploiting the rules in place for tourists and travelers, individuals may be able to legally reduce or eliminate their tax burden. However other PT's, such as itinerants, may adopt this lifestyle for purely self-ownership reasons, just to be free from government authority, interference and "The System". Some countries have introduced calculations based on the amount of time which has been spent in the country. An example is the IRS Publication 519 (2006): You will be considered a U.S. resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States on at least:
- 31 days during the current year, and
- 183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:
-
- All the days you were present in the current year, and
- ⅓ of the days you were present in the first year before the current year, and
- ⅙ of the days you were present in the second year before the current year.
If you terminate your residency after June 3, 2004, you will still be considered a U.S. resident for tax purposes until you notify the Secretary of Homeland Security and file Form 8854, Initial and Annual Expatriation Information Statement.
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 an extension of W.G. Hill'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
- Asset Haven - where you keep your money
- Playgrounds - where you spend your money
Philosophy
On the surface, perpetual tourists have some things in common with world citizens, in that they see themselves as untethered to any one nation. However, PT's generally seem to eschew the humanistic and utopian overtones of world citizenship. Many PT's align themselves closely with the libertarian school of thought, which advocates individual sovereignty - sovereignty vested in the individual rather than in nation-states.
References
- ^ Three Flag Theory for Expats "Some PTs add even more flags to create a five flag theory..."
- ^ Amazon Book Description "To succeed as a PT you will compartmentalize your life under these FIVE FLAGS..."
- ^ Five Flags Theory "Persons utilizing this philosophy are called 'PT's..."
See also
External links
- Worth Magazine Article - An article about the idea of perpetual tourism
- The PT Concept - information on "three flag theory" and becoming a Permanent Tourist
- PT Club Website - An overview from ptclub.com
- PTshamrock Website Another site for information
- Perfect Privacy Forum A PT services, information and networking center
- PT FAQs Some answers to commonly asked PT questions
- IRS Publication 519 IRS document explaining the "Substantial Presence Test"
