Living Abroad to Improve Financial Independence (1)

Note: This guest article was written by Gaël de zen-option.com, who shares on his blog high-yield tracks and options strategies to stay zen in the stock market. When you hear about financial independence, you often hear stories about business creation, yield, investment strategy in stocks and real estate, etc. All these things that are part of the sphere of investment, entrepreneurship and financial markets.

And if you are looking for financial independence, you may be thinking that the first step is to properly develop your assets and your sources of passive income. And then, you will enjoy them, you will travel, go and settle in the sun, buy a vineyard or a beach bar for your "retirement".

What a shame... You're probably going to spend most of your life dreaming about all of this. And if, after several decades of effort, you finally achieve financial independence (which means retiring a little earlier than your country's government allows you to), you will have changed:

• Physically: you may be less healthy to carry out your projects.

• Psychologically: we often forget to say that we age psychologically too. You may simply no longer want to do what you dreamed of at 30, you will have "moved on to something else", without ever having achieved it.

Time flies... Time is not money. It's your life, it's your dreams and your happiness.

And if the first step of financial independence was to leave and expatriate...? Rather than trying to struggle in a system that only gives a semblance of "freedom" (= consume what your means allow you), and to let yourself be swallowed up by all its constraints (notably taxes, but we will study all that later), why not leave it?

This will allow you to carry out your projects more easily while accelerating your path to financial independence.

I will open this debate in 4 parts and reasons for leaving. Here is the first one today:

Taxation

The first HUGE ball and chain that chains you to the exhausted systems of poorly managed Western countries (over-indebtedness is proof of this) is taxation. Unless you think you have some responsibility for this mismanagement or you are a bureaucrat (and therefore live with other people's money), RUN AWAY, because the State and the central banks will end up finding a way to steal your savings (levying bank accounts, hyperinflation, etc.).

The world champion in this area is France.

Whether you are an entrepreneur, craftsman, investor or trader, you are falling far behind on your path to financial freedom because of the tax burden.

Too many taxes kill business financing

I'm going to tell you about the French entrepreneurial adventure of a friend and fellow engineer at Supelec. After a doctorate, he founded an innovative company in the telecommunications sector.

His only salvation for raising funds at the beginning of the adventure was to hunt for public subsidies (regional councils, OSEO, etc.). Then, given the extremely high taxation for private investors, it was impossible for him to find business angels for the next stage of financing his company, which had nevertheless won initial contracts with major telecom manufacturers.

What is the result after several years of struggle (he didn't always sleep well)? The takeover by a German company (it was that or bankruptcy), at a stage far too early (for his personal fortune) of a technology that was nevertheless promising and scientifically validated.

In his case, several tax factors came to hamper his success:

• very high salary costs which caused R&D expenses to increase at a critical time for the company (technology validated and first contracts but not enough cash flow)

• a tax on capital gains that is dissuasive for private investors and has not made it possible to raise private funds to replace public funds.

And besides, it is not very surprising that there are not many former successful French business leaders who come to finance young entrepreneurs: all business leaders who sell their SME/SMI only think of one thing afterwards: leaving the country to escape a tax system that would very quickly eat away at their hard-earned fortune.

Paradox of a country which otherwise cries after foreign investments in France, by exempting for example the Qataris (who are already almost all rentiers) from wealth tax in France...

Driving away French talent and French money, while passing laws to favor wealthy foreigners. I don't quite understand the logic.

But what I know is that personally, if you are French, you are not responsible for the intentions of the leaders of a country that shoots itself in the foot (or even in the head) for ideological or religious reasons (dhimmitude).

Have no qualms about putting your ideas and money to work in places where they will be treated better.

Taxation is weighing on your trading and investment performance

From an investment and financial markets point of view, is it useful to specify that capital gains tax is confiscatory in France: it can go up to 62.5%.

The famous PEA (Action Savings Plan) simply brings it back, but with many constraints, to a "normal" level (between 15 and 20%).

There are plenty of countries that have reasonable tax rates (on corporations and capital gains) (around 15%) for people who take risks, create wealth, and jobs. Take advantage of them, the world has never been more open.

In Switzerland (another country I know well), it's a little different: taxation is reasonable and public money is rather well managed. It must be said that it's a true democracy (the only one in the world to my knowledge) where the people have a good economic culture and have their say (by voting) on every major social issue (including the level of taxes, and the use that is made of them).

On the other hand, the cost of living there is extremely high, and this brings me to the second obstacle on the road to financial independence (fixed expenses and the cost of living), which I will address in the next article in this series.

In the meantime, whether you want to achieve financial independence through business creation or investment/trading in the markets, think carefully about the tax environment, because it is one of the burdens that can be avoided by going abroad.

Yours sincerely,

Gael Deballe

Win on the markets without speculating, by putting the probabilities on your side:
http://zen-option.com/strategie-de-rendement-zenoption/