%% date:: [[2022-08-29]] %% # [[Flag Theory]] Flag Theory is the practice of spreading out life milestones (such as getting married, starting a business, buying a house, investing in assets, and more) over multiple countries, choosing the most favorable conditions for each one. Flag Theory is in direct contradiction to the more common approach of doing everything in the country that one happened to be born in. In flag theory, each flag is an activity or milestone that is intentionally "planted" in another country. <iframe width="560" height="315" src="https://www.youtube.com/embed/NBUVWlhmVDM" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe> ## Five flags Flag theory is often referred to as the "five flag theory", where each flag represents one type of activity. The five main flags are: - Nationality (and passports) - Tax residency - Business - Banking - Actual residence ## [[Multinationality|Nationality]] **Nationality** is your citizenship, a political connection to a country. Nationality can be inherited or acquired, and also has an impact on your freedom to travel. ## Tax residency [[Tax residency]] is the country that has the right to levy taxes on your income. People usually only have one tax residency, but in some situations, they may qualify for more than one. Your country of tax residency determines how much your take-home pay is. Ideally, you should have your tax residency in a country that does not tax residents on foreign income. ## Business **Business** residency refers to the place where a company is incorporated and where it pays taxes. Flag theory suggests starting companies in low corporate tax jurisdictions. ## Banking **Banking** refers to the place where financial accounts are opened. The best countries to open accounts in are those that value privacy, guarantee deposits, and provide little to no control to governments to touch the money. ## Actual residence **Actual residence** refers to "playgrounds" where you actually reside. Ideally, this would be a place with little to no [[VAT]] on purchases.