#586 – Navigating Residency and Business in Latin America with Johnny Mueller

Automatically transcribed from the original recording; names and wording may contain errors.

[00:00] South of the border down Mexico way That's where I fell in love when the stars above came up to play and now I wonder Hello there all you expat wannabes. I'm Johnny Mueller and you're listening to the expat files living in Latin America The show that tells you just what it's like to live work play and or retire down here in Latin America It's a mix of the good the bad the ugly and the great and it's all right here So let's get started the other day I was with John Galt and we were discussing how in some of the 20 Latin American countries It's relatively easy to get temporary and permanent residency while in others. It's slightly more difficult There are more hoops to jump through cost more money and takes more time

[00:47] Then there are those other handful of Latin countries who change the rules so often and make you go through so many hoops that it's almost impossible to get residency in a passport the problem is for each Latin country Regarding residency and passports and stuff. There are tons of conflicting information on the internet now It shouldn't surprise you that it would be your Latin lawyer that would know all the steps that you need to go through The problem is if you don't talk to a Latin lawyer directly about your case You could be spinning your wheels a long long time and spend a lot extra money In fact a number of times I found out myself that Latin embassies and their ambassadors and their office personnel have conflicting information on temporary and permanent residency too and that's within their own departments their own chain of commands Sometimes doesn't seem to know the right hand from the left

[01:33] That's what causes a lot of headaches for gringles and expats who try to do those things on their own Sorry to say you can't assume by looking at a Latin countries embassy website that the data there is absolutely correct Oftentimes a would-be expat will spend a lot of extra time and spend extra money trying to get certain documents Authenticated and such that really weren't necessary and vice versa Many times a gringle would come down thinking all his paperwork is complete only to be told that he needs another Idiotic piece of documentation or a stamp or a seal from the home country So bottom line save the stress the wailing and the gnashing of teeth hook up with a Latin lawyer At least to get the proper information get a list from that lawyer what you need to have right now What was necessary six months ago is not necessarily what's necessary now latin lawyers know this stuff

[02:25] They do residency applications all the time And don't think you'll get the proper information by phone and up the nearest latin counsel it either if you do that You're guaranteed to get an answering machine Not to mention you should never put a hundred percent faith in expats who give out information on the internet even if it's coming from a blog from someone who went through residency because Chances are that person went through the process a long time ago possibly years ago And if that was the case you can expect you'll have more hoops to jump through more paperwork to file more complications in general In fact our own john gulch when he first came down to central america spent a few hundred extra bucks because he was given Some bad information at one of the latin consulates up in the states So in his case he ended up bringing too many authenticated and certified documents

[03:13] So in the end that cost him extra money his was the somewhat rare case of being over prepared So bottom line expect misinformation and a few screw-ups along the line. I mean, let's face it We're dealing with third world latin bureaucracies here And you know third world bureaucracies are like first world bureaucracies on xanax But it wasn't like that years ago when the paperwork was much simpler You know two decades ago when I first came down to latin america the residency rules For example when it came to costa rica and columbia hadn't changed for years And now they're changing so fast the embassies and consulates can't even keep up Yeah, right as if they ever could so All you guna bees and wannabes who are still on the fence You've got to make your move do file for your permanent or temporary residency now while you still have the chance

[03:59] Since for the time being at least some latin residency programs are still easily obtainable Though there's a lot of pressure coming down from the us state department to tighten up on those residency programs So in six months or a year all bets are off By the way, I have a very interesting email here from gringo living in columbia married to a columbian woman He's been there like eight years now his columbian wife is college educated and she works in a putrid government agency In fact, my friend says almost everyone in columbia wants to work for a government agency because they pay twice what the private sector pays Same old same old, huh? Anyway, his wife says the trend at the immigration office in columbia is to not only make things more complicated for permanent and temporary residency

[04:45] But also to raise the fees dramatically Wow, that's a big surprise And she said the south american countries the ones in the trade association called mercasort will all be doing the same thing So expect things to become more complicated and more expensive And that's especially true if you want to become a permanent or temporary resident in a south american country But the good news is with almost all latin countries Once you've started the temporary or permanent residency process your grandfathered and no matter how many new rules and regs They slap on in the future at least that's what immigration officials are saying But who knows right? So again, you've got to get that part of your plan be rolling Now speaking of columbia, I was speaking of columbia, right? Yeah, I was you have to hear this email hits on a lot of the subjects including residency

[05:32] And what so many people are interested in what it's like for gringo's doing business in columbia So pay attention to this one. There's a lot of great up-to-date information here He starts by saying hi johnny This is stu since you had some guy talking about columbia on a recent show I thought I'd add some more to the mix Been living down in medellin columbia for seven or eight years now and things are really changing fast Getting the proper legal visas to stay in the country and to get residency is getting harder and more complicated all the time And you might want to know there are new and more complicated rules for people who want to buy or rent houses property and land I'm referring to gringo's and foreigners now I'll get to that in a little while but before I do I want to tell you about doing business in columbia as far as gringo's and expats are concerned

[06:22] Hell johnny, you wouldn't believe how expensive it's become to do business here in columbia legally It's night and day compared to what it was like eight years ago when I first arrived The business newspapers down here are now admitting that columbia is the most expensive place in latin america to do business They also say the most dangerous place to open and run a business is not as you might think San salvador honduras or guatemala, but brazil Those same magazines and journals are saying that the cost to do business in cali bogota medin cardajena, etc That would be all the big cities in columbia They're all on par with opening and operating businesses in middle america My advice for an expat who wants to open a business here in columbia

[07:09] Do stick to an internet or it business if at all possible And here's another tip don't I said don't if at all possible register it legally with the government There would be no need anyway if you had the kind of it business you could do from the home However, if your operation is big enough to need a business office You'll have to register it or you'll get in trouble and how would that happen? Well, usually it won't be the government that finds out it'll be jealous neighbors or jealous local business people and competitors That'll report you to the columbian version of the irs Then you'll be in some deep doo-doo. In fact, it happened to a friend of mine and they revoked his permanent residency They slapped him with a huge fine Then put what they call an embargo on his passport meaning he couldn't go out of the country until he paid the debt

[07:55] I repeat if at all possible if you're going to do business stick to an it business and don't register it with the government I know there's thousands of off the books it companies in columbia right now I'd say three quarters of all it companies are not registered. So how do people get their money? How do they get paid better yet? How do they get away with it the most common simplest and easiest way is to have your bank account where you receive your funds In another latin country or have an account in an offshore caribbean bank and you bill your clients from there Johnny most people think that the u.s. Is the only country that taxes its citizens on its outside earned income. Well, guess what? Columbia does too as of 2014 The law says if you're in columbia more than 183 days out of any 365 day continuous cycle

[08:43] You will be taxed on your worldwide income Just like in the u.s And here us expats have been trying to find ways to get around all of that bs And alas until just two years ago in columbia we had and note in columbia There's no exemptions to that rule no matter what kind of visa you might hold So if gringos expats and other foreigners are over that 183 day limit you are taxed on that worldwide income Regardless of the reason why you're in columbia In fact, you could be a do-gooder preacher out in the amazon saving souls And you'll still have to pay taxes on any money that you make outside the country So every year or every quarter or even every month depending on what kind of business you have You'll have to fill out all kinds of forms hire a spanish-speaking columbian tax attorney

[09:29] And sign over portions of your wealth that may have had nothing to do with doing business in columbia This is not a small issue if you come to columbia and don't plan on retiring That is you don't have a pension or social security and you have to work or plan on working this will affect you Not only that if worldwide income taxation were not enough a recent withholding tax law was passed where they take 33% of any transaction between a columbian citizen or company including all residents and that could be you The columbian government will now withhold 33% of all money that comes into the country That's determined to come from a known tax haven which includes by the way panama In fact is the word around here is that that law was specifically written to flush all that columbian money out of panama

[10:15] And bring it back to columbia to be taxed now We're not talking much about drug cartel or cocaine money here Drug cartel bigwigs know how to move their money around the world internationally in a millisecond They're not going to let the columbian tax officials get their hands on it We're talking mostly about money that's been stashed legitimately out of country obtained through a legitimate business And you might know that until about a year and a half ago panama had complete banking secrecy, but not anymore Here's something people never talk about in those promote columbia blogs When americans land in columbia for the first time and they see the huge building boom that's going on they'll say stuart Where's all that money coming from is that drug money? Yes, some of it is of course However, surprisingly enough it's been determined that most of that money at least until a year or so ago

[11:04] Was flowing in from anonymous banking sources in panama Then finally stew says johnny if people are thinking of coming to columbia for that better life To have their plan b and all that they should definitely be aware of these new tax laws and act accordingly But that's not all americans who are in love with columbia from a distance should be informed of what might be columbia's Worst tax of all as of january 2015 columbia instituted a wealth tax as of now The tax kicks in when you have assets worth three hundred fifty thousand dollars or more in country No wonder smart columbians keep their money in panama And there's another new tax called the cree tax in english it translates to roughly

[11:50] The income equality tax, you know johnny it pains me to even talk about this stuff What amazes me and other gringo and american businessmen is how quickly the columbian government was able to pull the red carpet out from under foreign investors Sad to admit but all these regressive tax changes came about when gringo started flooding in five or so years ago And with that 183 day rule expat businessmen I know still love the country though They qualified by saying the country's only good for gringos six months a year though being this is latin america There are ways around paying those heavy taxes For example, as said before if you have an it business and you don't have it registered and you have a bank account outside the country You see johnny i'm in the it business myself connected with internet offshore gaming

[12:38] I'd even say four out of five it businesses in columbia are off the books by now Your listeners must be wondering if your bank is offshore How do people pay their bills and expenses related to day-to-day life with credit and debit cards? They use visa mastercard american express and a few of the others including more and more popular Chinese bank issued credit cards by the way those chinese bank issued credit cards work in most atm machines too So you can withdraw cash at any time So the question is are moves and manipulations like that illegal according to columbian law technically? Yes Though according to moral and ethical law No, at least that's the way tens of thousands of us overtax columbian residents feel on the same subject Understand that brazil is on board with worldwide taxation too. So for now, it's the us columbia

[13:30] Brazil and a tiny country in africa called itria. They're the only four countries in the world that tax worldwide income So if you live in brazil as a resident your personal tax rate is from four to 20 If you have worldwide income, it's taxed at a rate of 15 So if one of the reasons you left the states was to escape the oppressive tax regime Good luck if you ended up with your plan b in columbia or brazil How did that happen? Anyway, how did columbia with its banana republic manana time tax system? Just in the last five or ten years turned into a us tax clone Many of us expat americans believe it's because columbia is so attached to the us financially and militarily The proof is right now. There are at least three us military bases in columbia

[14:19] And surely many clandestine ones having to do with that all important war on drugs Walking through medellin. I see us military types all the time The us also has many agreements and treaties with columbia allowing them to send in more troops if necessary I wonder who determines when it's necessary We always joke but we shouldn't that the columbian government is just an arm of us policy Some columbian journalists have suggested that fully a quarter of columbia's economy Is due to the billions flooding in every year to fight that so-called drug war That means the politicians and the bureaucracy and the entire country have been addicted to us money flooding in for decades now And johnny as far as south america chile is much the same except for the drug component

[15:05] They have at least one us base and the same agreements to give up their sovereign rights over to the usa in time of crisis or disaster I'd like to know who determines that wouldn't you? But I digress though. Not as much as you johnny As promised now it's time to talk about gringo is doing business in columbia You may have heard if you speak a little spanish and have a lawyer you can open a business in columbia in less than a month But don't think even if your spanish is perfect. You can do all that without a lawyer. It's almost impossible One word of warning in the big cities like medellin. They see gringos come in because it's no longer the local Columbians, but the gringos and europeans who are trying to open businesses So as columbian businesses crash and burn and leave

[15:50] Gringos and europeans flood in and try to create their own Since few locals speak english Well, many gringos and expats start businesses with columbian partners Having a columbian partner is one way to prevent being charged gringo prices for everything including legal help Those of us who've been in various businesses in the states and here in columbia know what it's like to have a business partner Like you've said johnny in a past show You'll start out as best friends But sooner or later you'll want to poke him in the eye with the sharp end of a selfie stick Or throw him in the dumpster at midnight. I've had two latin business partners myself and neither ended well So johnny in your last few shows you've been talking about rules and regulations changing

[16:36] Regarding temporary and permanent residency as well as various types of work and tourist visas, too In that regard I know of some recent changes that have occurred in columbia To start off there are three main types of visas available for foreigners in columbia First the retirement visa the amount to qualify has been slipping lower and lower over the past two years Due to the columbian peso's recent crash against the u.s Dollar it's now around 3000 to 1 so to qualify for that permanent retirement visa You have to show a monthly income of 700 or more That would be social security annuity a pension or even rental coming from an outside source Number two. They have what they call a business owner visa for this visa

[17:22] The paperwork's getting worse and crazier all the time With the crash of the peso the amount you need to invest is 80 000 in land or a business That's in your name It could be a house or apartment or raw land a rental any fixed asset that produces income However with the banks know your client law is strong and heavy down here, too You have to prove the legitimacy of all the funds that you ship into the country and prove you've paid taxes on them Which can't always be done So be prepared for some flies in the open and the process can always stall too that happens more often than you'd think As far as entering and exiting the country on a simple tourist visa Us citizens who are not also columbian citizens are required to carry a u.s passport and a return ticket or

[18:11] They won't let you in the country Okay, it's me johnny here. Remember in the last show. I talked about that website called Flyahead.com. Well, this could be one of those cases where renting a ticket for 24 or 48 hours would be a very good deal That's flyahead.com could save you a lot of money. Okay back to our columbian expats email He says u.s citizens do not need a formal visa for a tourist business say of 60 days or less only their u.s passport However stiff fines are imposed if passports are not stamped on arrival And or if stays exceeding the 60-day period are not approved in advance by columbian immigration authorities Okay, listeners should pay attention to this part very carefully. What if you overstay your columbia tourist visa?

[18:58] What kind of fines and penalties will be assessed? How about this for a government's arbitrary way of finding you? Well, first of all, you can get another 90-day extension But as with all latin american consulates and embassies now you have to make an appointment online In any event if you overstayed your visa even for one day and you leave columbia, you will face a fine Here comes the unbelievable part. The fine is calculated arbitrarily and could range from one half To up to seven times the minimum monthly salary of an average columbian in other words between 350 000 columbian pesos and 4.5 million columbian pesos And now with the peso at around 3 000 that could be anywhere from 100 to 1200

[19:45] I mean, come on. Have you ever heard of such a thing in other latin countries? They find you a dollar two or even five dollars a day if you overstay your time But in columbia, it's according to the average monthly columbian salary really what brainiac thought of that In fact a few months ago, one of my friends left the country and he was only late by a few days And he still paid the hundred dollar fine the minimum That's the usual charge if you're over by one to thirty days However, a lot of gringos expats and foreigners choose to stay a lot longer past their stay date Because they know they would have paid the same fine. Anyway, some in fact have overstayed their visas for many years Knowing no matter how long they overstay they'll never pay more than an 11 or a 1200 fine

[20:32] Okay, there are other visas besides your regular tourist visa. There's various work visas managerial visas teaching and professional visas As well as dozens and dozens of rules and exemptions and here's something else people think of coming to columbia have to know You can almost never rent an apartment a business in office space without a columbian cosigner And because of this there are rental and real estate agencies where someone does speak english They have the usual suspects century 21 remax and local people too and they'll help you do the deal They'll be your cosigner, but they'll ask at least six months up front plus front and back end deposit Of course, they're making a commission and that's why they'll cosign for you They'll also require you to hand over a stack of personal debts and financial paperwork

[21:22] Yep, I know there goes your privacy say johnny. Are you asleep? Have I lost you yet? Please bear with me. I know this is a long and rambling email But I believe there's some important information here for people thinking of going to columbia Let me just state once again that columbian taxes and the huge devaluation in the peso against the dollar in the last two years Have been killing new business startups Everyone on the net is talking about how cheap it is to visit columbia from the states Well, that might be true, but it's no fun to actually live or work here under those circumstances And right now columbia has the highest latin american taxes behind brazil now johnny I know the internet and the blogosphere has been filled with positive news about columbia That's why i'm writing this email to set the record straight from someone who's had eight years boots on the ground

[22:13] And of course the dollar to peso ratio has never been better in at least a dozen years That's for people who have dollars not pesos So your dollar buying power is about 70 percent more than just a year or so ago Which means you could buy more property for less. That's what all the bloggers are saying Anyway, however in the greater wise living in shopping areas Real estate prices are rising so quickly as to offset much of that peso loss to the dollar That's not to say there aren't some great bargains here. The dollar does go a long way, especially in food restaurants and traveling throughout the country They've got some low prices now However us long-term expats with a lot of boots on the ground here No, it won't last since the u.s Dollar is fiat money too and will surely crash after elections down here in columbia

[22:59] No one really expects trump to get in most gringos think that bulldog hillary will get in and that will be the end Of the strength of the u.s Dollar the other day in fact I was in a conversation with a gringo who had a degree in mathematics and Economics and when I asked him why the u.s. Dollar was so strong right now He said I just think it's the nicest looking horse on the way to the glue factory Anyway, johnny, I thought I'd add a little counterbalance to all those positive blogs and expat retirement and newsletter articles Yeah, I know. I know everybody says it's going to be the next costa rica Like you always say johnny who wants to be the new costa rica. Anyway, unfortunately It's sad to see in the big cities of columbia. It is looking just like costa rica gringo prices big government big taxes big brother and

[23:47] Big fines if you don't stick to the letter of the law My advice is the same as yours johnny come down and visit get some boots on the ground see for yourself But recognize you'll be an unhappy camper if you have a business down here and you stay longer than six months a year So that's it johnny just venting. I guess signing off from columbia stew Whoa, talk about marathon email stew. Don't think I can add much to that one. Don't have to don't want to Okay, let's downshift for a second the other day as luck would have it I was driving down a road way out in the boonies and who did I come across? Two tall blonde gringas sitting alongside the road sucking on their plastic water bottles sitting on their oversized backpacks Waiting to hitch a ride. They were northern european backpackers. Turns out they were riding a chicken bus the bus broke down

[24:36] People disembarked started walking every which way looking for another chicken bus if it happened to pass by Anyway, I gave them a ride to the pan american highway dropped them off at a mcdonald's where else During that 10 minute ride. I lectured them softly about hitchhiking and other hazards They didn't seem to absorb any of it Of course being scandinavian their english was good and one of them said to me How come no one else ever told us we shouldn't ride chicken buses? Why they're the backpackers iron horse, don't you know? So yes, they were a pair of backpacking clueless europeans broke tired bug bit hungry and slightly stinky But still on the defensive one of them said if we don't stay at hostels and backpacker joints and ride chicken buses We'd have never been able to come on this trip to which I said two blonde gringas like you hitchhiking out in the boonies You're just asking for trouble

[25:22] I wouldn't try that up in the states and one of them said we have only got robbed once outside new jersey So anyway about a half hour later What do you think I saw? The same two girls in the mcdonald's parking lot getting picked up by a short fat latin guy with two bodyguards They took off in a new shiny black suburban. I figured they were probably safe enough, but who knows? Bottom line. I don't recommend hitchhiking in latin america or anywhere for that matter except maybe where they come from Iceland oh and by the way speaking of getting out on the open road the other day I nearly got knocked over by a kid Uh one percenter in a high-end mall riding one of those hoover boards power boards, whatever they're called Yep, they're down here now. They're completely legal only spoiled entitled rich kids have them And they're crashing and burning and breaking their necks on them, too

[26:10] So what else is new I hear they're outlawing them up in the states. That said here's another heads up on my january 2017 Exped insider seminar just go to www.thenewexped.com Click on johnny's 2017 seminar link for complete information Now's a great time to get all your ducks in a row on that plan b We're getting down to the wire. It might be your land's chance to do so and still Apply for a temporary or permanent residency in guadamala. That's where we'll be holding the seminar again Remember guadamala is one of the easiest countries in latin america to obtain your permanent and temporary residency But as mentioned in the email and my rant a few minutes ago things are changing So you've got to act now uncle sam's putting a lot of pressure on foreign countries to make their Residency programs harder and harder to get into the republic rats do not want the sheep to leave the barn

[27:00] Let's see now. We've had the new seminar registration open for about a week and we're already half full So do get on board and reserve yourself a spot and get in on the early bird discount And finally do check out my youtube channel. You'll find it's more fun more organized and well better all the time And for those of you who want me to help you with a particular aspect of your plan b Just email me and we can set up a phone or a skype consult Of course, those aren't free, but if you come down to my january 2017 seminar, you will get a refund on the phone consult south of the border You've been listening to the expat files living in latin america coming to you twice a week from somewhere south of the border Email me the expat files at gmail.com

[27:46] And if you want me to help you sort out your own latin american plans schedule a one-on-one Consult with me just send an email and let me know at the expat files at gmail.com. No, su bemos