#550 – The Expat Files: Panama Papers, Offshore Strategies, and Caregiving Costs

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 Just a few things before we get into the meat of the program by now Everybody's heard of those newly famous Panama papers, right and about the Panama-based law firm called Mossack Fonseca Whose main job and services were to provide SA corporations and to open foreign bank accounts for clients now

[00:50] Just to fill you and according to the leaked paperwork. They've created more than 200,000 offshore companies to which that Panama law firm Mossack Fonseca Acted as the lawful registered agent now no matter what dirty slant the mainstream media puts on this everything that law firm Did was completely legal in Panama. That's what foreign SA corporations and LLC corporations do They own assets and properties like any corporation can anywhere in the world now this so-called Panama Papers case involves an unprecedented leak of 11 and a half million files from the database of the world's fourth biggest offshore law firm Located in Panama now nobody knows how these documents got out They were leaked by anonymous sources they say but what do they reveal? They show a myriad of ways in which offshore tax regimes work and how people can use them to buy property and assets

[01:42] anonymously overseas and note There's absolutely nothing illegal about that, which is nothing new we talk about SA corporations and trusts and LLC Corps on this program all the time And you know many run-of-the-mill expats take advantage of those services because it's one way to get your money the hell out of the banking System up in the states away from the long arms of the big nose of big-ass brother However in this huge leak which is said to be the largest journalistic leak of its kind ever the trail leads To some very very big political hitters like Putin Pakistan's prime minister the former vice president of Iraq president of Ukraine Sons and daughters and family members and relatives of high-end thieving political ass wipes worldwide Including a huge offshore investment fund run by the father of British prime minister David Cameron

[02:32] Who has legally avoided ever having to pay a tax in Britain which is why people with dough go offshore? So their oppressive governments don't tax them to death and by the way why so many expat gringos get the hell out of Dodge, too That's why so many smart people who don't like being in the plus 50% tax bracket open up offshore Corporations and bank accounts and remember they're completely legal so bottom line No matter what they're saying in the press right now You shouldn't no way get pissed off at the system that allows you to open up foreign bank accounts and foreign corporations in fact That's a favor to everyone why because your government is nothing more than a crooked Parasitic cancer and they'll take absolutely everything from you if they can the system just cannot be fixed You have to vote with your feet which means your money and assets should vote with their feet, too

[03:21] So while you shouldn't get pissed off at the way the offshore banking system works not at all nevertheless You should really be pissed off at your thieving politicians who steal your money and take bribes From corporations and lobbyists and then take that dough run it through offshore Corporations to buy mega assets themselves so yes offshore corporations can and are used to push crooked money around and Normal good people who want to remain anonymous use them, too But should those offshore mechanisms be banned no way it's just like your money It could be used to buy food and shelter or heroin so should we ban money so anyway I've been getting a small flood of emails asking me to comment on this since we talk about Panama a lot and offshore Corporations for gringos and expats on this show that said the barn doors open on Panama. That's for sure

[04:11] And if you're a longtime listener to the show you'll note I never recommend high-profile places like Panama or the Cayman Islands or Singapore Switzerland etc to do any kind of offshore corporation or serious banking because really as an American citizen You're just asking for trouble The fact is if you ever flew into Panama City You'd kind of recognize it as a carbon copy of the Miami business skyline Practically filled with nothing but hotels shopping malls and banks hundreds and hundreds of banks So then you might ask why all those banks in such a little country What does Panama produce an export that merits all those buildings nothing? It's just one big huge financial center Which puts it squarely on every first world tax department's radar

[04:57] So I've often said if you want to be on the radar go to Panama open up a corporation or set up a bank account So first it was the Swiss that voluntarily gave up their bank security and now with these Panama leaks the security damn There has completely ruptured by the way if you look at most international expat rags and offshore living blogs, etc They've been touting Panama as the place to do that kind of business for years now What a bunch of dummies. Meanwhile, I've always said just the opposite So either I pegged it right my crystal ball was working or I got lucky So which is it maybe because I've been to Panama with boots on the ground maybe 50 times now. Oh and get this I've heard this from Panama bankers They say that 95% or more of the people who have accounts and SA corporations have never even been to the country

[05:43] They do it online or by mail What's that say now for me? The big scandal has nothing to do with the fact that you can open up foreign SA corporations and LLCs and such They rightfully should exist and you should use them whenever you can but the fact that pus-brain Sociopathic politicians are on the take stealing your money using their elected positions to gain massive wealth Then using the so-called anonymous corporations to buy yachts planes and expensive real estate Well that to me is an extremely unfortunate use of a very good tool Which unfortunately paints good guys who have SA corporations and offshore bank accounts with the same brush So should we ban steak knives because you can use them both to carve dinner and plunge into a politician's eye?

[06:29] Hmm. I'll get back to you on that one Now you might wonder why they call it anonymous when obviously since the papers have leaked Nothing's anonymous. All the names are out there Well, though Swiss bank accounts were supposed to be anonymous, too Well, the story just broke a couple days ago and since it's the biggest leak of its kind in history There'll be new revelations coming out each day for a long long time with many more maggot-breath scumbag Politicians getting caught in the dragnet now, don't get me wrong I'm all for expats being anonymous and opening up offshore corporations and anonymous bank accounts when necessary That's what expats often do when they start a business by a car buy a house or property Whatever in order to protect them from lawsuits and creditors, etc. Etc. Just like corporations are supposed to do up in the states

[07:14] I know that sounds sleazy to some people who've never had a business before but think of it this way Suppose you had a bakery and you had the bank account and the bakery in your name and one night You're driving along and you hit a drunk pedestrian staggering in the middle of the road Well, technically he can sue you for everything you've got in your name because you know pedestrians have the right away They're supposed to anyway. However, if all your assets your car your bakery your bank account is in a corporate name He can't touch it. He can only go after it. What's in your name? Can you see why that kind of protection is so important to business owners and by the way? I think mostly it's prudent to open up an offshore corporation or trust and have it open a bank account for you in a foreign country Just to get your money out of the US banking system Which is on the verge of collapse and with all those bail-in measures your money is not safe anymore up in the states

[08:03] So bottom line get your money out of US banks now That doesn't mean you have to close your bank accounts in the states Just keep the balance very very low in case there is a blowout and a bail-in you won't get skin So then how do you get foreign essay corporations open up foreign bank accounts and the right banks? The ones that are strong and solid if you've never been out of the US Well, you don't because you just can't find out and you just don't know forget about the internet a lot of scams out there You have to get boots on the ground and talk to people down here So what's the easiest way to do that? Well come down to my July expat insider seminar You'll find out all about that kind of stuff in great detail and much much more So to find out all the details on the seminar and the sign-up info Just go to www.thenewexpat.com and click the link on top the page that says Johnny's July 2016 seminar

[08:53] Note it's Saturday, July 9th through Thursday, July 14th Don't forget if you sign up before May 1st you get the $500 per person early bird discount and note on the sign-up sheet You can pay in three payments. That would be three equal payments spread out a month apart Now this seminar will be held in and around Guatemala mostly way off the gringo tourist trail So come down and get your boots on the ground and see for yourself what that gringo advantage is all about now You know things are getting bad up north So you're gonna need a plan B and even if you do have a plan B You can't do it by yourself You have to have professionals and a network of people to help you out and that's what we offer at the expat insider seminar So anyway, just go to www.thenewexpat.com Click on Johnny's 2016 seminar link at the top of the page and at the same time

[09:41] Don't forget to check out the elective pre and post seminar tours that the famous John Galt will be hosting once again So why is it that I so highly recommend John Galt's pre and post seminar tours? Well, that's because in the past all my seminar attendees would send me email saying We'd like to have some more time in the country explore a bit and get more boots on the ground But we don't know where to start They'd asked me for my personal recommendations not what the normal tourists would do But what I'd do if I had the time on my hands So again, you are coming down a long way And I'm sure you'll want to get some boots on the ground either before or after the seminar So we've got that covered for you to remember the pre and post trips are elective You can come down and take just the seminar But I recommend you spend some extra days and get some more boots on the ground Enter John Galt and his spectacular side trips. So do keep that in mind. Okay, let's move on

[10:31] If you remember last week's show I read two different emails from Canadians with major health problems who were both living half the time in Canada and half the time down in Latin America Specifically Mexico just to maintain their Canadian national health care benefits both wanted to stay in Mexico permanently But the Canadian national health care has a five-month a year Residency requirement and you know, there's something I forgot to mention or didn't have time to mention in the case of the Canadian that was paying $24,000 a year for a Mexican caregiver because he's pretty much in need of someone like that 24-7 Now if you remember I did mention that he's paying way too much I don't know how he ended up paying her that much but certainly it has to do with the fact that he's on the gringo tourist trail and that she's used to first-world life because she

[11:18] Has lived up in Canada and has Canadian residency and my advice was for him to move to a Latin American city off The gringo tourist trail where he could get a live-in caregiver In fact an RN or a nurse specialist for a quarter or a fifth of what he pays his caregiver in Mexico Which is the beauty of having boots on the ground off the gringo tourist trail You find things like that out in a hurry In fact, I mentioned he could have a live-in or have two shifts of RNs coming in at a salary of around Four to five hundred dollars a month per person. So even having two RNs on different shifts He'd still be paying less than half of what he's paying a full-time caregiver in Mexico. Anyway Here's what I failed to point out on last week's show Give me a second here and I'll get to the point ever since I came down to Latin America

[12:05] I found one of the easy ways to start learning my Spanish was to look in the classified ads and help Why did ads in the big Latin newspapers? It's a habit I have and I still do that at least once a week So I have a really good handle on a Latin job market and the prices people pay for help Especially off the gringo tourist trail. In fact at my expat insider seminar I show a lot of these ads on the PowerPoint presentation to prove how very low the labor costs are down here and How low the cost of living is now it might seem I'm wandering all over the place again But follow me here when you go to your first world dentist down here in Latin America Who's got all the computerized equipment, etc, etc with an office identical to those high-tech offices in the states You'll wonder why he doesn't have a dental hygienist. I sure wondered and I asked my first world trained

[12:52] Latin American dentist why and he said Johnny Why do you need a dental hygienist in office when you can hire a dentist fresh out of school for? 500 bucks a month and let him clean the patient's teeth and do the oral hygiene instruction now that shocked me because you know We're talking about a dentist that's graduated from dental school working as a hygienist for 500 bucks a month Which leads me to those newspaper help wanted ads Well, I see all the time in the newspapers that hospitals and doctors clinics are always advertising for nurses aids nurses RNs surgical nurses, etc And they pay from three to five hundred bucks a month But you'll also see this person there hospitals advertising for medical doctors and specialists of all kinds

[13:39] And the going rate to hire a doctor full-time at a first-world-style hospital from 800 to $1,200 a month. So I ask you what can that mean to you disabled Canadian snowbirds up there? Who must spend five months a year in Canada to get the national health benefits? Well, I'll tell you what that means off the gringo tourist trail You can put a help wanted ad in the big newspaper and advertise for your own personal doctor I mean your doctor exclusively and yes You offer 800 to a thousand bucks a month and you'll get plenty of resumes. Are you getting this? Are you letting this sink in? How would you like your own doctor to show up at 8 o'clock every morning and spend his shift at your house? Yes, you too can have your own personal doctor completely dedicated to you

[14:24] Just like George Soros Bill Gates oil sheikhs and all the mega rich jerks and all the psychopathic presidential politicians have So you weren't aware of that. Well now, you know, okay that said Concerning that disabled Canadian who wrote last week saying he pays his Mexican caregiver 2400 a month on that dough if he was off the tourist trail, he could have not one but two Personal doctors hanging around of course, that would be a slight bit of overkill But here's what I'd recommend if you're extremely handicapped and bedridden Why not hire a full-time live-in RN for around 500 bucks a month then hire yourself a personal doctor to come in every day, too He'll certainly speak some English How would you like to have an educated guy like that around to shoot the breeze watch a little TV with you play poker

[15:11] Discuss GMOs fracking the state of the world and Kardashians, but now I don't mean he's coming in to make house calls I mean he is your personal physician period. I know I know it sounds crazy and it's extreme overkill But that's what you can get for that kind of money. And again at my expat insider seminar We talk all about health care. We take you to first world hospitals show you Unbelievably cheap first world full coverage insurance programs that range from 50 to 125 bucks a month with drug and prescription Plans included you will learn and see all that when you come down to the seminar So what else do we do at the seminar? We'll do health care along with health care boots on the ground We'll do real estate with real estate boots on the ground and we'll show you exactly why there's a bubble down here

[15:57] And you should not buy yet. We do a day of banking SA corporations all the legal stuff You need to come down including temporary permanent and pension auto residency as well as passports And we do a day on business business startups both IT and brick and mortar all with the kind of boots on the ground You'll never get if you come down here by yourself But we hold your hand all the way and drag you along if necessary, but I digress as usual now today I'm doing something very unusual. I'm having a two-part interview With an expat tax expert because you know, that's one of the questions I get all the time in emails Who's gonna do my taxes is my guy back in Cleveland gonna do it? Can he do them? Does he know what to do with expats? Are we a special case, etc, etc? Anyway, since we're closing in on April 15th

[16:43] First let me tell you what I generally recommend for expats looking for tax advice and tax preparers Let's say you're a fresh new expat in Panama City Panama If you're looking for a tax preparer pick up any one of the handful of gringo Newspapers that come out weekly or monthly as it turns out all Latin American countries have their tourist spots even countries I consider way off the gringo tourist trail have what they call tourist areas now These places might be very small but those are the places you'll see gringos gathering and coming in and out So there'll be some English language tourist pamphlet or guide. They generally come out monthly That's where you'll see little hotels and restaurants advertised and in the back They'll always be a classified and want ad section. It could be just one tiny little page, but it'll be there

[17:31] You'll see ads by physicians and dentists and beauty parlors and tour operators, etc And that's where you'll see the occasional ad placed by a tax preparer almost always placed by a retired gringo expat Who was a tax preparer up in the states? They're usually very good guys to hook up with to do your taxes because they're in the same boat You are now if you're on the gringo tourist trail There'll be a lot of gringo pamphlets and a lot of tax experts advertising in the back of them And of course, there's always local Craigslist and olex.com so you'll have no problem there But what about gringos way off the trail or traveling expats who don't have anyone to do their taxes and need someone or a service They can trust that said today We have a Skype interview with an international tax preparer a bonafide expat himself and his website is the online

[18:18] Taxman comm we'll talk to Vincenzo Villa Mena US educated CPA who's living right now in? Medellin, Colombia, so first Vincent tell us a little about yourself I'm born and raised in New York. I was doing taxes and accounting I wanted a big for it at PwC and Actually, I did finance for a little while too because I always kind of thought that I wanted to finance It's kind of the dream job big money blah blah blah then everything happened in 2008 Finance wasn't what it was all cracked up to be right? I mean I got paid pretty well, but you know The hours were long. I didn't like the people I worked for and Ultimately the job didn't turn out to be what it was because the recession fast-forward

[19:05] 2010 I ended up just kind of waking up one day and ultimately left left, New York Because when you do something, you know drastically quit your job because you don't like it then you might as well just jump full in and and quit everything and so I Went down to a to Buenos Aires Argentina had some friends down there I've been down there around six months before that and that's where I Started this company. I mean I had no real plan, but it was a matter of already being experienced in expat tax worlds You know again just seeing this sort of you know this huge need for expats that need their taxes done down in Argentina That's where I ended up building the website through a team and formed what it is today now looking at your website

[19:52] I see you have an office in New York does that mean you're a snowbird and you go back and forth from the states down To Latin America, which leads me to the question. Are you a permanent expat yourself? Do you have property in Latin America? Etc? Etc? So residency in Medellin. I'm definitely more Latin based Basically, I do go to back to New York, but I am based in Columbia have residency here looking to buy a house here and really at this point split time between Columbia Argentina and Brazil. I understand you speak four or five languages including Italian, right? My family is Italian. I I spoke Italian growing up Obviously went to Argentina and picked up Spanish pretty quickly And then over the last couple years have really just learned Portuguese and all in the street talking to people

[20:39] Etc Now let me tell you a little bit about my experience in getting emails from all kinds expats meeting them talking to them running seminars And such when expats come down They're all pretty much in the know that things can't last up in the states The next big downturn is coming and in fact a lot of them are escaping big brother And they want to get in lower tax jurisdictions So many of them are working on their plan B and they want to know when they get down here Who knows the ins and outs of tax preparation regarding expats exclusively because we are special cases Now at my Latin insider seminars We have a half a day with a local lawyer and we talk about taxes that would be local Latin taxes Which are infinitely less complicated than American taxes in fact You know most tax codes in Latin countries are tiny little books under a hundred pages

[21:26] Whereas the US tax code is what now? 77,000 pages or so so you do want a tax preparer. That's familiar with expats Who's done expect taxes and perhaps as an expat himself not your local tax guy from Minneapolis who might be a nice guy Who's in that boat who's got an SA corporation or residency or bank account in another country? I'm lucky. I'm the local guy from Edicine There's really not anybody that does expat taxes here, and then of course everything's set up online Which is why of course your website is www online tax man calm, right? So I assume that way expats everywhere can go online fill out the forms et cetera and do some skipes with you and get it All done now you have an office in New York, and you have one in Medellin, Colombia

[22:16] So I suppose that could be an advantage of the IRS knocks on your door and says I want files on the so-and-so client So maybe you could talk a little about confidentiality in the long reach of Big Brother if you will We don't have like you know regular files in New York, right? Everything is kind of online and encrypted, etc You know you never know as far as Big Brother But I mean you know we have a New York office and a US presence, and then we also have an offshore presence So again kind of depending on the situation By the way, how many expat tax clients do you have now? like approximately 600 700 and how many us non expat clients do you have what's the breakdown? When I was in New York, I was doing taxes too on the side

[23:01] So I have kind of some leftover clients from that You know we also have a lot of clients that technically they're still living in the States But they might have you know done some sort of offshore investments like a self-directed IRA and and you know have foreign bank accounts And they're kind of diversifying their portfolio outside the US So we also have a lot of people that are one leg in the United States within one leg out of the United States Okay, then speaking about the tax man knocking at your door. What would be the percentage of expats who get audited? Versus let's say the average taxpayer up in the States who's living up there Generally speaking right I mean I think you have to look at like around maybe roughly 1% I mean that's kind of more of a general statistic now I think you know expats do have a slightly higher chance of getting audited. I guess renewed focus obviously with FACA at the same time

[23:55] That iris office in particular is also quite overwhelmed you know between all like the volunteer disclosure programs And at all the work that FACA has gone through so that office is a lot more overwhelmed in particular and just one point here I was talking to my friend John Galt the other day And he told me that you can greatly reduce your chances of an audit if you file late Which at first doesn't seem to make sense, but then it makes a lot of sense considering you're filing after they've already received Millions and millions of forms and they're swamped so there is a trick when you file early You have a greater chance of audit isn't that weird that said? Here's one particular text question. I seem to get a lot, and I'm no tax expert at all That's why we have you on now I've been down in Latin America a couple decades now And I only know of one gringo expat who's been audited and that notice came from the IRS office in Puerto Rico

[24:44] I understand that's the nearest office to Latin America However right before tax time like now in April I notice in the big Latin American cities that are capitals where there is a US embassy There'll be a blurb in the paper usually in English that says the IRS tax guys are in town Temporarily if you have any tax questions come on down milk and cookies provided makes you wonder What kind of cyanide they put in those cookies doesn't it yes? There is an IRS office in Puerto Rico most of the like international stuff is actually run through the Austin, Texas office of the Philadelphia Office, you know speaking with with other people in my industry and kind of getting some insider details You know the target before was was Switzerland, and I think not Hong Kong in Singapore

[25:31] So what you're saying is if you're in Latin America. You're pretty much not a hot spot on the IRS radar However if you're in Latin America And you go to the US embassy office and visit with the IRS agents when they're in town for milk and cookies From what I've heard it could be a fishing expedition not necessarily about you But perhaps where you live and where other upscale gringos might live and you could inadvertently Throw some suspicion on your gringo neighbors that might just be living higher on the hog than their income statements indicate in fact I've heard some first-hand stories like that from gringos in Costa Rica, but we don't have time for that right now I'll get to that in another show. I'm sure anyway speaking of being on the radar with the breaking of that international Panama paper story. I'm sure Panama is red hot on the radar

[26:19] Yeah, it makes sense right. I'm not surprised have I ever been you know subject to any sort of fishing expeditions You know no because I kind of know try and maintain a distance I think you like this in fact I know of a gringo who went to an IRS milk and cookies event at the embassy in Panama He said he spotted at least three cameras videoing him at all times nice friendly gesture, huh? Yeah, that's right They need to video everyone at an IRS open house So Vince my next obvious question to you is you got 600 or so expat clients Have you had any that were audited under your watch? And what happened I? Have I have oops sorry to cut that interview off just when it was getting interesting talking about expats getting audited

[27:05] Well, we'll start right in with the second part of that interview next time so stay tuned again Let me remind you you have till May 1st to sign up and get the early bird special for my July 2016 boots on the ground Latin American seminar So mark your calendar and ask your soon-to-be ex boss for those days off by the way Don't forget to check out my expat files YouTube channel As you'll see the pictures and photos that go along with the audio are getting better all the time and don't forget to subscribe It's free 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 And if you want me to help you sort out your own Latin American plans schedule a one-on-one

[27:50] Consult with me just send an email and let me know at the expat files at gmail.com. No spamos