What was previously fun requires now serious decisions. Your life. Should you resign from you boring job, although it makes now somehow a bit fun. Should you hire people. Should you change anything at all.
But maybe the most urgent decision would be: 1) Staying where you are. Paying 45% Tax rate. With rather bad regulatory conditions 2) Moving to a business friendly and tax friendly country like Switzerland. Paying 10% Tax.
What would you do?
PS: Some of my own thoughts. I never would go away to Swiss for a raise from 100k -> 200k. But it is somehow more difficult when we are talking about millions. Especially when I have the feeling that my government doesn't spend the taxes well. Not sure yet what I would do with one million more, but guess something like starting a new company or helping parents and so on. To be honest kind ofparalyzed regarding this since there seem to be no rational solution. Moving to a new Country could really suck. Especially since friends and family would be somewhere else. On the other hand. Just doing it for a year would result in multiple millions of net worth. It could also be a nice experience - but not sure about it. So really struggling.
I can understand if your government is highly corrupt or something, but it seems distasteful to me to take advantage of the strong safety net, schools, etc. that are funded by a high tax rate, then once you've become successful to try and dodge your responsibility to give back to that same society.
Just my 2 cents -- you do you.
I wouldn’t feel bad about moving to escape a tax burden at all. Getting used to a new country isn’t that difficult, in my experience, and you’re always a short plane ride away from your origin country.
1. If you haven't done so already, you need to immerse yourself for 3 months+ in the target country in order to understand the lifestyle, the people, the culture, the weather...
2. You have a successful side project. If there is room for growth, you just need to wait a bit longer to achieve the magical 1m.
3. Depending on your personality, you may become a bit of a liability to your current employers. Having an independent income changes your perspective from a decision making perspective because ultimately the success of the company is no longer tied to putting bread on the table.
4. Life is short. Money comes and goes. Work out what would make you happy (not necessarily an easy thing to dow), and then work towards that goal. You are lucky, you have an amazing opportunity, don't squander it!
Also I keep thinking that the disruption of moving the company, legal and personal challenges there and etc are REALLY going to hit your productivity / momentum. If you're looking at a million dollars, do you chose to take a big disruption at that point?
I think there's a lot more to consider here than how you frame it. I'm not sure the outcomes here is as simple as tax rate.
In addition, some studies point to not only worse care in the US if you aren't in upper incomes, and living in the right regions, but also that even with the higher levels healthcare in the US that come with wealth, the outcomes can be lower than what median care quality in leading EU nations provides. I'm not sure the studies are fully conclusive, but that's two healthcare factors that you haven't mentioned, that I thought over when looking at moving away.
That way you're "clean" when it comes to taxes, and don't have the downside of leaving everything behind. Easier said than done of course.
(Implicit assumption you're the boss of your thing, so you can work remotely as you want.)
As others said, getting new friends in a new place (especially abroad) when you're, say, over 30, is really tough.
This makes sense to me. When you've got a buffer that big, you can start to think in terms of living off your interest/investments.
A higher tax level can deplete your wealth's ability to provide for you indefinitely. I can understand that losing this is a big deal.
> What would you do?
I prioritise the welfare and happiness of family and dependents. I'd stay put.
On the other side of this, you might find yourself disagreeing with your government. It might make you happier to move to a government that more closely matches your ideals.
I'm not in this area. But here is some example what could theoretically happen: You're starting a twitter clone and the Government says you are responsible for every post on your platform. You get sued and you are done. Right now this wouldn't kill me since I could always move on. But it could cost a lot and possible give a huge setback.
You know you can make new friends as well as keeping old relationships alive. You could invite friends to visit or live with you for a bit.
Taxes asides, it might be worth it to move just to have a place with better laws for businesses.
And honestly, above one million, the taxes you save will more than pay for airfare to spend time in your country.
Yes, this is my answer regarding $.
The only advise that I have to give is: money are means to an end, not an end in itself. The urge for adventure is a valid reason for change, making more money without purpose is not.
but in the end its a personal decision that only you can make.
Once you enter into a higher level of wealth, you need to protect it. Now it depends where and how you structure your business. Allocation of preservation of wealth is a human goal.
If your business relies entirely on revenue, then in any regard you will be taxed - so it would help to find a satellite country that has a lower tax rate for revenue.
It also helps in case of any nasty liability lawsuits down the road for warranty or sheer incompetence/negligence. Having money/resources in a different part of the world, different from your customer base can shield your wealth greatly because requires more cash upfront from those with cause to sue. Easy to sue locally/nationally, but internationally, need to bankroll multiple people and outside of directly government intervention, you're pretty much safe and have alot of "time".
If income is by capital gains, it's entirely different and depends mostly how property/rights are treated/respected where you are. Especially taxes and how swaps/transfers are taxed.
Also differs if it is entirely Intellectual property as well. Local government rules for IP matter, and are not severely punished internationally, but you want to be able to protect and protest it, so local satellite offices are needed to ensure compliance. Depends which market of course.
So we covered general SAAS/Revenue, Capital Gains and IP.
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For your regular job, to resign and hire people. You can and should hire people along the way no matter what. Whether it'd be a virtual assistant/secretary or someone to organize - and then onboard more and more people that know your product/what you do/can contribute. You need to create departments and silos that push more into marketing, sales, reputation and general support. Marketing should be a profit center, support is usually a cost center - but you need to scale client acquisition and work. Automation is great, but, you can't automate everything and after a while you will get overloaded/overtaxed on day to day stuff, you'll just want to slink back some days and do nothing - but what if your main client/highest billing client has an issue, or wants 1:1 time, how do you react to that? What procedures do you ave in place for day to day matters as it's operations and makes business easier. So, change in the form of creating structure and procedure.
Resign when you have a good runway, your forecast is all green and you have a proven history of salary/income from this side project that rivals or exceeds your main day job. If you do - your time now becomes twice as valuable. I would of course try to see how long you can maintain double dipping working for someone else/yourself, but it'd come a point where you want the immediate time relief of just focusing on yourself/your project - this should be when you have a team in place and people to delegate and savings/cushion/runway of 2-4 years, be liberal or conservative, but, how you structure your personal day to day also matters highly. Time, becomes expensive.
The experience is great, and many people do it, from digital nomads (ugh, right?) to just talented people in general - there is no rule, per se that you must form a business where you live/reside, and many countries welcome the foreign influx of cash/assets in their country, but at that same time it also depends highly on that country's reputation, human rights, your rights, corruption and ease of doing business which are all recorded and known index's. Some country's have langauge and country barriers - China and Japan welcome foreigners to start corporations, but one is very friendly and has great programs for entrepreneurs with rights guaranteed (Japan) but suffer from culture and language barrier (Japanese, Hanko, Holidays, Politeness and I won't say dislike foreigners, but unless you have friends, can make some things harder.) vs another, China, that you have no property rights, ease of doing business is easy with cash, but wiring/fiscal currency controls, IP controls, and general distrust of media/government alongside culture and language barriers make it hard. Cheap labor though.
Taxation in Japan/CN is also pretty fun, but that's another topic I won't get into -- Estonia makes it sound easy too. Southeast Asia in general is also fun but it's a conversation worth having once you have a proven business model and history of revenue that a 20% reduction in taxes, matters. Because 20% reduction of $0 is still, $0.
Second, countries are locked down now but even after this pandemic is over, your limit is 90 days. If you're from a Schengen EU country you can get a residence in Monaco and just spend your time traveling. But again, I've heard that if you've ever paid taxes in France, for example, it might not be possible.
There are cruise ships that exist for this purpose. Spending a year surrounded by those kinds of people would seem like a special sort of hell, to me, personally.
If you can live abroad, generally, that's a great experience. Leaving family and friends can be a big cost for some people but if you can do it, it's recommended.
Traveling is like meeting someone, living there for a couple months is like dating them, and longer is like moving in with them: you get to know them intimately, all of their idiosyncrasies and it influences you in ways you can't avoid. You end up being a different person, usually for the better.
Like with everything, it's different per person. I always say: don't do anything just for money if you can help it -- and you usually can.
Considering the GAO reports that over $100 Billion is wasted by the federal government annually, I find it hard to truly believe that it is going to those who need it (how's need even defined anyways?). The OP also states that he doesn't believe the money is being used properly.
You don't like its efficiencies? Help fix it. You don't want any of its services? Let's see how long you last without them, especially the police and military protecting that wealth. It's all a social contract and you don't get the services but get to opt out of paying for them because you got more and realized that you're a greedy, shitty little scumbag.
Also, governments lookout for you. So basically if you start a business in my country and are then not satisfied, it becomes much more difficult to move away. You will have to pay a tax on the liquidation value of your company. Actually I never dealt with this stuff and was surprised about all the laws around this topic.
"don't do anything just for money if you can help it -- and you usually can." Can't agree more. Been always my mindset as well. It changed a bit to be honest as I'm thinking about paying multiple millions in taxes that can be avoided just by moving to another city. Especially since the Government actually wasn't able to provide a good and fair regulatory framework. So there is a non-zero risk that they could kill the company.
Someone else said it well: spend several months checking out any potential candidate location. Talk to expats. You'll get a really good idea of what it's like to live there.
