[ HTJ Podcast ] Derren Joseph interviewed by Brad ‘Bảo’ Hirsch host of the Radical Traveler Podcast – 10th March 2021

VOICE OVER:

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Brad Hirsch:

Well, hey, you know, already we got the Podcast going on. So, I got to say Derren, welcome to the show man.

Derren Joseph:

Thank you. It’s a pleasure to join you.

Brad Hirsch:

So, sending you a scene that I understand you were living in Singapore these days, is that right?

Derren Joseph:

Oh yeah. I bet. Well, like I guess many people who would be in your audience, I move around a bit, but I've been based in Singapore well, October will be eight years. Eight years.

Brad Hirsch:

Oh 8 years, okay, okay.  So how many years would you say you you've been a guy like a digital nomad so to speak?

Derren Joseph:

Well, I guess, you know, a digital nomad is a term that has a lot of connotations, which I guess we can get into later, but in terms of someone who is not tied to my desk, location independent, I want to be fair. It's started before I moved to Singapore, I did a contract with a, a large technology company, which I won't mention a name, but the rule was location independent because my team was split, but I was managing people in both the London and in Seattle, specifically. So, I was moving back and forth and that was the first time I realized, you know what, it really didn't matter where I was. I can work from home to work from one location and the other, and that kind of opened my mind up to a location independent. But when I moved to Singapore for the role that I do now, I think that's where it went to the next level. You know, that, that sense of freedom and flexibility, which I think many people do enjoy.

Brad Hirsch:

Sure, sure, I mean, what would you say that a living at Singapore has some special benefits to it as opposed to living in Laos or Cambodia or something like that?

Derren Joseph:

Well, you know what I think, I think it really depends on and maybe this is an opportunity to segway back to the whole idea of location, of the digital nomad. I see, in my mind, I like I have like these two categories or two boxes, there are those who do it because, and of course, you know, there's crossover, right? So, then we should do it because, you know what? I enjoyed freedom. I enjoy lifestyle and you know, but I would mind a situation that's a bit more chilled. And then there’s those who you say, you know what? I do and enjoy the lifestyle, but I want to take whatever Business I'm in. I want to take this to the next level, right? So, you can be location independent, but then you want to enjoy some of the networking effects and being, you know, at least in a certain tapped into a certain ecosystem physically sometimes. And I work in financial services and my clients tend to be more in the second category. They are successful, they are six, seven, eight, or even nine figures and, and yeah, they enjoy being location independent.

Brad Hirsch:

Sure, sure. So yeah, it's a very diverse country from what I understand.

Derren Joseph:

It is, it is.

Brad Hirsch:

Yeah. Well, in a while we were talking about being a digital nomad or, you know, an ex-pat an entrepreneur, I want to say, in your book, you talked about three flags or five flags, you know, or kind of that idea. So, can you expand on that a little bit? What does that mean? A three flags or five flags?

Derren Joseph:

Well, you know people that are familiar with flag theory, right. I'm aware that especially being in Singapore, I believe that they are actually companies Incorporated in Singapore and Malaysia and elsewhere that use that term. But so, you know, but my understanding is that it's not just the name of certain businesses, but it's a term you use to describe an idea or concept in a device by some guy I think in the 1950s. And basically, you know, some people talk about three, five or seven or eight flags, but, you know, I don't think it's meant to be dogmatic, but what it is, it is about a principal and the principal is diversify your lifestyle, which, you know, makes sense because finance 101 is you diversify your assets or your investments as well. Don't have all your eggs in one basket. So, it kind of takes it to the next level. What's your entire lifestyle. And for some of my clients, it isn't just something cool that is on a book, on a website, it's a genuine concern to them because they come, they may belong to a certain religious slash ethnic groups where historically the might of been persecuted. And even though in the younger, some of them, they had a parent, they have parents and grandparents that gave them stories of when, you know, politics turn against them.

So, I don't want to get into that, but obviously that happens. And from then within their family, they have a philosophy that are just in one jurisdiction. They never have all of their wealth in one jurisdiction because as a family thing to remember what it was like to lose it all, you know, it was a couple of generations ago and for some of my Asian clients as well and Southeast Asia outside of Singapore, you know, whether, I know it's a bit controversial in some jurisdictions, but people of Chinese heritage tend to do statistically disproportionately well in business, right?

And there had been certain cases of civil unrest and within recent memory. Most recently, at least within my little network would be late nineties in Indonesia where people of Chinese heritage were deliberately targeted. So as a result, people with that ethnic background, they have a philosophy as well of also diversifying their lifestyle. So as a result, where they run their businesses may not be the same jurisdiction in which they have citizenship or residency. Maybe they have more than one. So, you know, they have that freedom of movement of needs to be, they may store their wealth in another jurisdiction as well, and they want it and be entertained and not just in Asia, you know, I'm thinking of certain families and South America or the Caribbean, where unfortunately, kidnapping is an issue as well. So, if they want to hang out and if they want to relax, sometimes they can't do it with their run, their businesses because conspicuous consumption, conspicuous displays of wealth may create problems. So, they have another jurisdiction where they go to hang out. So basically, it’s about diversifying your lifestyle. And then that becomes three, five or seven to eight flags depending on how we want to do it.

Brad Hirsch:

 Sure, sure, that explains it really well, actually. So, I get a lot of folks that, you know, call me cause I'm a very light consultant, a broad consultant and of course the finance and citizenship side is only one piece to the puzzle. But, nevertheless, I get a huge number of folks that give me a call and are really at the beginning stage, just starting to consider moving abroad or, you know, expanding or gaining residency in, in other country. And, they often kind of the big question at the beginning is why and why bother because let's face it moving to another country. It's, it's got its own challenges. I mean the food, time zone and let alone tax implications and running in an international banking. We can all admit that it's a complicated thing, but why would you say Derren? Why is it a good idea for people to bother moving abroad in the first place?

Derren Joseph:

So, you know, I preface everything I say, by the way, this game in a one size doesn't fit at all, what's good for one person is not good for necessarily good for another. Everyone has to figure out what the own way. But having said that, I think it's become more topical recently. And I guess because of the nature of what I do, most of my network are US exposed, you know, and so given, you know, whatever has been happening in the past few years, there's, you know, people are comfortable talking about colleagues leaving California and going to Taxes or leaving New York and going to Miami right or South Florida. So, part of that would be some sort of arbitrage with taxation given that California is the highest taxes in a union and you can automatically see 13% by moving to Taxes, which is zero tax. Right.

Brad Hirsch:

That would make or break in Business.

Derren Joseph:

It can, yes. But part of it may also be lifestyle. So, some people were, you know, they felt uncomfortable, you know, families, kids, whatever, with some of the protests had been going on or you know, some of the other social issues and they want it to move somewhere where things aren't as uneasy at the state. So, it, in other words, it's kind of like taking that same principle. The point is not everyone left California, not everyone left in New York, but for some people is the right thing to do for themselves, their family in their business. And similarly, why not leave the US because I mean, you've just saved the13percent. You can save a whole lot more by jumping in a plane and going to another jurisdiction that works for you, your family. So, there's as an arbitrage as a tax arbitrage, but for the most part, it is about creating the lifestyle and environment that, that works for whoever it is.

Brad Hirsch:

Ah sure, sure. They do go hand in hand for sure. One thing I bring up to folks now, and then of course I'm not like a seven to eight figure guy and I'm more of a simpleton. However, it is the fact that my last a year that I live in the United States, I spent about 30 grands on a tax, you know, between state, federal, you know, you name it, employment taxes. And which made me smile is here in Vietnam. We live in a rather luxurious lifestyle, but we live under a thousand bucks a month. So, I had this moment where I'm thinking, gosh, in my tax savings alone, like, hey, if our tax burden was cut in half by moving to Vietnam in effect, I'd been living here for free. So, there's, I'm definitely in the category of people where my tax savings alone by moving to another country, only that a based in my entire lifestyle, everything is basically free after that. And I think that that's a really important point that a lot of people need to need to fathom. Do you run across that a lot?

Derren Joseph:

Yeah. I mean there is, again, you know, when you get from my perspective is that when you get to a certain level of income, within reason you can afford to pay, you can afford and you are highly incentivized to get onside professionals who can help you, you know, rationalize that tax situation so much so with the right structures in play, you may not actually may need to leave whatever jurisdiction you enjoy being in. So, you know, if it is, you know, if it is that you are not a seven or eight figure income earner and you know, it's just, I'm not judging. I'm just saying that people make different choices, right? So, if you have not the end, you have to figure things out in your own. I think in terms of moving from one jurisdiction to another, that's a quick win and that's something you can more or less figured out on your own. OK, I'm in California, I'm going to move to Nevada. I'm going to move to Texas. Okay. Right. You just do it. Whereas if it is that you, you need it to remain, you know, you need it to remain in a certain jurisdiction, but you can pay a team to help you restructure the way you hold your assets. You can probably make a big saving as well. So, my point is that a more of a move is not always necessarily to save. It could just be surrounding yourself with the right people, and that advised people unfortunately, and people complain. But that advice isn't cheap because, you know, it's not like you can pick up a book and, and learn the nuances of some of these rules pretty quickly on your own. And in addition to what is the change frequently? So, the learning curve is pretty steep and it's expensive. So, people who had that sort of advice need to be doing a compensated for push for providing it. So, there’s that aspect of it, you don't necessarily need to move to save that kind of money. So therefore, if you choose to move, it will be for other reasons as well. Maybe savings will be part of it, but that's not the entire picture.

Brad Hirsch:

Sure. Yeah. That's a good answer. Yeah, certainly. I mean, you got to build a life wherever you're at as well.

Derren Joseph:

Exactly.

Brad Hirsch:

Going to that direction you've talked about, or I liked the metaphor that you brought up and your book's there, where, when it comes to financial advice, it's really an analogous to a medical bag, you know, and you don't have a pediatrician and ask him a neurological question or a heart surgeon and asked him about a foot of disease. And so, we can agree that in the medical field, there's a lot of a specialty and we could also agree that in the medical field is infinitely deep in every direction. So, finding the right specialists, you know, for the job, for what you're trying to do is a real key importance. And one thing that you mentioned when it comes to finding a good team to work with is finding, finding a group or not just an individual, but an individual part of a larger team that is stationed all around the world. And, and that's the case with you and the companies you work with is that right?

Derren Joseph:

Yeah. So, I run a semi-autonomous team within a larger practice called Moores Rowland. So, within Asia, so we're based in, in Asia was so we have just over 30 offices, around three offices in 12 countries. So as far North, as Tokyo and Beijing, all the way down to Australia, New Zealand and Singapore, and the point is that, you know, as you intimated a one person can't know everything. So even though I may be at the point of contact with the client behind me, I have a great team and those were the shoulders upon which I stand. And you know, it would be disingenuous and professionally responsible for me to give an advice, knowing only part of the picture, because let's say for example, you were in Vietnam, Cambodia or whatever, and I can give you US advice. It may work for the US, but I might put you in a worse position within Cambodia Vietnam right. So, on both sides and, you know, and give you something that optimizes across all the jurisdictions in which you're exposed

Brad Hirsch:

Sure, sure, sure. An excellent way to put it. Yeah. And because they all do have their own unique things and like one interesting example to kind of use this metaphor a little further. Last year I ended up getting sick and my wife suggested I go to the hospital and of course we showed up and within a minute, you know, got a quick blood sample and they have the machine to check and then gave fever, malaria, Zika, basically your tropical diseases, the whole smatterings, and the whole test from start to finish took about 15 minutes.

And yeah, and it was, it was great. And in person, we have all the medicines for all of these in stock. They have the vaccines for all these insects. And I just smiled thinking to myself, gosh, if I let's say God forbid got malaria and I showed up in America, how long would it take them to figure that out? Like it's just not on their mind. And perhaps are a lot of these doctors have never once ever seen a case of malaria in their entire, in the entire life. So, so I think that that's a good example of a situation that might be obvious and easy to solve here. If you take a local advice from local doctors, but despite the fact that the American doctors are terrific people, extremely smart, well-trained an excellent in their own way would be ineffective. Just plain and simple.

Derren Joseph:

Absolutely. Absolutely. And you know, it kind creates a slight conflict. If I'm going to be completely honest with you, and it’s not just myself, but many of my fellow practitioners would agree that we actually make more money cleaning up mistakes. Then we do, and helping people get things right the first time because, you know, it's natural. You leave Australia, leave the U S or whatever, and you, and you start move around doing business. And then your natural instinct is, well, I've worked with my guy back in Sydney or New York or Florida forever. What am I going to change him out? You know, if it ain't broke, why fix it? And then, you know, he he's loyal to you or she's loyal to you as well. So, they don't want to say exactly what I'm not to. Sure. And some of them will wing it and it ends up by bringing you in, in the end. So, we need to try and unwind whatever mistakes we've done and, and that, and that can be pretty costly to a taxpayer.

So yes, obviously, and then, Oh, another thing would be those who spend a lot of time in online forums and Facebook or whatever.

Brad Hirsch:

Oh sure. So, I researching. Yeah.

Derren Joseph:

Yeah. And it was like the blind leading because just because you know, Brad is also from the US, I'm not going to copy everything that Brad did because I work for Brad and then, you know, he has, Brad has his own business model in his clients in a specific place. And he lives in a certain place. So, people just copy and paste without understanding that when it comes to taxes things, a pretty nuanced, and they give themselves in trouble as well. But, you know, I guess it's just all part of the, you know, the experience and we call live, we live, we learn, we try to do better next time.

Brad Hirsch:

Sure, sure. And then I'm going to keep hitting on your book there, because I had some tax questions and stumbled across to your book. And I was like, man, that was the most specific title I've ever seen him. And, but either way, and a lot of chapters, you know, you'll start it off with a general advice and talk for about a minute. Like, here's the general big picture followed by 30, 40 minutes of nuance, the changing environment. And a good example. And I think a strong takeaway for a lot of people is that, especially for Americans is a foreign earned income exclusion. Yeah. That was a big one. And, and it's something that I personally am able to rely on quite a bit. In other words, I'm a real quick, it's a hundred, and I think it's a $106,107,000 for single filers is basically I explained it as it's a write-off. It doesn't mean the tax tree. It's basically a write off of your, you know, state and federal income. You still have employment taxes, but that takes a huge chunk out of it. And, and that's a huge reason for a lot of people to consider moving out here. If, you know, broadly speaking in your first a hundred grand is tax free. I mean, it's an overlay or an over simplification, but sort of true. And now that's a big draw for a lot of people to be sure that's full of a ton of nuance, you know, as well and a ton of details and you cover those really well in your book. But with that said, is there some general things you can say about that exclusion and, you know, how does it apply to people, I guess some general advice.

Derren Joseph:

Okay. So, I'll kind of like create the context, explain what it is, and then explain some common misconceptions. So basically, what it is, section 911 of the US tax code provides for that, if a us person is outside of the US and when I say a us person, I use that term very, very carefully. So, a us person would be someone who has either a us citizen has a passport or a green card, or is someone who triggers substantial presence. So that is something we deal with all the time. It’s typically something we deal with. But right now, with COVID-19, it's a bigger issue where people unintentionally through no fault of their own. There had been so many travel disruptions. I have a client this morning who a European based in Singapore, who was doing a job in a certain state in the US, and COVID hit, he could not leave. There are no flights. So, what is he going to do?

And then when the flights came back, it was hard to get into Singapore blah, blah, blah. So unintentionally he's spent a long time in the US, he's now US taxpayer, right? So those were the three categories, citizen, permanent resident, AKA green card or substantial presence. There's another one, but we believe that for now. So, if you are a US person and this is as I've defined it, and that comes from section 7701 in the tax code, and I think it's important that, you know, you trust, but verify. So, whoever is speaking to me, whoever it is, you know, just double check that person is, you know, knows what they're talking about. So, anyway you spend a certain number of days or time outside of the US, and you can qualify for something called the foreign income exclusion, which excludes the first a hundred K plus of your income from US taxes. So, you still report it, included from the tax calculation and under that section 911.

So, you can benefit in one of two ways. The is the one that everyone understands. So, because, it's a quantitative, and objective. The other one is qualitative and subjective is just harder to understand. So, the easy one is the physical presence test. So basically, you don't spend more than 30 days in the US. Wherever it is in the world, you qualify in a day in the physical presence, right? Easy. You just count your days easy.

The other one is more, it's subjective, it is qualitative, it’s a test of intent. So basically, you have to demonstrate on the form 2555, that center of life, your center of life has moved from the US to whatever jurisdiction you claimed to be a bonafide resident of.

Brad Hirsch:

Job, company, contracts.

Derren Joseph:

Exactly. Do you pay taxes in that jurisdiction as well? So basically, they try to ask whether you are a bonafide residents. Now the common misconceptions on that side, I have a client this morning, based in the middle East and connected with them in LinkedIn, they are doing very well. But the point is that they didn't pass that threshold for the Foreign income exclusions, and the person made less this, it moved to the inflation, but for 2020 is 107,600K. So, this is not passed that threshold for the past few years. So, they incorrectly assume, because again, that's some of the misinformation, some of the fake news being peddled in some groups that if you don't pass a threshold, if you don't need to file, and now she's having an aha moment, she's been misinformed. So, she needs to play catch up. So that's one of the misconceptions believing that you don't need to file. In fact, the threshold, depending on your filing status can be as low as $5. So, in other words,

Brad Hirsch:

Of course, if you're a married, yeah,

Derren Joseph:

Exactly. So, you made in $5, you need to file a return. So that's the first, first misconception. And then the second thing is, of course, we spoke about the arbitrage. You know, you save the 18% in theory, but moving from California in Leslie to Nevada, Texas, and you can even assuming you make you know, like a, a hundred grand or whatever, maybe you can save everything by moving outside the US that's a second misconception. Not exactly because you need to move to somewhere and unless you're going to move to Dubai or a certain Caribbean island, wherever you are going to move to? They have tax rules as well. So, you may be tax free from the US, but you are living in Bali, which is my case yesterday. A bunch of people living in Bali at many people live in Bali, but in Southeast Asia, Indonesia has one of the most aggressive tax codes. So, you jump pot into the fire.

So, you know, so yes you have saved $170,600 at least excluded that from your tax calculation to the US but Indonesia also taxes you and your worldwide income. Indonesia also wants to see a list of your assets. You know, they want to know about your bank accounts in the US, what LLC you have, they want to know about everything as well. So, the point is, yes, it's important to understand where you're coming from, but also be conscious of what are you going to.

Brad Hirsch:

Of course, yeah, yeah, definitely in, and this is a big deal. And we keep on talking about this exclusion because, as an example, it's reasonable that a person could be paying, let's just say, $30,000 in taxes, federal and state without the exclusion, you know? And so that would normally they'd be paying that 30 grand, but with the exclusion, maybe they'd pay close to zero. So, it is possible that it's a $30,000 difference, whether you qualify for this income exclusion or not. So that a huge one. And, and I keep bringing this up to American folks all the time. You know, if you're in the neighborhood of earning about a hundred grand, 80 grand a year, man, considering moving overseas and qualifying for that, shoot you’re doing great. You know, you brought up an interesting nuance in your book that I thought was really a worth focusing on. And that is that this is actually earned income. That means if I have a job and I'm working online, for example, or I'm a consultant or something, and I'm actually earning money, great, then it would qualify for this income exclusion. Now, in contrast, if I'm receiving social security benefits or like residual income, well, or I'm receiving like a pension from the male or the military or something, well, that wouldn't really qualify. That's not considered earned. Is that right? Did I understand that nuance correctly?

Derren Joseph:

Yeah, absolutely. So, we need to differentiate between an earned and unearned, otherwise known as like passive income or investment income. So, the foreign income exclusion section 911, applies to earn income. So, you performed a service are provided a good, and you, you know what, whatever it is, you, you actively engage in a trade or business. You are performing something and you've been compensated for it. So that will quantify where's your investment income, not necessarily. And it works both ways as well. So, some people may move to the jurisdiction. So, I spend time in Portugal. So, Portugal is quite popular for the location Independent people is probably number one in a lot of people's list. And again, the fake news and some of the misunderstandings and some of the groups on Facebook or whatever would be you move to Portugal and you live tax-free under the NHR program, not a habitual residence. Well, yeah, but it's tax free for certain types of income. So, for example, investment income, interest dividends, or whatever, maybe yes. But if you are working, no, you are going to be paying taxes. So again, it is a distinction that it's really worth taking time to understand between the investment that income and the earned income, not just from a US perspective, but as I always say, if you leave the U S where are you going to go? So, you need to pay attention to the rules there as well, because they have rules.

And as we see, well, given the health situation that the, the entire world is facing, I don't think there's a government in the world right now that is encountering their pennies. And there are going to look at tax revenue as a way to plug the holes that they have in their balance sheets. And if it is so once upon a time, they would turn a blind eye to people, you know, just kind of like pop in, and out or whatever, doing stuff online, not anymore, not anymore.

Brad Hirsch:

Sure. Is there are getting a lot, stricter is what you're saying. Okay. Sure. And a one angle to that I think is important is a, you've talked about areas or know certain countries and the penalties for not reporting certain things. For example, if a person from America living in Singapore happens to have a Swiss bank account, for example, and doesn't report it and doesn't say anything about it. Well, that could be like they would get penalize. In some cases, I think you talked about a 150% penalty are more, in other words, if you got a 10 grand in there, well, it's a $15,000 penalty for not reporting. Is that about, right? That there are a lot of penalties in the world for people not following the rules.

Derren Joseph:

You know, just dipping out in a bit of geopolitics. I think for a while now, we have at least anyone who has been paying attention, appreciate that the new oil is the new gold is data. And also, to Western countries in particular, what matters more than collecting revenue is collecting data. And for the US, I think the inflection point was 911.

So, post 911 at the Patriot act and certain other rights that kicked in that basically meant that the government, the IRS, you know, various government agencies, they are very, very sensitive to data. IE what are US persons as defined previously doing a broad. So, if you didn't file a tax return, okay. All right, well, penalties interest, if you don't pay the taxes and we're in a zero-interest rate environment. So, depending on how much but if it is, you did not report investments or holdings outside of the US, there may be other past to be an implicit assumption that you’re up to some sort of nefarious scheming, you are doing something that is counted to the interest in the United States? So as a result, the penalty is a pretty draconian. So, in the US, my home state is Florida. So, a few years ago, there was a case that was, you know, we get all of these legal emails. And there was a case where there was a professional living in South Florida. I think he was a dentist. And he had a million dollars in a Swiss bank account, which she did not report to the IRS. Now, the IRS held that he didn't report that balanced for three years. However, they made that assumption. Now the maximum penalty that they can, they can levy on an unreported bond balance is 50%. So, 50% of 1 million is half a million over three years at 1.5 billion, which is a case that if you just mentioned, so here he was, you know, that was the penalty that he was asked to pay. It was settled out of court. So, we don't know how much, but that's what they can. And they take it very, very seriously and is not just the civil penalties, but they can also be criminal charges as well.

As we saw with the people connected to the former US administration, regardless of whatever hacking or whatever the point was at this particular person who his name, I won't mention because it is enough in a media that they had bank accounts outside of the US and they did not report it. They use that as an opportunity to get a at the person. So, the point is, you know, what all they want is information, and it's not necessarily taxable. All they want to know is what you're doing. Have you invested in a company and outside of the US just tell them what it is? Do you have a bank out in Vietnam? In the Philippines? just tell them what it is, because if they find out on their own, it's going to be a whole different game.

Brad Hirsch:

Sure. Yeah, certainly. And why bring up to a lot of my friends and colleagues and clients that, hey, I bring up to them. How long have you been sitting around and thinking about your travels in taxes? They're like, Oh, I don’t know, a few weeks, a few hours here in there. And like, right these boys have been thinking about it for 200 years. They know way more about it, the news. So, don't try to cheat the system, you know, instead a you're better off learning how the system works, you know, of course, finding a professional help and you can go on from there. And I'm, and I don't want to touch on, you know, you talked about fees and sure. There was a certain cost with, you know, getting help. I'm like even calling me, there was a certain fee I'm a pretty low, but there is still a fee. But my goal and what I always tell folks is that a I'm here to save you money. In other words, if you pay me a hundred dollars, but I can save you two grants. Well, how much did it cost to talk to me? Well, in effect, you came out at 18  hundred bucks a head, and there's a countless situation where a, you know, vocally and over the phone wedding related you name it where, you know, a small input of talking with an expert can save countless hours of stress, headache, and God forbid, you know, penalties and fines and that kind of thing.

So, so would you also say that in your experience, when you're seeking out clients, you're looking for clients, for whom, you know, you're able to save them a lot of money and, and absolutely make it worth it. Is that, is that right? Or do you have any examples of that for people who

Derren Joseph:

Absolutely. So, my most recent client in Bali, I think we wrapped up his account. And last week, I mean, my fees were around $10,000, but he got a refund of much more than that. I mean, I won, but it was quite so, you know, in other words, I did your returns for free. If you look that way, you know, but I guess the thing is to, you know, to the point you raised earlier, some people want to do the right thing, but unfortunately, they are people who they may be very well-intentioned.

So, in this particular, this client in Bali, he didn't do the return's previously on his own somewhat to help him. And I'm sure that present a really good, hot, and they were trying to do the right thing, but they are not qualified no of the experience. So, he was paying way more in taxes than you needed to, which is Y could get him 20 to $30,000 refund. Right. So, you know, so it's not that people, you know, some people are trying, some people are trying to hide out. I mean, that, that happens.

There are emails that I just don't reply to because I can tell they're kind of shady, but some people want to do the right thing, but unfortunately, they don't know where to look. And unfortunately, people who are qualified and experienced, well, we are restricted by the terms of our license, by what we can say in how we can market ourselves. Where people who are unregulated, and unlicensed they're hands aren’t tied and they can get on to YouTube. They can get on to Facebook and they can say whatever they want. They don't have a professional liability insurance. They don't have to worry about anything. And if you notice what they do, they will never be in Singapore because Singapore is heavily regulated. They'll go next door, to go to Indonesia. Malaysia there will never be in Western Europe because that's heavily regulated as well. So, they'll go to Eastern Europe. They'll never go to the us or Canada. They claim it's high taxes because it notes regulation. So, they'll go to Panama or Mexico and they will make, and they will say what they need to say, because they know that if they were to make that video or to say those things for when, in one of those regulated jurisdictions what's going to happen.

And I know that there is, you know, there's another, you know, like an online personality who it turns out last year is under investigation and seven jurisdictions, seven.

In the US the UK, Australia, and New Zealand, and a couple others, you know, who is not looking, but, you know, he is a regular, he has a really, you know, charismatic personality or whatever, but he was, he's an unregulated ish. You know, he has no license or whatever. And sometimes he says things and, you know, he does have a business. So sometimes he does things that kind of crosses some lines. So, it's a weird, so people do look, but my advice is to look for someone with a skin in a game, the score would be a licensed to lose. So, if it is that, you know, go sideways, you have recourse if you have recourse.

Brad Hirsch:

Yeah. I understand what you mean. Not well, and I think a lot, not only stand in the game, but it's nice talking with a guy like yourself, because you're actually living in another country, you are actually doing that in your practice. Right. And so, you can answer lot of questions, which in my own experience, you know, so at that, that really, you know, certainly, certainly so well, good. Okay. So, to shift topics a little bit, I wanted to ask you, because you've been in this game for a while, what kind of trends have you noticed, or what has been some changes over in the last, let's say 10, 20 years. And it will, if we went way back to the 1970s, yeah. You ended up talking about that book, a future shack, you know, and that was really predicting the digital nomad explosion and the post-industrial world, you know, that we're really living in here now. But, but anyway, so that's, that's kind of a futurist book, but it's proven to be totally true. But what, what trends have you noticed in the last five, 10, 20, 30 years? What are you seeing? And demographics types of income, types of questions. Yeah. What have you seen?

Derren Joseph:

So, you know, so I did write a follow up to that book, it’s called, Adapt or die. And I penned in when I was under locked down in Indonesia when things for us kicked off last year, because I can see that certain preexistent trends that the health crisis that we're facing has served as a catalyst. So, it's accelerated process and trends. So, some of the key trends that I pay attention to, and it has implications to me and my clients would be difficulties in travel. And that's something, you know, I have a client who, whose grandparents or great-grandparents are whatever, you know, move to the US in the late 18 hundred, early 19 hundred. And they, you know, they came from Europe, from Western Europe and then the whole Ellis Island thing back in those days, because he traced his records, you know, like a family tree, and you can have shown up and Ilice Island without any form of documentation, no ID. And it's like a rough kind of a health check, you know, and make sure you’re ok, welcome to America. Now, something, you know, fast forward a bit, suddenly you need some form of identification. I mean, there was like a passport, but how are you show me something that says where you are and where you have come from, and then fast following, they need passports and then fast forward visas. So, they, they are barriers to free them to the movement of human beings. It's becoming increasingly difficult. And when we see in the present situation is that all visas had been thrown out. Everything has been scrapped, all biological, everything has over. So, you back to, you know, there was a period of time. We were having a US passport was at the same level of having like an African or an Asian passport or some, another emerging market where no one wants to let you in. And yes, boarders are slowly reopening on a bilateral basis, but for the most part, and on essential travel is still, is still pretty difficult. And I don't expect that, you know, there's no returns to 2019, this is something that was going to continue. So, one of the first things is difficulties in travel, which means that for those who do business internationally, who are location independent, these are runs and stuff like that. And that's all news. You need to cultivate and curate a portfolio of residences and citizenships that's. So, you know, I'm going from a sixth one next month, which you moved in

Brad Hirsch:

Six flags. Okay, sure.

Derren Joseph:

Not a flag, but in terms of jurisdiction, because, you know, I want to be able to enter and exit, and I recognize that and the snap of a finger, they can shut the borders again, once things, you know, and I may need to get in there for business reasons, and I don't want any problems. So, you need to cultivate that portfolio and you need to do it carefully. So that's the one thing another thing is to, in terms of taxes, as we mentioned, we hinted earlier, every government in the world is hurting right now, no matter how rich you are. And, you know, Singapore as a pretty rich country. And they're feeling the pain as well. So, expect that Taxes, we're going to go and to go up whichever jurisdiction you are exposed to expect taxes to go on that that's, you know, that's a given and in some cases Expat so, you know, in the US and I think New Zealand, some of the jurisdictions there've been conversations and the UK as well about wealth taxes

Brad Hirsch:

Ah, okay. That's a broad category.

Derren Joseph:

Yeah. So, you know, it's a conversation has been happening where, you know, you are not being tax on income, but just by the, you know, having assets be on a certain threshold, whatever that may be, they may want to tax you. And what we've seen after the tax cut and jobs act 2017 of the president, previous president, previous administration, President Trump, those taxes can be retroactive. So, it's not like the way that it's coming up. So, you have time to plan and get your phase in order. And I can say surprise, here it is. And, you know, we kind of get them back data in terms of, so again, you know, but you know, I think tax professionals, especially those that are qualified in a jurisdiction, they have the add to the ground and sometimes they know what is coming when or what the legislatures are thinking of. So again, as, as a business owner and, and I guess many of the people that we do with our business owners that, you know, it's worth keeping the, keeping the lines of communication open with your tax professional, your structure, your corporate structure, your business structure is kind of like your core. You know, you need to have it service, make sure it runs properly. You don't want to break him down at the moment that you need it most.

Brad Hirsch:

It's a good metaphor, I think, Oh yeah. You think is enough spend in a few, a hundred dollars repairing a car. Well, you know, spend a little money looking at your financial structure and arguably that matters more.

Derren Joseph:

Yeah. So, those are two, two trends that I think is important that, you know, people who do cross border work need to be aware of.

Brad Hirsch:

Okay. Sure, sure. In my own experience what I can say, and I've had my experiences rather than narrow, but in America when I was growing up, I never once met anybody or heard of anybody that left America to go and live and retire in another country. I think the first guy I met, maybe I was about 25 years old in Mexico. And I'm like, you can do that. Wow. And like, it didn't occur to me. Similarly, when I first got to Vietnam, let's say five, six years ago.

I didn't know anybody who wanted to retire and move to Vietnam. I didn't need a single one, but if I look around now in 20 to 21, I know at least nine people firsthand that live in my city only sure enough, they are retired in America and they're like, whoa, I can live on a hotdog, toilet paper and in water, or go to Vietnam and live like a King in effect. So, I would say people retiring and moving to places like Vietnam or Eastern Europe and so forth, I would say it's considerably trendier more accepted and there's more of a, a path to go they're would you say you've experienced that like an influx or more people that want to retire and in another country?

Derren Joseph:

Hmm. That's tricky. So not necessarily, no, to be honest, no, most of our clients are still in the, in the working space. And I think our fees aren’t the cheapest, just, just being completely transparent, completely honest. So, I think when someone gets a, a, a situation where with the end of the working life of the things, a pretty simple, then they, theirs, they probably are no need to, to pay for a team, a, a, a, a certain team, a team that operates at a certain level to do their taxes. Sure. I can try, they can try and do it on their own, and they can get a team that is perhaps less qualified in more complex things in more quantified, in a simple thing to help. We do have some retirees. So, you know, and I focus on what is expensive jurisdictions, so, when someone retires in Singapore to stay in the Singapore that you have to been doing pretty well, because things certainly aren’t cheap there and have a portfolio that is sufficiently complex to keep, you know, teams like my busy. So, you know, that is not an area of growth that we see where we see as an area of growth would be, you know, just peep Entrepreneurs doing business deals, cross border, you know, a couple creating the tech start-ups, you know, you know, various apps or whatever the case may be the one to penetrate certain markets, or they want to raise capital in others. And that's, and that's kind of like where we see a lot of growth right now.

Brad Hirsch:

Sure, sure. And neither of us know the future here, but I had a bit of an anticipation that I'm with a large, the millions of Americans, just to pick an example of that are finding themselves able to work online and able to work remotely over zoom or whatnot. I wonder if maybe 1% of those folks are going to realize like next year, they can continue to be online, but just move to Southeast Asia or a move to Eastern Europe and continue their same job and can continue to the same level of productivity. I would really anticipate that in this next year, the whole world was going to see a lot more digital nomads, full working employees, working at a company, IBM, Microsoft, you name it. We are working at their companies, but just happened to be stationing, you know, overseas. I think that we're going to find the highest year ever, you know, or the probably set a new record for a number of folks doing that. Would you expect that to be the case yourself to do?

Derren Joseph:

Absolutely. So again, pre health crisis. It was a thing; the number of remote workers was on the increase. And, you know, a certain, a commercial district was feeling downward pressure already. Now we have a health crisis and that trend has been accelerated. And well, we don't need to talk about Wework in other coworking spaces. And those who deal in the office space game, feeling the heat as people work remotely indefinitely, and the industry leaders have, you know, they have set the example, you know, the Googles, the Microsoft’s, or whatever the Facebooks have said, you know, indefinitely go. And just as long as you get stuff done, just go wherever you want to go. So, I see it increasing now as to where people go that may change, you know, so pre health crisis, you know, you are popular places like Thailand or Indonesia you know, where else? Yeah. I think this is some really big one's in Asia. Now, the, we do Asia is handled. This situation is different from the rest of the world. And that everyone uses terms like lockdown, but when Asia locked down, they really locked down. You know, we've had examples like in, in KL, in Malaysia with security guards will not let you out of your condo. We'll let you leave right. Now in the West. When we say locked lockdown, sometimes it's not that strict. So, you know, so some people have fell back and they say, oops, I've lost your camera. Are you still on?

Brad Hirsch:

I'll get it fixed.

Derren Joseph:

So, they they've said, you know what I've seen people say, I want to remain location independent, but maybe Asia is not for me given the lockdowns. And they, you know, the lack of freedom of movement and the way I was unable to leave and come, even though I had like a residence permit, I was not allowed to return to Singapore, to Malaysia, to Indonesia to the Philippines. They did not let you back in. And your life is there, your home is the Knicks, your friends, your family, whatever. So that was pretty off putting. So, I see that having long-term implications, in addition to, which I don't think is Asia has figured out how to reopen in a way that lets that is comfortable for people. So as a result, I've seen people who do have that freedom of movement choosing other jurisdictions is choosing a Portugal's, Spain's in Netherlands, a middle East, Dubai, Mexico has been a huge winner.

Once you go to a lesser extent Columbia, Barbados, Bermuda. Because Barbados does come with the Welcome visa, Bermuda. So there like 16 jurisdictions and we have tracked predominantly the West's that have reopened. And they’re welcoming because they have pivoted, they've realized that short-stay tourism is over food for the foreseeable future. We need to build our industry based on lost the tourism. So, then we propose, they will tell us for whatever creates at visa and Tax systems and attract these location, independent people in, let them in. So, my point is you're right, that trend will continue. It has taken a massive leap forward as a result of the situation we're in now with the jurisdictions that you would have anticipated would be a clear winner may not be, and some are coming out to the background and people didn't really think up like who would've thought a Barbados, Barbados is huge.

Brad Hirsch:

Huge, meaning they’re popular.

Derren Joseph:

It used to be popular, yeah.

Brad Hirsch:

Sure, sure. A great right there. And, you know, interestingly enough, I see, like in the case of Vietnam here, when they have folks that expats don't want to move here and we'll just start from the country's perspective. They're like, gosh, almost 0% of them are a drug deal and criminals so, nice they don't cause any troubles. And if anything, they earned money from outside, you know, online and then spend it all right. Here, it's kind of hard to beat. In fact, if the number of ex-pats living in Vietnam double, Oh, they'd be laughing and they wouldn't mind it a bit. So, I, I definitely noticed that not just here, but in a lot of other countries where they on the ground level and on a macro level, they really do welcome a long-term, you know expats and like, like you said, I would expect that to go up the focus on long-term. So yeah. We'll see how the bees is work out and all of that. Right.

So, Okay. Well, great. Well, I did want to ask you a, what a day in your case living in Indonesia and would you consider yourself multi-lingual, you know, or just in various languages?

Derren Joseph:

Well before I moved to Asia I, well, I did a French, Spanish in basic German and I thought, you know, I'm moving to Asia. Those languages will be useless. It has helped me though, in terms of many I've been, I pick up a lot of Swiss and French clients and then, you know, many Asian as well as American clients, once you know you’re doing pretty well, you want to invest or do you want to have your wealth? You know, flag theory in Switzerland and in Luxembourg, basically jurisdictions where your documentation comes to your statements on French or German. So that has held in terms of day-to-day life, my highest net worth clients on tonight, Singapore there are actually in Indonesia. So, and it does help to you know, I just know survival Bahasa, you know, to deal with taxi drivers because obviously my client's a multi-lingual that speak English, but, you know, just dealing with like restaurants and maybe some guys on the hotel, Uber drivers, or grab a driver.

So, I think the language does help to just create someone into the local society. But if it helps someone develop to a certain amount of respect, you know, you there, you know, you're doing business you, you know, just, you know, it takes time. Just, it shows that you, you show up, you know, you, you have invested, you've invested, not just the language, but the customs, because we all know those who've lived in different countries. There are different ways of doing a, doing things that you want to be respectful. So, and the respect comes not just from the language, but understanding how things are done.

Brad Hirsch:

Sure, sure. And then in a more professional level, you've talked about the importance of finding a team of professional team that is multi- lingual, in other words, if you’re moving to Portugal, you better be darn sure that they got an opposite in Portugal in a way, and they speak Portuguese. So, in that sense, and I'm sure there's a lot of cases where you rely on a broader team like that. And perhaps if somebody did call, let's say they were a Portuguese speaker and they did somehow call you directly, you'd be able to forward them over to a person. You know, who's a native Portuguese speaker, is that right?

Derren Joseph:

Absolutely so important. So, our firm is also a member of a network called Fusion, which is a more or less centered in Europe. So, that gives us access to that talent pool. And as, I don't know if you are aware, but I do quite a few webinars. So, the next couple months I'm doing 15 webinars and Portugal is, you know, Portugal, the US tax is something we do not monthly, but probably every other month. And so, I do it with Augusto Paulino, you know, he is a Portugal a tax attorney, you know, he is part of a practice. That's about 200 people strong. So, these aren't like, you know, some guy is sitting in a corner, I'm trying to figure everything out on himself on their own. They are fully qualified and have a strong team behind them as well. And together we handle queries. And when you look with a client, similarly, it's been a Ricky, his law firm, even in Israel, we do Israeli taxes as well. So, yeah.

Brad Hirsch:

Well good. Are your webinars normally opened to the public?

Brad Hirsch:

Yeah, we prefer RSVPs. So, and we encourage people to submit questions in advance and we do it on a first come first serve because normally, so we, who did we have last week? I think we did Spain last week and yeah, we had dozens and dozens of questions, so it's good that we get them in advance and we can look for the people, you know, many people ask the same thing in different ways. We can respond in a way that covers a large number of people. So yeah, that one, we, I think we probably just had an over, just a little bit over 200 people for that one. So yeah, we have webinars regularly. They are all on our website. HTJ.tax, and, and you can feel free to, to RSVP and you can get, we give us the zoom link, like 12 hours in advance, but we have also started live streaming it on Facebook, on LinkedIn.

Brad Hirsch:

Okay. Sure. So, it's not the most interactive.

Derren Joseph:

Yeah. The thing is that if it's like, stream, I don't necessarily see your questions, but if you RSVP in advance, and you emailed me, then we have your questions, right? The guys that are on zoom, there’s the chat box. But I can't see the chats on Facebook or LinkedIn or whatever, so yeah.

Brad Hirsch:

Yeah. Okay, great. So, for a lot of my listeners, they can find out more about you and see some of these webinars by going to your website, which I'll link, of course. And, and along the way I would recommend to a lot of people are to everybody read your book, man. It's, great. And it's, and it’s pretty short, like the audiobook version is only three and a half hours or something like that four hours. And it does a real good job of giving an overview and it really does. And, I really believe like I can point to three people that are just in his last year, if they were to read your book, it would have saved at least a thousand dollars. I can think of three exact people and I'm one of them. Yeah. So, I definitely in the long run will encourage folks to consider getting that book. And I mean it's in my opinion for $10. Oh my God, that's nothing, that's a sandwich in the pot and a soda. Right. So yeah, that would be another good thing. And other ways do you, you know, keep up on Twitter, are there other places to kind of keep in touch with you or mostly Facebook or other the website?

Derren Joseph:

So, we have a social media team and every day. Yeah. I think it's every day new have a video of like a one minute. So, I mean, but it's on YouTube is on Tiktok. It's on Instagram. It's on everywhere. Well, most places including whatever. So just basically. Basically. Yeah. Yeah. And the stimulus payments are your stimulus payments taxable.

Brad Hirsch:

Yeah. Let's just say the important questions actually. I think I might've saw that one on you. I think indicated that instead of receiving the payment, you can actually get it reduced off of your tax bill after you file. That was the aha that I heard from one of your videos like, Oh, that's because I had hated to pay taxes and then receive the payment. It's a difficult for me to receive a check and then pay tax is I would rather just be deducted on the front, on the back end.

So, there was an example of a quick question and a quick answer that had a huge impact on my own exposure. So yeah.

Derren Joseph:

And that's a great example too, because you know, if someone only knew half the picture of like the US site, they would say, no, it's not taxable post-op but the person who actually asked that question was resident in Dublin, in Ireland. So, the complete answer, no it's not taxable to in the US but yes, the Irish government will tax it.

Brad Hirsch:

Whew. Oh man. Well, you're just full of great insight. There are Derren and I want to say, I really, really appreciate you joining me here on the podcast, answering a few of my questions and I really hope that, you know, folks down the road, if they're in a situation where they need advice like yours, that they're able to find you online and contract you down the road.

Derren Joseph:

Well, I appreciate you giving us an opportunity to join your podcast as well. It's been an absolute pleasure and I look forward to the next time,

Brad Hirsch:

Hey right on, man, we'll leave it at that. And you enjoy the rest of your day and we'll see you next time. Thank you very much

Derren Joseph:

Thank you very much too. See you next time.

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