FBF 04 | Flash Back Friday | Escape the Tax Trap: Build Global Wealth with Second Residencies With Mikkel Thorup

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8d ago 46:10

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Title: Escape the Tax Trap: Build Global Wealth with Second Residencies With Mikkel Thorup

Summary:

In this episode of the Passive Income Attorney podcast, host Seth Bradley interviews Mikkel Thorup, founder of Expat Money. Mikkel shares his unique journey from a challenging childhood to becoming a successful consultant for expatriates. He discusses the benefits of living abroad, the importance of financial freedom, and the various strategies for obtaining second residencies and mitigating tax liabilities. The conversation delves into the emotional aspects of relocating, the rise in interest for expatriation, and the practical steps individuals can take to create a backup plan for their families. Mikkel emphasizes the importance of personal responsibility in achieving financial independence and living a fulfilling life.

Links to watch and subscribe:

https://www.youtube.com/watch?v=J9zyPxUOrnI

Bullet Point Highlights:

Mikkel Thorup’s journey highlights the importance of resilience and adaptability.
Expatriation offers opportunities for freedom and adventure.
High net worth individuals often seek second residencies for tax benefits.
The emotional aspect of relocating is as important as the financial.
Understanding the difference between expats and immigrants is crucial.
Investing in foreign real estate can provide residency benefits.
Tax implications for U.S. citizens abroad require careful planning.
Personal responsibility is key to achieving financial independence.
Mikkel emphasizes the need for a backup plan in uncertain times.
Exploring new cultures can lead to personal growth and fulfillment.

Transcript:

Seth Bradley (00:00.206)

Hey y'all Seth Bradley here. Thank you so much for tuning in and spending your valuable time learning with us. Absolutely appreciate each and every one of you. I've got a small ask. If you'd please just take a few seconds and leave us a rating and review on Apple podcasts or wherever you're listening from. It goes a long way in landing the best new guests for our show. That's it. Thanks again. Let's go.

This is the Passive Income Attorney Podcast, where you'll discover the secrets and strategies of the ultra wealthy on how they build streams of passive income to give them the freedom we all want. Attorney Seth Bradley will help you end the cycle of trading your time for money so you can make money while you sleep. Start living the good life on your own terms. Now, here's your host, Seth Bradley.

Ladies and gentlemen, welcome to the Passive Income Attorney podcast, your favorite place for learning about the world of alternative passive investing. And today's show is spectacular. We have an incredible guest, Mikkel Thorpe. He's the founder and CEO of Expat Money, a private consulting firm started in 2017 that helps private clients to legally mitigate tax liabilities, obtain a second residency in citizenship.

and assemble a portfolio of foreign investments, including international real estate, timber plantations, agricultural land, and other hard money, tangible assets. He's really speaking my language there. He's also the number one bestselling author of the definitive expat book, Expat Secrets, and he's the host of the popular weekly podcast, The Expat Money Show. All right, folks, without further ado, let's jump in. Michele, what's going on, brother? Welcome to the show.

Very happy to be here, Seth. think this is going to be a fun conversation and an amazing program you have. So I'm very happy to be here and hopefully share a little bit about my experience and hopefully some insights for your audience.

Seth Bradley (02:06.222)

Thank you, appreciate that. Yeah, this is gonna be very interesting, really unique background and really unique how you help people out. So excited to get started with all that. But first, let's jump a little bit into your background, your backstory, take it back as far as you'd like, man.

Sure, absolutely. For my story, I do have to go quite far back in time, but I will try to make it as concise as possible. So Seth, what happened was when I was a child, I was actually diagnosed with a learning disability. And what happened was one day a teacher pulled me out of class and sat me down in a little room and said, Mikel, something doesn't work quite right in your brain. And what we want to do is we want to send you to a special school, special school for special boys.

So that's what I did every day for three years. I got on a little white bus and I took a little white bus across town and I went to this quote unquote special school. Now the only problem Seth was it was actually not a special school. It was a regular school with a special class. So you can probably imagine what happened. I got in tons of fights. I got picked on, I got bullied and all around a pretty crummy experience. Now this is no woe is me, poor Mikkel victim, victim type of story. Certainly not. mean,

I got hit and I hit back. And if I could, twice as hard. Like I would never claim otherwise. Like I absolutely went for it. But I went to this quote unquote special school for three years. And I thought, and I hated the experience all around. But after three years, I got to go back to my neighborhood school. And I was so excited, Seth. I was so stoked. You know, I thought, wow, all my friends will...

be missing me and looking forward to see me. And you can probably imagine what happened. Day one of school or the first week of school, I show up and everybody starts gossiping and whispering. And, I remember Mikael, he went to some retard school. Thanks, guys. Very politically correct. You know how kids can be. They're just such gentle souls. But yeah, it left a very bad taste in my mouth for public education.

Mikkel Thorup (04:15.318)

So I stopped going to school. And then when I stopped going to school, I would begin to fail all my classes and fail all my things. And they'd ship me off to summer school and I would fail that. long story short, I stopped going to school when I was 12 years old and I officially dropped out when I was 15. And when I dropped out, a couple of years after that, I started traveling and I started traveling internationally.

And I started meeting all these incredible people who were living their lives totally different than anything I had ever seen in Southwestern Ontario. I'm Canadian, I was born close to Toronto. And I started to meet all these amazing people and they were like learning things differently and they were building their lives differently. And I felt like, wow, these are my people, these are my peeps. And I decided that I wanted to explore the world.

And fast forward, that's what I've done for the last 23 years straight. I have been traveling the world. I've visited 110 countries. I've lived in nine different countries. I've circumnavigated the globe over 400 times. And throughout this process, I have learned a lot about how the international markets work. And I have been very fortunate to be, to be a mentee, to mentor under

different attorneys and accountants and work directly with some of the smartest people in the world and really have hands-on knowledge about my work. And really what I do is I help relocate people overseas and we deal with all of their tax issues and their immigration issues and their legal issues. And as you can tell from my story, I myself am not an attorney. I have full-time attorneys who work for me. I have attorneys that I partner with to do different types of work.

And I have attorneys who are clients of mine who actually hire me to do a lot of the work. So it's a very different type of thing than the traditional education. But I think that what you will see from today's conversation, although I don't have a university background or traditional education, it doesn't mean that I'm not educated about these things at all.

Seth Bradley (06:27.466)

Sure. What an incredible story, man. First comment is kids are ruthless, right? They don't care. Kids are ruthless. I grew up in West Virginia. I don't look like I grew up in West Virginia. So that was an interesting few years there in elementary school and middle school before you kind of start figuring things out. Was in quite a few fights myself. So we share that similar background.

So you understand what I'm talking about for sure.

Absolutely. then having a bad taste in your mouth from public education for sure. You know, my gripe is a little bit different than yours. My gripe is financial education. We don't get any of that growing up. you know, they teach you maybe well, back in my day, they used to teach you how to write a check. People don't really write checks anymore. And that was about the extent of it. And then we've to go out and get that all on our own. But

Yeah, and traveling as well. That's incredible that you got to travel that early in your life. I had a similar awakening when I studied abroad in law school in Spain, and I hadn't traveled outside of North America, really. And then when I traveled abroad and studied in Europe, I was like, wow, this is incredible. All these different people, all these different cultures are so close together and everybody's got a different way of doing things and it's still successful. There's more than one way to do it.

Typically when you grow up in the US, you think there's one way to do it. It's the way the US does it. there's other ways to be successful and to have a culture work. So it's mind blowing. And like you said, you met people that were traveling. I did the same thing and as usual, Australians. But you see them all, like you're like, what are you doing? They're like, well, we're just traveling the world. What do mean you're traveling the world? This is my first time out of North America and they've been traveling for months or years and they just keep moving and moving and experiencing the world.

Seth Bradley (08:18.926)

It was certainly an awakening experience for me. It sounds like you had the same experience.

That's amazing. Absolutely. That's so cool that you got a chance to study in Spain and go to school over there. What a gorgeous country. mean, it's just so beautiful over there.

Yeah, yeah, absolutely. So let's kind of dive into this business that you have here. mean, what, know, who is your, who is your avatar? Who's your ideal client? Like who, who can use your help?

Good question. So I mainly work with high net worth individuals. So I'm looking at mostly helping families. I'm a family man myself. I got two gorgeous kids. I have a wife who I love and adore. A lot of people who come to me have a family. They've built up a business, whether that be a brick and mortar business, a practice, a professional practice, or even some type of online thing. And what they're doing is looking at restructuring the business overseas. The business...

themselves and their investments, their wealth. So most of my clients are Americans and Canadians. I do have some New Zealanders and Australians and some Europeans, but the majority of my people are North Americans. And we go through the whole gamut. I run them through four major tracks of everything that we're doing. So it is the immigration. So building out a matrix of the different countries that they could live in.

Mikkel Thorup (09:42.37)

you know, and then comparing them. And this is from all fronts, you know, the tax situation, the lifestyle, the family where the kids are gonna go to school, all of these types of things. So that's kind of track one is the immigration where they're actually gonna be. Then is the restructuring. So if we have to restructure their businesses using LLCs, IBCs, trusts, foundations, essays, whatever structure.

Then it's the tax situation. So tax situation of their home country, whether that be the US or Canada, then the tax situation of the country that we're moving to, and then the tax obligations of the country that we're restructuring things in. So making sure that we're staying legal and compliant on all of these. And then we're dealing with their investments. So that might be the real estate or it might be precious metals or just anything from the investment side of things.

So as I said, I'm not a lawyer, I'm not an accountant. You can think of me as a coach or a consultant. What I do is I help liaise the whole thing. I help create the plan. And then I outsource, you could say a lot of the legal work to either my own staff or partner law firms around the world. And it's a pretty intense program. It's a 12 months worth of consulting. My fees are...

are very high. don't, this is not a race to the bottom. This is not Walmart by any means. So, but add to all of that, not just the financial advice and analytical type of insights that I'm able to give. Also, what I'm able to do is help with a lot of the families. So the emotional attachment and the emotional situation of leaving your home country, of saying goodbye to friends and families.

of relocating the kids and dealing with the kids' issues, making sure that they adapt in the new country that they're in. So there's a whole bunch that goes into my work. I always thought at the beginning it was very much an analytical type of thing. And after years of doing this, I actually realized it's a very heart thing. There's a lot of heart that has to go in there, a lot of compassion and a lot of understanding and listening and...

Mikkel Thorup (11:54.668)

a different piece of the puzzle than what I actually expected my work to be like at the very beginning, if that makes sense.

Yeah, that makes sense. And what would actually make a person want to do this? Why does someone want to, you know, upheave their family and go to a different country rather than just visiting? I mean, is it like a sense of adventure? Is it because there are these major tax advantages? Like, what is it exactly that makes them want to go?

So this is a good question. Now, for expats in general, and maybe it's useful to make sure we have the lexicon correct here. So an immigrant would be someone who goes to a new country, leaves everything behind, they set up in the new country, and they plan on being there forever. So we might think of someone who comes from the Middle East or comes from Eastern Europe or Asia or something like that to the US or Canada. They're an immigrant, they're now American, they're going to spend their entire lives there.

An expat is usually pretty different. An expat is gonna go to a new country for either work or for opportunity, but they're different than an immigrant in that they most likely will not stay in that country for the rest of their life. So they'll either return back to their home country or move on to another country. So I consider myself an expat. I've been living overseas for 23 years. As I said, nine different countries.

I've moved to different countries, but I always knew that I would move on to another country. So I'm in Panama right now. I've been here for about four years and I love Panama and it's a great place, but I don't know that I'll be here for the next 50 years. mean, I also have residencies and citizenships in other places. So kind of going back to your original question, a lot of people will become expats because either mom got a new job or dad got a new job. You know, that's kind of...

Mikkel Thorup (13:41.666)

for work reasons, especially like I lived in Abu Dhabi for eight years next to Dubai in the UAE. And a lot of people who came over there worked in the oil and gas industry, engineers and executives and people like this who would earn four times the salary working there than they would in their home country. But there's another set of expats who also like to move overseas because they want a bit more freedom in their life. They want more adventure like you mentioned.

You know, if somebody doesn't agree with a lot of the divisiveness which is happening in North America right now, you know, I'm not here to come on your program and talk a left, right, like honestly, I don't care. From my perspective, I'm freedom minded. That's everything is freedom. It's not a left, right type of thing. It's I want freedom in my life and the majority of my clients, it is a absolute very big driver for a lot of these changes is to have more freedom. So that's kind of a, you know,

I broad answer different types of people that I work with, but everybody has their own reason, I suppose, at the end of the day for going through this.

Yeah, yeah, that makes sense. Are you seeing more of that or have you seen more of that search for freedom lately, let's say, with all the divisiveness that there has been? And again, we don't want to dive into politics, but there has been quite a bit of divisiveness in the U.S. specifically over the last few years. You know, what are you seeing more of an uptick of that when people are searching for that?

100%. My business has probably maybe not 10x'd, but not far off over the last three years. I have a lot of people who are very concerned what's happening in their home countries, concerned what is happening in the world, and really see the work that I do of being an expat and having a plan B and a backup really as political insurance. So that's how a lot of people think of it.

Mikkel Thorup (15:36.28)

Some people might stay in Canada or the United States, still have their normal business, but at the same time, want to have a residency or another passport, an offshore bank account or a corporate structure overseas, just in case things don't go that the way, you know, the direction that we want them to, that they're still kind of, you know, protected. I think that it's important for, to people to hedge their bets and to look at all sides of this and understand that the world is not always sunshine and rainbows.

And we have responsibility to our families to take care of them. And I think it's only prudent at this point, but definitely to your original question, yes, we have seen a massive uptick in new people being interested in this.

Yeah, I can see that. And let's dive into that, that second residency sort of thing. And also just generally that backup plan, that safety plan, because some folks are concerned about the way that things are going in their particular home country. What does that look like? mean, from a, they come to you, they hear you on this podcast and they say, cause a lot of folks might do that. They might be, Hey, we were high net worth individual. We're concerned about what's going on with the economy and with politics in the U S.

We want to have a backup plan. What does that look like?

Yeah, absolutely. So it's definitely important that you understand more about me and the work that I do. mean, you guys can learn and read about my stuff at expatmoney.com. But for the plan itself, usually, as I was saying before, we work through four different tracks. So let's take one of the easy ones, having a second residency. So second residency is the legal right to live and work in another country. You might think with your...

Mikkel Thorup (17:20.245)

American or Canadian passport that you can just jump on an airplane and go to another country and set up shop. And you can probably go to most countries as a tourist, but after 30 days or 60 days or 90 days or whatever it might be, you got to leave. I mean, you have, you would be illegal in the country at some point. And even when you go there, you don't have a legal right to live in that country or work in that country or generate funds or anything like that.

So what we wanna do is get you that residency. Now there's many different types of residencies in the world. You told us earlier in our conversation about how you had a student visa and you went to university in Spain. Okay, that is a type of visa, a type of residency. Another one would be a work permit, know, domestic help. Like at the moment we're sponsoring our nanny for our kids.

She's Colombian, we're doing the immigration process, we're getting her a work permit and she's gonna stay and live with us and take care of our kids. Those are a couple of examples of residencies. I don't do those types of residencies. What I do more is investor residencies. So these are for high net worth individuals. You make an investment in the country and in return, they give you the opportunity to live and work in that country. And now why is this is very different?

Say for a student visa, when you went to school, you had your certain amount of terms that you would have went a couple of semesters. And then when that is over, you have to leave. With a work permit to go over, you have that job and the nanny has a job with us. And if she quits or she loses her job, her visa is terminated. I don't like things like that. I like permanent visas, permanent residency visa. So as long as you keep up with the obligations that are set by the immigration department,

You get to keep that visa for ever. So I can give you a concrete example. I live here in Panama. There's two major residency programs here from the investor side. There's what's called the friendly nations visa, which is open to anyone from 51 different countries around the world. Basically countries that have strong economic ties with Panama and it's a $200,000 real estate investment. There's a couple other ways to do it, but the best way is certainly the real estate. So.

Mikkel Thorup (19:37.644)

You make a, you purchase a property, you get the title deed, you know, a very strong legal document, you own the property. Now you apply for your residency. You go through what's called a two-year provisional visa. After the two years, you apply for your permanent residency. Now you can have your permanent residency forever for the next 50 years. As long as, and this is the only caveat, as long as you visit the country one day every two years, your visa is active. That is a

very small amount of time to keep your visa active. So what usually happens is my clients will come down for a long weekend. I take them out for dinner. We drink a bottle of red wine. A couple of days later, they go home. Easy peasy, not really a huge time commitment or financial commitment. And I should also note Panama's a gorgeous country. mean, amazing beaches on the Caribbean, beaches on the Pacific. There's mountains.

It's tropical weather, it's a safe country, organic food. It's really a fantastic place to spend time. So that's the Friendly Nations Visa, $200,000 real estate, two-year temporary, then permanent residency after that. There's a new visa that came under this administration, the current administration here in Panama, which is called the Qualified Investor Visa. It's a $300,000 real estate investment. However, instead of the two years of provisional,

You go straight to permanent residency. Everything else is the same. One day every two years, gorgeous country, et cetera, et cetera. And a lot of people like Panama as a plan B location and to have it as a second residency. Because Panama is a territorial tax system. So there's no tax inside the country if it's deemed foreign source income. So you can think of you have a...

You have a law practice and you consult with your clients through zoom and your clients are around the world. Great. There is zero tax for you here in Panama. You have an online business, you sell widgets. There's no tax for you here in Panama. You trade stocks or you take real estate income or you have crypto or anything like that. Capital gains, dividend distributions, anything like that. There's no tax here in Panama. So.

Mikkel Thorup (21:55.374)

Panama is a great place and there's a couple of great solutions. Now we can get into the obligations if you're an American citizen based on worldwide taxation. You know that's a separate piece and we do deal with that. But I think that that's probably a good explanation of the residencies the program the country and the advantages.

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Mikkel Thorup (23:51.723)

you

Yeah, I love that. there other, so are other countries similar in that way? Is there just kind of a financial barrier? I need to invest X dollars and able to get that, to be able to get that.

Yes. there is, okay. So pretty much every country in the world, if you take out, okay, let's put it this way. Every free country in the world, which the majority of the world would be considered free countries, there is some type of an immigration plan to enter that country. Now they're going to have it in two different fronts. It's either going to be a lot of money and very little time or a lot of time and very little money. know, usually because my people.

Yeah, exactly. So it's a, it's a give and take like anything in the world. you know, I can migrate you to a place, but if you have to spend more than 183 days in that country, then that's the bright line test. Now you're a tax resident of there. So maybe there's not an investment amount, but if you end up spending, I don't know, a hundred thousand dollars on taxation, it's not exactly a free visa. You know what I mean?

So I like to work with a lot of them where you make the investment on the front end, the time requirement on the back end is not too much. And I specialize in the tax-free type of zones. So there's about 40, 42 countries that kind of qualify under this umbrella, know, politically stable, favorable tax situation and favorable legal stage and asset protection laws in your favor. It's about 40 or 42 countries. That's what I focus on. I don't...

Mikkel Thorup (25:29.078)

I don't relocate people to Germany with a 60 % tax rate or Sweden or Finland or something like this with huge amounts of taxation. It's more Caribbean countries, Latin America, certain European countries, Middle East, GCC type of countries. But definitely there's more than just Panama. It's big world out there for sure.

Yeah, what are your top three? Is Panama up there?

Panama is definitely up here. I really like Panama for the reasons that I mentioned before. I also really like Uruguay. I've taken groups of clients down to Uruguay. I actually have a small group there right now. Uruguay is an amazing opportunity because although it is not a tax-free country, what they have for foreigners entering into the country, they have a 10-year tax holiday. So there's no tax on foreign sourced income for the 10 years. But it's actually the year you arrive,

plus 10 full years. So it's kind of a 10 plus one. So almost 11 full years of tax-free in the country, which is very nice. And Uruguay is not a developing country. It's not a third world country. It is a fully set up country. All the infrastructure, very well educated people. English is prevalent. Amazing opportunities there. Food independent, water independent. Some of the best Seth, some of the best meat you will ever eat in your entire life.

If you like beef, is unbelievable. It's like, it's fantastic. You have the ocean and then like a town and then behind that is rolling green hills and pastures and stuff. It's, so wild to be down there, but it's really, really gorgeous. So I definitely put Uruguay on, on the top there. And then there's different countries that I like for, other reasons. you know, I do a lot of work in Columbia. do work in Brazil. do work in, Portugal and Cyprus and.

Mikkel Thorup (27:23.596)

lots of countries around.

Yeah, incredible. I'll have to check out Uruguay. Haven't been. I'll do some research now. Since this shows a lot about investing as well, what are some of the countries that you see that are in that top list but are also great investments? Maybe investing in that country is just as big of a benefit as getting that second citizenship.

Sure. So I don't look at investments anymore, just the investment itself. I try to pair things. So I want to make sure that I get an investment and on the back end, I'm getting the visa or eventually the citizenship, you know, because there are ways that when you spend enough time in the country, you go through a process called naturalization where you can actually become a citizen of that country. Now I'm doing a citizenship by investment program right now and

It'll cost me well over $200,000 just as a donation to a government, and I'm getting a citizenship in return. For me, that is money very well spent. But if you think about a country where you can make a real estate investment and you get that for free on the back end, that's pretty spectacular. So for example, in Turkey right now, you can do a real estate investment anywhere in the country. It doesn't have to be a government approved project.

It can be a condo, can be land, can be commercial real estate, anything like that. And they will give you citizenship on the back end. It has to be at least $400,000 and the investment can't have been previously owned by someone who's doing the citizenship by investment. It has to come from a Turkish citizen, but it's definitely an option. And we're seeing okay returns over there. I mean, is this not gonna make you a million dollars tomorrow, but it's...

Mikkel Thorup (29:10.584)

you know, say 5%, 6 % cash on cash return and you get a citizenship on the backend. mean, better than a kick in the teeth, I'll tell you. you know, there's a lot less, you know, sure programs out there. So I like things like this that I can kind of double up and do a value add on it. We mentioned Uruguay, okay. To enter into Uruguay, there is not an investment to get residency. But if you don't do an investment, then the time on ground is about six months to get your residency.

But if you purchase farmland or a condo or something like that, they take that into consideration when doing your immigration. And they see that as an economic tie as one of your strong ties. So can either have time in the country, which is a strong tie or an economic tie. So I've seen it as low as about a month of being in the country to get your immigration there with an investment. I've actually seen it less than that, but I don't want to go on record with some of these things because I can't promise it.

But those are some really good options how making an investment, which should be a sound financial decision, will also give you a bit of a bonus. I don't deal with stock markets. I don't deal much with hedge funds or certainly not mutual funds or these types of financial accounts. I'm very much a tangible assets kind of guy, agricultural land, timber, real estate.

precious metals, things I can touch and smell and taste and, you know, I like that kind of stuff.

Yeah. that's personally speaking, that's appealing to me. It's like if you can present to me a great investment or at least a really good investment, and then you get that secondary benefit to it. I mean, that's a win-win situation where, you you're making a sound investment, especially in like real estate or precious metals or something like that. And then you get that, you know, that added citizenship benefit or visa benefit.

Seth Bradley (31:11.852)

You know, it's a win-win. So you're accomplishing two things at the same time.

Exactly, exactly. And we see this with a number of different countries. And, you know, it's really fantastic when you see that governments actually have to compete for us. We're entrepreneurs, we're business owners, we're professionals. We bring a lot to the table. And really, that's why these programs exist. What they want to do, what governments want to do, is bring in productive members of society, people who are going to build something and create something and add to the overall economic prosperity of the country.

So this is kind of their way to do that. And in reward, you can have the residencies, can have tax benefits, you can have lot of safety and stability. And it's just, I don't know, it's fun. I like enjoying like this. I like investing like this. I think it's really, really interesting. It scratches a certain itch for me. And you gotta do a little extra paperwork and you gotta...

You got to figure things out. It's certainly not a trial and error type of thing, but definitely that's why people work with me because I've been doing this for 23 years. I have the full network. I've helped hundreds of clients go through it. We transformed their entire lives. And at the end, you watch someone who's stressed out or hangs anxiety about what's happening in the world. And we take them through all of this and they start the conversation with their shoulders like way up like this. then...

You know, as the weeks go by, everything kind of drops and, you know, they feel good about it and they know that they're taking care of their family. And it's amazing. I love this type of investing and I love this type of work.

Seth Bradley (32:56.216)

Cool, very cool. Are there any kind of tax benefits that US citizens could take advantage of by having a second residency in whatever country it is?

So with the U.S. tax situation, you have to understand that there's only two countries in the world that tax based on citizenship. So as a Canadian citizen, I am taxed on my residency. So if I live in Canada, I pay taxes there on my worldwide income. I haven't been a Canadian tax resident in many, many years. I did all my separation. Now I don't live there. I have no tax obligations back to Canada. With the U.S., it's only one of two countries that tax on residency and citizenship.

The other country is Eritrea in North Africa. It is known for blatant human rights violations and is a very abusive system. So I will let you take ties, comparisons from that, whatever you will. But what happens is even if you move overseas, so let's say Seth, you relocate overseas and you never step foot in the United States again for the rest of your life. You don't even look in that direction.

You still have a legal obligation to pay taxes, to file and pay taxes on your worldwide income, no matter what. Now saying that there are a couple of tools in the toolbox, which will help us to legally reduce that. So the main one or the first tool that I would always reach for in the toolbox is called the foreign earned income exclusion, FEIE. And what this does is allow you to exclude the first $120,000 of

earned income and you're not paying tax on that. Okay. Now there are some caveats. Okay. So as I said, you need to, you need to live in another country. This is not something you can claim and still live in Florida or New York or Los Angeles or something. You actually have to physically live somewhere else. So there's two tests. There's one that's called the physical presence test. And the second one is called the bona fide residency test. We always do the physical presence test first.

Mikkel Thorup (35:01.292)

and it is 330 days in a foreign country. So this means that if you are jet setting around the world and you're flying from one country to another, it doesn't count. If you are in international waters and you got a big, beautiful yacht and you're going through these international waters, it doesn't count. What counts is your feet physically on the ground inside of a foreign country for a minimum of 330 days. Okay? So that is the physical presence test. Now...

Year two and going forwards, we do what's called the bonafide residency test. So physical presence test is subjective. I'm sorry, it's objective. Okay. It is mathematics. The substantial presence test is, or the bonafide residency test is subjective. So what we're going to be doing is looking at your overall ties to the country. So do you have a residency there? If you like to exercise, do you go to the gym? Do you have a library card? If you're religious, do you go to synagogue or mosque?

or the church, the cathedral, you know, we want to show relationships. Do you have a property there? Do you have a rental agreement? Do you own real estate? Okay. So this is the, bona fide residency test. And what this allows you to do is spend slightly more time in the United States. This doesn't mean that you can just go back to the U S and live there full time, but to go back and see friends and family and go on vacation and Christmas and

birthdays and things like this, you don't have to be as anal retentive. What you need to do is really prove that your house is not in the United States anymore, it is overseas. Now, so that's how we deal with a lot of the things from the US side. So as I said, it's $120,000. But here's the cherry on top, Seth. If you are married and your spouse is also an American citizen, it's a doubling effect.

So now we're talking about the first $240,000 of earned income. $240,000 of income in Panama, you are King Seth. Like, I mean, you are living like a fantastic life. I don't know how you would physically spend that amount of money down here in Central America. Like it would be grossly irresponsible for you to spend that amount of money here for your lifestyle, okay? But let's say that you really do.

Mikkel Thorup (37:21.538)

There's other tools in the toolbox. There's housing allowance, there's tax credits, there's other things that we can do that follow the IRS programs to try to legally reduce this stuff. So these are the types of programs that I work with a lot of my clients on and make sure that we do it legally and compliantly. We file everything that needs to be filed. We count the days, we make sure we have the subject of ties. You know, we get into the nitty-gritty.

All I'm talking about today and nothing I am talking about today is individual tax legal or financial advice. This is just general advice and you can go to the IRS website and read about it. But people who work with me, we get into the nitty gritty and I have my lawyers sign off on all of it. I have my accountant sign off on all of it and it's all very kosher.

Man, that's an awesome overview, man. I really appreciate that. And I think I'm gonna move to Panama.

We'll be neighbors, my friend. We'll be neighbors. It'll be awesome.

Alright brother, before we jump into the Freedom 4, what's one last golden nugget for our listeners?

Mikkel Thorup (38:26.038)

No, I just think that, you know, if you're listening to this conversation and you go, wow, this is amazing. You know, there's so much to this. Well, first of all, I guess you can reach out to me at expatmoney.com. There's a ton of resources on our website. We do daily email newsletter three times a week. There's a new blog article. We do weekly podcast episodes, weekly YouTube episodes, monthly webinars, quarterly.

scripts for private clients, annual summits. I mean, there's a lot of stuff to go through, like a ton of free resources at expatmoney.com. So definitely subscribe to that. But my other piece of advice for you would be if you're listening to this and this sounds interesting, then go and try it out. Like come down here to Panama, come to Costa Rica or Uruguay or Portugal or whatever countries we've been discussing today. Go and see it. mean, see, do you like it? Is it?

Is it interesting? Do you like the challenges of a new language? Are you meeting interesting people? Like I love this type of lifestyle. You know, it's from the work side, the hobby side and my personal side. Like a quick side note, I'm Canadian with Danish heritage. My wife is from mainland China. We met in Germany. We got married in Africa.

Our daughter was born in the middle East. Our son was born in Brazil and now we live here in Panama and we have other citizenships, real estate and investment and probably in other dozen countries. So like I really like live and preach this stuff. I'm not just an armchair person, but definitely if you get out there and explore the world, there's a lot to see.

That's incredible, man. I'm not jealous of too many people, your diverse background and how you've traveled the world, it gets the wheels spinning, man. Appreciate you sharing that. All right, let's jump into the Freedom 4.

Mikkel Thorup (40:25.854)

It's time for the Freedom Form.

What's the best thing you do to keep your mind and body healthy?

You know, my daughter is six years old and I take her for martial arts to private lessons a couple of times a week. And while she's doing that, they have a fantastic gym there. So I spend a couple hours in the sun and then I do a big workout and then I swim. And the whole time I get to watch my six-year-old get private lessons. She's like a little ninja. So it's like, it's everything. you know, it scratches.

psychological, physical, everything. And I get a big kick out of that every time I get to do that.

Yeah, nice. With all your success, what is one limiting belief that you've crushed along the way and how did you get past it?

Mikkel Thorup (41:13.742)

Wow. Well, know, alluding back to my original story about how I was told that something didn't work quite right in my brain. And a side note, it's dyslexia. Like I have dyslexia. Okay, now in 2023, it's not a big deal. 1980s, it seemed to be the end of the world and to rip me out of school. So I definitely.

grew up thinking that there was something wrong with me because I didn't learn in the same way or I didn't see things in the same way as everyone else did. What I have done is figured out ways that I can learn. So I'm a voracious reader. I've read well over 2000, probably close to 2500 books on my subject matter, on business and economics and tax and anything business related, well over 2000 books.

but a lot of that was done through audio books and audio type of programs. I'm very much an audio person, hence why you and I are doing a podcast today. Hence why my podcast, the Expat Money Show has been going for seven years and is so successful. I'm very much an audio type of person. So I kind of thought growing up that I had to fit into a certain model, which public education says that you need to learn things. And actually if I just...

or if I just looked at it from a different angle, actually, I'm a fantastic learner. I can learn anything and I have a great ability for it, but I just had to tweak it a little bit.

Yeah, yeah. What's one actual step our listeners can do right now to start creating more freedom?

Mikkel Thorup (42:51.586)

take responsibility for yourself. I mean, I think that a lot of people in today's day and age really wanna look at politicians or governments or government organizations and really think that they're gonna be solving all of these problems. Government in most cases, they've caused the problem. They've caused the problem with the Fed, they've caused the problem with these banks, they've caused the problem all over the place. And you can't look to them for solutions. What you need to do as...

husband and wives and parents and as business owners and responsible adults is take care of yourself, learn about these types of things and actually take action on putting them into play. And that's why, you know, my work is not theoretical. Like I don't talk just about the theory about these types of things. I talk about the practical steps. This is how you do it. A, B, C, D, you know, and piece by piece, we move the

the ball down field to have more freedom in your life. But definitely it comes down to you. The first thing, which is personal responsibility.

I love that, love that. Yeah, accountability and taking back control of your life and your situation and not blaming it on something else that's out of your control.

You got it exactly.

Seth Bradley (44:09.07)

All right, last but not least, how was passive income or entrepreneurship made your life better?

In all aspects of everything that I do, I can't think of anything more dangerous, especially in today's day and age, as having a boss and working for a company. That's all your eggs in one basket type of thing. I'm a consultant. have many clients around the world who pay for my expertise. That gives me a lot of stability in everything that I do. Now I...

whole money out of my business and I'm putting it into real estate around the clock. Like that's all we're doing right now is just, just buying real estate. bought three houses cash over the last year and it's great. You know, now, even if I'm not like, don't worry about stock market. can make 12 % or 15%. You are just as likely to lose it all. You know, I'd rather put it into a real estate deal that I can actually see.

I can actually touch and it might be 6 % or 8%. I'd rather have that stability and the passive nature of a lot of it. And just, just makes me feel a lot better, but definitely being an entrepreneur and investing like this is mental, mental health insurance for sure.

Preach into the choir, man. I love that. You got to take what you're earning from your active income, whether that's, you know, an entrepreneurship venture or business, or even if you're in a W-2 and put that put that income to use, put it in a hard asset by real estate, buy precious metals, whatever that might be instead of the being on the stock market roller coaster. You got to get off of that. Got to get off.

Mikkel Thorup (45:53.12)

Exactly. as we've seen over the last, well, I mean the last year, but more specifically the last couple of months, what a nightmare. Like, my God. No, I'll, I'll, I'll, I'll enjoy my beach house and, and take my kids out there and then rent it out when I'm not using it and pay for the whole thing lifestyle. I mean, there's just so many other, much better benefits for doing it this way.

sure. Mikael, this has been incredible, man. Really appreciate you coming on today. We're going to let listeners find out more about you.

Perfect. Yeah, I really appreciate the opportunity, Seth. If you guys want to find out more about what I do, as I said before, go to xpatmoney.com. There's links to everything on there. Add to that whatever platform you're listening to our conversation on. If you go on that platform and type in xpatmoneyshow or Mikel Thorpe, M-I-K-K-E-L-T-H-O-R-U-P, my podcast should come up. We've been going, as I said, for seven years, you know,

250 episodes, just under 250 episodes. Big names, small names, lots of content to go on. There hundreds of hours of good stuff for you there. So expatmoney.com or search expatmoneyshow.

Alright brother, appreciate that man. Enjoy Panama.

Mikkel Thorup (47:07.692)

Thanks so much. I'll talk to you soon,

Mikael Thorpe, what an incredible journey he's been on. What an incredible story. Once again, I'm not very jealous of too many people, but wow, I can't help but be a little bit jealous of the life that he has led and the things that he's seen and the things that he's experienced. You know, he's really just living that free life.

meeting cool people and doing cool things. That's what life is all about, right? And he has taken that to a whole new level. Even while having an incredibly successful business and a family, he's able to travel all over the world, live in different places and just experience the best that life has to offer. That's incredible. And that's something that we can all look at and try to replicate at least on a small scale and experience great things.

All right, folks, until next time, enjoy the journey.

Thank you for listening to the Passive Income Attorney Podcast with Seth Bradley. Do you want more ideas on how to generate multiple streams of passive income? Then jump over to passiveincomeattorney.com for show notes and resources. Then apply for the private Facebook community by searching for the Passive Income Attorney on Facebook. And we'll see you on the next episode.

Links from the Show and Guest Info and Links:

Seth Bradley’s Links:

https://x.com/sethbradleyesq

https://www.youtube.com/@sethbradleyesq

www.facebook.com/sethbradleyesq

https://www.threads.com/@sethbradleyesq

https://www.instagram.com/sethbradleyesq/

https://www.linkedin.com/in/sethbradleyesq/

https://passiveincomeattorney.com/seth-bradley/

https://www.biggerpockets.com/users/sethbradleyesq

https://medium.com/@sethbradleyesq

https://www.tiktok.com/@sethbradleyesq?lang=en

Mikkel Thorup’s Links:
https://mikkelthorup.com/
https://www.facebook.com/ThorupMikkel

https://x.com/ThorupMikkel
https://www.instagram.com/expatmoneyshow/
https://www.linkedin.com/in/mikkelthorup/
https://www.youtube.com/c/ExpatMoneyShow

356 episodes

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