Questions: Norwegian banking, Panama scams, Exit Tax

August 13, 2010
Zakopane National Park, Poland

After finishing off a very successful liberty camp yesterday, some friends and I arrived in southern Poland last night where we plan on spending the weekend rock climbing in the High Tatra mountains.

Perhaps it’s not particularly auspicious to kick off this trip on Friday the 13th… but fortunately I’m not a superstitious man.

Before heading up into the mountains, though, I’ve been spending some time catching up on emails and questions from our community.

The first one that caught my attention was from Stuart– he writes, “Simon- after reading the “Going Global” offshore guide, I noticed that the Norwegian krone is recommended for investment. Do you have the same level of confidence in Norway’s banking system? Would you plant a banking flag there?”

Norway’s currency is becoming increasingly popular as a store of value thanks to the country’s stable economy and balance sheet. The Norwegian government ran an 11% budget surplus last year at a time when the most of the world was running an equal amount in the red.

Investors know that Norway’s wealth is based on abundant natural resources, therefore it has a higher likelihood of long-term economic strength than other economies based on consumption.

In the late 1980s and early 1990s, Norway experienced a terrible banking crisis that affected 2/3 of the industry and led to the nationalization of the three largest banks. It was caused by a chain reaction of deleveraging and asset price devaluation, leading to significant banking losses.

Essentially, this was a dress rehearsal for what the world experienced in 2008. Having learned the lessons from its own banking crisis, however, Norway was well-positioned to deal with the most recent credit crunch.

Banks there are well-capitalized, and there is a Guarantee Fund that covers all accounts up to 2 million krone (roughly $325,000).

In order to open an account, you would need a passport and a Norwegian national ID number; this can be applied for with the government tax office. You do not need to be a full time resident of Norway, though, anyone can open a bank account.

Overall, Norway is a reasonable place to plant a banking flag, and it may be worthy of your consideration depending on your personal circumstances.

Next, Kim asks, “Simon, I’ve been looking online at some legal service providers in Panama. I would be interested to know whether you think they are reasonable and legitimate, and whether their appraisal of opportunities that exist is accurate.”

In my opinion, the best way to find reliable and trustworthy contacts is to put boots on the ground in a new country. This is something that I’ve done in multiple places around the world, and I can tell you from experience that it can be time consuming and sometimes costly.

The short-cut that a lot of people rely on is Google, what I often call the ‘black hole of accurate information’. Most of the time (but with some exception), offshore service providers who rank highly in Google are great at marketing, but not spectacular at actually providing a service.

In fact, I know personally of one online service provider in Panama who ranks highly in Google that ran off to another country with clients’ money. This sort of thing unfortunately happens all the time, all over the world.

The highest quality service providers won’t be found online… or in magazines or on billboards. They get new business by word of mouth.

They don’t run factory-style businesses that churn out generic, cookie-cutter services. They take time assess each client’s individual needs and customize a solution. And the only ways to find them are through a personal referral, or by spending time on the ground.

If you’re interested in learning more, I wrote about the process for how I have done this in the past in the above-mentioned Going Global report. I also wrote a bit about the process in the free Network Infiltration report that was released last year.

Last, Betsy asks, “Simon, I’m learning a lot from your emails. I’m wondering if you could explain what is this 30% ‘exit tax’ that’s charged to American citizens who renounce their citizenship? Thank you, and keep up the good work!”

Sure; if you’re a US citizen and you want to renounce your citizenship, the government will have its hand out one last time for a portion of all of your remaining assets.

Effectively, they tax you as if you had a giant liquidation sale on the day of your renunciation, realizing the gains from all property– houses, cars, stocks, boats, bonds, businesses, art collections, retirement accounts, etc.

The tax is 30%, but they give an allowance for the first $2 million. Effectively, if your net worth is under $2 million, you can escape without paying the exit tax. Anything over $2 million will be taxed.

Have a great weekend… and keep your fingers crossed that I won’t be too accident prone in the mountains.

About the Author

Simon Black is an international investor, entrepreneur, and founder of Sovereign Man. His free daily e-letter Notes from the Field is about using the experiences from his life and travels to help you achieve more freedom, make more money, keep more of it, and protect it all from bankrupt governments.