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Category Archives for "Europe"

Escaping the Welfare State with a Second Passport

The German Welfare System

The modern German welfare system, which came into effect in 2005 and is colloquially referred to as Hartz IV, bears the name of the fourth section of a labor market reform recommendation submitted by Peter Hartz, then Volkswagen executive and political advisor to German Chancellor Gerhard Schröder. The German Language Association selected Hartz IV as the 2004 German word of the year.

In a nutshell, working-age citizens and residents of Germany are eligible to claim Hartz IV welfare benefits if they are unable (or unwilling) to find work, have exhausted all available unemployment benefits, and are deemed by the government to be capable of securing gainful employment.

People who are not expected to pursue gainful employment, such as children, severely disabled individuals, and senior citizens with insufficient pensions and assets, are entitled to a separate type of welfare. Although the benefits are similar to those of Hartz IV, these welfare recipients are not required to demonstrate efforts aimed at securing employment.

 

Living Large on the Public Dime

So just how generous is the German welfare system? Single Hartz IV recipients without children or special needs receive a monthly welfare payment ranging anywhere from approximately €700 to €1,300. The exact payment amount consists of a fixed €432 subsidy plus the actual monthly rent of the welfare recipient’s government‑approved 500‑square‑foot apartment including cold water, garbage pickup, and heating costs (but not electricity or hot water).

Each German town establishes its own rent cap limiting how expensive a Hartz IV apartment and the aforementioned covered utilities are allowed to be. The highest rent caps can be found in expensive cities like Munich and Bonn, while rural towns in eastern Germany feature the lowest caps. Hartz IV recipients are required to pay their own rent, utility bills, and other expenses using their monthly welfare payments. Free comprehensive health insurance policies are provided to everyone covered by Hartz IV. Additionally, welfare entitlements undergo annual increases to offset inflation.

Although people on the German welfare system are officially expected to be searching for work at all times, they are nonetheless permitted to go on vacation for up to three weeks at a time and up to six weeks per year without forgoing any benefits.

 

“Hands off My Assets. I’m on Welfare!”

Welfare recipients also enjoy a certain degree of asset protection (Schonvermögen), as they are permitted to maintain bank account balances of up to approximately €11,000 while continuing to receive welfare benefits. Although any balances above the threshold must be depleted before claiming Hartz IV, this problem appears to be easily resolved by conducting timely cash withdrawals.

Welfare recipients are also permitted to own or purchase a car valued at up to €7,500 without having to fear the loss of any benefits. Designated individual retirement accounts are also off limits for the welfare agency when determining a person’s Hartz IV eligibility.

Furthermore, homeowning single welfare recipients with no children are permitted to continue living in and retain ownership of their 900‑square-foot house or 800‑square-foot condominium while receiving monthly welfare payments of €432 plus the covered utility costs and free comprehensive health insurance. As a result of this rule, homeowning welfare recipients are afforded living quarters nearly twice the size of those available to welfare‑receiving tenants.

 

The Land of Milk and Honey

The availability of welfare benefits is not limited to German citizens. Foreigners holding a valid residency permit are also entitled to Hartz IV after living in Germany for three months. In addition, refugees are allowed to claim full welfare benefits after only a short stay in Germany.

The total number of foreign nationals claiming Hartz IV benefits now accounts for more than one third of Germany’s 4‑million‑strong community of welfare recipients. The actual percentage is likely even higher given that holders of both a German and a foreign passport are counted exclusively as German welfare recipients.

It should not come as a surprise that the prospect of claiming German welfare benefits – consisting of a monthly payment of up to €1,300 plus free comprehensive health insurance without having to lift a finger – is quite an appealing one even to the most industrious of third‑world immigrants.

 

Bamboozling the System

A hotly debated aspect of Hartz IV involves the monetary penalties that can be imposed for failure to fulfill the monthly quota of job application submissions and refusal to attend job interviews brokered by the local welfare agency, among other things. Many politicians wish to do away with these requirements.

Despite the strictness of the rules on paper, it is common knowledge throughout Germany that only minimal effort and the application of a few easy tricks are needed in order to convey to a prospective employer the image of an uneducated, unmotivated, and unemployable candidate, which in turn will enable the welfare recipient to remain on Hartz IV indefinitely.

Frequently applied tricks include faking illnesses, submitting poorly written cover letters, and committing intentional gaffes at mandatory job interviews. There is no shortage of internet‑based advice for Hartz IV recipients who are intent on ensuring that no employer will ever wish to enlist their services.

 

Hiding in the Shadows

A person living in the same household with a significant other who earns a sufficient salary or owns sufficient assets (as deemed by the German government, of course) is expected to rely on the better‑situated person for financial support and is therefore excluded from welfare benefits (Bedarfsgemeinschaft).

Skirting around this rule often requires unmarried couples in these situations to go to considerable lengths to conceal their relationship from the welfare agency. This appears to be a fairly common practice, which is not surprising given the significant monetary benefit and the perceived ease of getting away with it.

 

And You’re Footing the Bill

Anyone reading this article from Germany or any other western country may be mildly amused and/or downright appalled. In either case, it should be kept in mind that you are involuntarily contributing to an outrageous system of handouts that will require the imposition of ever‑increasing taxation and wealth confiscation on productive citizens.

With formerly fringe ideas such as universal basic income, free universal health insurance, and free college education likely to become reality in western countries in the very near future, the broke and woke western governments will be looking to corral their productive milk cows by any means necessary in order to continue their pro‑welfare, pro‑warfare policies.

As a result, we will undoubtedly see western governments continue to make life difficult for citizens seeking to become tax‑nonresident or seeking to simply exit the country (Australia). This will coincide with other western governments imposing US‑style citizenship‑based taxation aimed at trapping citizens’ wealth within their borders.

If you’re living in one of these countries with your entire political and financial exposure limited to that country, you should consider yourself a sitting duck with your assets ripe for the taking.

 

Second Citizenship as an Escape Ladder Strategy

So, what can be done to keep assets out of reach from the greedy hands of government? The most effective safeguard involves the acquisition of at least one additional citizenship in a relatively free country outside of the home country’s sphere of influence. This is a sound and proven method of protecting wealth, individual liberties, and physical safety in uncertain times.

Possessing one or more additional citizenships affords an individual the luxury of relocating to a more desirable national jurisdiction at the drop of a hat and the opportunity to spread political and financial risks across borders. And although this can also be achieved to a certain extent by obtaining foreign residency permits, it is the institution of citizenship that offers the highest level of rights and protections to individuals by a national government.

 

Time for Action

Being sworn in as a new citizen at a naturalization ceremony is a unique experience quite unlike any other in the arena of civic achievement. It is the sudden realization of having finally broken free of a single government’s dominion that evokes feelings of exhilaration and wholehearted liberation. Now, are you ready to unleash your international game and begin living the liberated life?

 

Liberated Life’s Armenia Country Report

If so, you will definitely want to read our captivating 69‑page Armenian Citizenship Report, an expedient guide to gaining a wholehearted understanding of the wide range of options, rules, benefits, risks, and implications of obtaining a valuable second citizenship and passport in the country of Armenia. It provides deep‑rooted insight into little‑known albeit important caveats of each citizenship and residency option and presents an unrivaled overview of the benefits and drawbacks in a straightforward and honest manner.

Liberated Life’s Armenian Citizenship Report is jam‑packed with critical information and detailed strategic analysis designed to empower readers to draw their own informed conclusions on whether Armenian citizenship is a pursuit-worthy endeavor that fits into the framework of their international lifestyle planning and preferences.

 

Further-Reaching Opportunities

If you would rather explore second citizenship opportunities elsewhere, or if you are entirely new to the world of second citizenships and wish to begin your journey by obtaining valuable broad‑based insight into the various programs in place, a Liberated Life specialist will be happy to bring you up to speed on the cutting‑edge of international lifestyle diversification strategies and second citizenship opportunities. Reach out to us at info@liberated.blog today.

 

Experience and Expertise

Liberated Life’s specialists hold advanced university degrees and possess a wealth of highly actionable second citizenship expertise. They demonstrate a pronounced personal passion for the pursuit of freedom by way of internationally diversified lifestyles and are very well‑versed in the intricacies of this field due to years of daily reading, research, and remaining abreast of industry trends and developments.

Additionally, all of our second citizenship specialists are multilingual native English speakers who have successfully acquired at least one second citizenship in adulthood, which enables them to provide valuable insight to clients from a position firmly rooted in understanding and first‑hand experience.

Reach out to us today to order your copy of Liberated Life’s Armenian Citizenship Report and to obtain the critical information that you need to embark upon your international journey toward achieving greater individual sovereignty, security, and freedom!

Malta as Residence and Canada LLP as Business?

A warm, safe and pleasant place to live in Europe? And tax-optimized as well? Let’s take a closer look at Malta and the opportunities that arise with foreign companies there.

Malta as Residence
Birgit of Manafx has written a guest article for us, which shows a good combination for all those who want to stay in Europe:

Is Malta a good choice?

Language

To live, Malta is certainly interesting in the European sphere. English is the 2nd language next to Maltese, only in court you can insist on Maltese. School English is really sufficient in this former British colony.

Security

Malta is the second safest country in Europe – here on Gozo (Malta’s sister island) the keys are still in the front doors’ lock, or bicycles are left unlocked in front of the door overnight… You can take part in fiestas including fireworks without getting into fights or becoming the victim of pickpockets.

Weather

300 other good arguments are the sunny days. Rain almost never falls from May to September, a summer storm can, but doesn’t have to occur and if it does, it’s early June or September. The temperatures are often beyond 32 degrees Celsius, with the Sahara wind it sometimes cracks the 40 degrees. Then it becomes hot but not humid. The sea provides fresh air.

Supply

Fruit and vegetables are produced locally (especially on Gozo) despite water scarcity (Malta is one of the top 10 most arid countries in the world). There is for example a factory for processing tomatoes – whether as ketchup, pulp, sauce – the whole process can be visited.

Water is won beside the ground water mainly with osmosis plants from sea water, the tap water should be drinkable, I myself use my private osmosis plant, because I don’t get along with the taste.

Traffic

Left-hand traffic is not everyone’s cup of tea, but getting used to it is usually quite fast. If you want to be on the safe side, just take a few driving lessons – at about 10€ per hour. A driving license made in Malta is valid throughout the EU (even if there are no motorways, roads or night drives).

Relocation

Moving to Malta for EU citzens is as simple as moving from one city to another. The requirements for a Maltese ID-Card are manageable and there is a good reason to get one.

What about taxes?

Tax system

Those who live in Malta are subject to local territorial taxation. In plain language: only income that is earned in Malta or funds that reach Malta are taxed. All other foreign income does not have to be declared and is therefore tax-free. I am talking about the “Non-Dom Status”.

Its owners are only taxed on income arising in Malta, on income outside Malta which is transferred to Malta and on gains from real estate in Malta.

Assets and investment income

Assets are not taxed and non-domiciled residents can receive investment income outside Malta and bring it into Malta tax-free, so separate bank accounts for capital and income are recommended.

Real estate

Income earned outside Malta and remaining there is not subject to taxation (if you use your foreign income to buy a home from a Maltese person, ask them to open a bank account abroad and they will bring the money to Malta and not you).

However, capital gains arising in Malta will be taxed in Malta for individuals resident in Malta.

Malta, for whom is it suitable?

Digital nomads, affiliate / online marketing specialists, MLM / networker, blogger, dropshipper are in good hands in Malta, but also those who derive their income from rentals, dividends or similar sources should take a closer look at Malta.

Malta is often presented as a “tax haven” with an effective tax rate of 5%. Which is true if a holding company is used in addition to a trading company. The trading pays 35% corporation tax.

Benefits for foreign shareholders

Foreign shareholders (i.e. persons or companies not resident in Malta) can now reclaim 6/7 (30%) which is then redistributed to the holding company. However, on the one hand it takes much longer than two weeks (currently up to 8 months) and on the other hand the cost factor for 2 companies is not insignificant.

If the shareholder now lives in Malta himself, a holding company abroad is inevitable. A tax refund to the shareholder living in Malta is subject to a maximum of 35% income tax.
To avoid this, the “Malta Holding Model” is recommended. A foreign company – preferably a Hong-Kong LTD or UK LTD – will be used as a shareholder to receive a 0% tax refund in these countries.

Do I need Malta in a double package?

It is obvious that the agencies providing a Malta LTD almost without exception additionally offer the establishment of the holding company. They earn two times. Both, due to the establishment as well as the annual service fees. A comparison is worthwhile. On Malta, I see prices between 4,200 and 20,000 EUR.

Many tax authorities get to be suspicious only because of this constellation. Yes, it is legal and works if it is set up and maintained properly, but the disadvantages already mentioned show the potential for optimization for entrepreneurs.

This is where Canada comes in!

With only one Canadian LLP including its good reputation (the reputation of the Maltese LTD is already quite battered), its 0% taxation, lack of accounting requirements and easy incorporation (which is not really true for the Maltese LTD), it should be the tool of choice for the location-independent online entrepreneur.

The formation costs are about the same, but the low annual maintenance costs clearly speak in favour of the LLP.

The smart combination

As much as I favor Malta as the center of my life, I would be just as clearly in favor of an LLP solution. With Dennis as my main contact person I feel in good hands. He has prepared an information package that clarifies all the essential questions. HERE you can get it for free.

Gozo, 25. Feb 2020

Birgit Viett

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https://manafx.com

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Less bureaucracy with the Canada LLP

Now it is Your Turn

What questions and additions are on your mind right now? Share them with us!

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