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Steven (00:50):

Hello everyone and welcome to the Retirement Tax Services podcast, financial Professionals Edition. I’m your host, Steven Jarvis, CPA, and with me this week as a guest. I’m so fascinated to talk to Renato Bacaro spends his time helping people better understand how taxes work in different jurisdictions, both domestically within the US and across the world. So this is something I can nerd out on for hours. Hopefully we’ll keep it to about 30 minutes, but Renato, welcome to the show.

Renato (01:17):

Thank you for having me, Steven.

Steven (01:19):

Yeah, of course. Now before we dive into some of these specific things around jurisdictions, just give the audience just a high level background of where you come from and why you’re so passionate about this topic.

Renato (01:31):

First of all, I come from multiple to our family. My father was Italian, my mother is Spanish, Portuguese, so I not living in Europe. I live in Europe right now. I live in 20 years in San Diego, so I have this global citizenship on my DNA.

Steven (01:44):

Yeah, so this is personal for you too. You’ve experienced this of being in different jurisdictions. A lot of people listening to this podcast, they probably really only think about jurisdictions as countries, which we’ll get into how we really need to dive deeper than that. But part of the reason I was excited to bring you on the show is that international tax is something that I generally stay away from. Not because I’m opposed to it, but because it’s a really complicated area and up until now, an area that doesn’t always have great or clear resources. And so it’s an area that you want to make sure you’ve got good answers before you go falling down a rabbit hole. But it’s also an area where I’m seeing advisors get more and more questions. They’re having more clients who say, Hey, I’ve got this opportunity to do business in another country, or, Hey, I’d like to retire to Spain or Italy or wherever it might be. We can’t just put our heads down and say, ah, well I’ve only got to worry about US tax. So with all that context, Renato, talk about what it is you’re doing now.

Renato (02:39):

Okay, so I’m going to talk about a little bit of my background on professional side because that’s what I do for years. So I come from a Australian KMG work, international tax departments there, and international tax is a very old situation for everyone, but not everyone has access. If we go back to the Bible, we see the tax collector being mentioned in the Bible for 22 times and people are fighting for followers on that time. So we have Jewish people and have the Romans and Christ came in the middle, create some market share. So they’re fighting for tax differentials differently. Leadership, they’re fighting for tax like four years and international tax, they’re fighting for tax still today. So it’s international taxation. It’s a long discussion and it’s been there for a long time.

Steven (03:32):

And as we’re getting ready to record the show, one of the things that you talked about that stood out to me was that this is one of those topics where, let’s take this example of an advisor has a client who comes down and says, Hey, I want to retire internationally. As great as Google is, as great as chat GPT is, there still isn’t a great way to go and type in somewhere. Hey, what are the tax ramifications of retiring somewhere in Europe? And if I pick Europe, of all of the dozens and dozens of countries there, what are the different implications country to country? And so that’s part of where you’ve been spending your time now for quite a while and the tool that you’ve been working on is, well, how could we create a better answer to that?

Renato (04:09):

First of all, international tax spending. Usually people think that for the multinationals and for the wealthy, but not today anymore. For example, if I tell you what is the best place to move today as an individual, and if you make over 300,000 a year, you’re not going to believe.

Steven (04:27):

What is it?

Renato (04:28):

There is one country offering flat tax rate a hundred thousand a year. They don’t care how much you make. You’re not going to believe in the name of this country. I don’t know what is it, Italy, really? Yes. So Portugal came like 10 years ago with a great tax planning for new individuals and wealth individuals and now Italy and Spain, they’re fighting back. So those are the type of information and opportunities that we are trying to bring to people. So okay, I want to retire, I want to have a great food and I want to this type of weather and I want to visa program family friendly. What is the best place for me in Europe? And I can give you the answer in minutes.

Steven (05:11):

Yeah. So this definitely reminds me of one of the things I say often on this podcast, which is we got to make great life decisions and then figure out the most tax efficient way to go about them. If I’m in Spokane, Washington, if I went and told my wife that we could move to Italy and have a flat tax and never pay more tax again, it would be a hard note because all of her family’s here. But like I said, there’s more and more people that I’m coming across who are open to these ideas of, Hey, what would it look like if I retired somewhere else? And so you’re saying that rather than dive through Google or try to individually evaluate every single country on your own, you, you’ve created this tool where much more quickly we can say here are the differences between these different jurisdictions and what it would look like.

Renato (05:52):

And also let’s make clear not only for individual, let’s say you have a crypto investment company.

(05:58):

You don’t need to move from, but it may be if you go to Estonia, it’s 0% capital gain, and then when you decide to retire at 70, 75, then you move to Estonia, you move to Italy, and then you realize your gain there as individual. So it’ss not only about global mobility of people, but also global mobility of our business, but we just need to break through that box that created that jurisdiction. We have to pay tax for jurisdictions that we live. Yes, as individual, yes, probably 99% of the kids, yes, we have to pay where we live, but not for our business, especially if we have a digital business, online business.

Steven (06:35):

Yeah, it’s a great point because the tool that you’ve created isn’t just about international jurisdictions, it’s also about jurisdictions across different states or localities. Because being in the US it can be easy to think, oh, well the IRS dictates the tax rules. That’s all we got to think about. But it really goes a lot further than that. I mean, we have large businesses in the United States moving between states for tax reasons and while Jeff Bezos and Elon Musk aren’t calling me for tax advice, there are smaller business owners that are curious about these things. So Renato, tell us a little bit more specifically about what the tool is and how it works.

Renato (07:09):

If you go there and the tool, we are going to input your information, the CPA, the tax advisory input, the information, and then you run that information using 45 metrics. And then you’re going to give your report, you 10 locations, the best locations for your scenario, and then you’re going to choose considering privacy, political stability, the things that are important for you. So basically what you’re trying to create is a framework to make an informal decision, not like I’m going to say black and white where you should live, but it’s a framework to start and help the tax advisor to at least start. Why? Because we know that today if you go to a CPA that is not familiar with an international tax advisor, he’s going to send to a friend that’s familiar and this friend going to send to another friend in Panama or in Malta. So it’s a tool to create a framework to give you an opportunity to keep your client. You help in the US doing the international concierge, let’s say with Malta, with Estonia or Panama or came Island.

Steven (08:15):

Yeah, I like that you’re talking in there about not just the tax savings, that it’s not just black and white, here’s how much tax you pay in one country, one jurisdiction versus another because there are other very real considerations, especially when we talk about other countries. You mentioned political stability and mobility and some other things in there. And then I think you mentioned it before we hit record, but I just want to draw this out. As you talk about this tool and really this network you’ve created, it’s not just about identifying those top 10 jurisdictions, it’s then potentially connecting people with resources to get the work done and execute on. It’s not just like, let me check the box and now I live in Estonia.

Renato (08:50):

Yes, exactly. The two going to bring you from your needs all the way to the tax expert in the location. You going to implement the

(08:59):

Solution or you’re going to open your company. And let’s take the example of the crypto investment company. The two said to you, okay, let’s open a company in Malta because it’s 0% capital gain today they’re, it’s a long-term investment. They’re going to realize that gain in 10 years, whatever. And then let’s say Malta changed the legislation and say, now it’s not zero, now it’s 15, and the two going to notify you. And they’re going to tell you, Steve, change your company close here on open the Netherlands because here going to turn into 15 and move to the Netherlands because now is one there. So also the two going to create this environment of protection to the taxpayer and why, what is the fundamental behind the two? Because I see jurisdictions as a service provider, it’s a legal and tax framework to provide service of legal and tax. And you receive, choose where you’re going to hire that service. You’re going to hire a service where is easy to repatriate money, where is easy to dissolve a company or it’s good to travel or be with the family or retire like a 45 metrics.

Commercial (10:10):

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Steven (11:49):

Yeah, I love that you’re incorporating so much into that decision because a lot goes into it and this is an area where if you’re going to go down this path, you want to make sure you are hitting on those different data points and that it’s not simply a quantifiable decision of here’s where I pay the lease in taxes. And I like that you talk about these jurisdictions just as frameworks because at the end of the day, that’s where they are, that in the news they can become politicized as far as some of the fights that go on of, well, how are we going to incentivize people to move to our jurisdiction? But this tool isn’t about sneaking in the back door and hiding from someone. It’s about understanding and utilizing the jurisdictions that are out there.

Renato (12:26):

Yes, exactly. Because it’s like we were talking before, if you’re going to go to New York and fly to New York, you can find a ticket easily. But if you want to open my crypto investment company, how should I do not even our CPA knows? So we are trying to give initial a framework so the CPA with the client, they can make the best decision.

Steven (12:50):

I like that analogy of flights because yeah, whether it’s setting up a new company, it’s where I’m going to retire, it’s where I’m going to live for an extended period of time. There isn’t an expedia.com for, hey, where should I live for tax and other reasons?

Renato (13:04):

Yes.

Steven (13:04):

Now one of the questions that’s on my mind that I’d love for you to speak to is, okay, you would have to give me a number as far as how many jurisdictions there are, but it’s a lot. You’ve already been working on this tool for years. How do you accumulate that much data and keep it current to make sure that this tool stays relevant because none of these jurisdictions are going to commit to keeping their rules the same for any extended period of time.

Renato (13:27):

Yes, yes. That was the challenge because I always had this crazy idea like 20 years ago as being a global citizen, see jurisdiction as a service provider more than the regular people, let’s say,

(13:40):

Because I could live anywhere else here. I pay less tax and have more service. So I had this mindset, but we didn’t have the tools. Data science wasn’t there, the big computers were not here. So how could I put all that data together and analyze it and give a proper response if I don’t have the tools? But now we have it, now we have data science, we have big computers and we have the artificial intelligence. And so it’s a no brainer. Now imagine chat CPT five years ago or eight years ago would be impossible to imagine the quality or the results that it can offer us today. So it’s the same thing. It’s the same analogy. And another analogy I would like to do, it’s about painting, about art and cameras. When cameras came around, people were kind of hesitant to adopt the camera because you would kill the artist and the artist was responsible to draw and to paint like a people or landscape and they’re doing their job and people were the type of hesitant because oh, maybe going to remove people from doing their job. But it was the opposite because when they saw the cameras and saw the quality of the picture and the painting, the camera was much better.

(14:54):

So better to take pictures than keep doing the painting. But then it opened a door to creativity.

(15:01):

The abstract thinking started to grow. So our energy are more focused on the creativity side. We be more creative. We are going to take care more of our clients. We are going to invest in the relationship and going to invest different things, not on research. Not only spend hours or weeks trying to find out which jurisdiction is good for me. So it’s a type of tool that we know that creates some friction because of the conflicts of interest. Oh, it could be less hours, could be less money, but it could be a better quality of service. And if our generation doesn’t do that, the new generation will do it.

Steven (15:40):

Yeah, absolutely.

Renato (15:41):

Because they’re going to bring a better pricing point and better understanding what is the available tools. So I understand also the tool can create some friction and some type of concern in utilization, but it’s there, it’s great. And then it can save a lot of time. It can bring a efficiency to the CPAs also. We can be more transparent to our clients because we’re going to give them the tension jurisdictions that you can open a business or move or do whatever we need to do.

Steven (16:09):

It’s a really great analogy with the camera and artwork because yeah, to your point, there are still people doing creative things even though we have cameras. I like that description because I dunno if you get too far down the rabbit hole of the origins of the internet and what it was always meant to do, it’s supposed to be the information age. It’s supposed to be, Hey, we have the internet. Now you can get access to everything. But that comes with the problem of now there’s so much information, how do you store through it all? And so most people just don’t. Internet’s been around for decades now, but with tools like this, it suddenly makes, coming to your point about creativity, it makes more possible for people that had thought about starting a business in another country or retiring in another country or whatever it might have been 10 years ago, 15 years ago, five years ago, it might’ve felt like, you know what? There’s just too much to sort through. I could never possibly understand what my options are, so I’m not going to do anything. And tools like this make it possible for people to live dreams they never thought were even worth considering. So to me it’s really exciting.

Renato (17:08):

Yes, exactly. Our job here is to offer more opportunities and give people power to make decisions. At the end of the day, it’s about that. And also there is another topic, more like a socioeconomic topic about the two because let’s talk about the jurisdictions and how they treat our money because people don’t care about paying taxes if they have the service, right?

Steven (17:31):

Yeah.

Renato (17:31):

If you go to the countries that you have good services, welfare state and good welfare state tax spend is lower because people don’t care too much pay tax and that issues I’m having good hospital or good schools and et cetera. So I don’t care too much because I pay, I have my money back here in the school, in the community, whatever. So when it created this type of competition among the jurisdictions in a transparent and online platform, the public administration will need to work harder to keep our investment.

Steven (18:05):

Interesting

Renato (18:06):

Because now just the wealth and multinationals have access to this type of pushing into the public administration, the middle class, the upper middle class, they don’t have access to push public administration to do a better jobwise. They’re going to move. So this tool is also about control of the democratic system because we’re going to, that’s really interesting. Need better politics and better people take care of our money. Well otherwise are going to move.

Steven (18:36):

That’s fascinating because I hadn’t really thought about that, but up until now, the foreign jurisdictions that as a US citizen, the forest jurisdictions you hear about from a tax perspective are only the really extreme examples. It’s the ones that almost become a meme of tax havens. But again, they’re real frameworks and you gave the example earlier after we’d hit record of Portugal making a move and then Italy feeling anything better respond as this becomes more transparent. And to your point, people at more socioeconomic levels have that mobility. It creates a little bit more of a competitive market.

Renato (19:11):

Yes, yes. Interesting. We know as a tech, as an advisor that 90%, 90 0% of people that ask for tax planning, they can’t get the service because you dunno how to do because you don’t have the tools. Because we feel all better to be safe than sorry because I don’t have the proper tools to take that step. We are trying to offer that.

Steven (19:35):

To me that’s so exciting because like I said, this isn’t, international tax is not an area I spend a lot of time in because I’ve run into the same challenges. Other people of this is complicated. Where do you find all the information? How do you organize it all? How do you store through it? And so tools like this are really exciting to me. So for tax advisors, for financial advisors listening to this, I think we might have skipped over the name of the tool, how to access the tool. I know that this is still in the development phase, but what can you share for people who are interested in this?

Renato (19:59):

It’s tax.network because we focus on the network, we focus on the CPA. So tax, mainly tax problem, but it focus on the network because what is the thing of the CPA trust? Somebody on the other end in Panama on the other organization created this relationship. So we give them the data because we see ourselves as a data company because the data is the most important part of the tool. Everything around for this commodity, like the AI and all the technologies, because the datas are important. All the data we have scrapped and organize it and clean it. It’s important. And then you offer a way to implement and create a relationship on jurisdiction that’s the best jurisdiction for your client in the US for example. So the two is tax.network, it’s easy to access and it’s open for beta users.

Steven (20:58):

That’s really exciting. We’ll make sure it gets linked in the show notes, tax network and yes.network is the domain. Don’t put.com at the end of that. Yes. Now that’s really exciting. I’ve got it pulled up here as we’re talking and it’s definitely something I’m going to check out and play around with because when those questions come up, yeah, it can be really challenging to find those answers. So I’m excited that a tool has been created on this. Renato, where do you see this heading next? Obviously you’re in beta, so finishing out the existing vision, but where do you see international tax resources like this heading in the future?

Renato (21:27):

Right now we are accelerating the two with a small team. We were in New York, there is this big fund from Singapore. They have offices in state countries and we are in the office in New York. And now we are going to the office South America in Sao Paulo and then keep building the tool. But we still have a lot to do that tax information is not easy to work with. I used to play, I have this thing with my team. I say we are trying to decode the tax code.

Steven (22:04):

I like it

Renato (22:04):

Because it’s open an open source of a software and you see things, what is that? And people, regular people, when they open the tax code, they see the same thing. So we are trying to decode the tax code because it’s hard and it’s hard and they don’t care to be easier. They don’t care too much. Why? Because they don’t have competition. Have you heard about the case of Estonia?

Steven (22:27):

No. Tell me.

Renato (22:27):

It’s a small country in Europe.

Steven (22:29):

No, I’m familiar with Estonia, but yeah, let’s talk taxes.

Renato (22:32):

Yes, they’re doing a great job. One is Israel and Estonia is the highest per capita unicorn startup in the world because they’re small, digital and lean. So it’s a very efficient type of government. It’s a very efficient type of administration. So we are after the efficiency, the transparency, we’re not after not paying tax, we are after. The purpose of the tool is to give you a way to find a more transparent place to set up your business. It can be state, it don’t need to be outside of the us. It can be moving from California to Texas or moving from New York like the winter birds to Florida and to build equity in our home in Florida is the same thing. So we have this stigma around taxation that we can’t do because they say we can’t. But those are the same rules. The rules that serve the government serve us. So we just need to be format and we don’t need to pay $2,000 an hour anymore for a big effort to be informed for that. We can go online and use different tools and we hope to solve that problems in unit.

Steven (23:50):

Well, I really appreciate all the background you taking the time, not just to come out and share this, but all the time that’s clearly gone into building this because I mean your point there at the end is well taken that this, some of this is just an accessibility issue that if you were willing to pay enough an hour, you could always find someone who would figure this out for you. But that’s not accessible to a lot of people.

Renato (24:09):

So

Steven (24:10):

Tax.network, this starts making it more accessible to more people.

Renato (24:14):

Yes, you got the point. I’m not reinventing the wheel, I’m just taking the current tools and using to our old concept and bringing that to people. It’s not rocket science, it’s just like now we have the two available. What is the two? Data science, great computers and AI and all that. That’s it. We are all offering power to people. That’s it.

Steven (24:36):

That’s super exciting for anyone listening as you have questions about jurisdictions, whether domestic or international, this is a tool worth checking out. So you get access to these resources to recommend to the tax advisor you work with to get access to these resources. These questions are going to come more and more. There’s going to be more and more people interested in this stuff and this is a way to find those answers. So Renato, thank you so much for coming on the show. I really appreciate your time here and to everyone listening, until next time, good luck out there. And remember to tip your server, not the IRS.