Five Flags Theory & Georgia As A Strategic Destination
Reduce jurisdictional risk and diversify | International Lifestyle / Letter 1 / June 2026
International diversification is currently as important as it has ever been for the discerning free-thinking individual. Western governments, without apology and quite brazenly have entered into ‘tax scavenge’ mode.
Instead of taking accountability for the debt problems they have created, history suggests that they will increase the extortion of their citizens and inflate their currency supplies as a way to avoid the consequences of the increasing debt. They do this as a way to buy time, ensnare votes, transfer wealth from the middle class to the upper class and preserve their individual lifestyles in the short-term.
Inheritance tax, unrealised capital gains tax, increased income tax, theft from retirement funds, gold confiscation. Everything is on the table and they are not trying to hide it.
Politicians in the Netherlands recently introduced a bill to implement an unrealised capital gains tax. It passed the lower house vote and could be potentially active in 2028.
Getting taxed on assets you have not sold of which their market value could drop to zero after they are assessed on their value, of which you may have to sell to pay the tax is completely nonsensical and destructive in every way imaginable for all parties involved.
At least with income tax you have already received the income before they steal it. But with this tax they just steal it from you before you even receive any income based on a hypothetical non-realised value that is not confirmed by the market.
Make it make sense…
We need to position ourselves to account for the probability that these actions will continue and increase.
Five Flags Theory— International Diversification
I am an advocate for living an international lifestyle. Which has led me to deeply think about the popular ‘five flags theory’ and how I can implement a version of it into my life.
For those new to the concept, five flags theory advocates for planting ‘flags’ in different international jurisdictions. The flags relate to personal finance, business setup and preferred lifestyle.
The reasoning for the five flags setup is simple. By planting flags in different international jurisdictions you can reduce the risk of governments coming after your capital, assets and your relative personal freedom which can negatively affect your quality of life.
The Five Flags:
Citizenship / Passport Flag - Obtain a second citizenship (or more) in a country that aligns with your goals.
Business Flag - Base your company in a jurisdiction chosen for business friendliness, taxes, regulations, and stability.
Residence Flag - Become a legal resident somewhere that offers a favourable lifestyle/tax environment.
Asset / Banking Flag - Hold assets, investments, banking relationships, or structures internationally.
Lifestyle / Playground Flag - Spend your time, consume, travel, or enjoy life in places chosen for quality of life and cost efficiency.
Where You Pay Tax - Company & Personal
Where will you pay tax if your company is set up in one jurisdiction and you become a legal resident in another?
This is a factor that may require clarification.
Your company pays tax according to the rules of the company’s jurisdiction.
You personally pay tax according to the rules of your tax residence.
Money moving from the company to you (salary, dividends, distributions) can trigger another layer of taxation depending on the countries that are involved.
You establish company setup and legal tax residence and then you follow the rules of both jurisdictions as to how you declare your earnings.
The key is designing the structure so the three layers work together.
There are locations around the world that can offer you a better suited environment, culture and financial structures relative to you needs.
For the individual with agency and with personal entrepreneurial or investment goals, it is wise to consider an optimised five flags setup to enable you to achieve your goals more efficiently.
Flag number three (residence flag) has been a priority of mine recently. I have been looking into the country of Georgia amongst others as a possible location to live and establish tax residency.
Georgia seems appealing to me. As a tax resident you can potentially pay a very low 1% tax rate as an independent entrepreneur. This rate can be obtained if your annual business revenue is under under 500,000 GEL (Georgian Lari). This is around 188,000 USD at time of writing.
Visa and immigration options available to foreigners are plentiful and generous. While there are ongoing geopolitical concerns for Georgia being located at the crossroads of Eastern Europe and Western Asia, it seems to me to be a low key country and can provide a good quality of life for the right person.
Georgian GDP per capita has risen 150% over the last ten years and current government debt to GDP stands relatively low at 34%
The low debt to GDP and growth figures reduces the risk of Georgia entering tax scavenge mode.
To outline the process of analysis I will use Georgia as an example, but of course there are many other low tax jurisdictions to choose from.
Georgia Tax Residency And 1% Tax Structure
I must preface this by saying I have never travelled to Georgia. The information provided is from research only.
Establishing tax residency as an entrepreneur in Georgia is relatively simple and requires two main things.
- Independent Entrepreneur (IE) Registration - Which establishes your company entity
- Small Business Status (SBS) Application - You qualify for SBS if your business has annual income under 500,000 GEL (~188,000 USD)
This setup is great for those with a business than can operate with a computer and an internet connection. You are also able to start a brick and mortar business within the country as a foreigner with this setup.
I can recommend Dylan Sadler as resource for Georgia setup. He has a lot of quality free information and a Georgia setup Skool community which is free to join currently. View his website here.
Along with IE and SBS setup there are some other supportive actions to take such as opening a Georgian bank account to accept business payments, obtaining a Georgian physical or virtual address and filing monthly income declarations with the Georgian Revenue Service.
If you stay 183+ days within Georgia in a rolling one year period, you can then apply for a tax residency certificate. You can then present this certificate to your current country of tax residency as a supporting document, to show that you are living and paying tax somewhere else.
Do these things and you can legally be paying 1% tax. Pretty cool and pretty simple right?
But how does Georgia rate as a country to live for 183 days per year? Let’s have a look at the capital city Tbilisi.
Tbilisi Livability Scorecard
Evaluating the city across seven key quality-of-life indicators.
There are around 195 countries in the world. Choosing where to plant your flags is a completely subjective decision, but there are real world conditions such as safety, infrastructure and geo-arbitrage opportunity which you can analyse objectively to inform your decisions.
The information in the above infographic reflects how Chat GPT rated Tbilisi compared to other major cities when asked to evaluate a selection of quality of life factors.
The reality is that comparing cities and choosing where to plant your flags is highly personal, so take the time to enjoy the discovery process of learning about new countries, their culture and economic environment.
Don’t rush the decision and consider all geopolitical and macroeconomic factors.
Learn the history of the country and how it has evolved to be what it is today.
Asses the countries ability to grow, prosper and thrive in the immediate and long-term future.
Have a good day, and if you are living an international lifestyle or hope to do it in the future— best of luck and I hope you enjoy the experience.
Until next time.
-Shernon
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Cover photograph by Shernon Hague | Arashiyama, Kyoto, Japan 2016 | 35mm film