People often tell me this:
Whatever we do, “it has to be 100% legal.”
In the same email they often express a fear of “skirting the law.”
I assume a number of things when people mention this:
- They are afraid of the government. I think most of us are in some way.
Pretty remarkable when you realize we pay these people.
- They have the idea that everything has to be approved
and regulated by a bureaucrat for it to be “legal.”
- They want to do everything by the book (great).
Don’t get me wrong, I am not picking on these people.
I think it is a normal question.
But here is why I think that this is a very difficult question to answer:
1. THE WORLD is not 100% regulated:
Most law systems leave room for judges, prosecutors and government employees
to examine the actual facts & circumstances.
This is especially true in tax law.
But also if you kill someone it can be because you’re insane or defending yourself (or a combination of both).
If you’re convicted can depend on a judge, lawyer or jury.
Therefore, “100% legal” is something that is hard to achieve.
It is also strange from a logical point of view.
I mean, this implies that something could be 73% legal.
Ok, this is maybe getting a bit dorky.
2. THINGS CHANGE:
Both laws and regulations are constantly being developed.
What works now, might now work tomorrow.
In addition, your situation might change.
You might sell part of your company to a buyer in country X or find a great new client that will change your situation.
Do you want to plan all of that now?
Or do you adjust to the actual circumstances?
And look at technological advances.
Existing Taxi regulations are not applicable to Uber.
They might take years to catch up and in some places you break the law going from A to B.
Shall they just discard the project because of this?
3. WHO ENFORCES THE LAW?:
Yes, laws are written down.
But flesh-and-blood people implement the laws.
With VERY different results.
Trouble understanding this statement?
Then research the process of getting a Thai Visa.
See if you can spot if the knowledge, intelligence,
location or mood of the immigration officer makes a difference.
4. 100% Legal WHERE?
Laws differ widely from country to country.
What is legal in one place might not be legal in another.
And where are you really living?
Once your life and business spread around the world you’ll have
less to do with a single law system.
This can make your life less risky,
but also more complicated.
5. MAKING ECONOMIC SENSE.
Trying to be 100% legal might not always make economic sense.
You want an example?
If you sell digital products into Europe you need to pay VAT in the countries where your customers are.
This is will cost you time and money to set up.
Will you risk this investment?
You might wanna try to actually sell an X number of Ebooks first.
This way you can structure your business AFTER you have proof that there is actual demand for your product.
6. NOBODY KNOWS:
Governments are out of control.
In most countries, no single person can tell you how many laws and regulations there are.
You have national-, local- and provincial laws.
Trade deals, international treaties, the OECD, the IMF.
You might be breaking all sorts of rules without even knowing it!
7. BAD INTENTIONS:
Regulation is an ideal tool for big corporations to keep competition out.
Or to prevent newer, better products to enter the market.
As an example: the corporate service sector in the Netherlands.
Here, a few big players together with the central bank have setup
with very strict regulations.
This makes it VERY difficult for small companies to stay in business.
What will you do when it’s you turn?
How To Be 100% Legal – Conclusion
I discussed this matter with my old boss.
He said: “if you’re an entrepreneur, you’ll break a law sooner of later.”
And that is what I see people do as well. Calculating the risks.
Dealing with what comes when it comes.
The point I am making is:
It is difficult to always be “100% legal.”
But I understand that as an entrepreneur you want to build in as much certainty as possible.
Luckily, the principles of international tax law are logical.
And they are standardized.
And… most standard cases can usually easily be answered by someone like me.
Do you want to talk about your situation?
Check this out: