Geographic Arbitrage Or Geo Arbitrage: What is it? (2024)

What is Geo Arbitrage?

Index Quick view

A bridge between two worlds that allows you to reduce costs

Geographical arbitrage allows you to reduce long and short term living costs. Just like the Las Americas bridge in Panama, arbitrage is a bridge of union between an expensive strong currency country that you want to take advantage of for its corporate and tax free base with strong currency and a low cost country with weak currency where to actually live.

It requires a life plan

To make it possible to apply geographical arbitrage in your life you need to plan it by choosing at least two countries through which to implement it.

Live where it costs you least

You will live where it costs you least and where you can take advantage of currency arbitrage between the country where you will do business and from which you will receive funds in hard currency and the economic country in weak currency where you will spend these resources to your advantage.

The best destinations

Certified that the best destinations to start with are Panama and Mexico where Panama means the country with a strong currency and Mexico the one with a weak currency and with a high but economical standard of living.

Geographic arbitrage for expats and digital nomads

What is Geo Arbitrage? Geo Arbitrage is the well-known technique of experienced digital nomads and more advanced expats, to manage their economy and their tax residence in such a way that both give only the best and most efficient result both on a practical and financial level. Geo Arbitrage is commonly used by expats and digital entrepreneurs, the so-called digital nomads. But what does geo arbitrage specifically consist of and why is it convenient?

How Geo Arbitrage is applied

The basic definition of geo arbitrage is taking advantage of the difference in costs between two geographic locations, despite having the same type of lifestyle.” Geographic arbitrage is essentially making money in a strong currency and spending in a weaker currency. So normally the usual set up of the most experienced expatriates and of all digital nomads attentive to their finances and living costs is:

Physical Residence in Panama (for reasons of extraterritoriality and corporate tax residence, Zero Tax and territorial taxation, anonymity being tax havens) where companies are incorporated and an anonymous offshore account is opened where cash can be made in American dollars given that the national currency in Panama is the Dollar USA.
Tax residence in Mexico or Colombia , where you register with AIRE, and have a transparent and fiscal residence without burden of reverse proof towards the Italian tax authorities or any other European country. In Mexico and Colombia the cost of living is up to 4 times lower than in Panama and is spent in dollars collected in Panama by exploiting the monetary arbitrage between the two countries and multiplying one's purchasing power many times when purchasing goods and local goods priced in weak local currency (For Mexico MXN , For Colombia COP ). * Note Mexico is more convenient because it has low inflation rates compared to Colombia, this is why we do not consider countries like Argentina or Venezuela, as despite the favorable exchange rate they have inflation rates that increase by up to +20% every month

What to do to start living according to geo arbitrage or geographic arbitrage

All our clients, after a year or two from obtaining a residency, especially residency in Panama (or its counterpart in Paraguay), begin to understand that the real advantage of being a resident is Panama (or Paraguay) it is precisely geo arbitrage, that is, living in a country other than Panama or Paraguay where you can practice geographic arbitrage and often also apply other methodologies necessary for financial savings. This is why to start practicing geographical arbitrage, start by initially taking up residence in Panama, a country with a strong currency but expensive to live there, and in the meantime begin to build the plan relating to physical residence, where you will live and take up tax residence by registering with the Aire . Our advice: consider Mexico or Colombia. Geographic arbitrage works by taking advantage of financial opportunities in multiple locations. For example, a smart person from Milan or Monte Carlo might not want to sell their house and move permanently to Mexico. Instead, he could rent out his apartment on Airbnb or put it up for long-term rent. In this way, a good part of the costs he would have in Mexico could be covered thanks to the hard currency (euro) that he would use and which comes from passive income where it is not necessary to work. It's an especially smart move if he can spend that season in places like Mexico or Colombia, which offer much cheaper stays. The dynamics and examples are endless. It is up to the customer to decide. If you wish to take advantage of geo arbitrage, contact us.

Origin of Geographic Arbitrage

Geographic arbitrage is a term coined by the FIRE (Financial Independence, Retire Early) movement. FIRE supporters combine investments and a typically well-paying job to realize the dream of retiring when they reach their 40s or even their 30s. One of their main tactics is to take advantage of local costs of living across the country and even the world to keep the cost of living as low as possible, thus lengthening the value and lifespan of the money saved/earned and making retirement possible. anticipated. If you are considering this move for yourself, then you may want to work with a financial advisor first to get your finances in order and ensure you are set up for success. Contact one of our financial advisors to receive appropriate advice on how, where and when to move and how to start your personal geographical arbitrage project and planning.

Consulting on Geographical Arbitrage and Tax Engineering

You can contact us and receive automatic geoarbitrage consultancy for a fee by issuing a payment of USD 250.

You can pay via PayPal to one of these two emails: [email protected] or [email protected], you can also pay via credit card, or Apple Pay or instant bank transfer by contacting us and requesting the appropriate link.