4 Tax-Friendly Places To Retire Abroad
Retiring abroad is a dream to many. For some, the idea of the perfect retirement is sitting on a sand-soaked beach, while for others it might be strolling through a quaint European city dripping with charm. On a financial level, though, retirees may consider moving abroad to escape paying taxes to the federal government.
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However, the U.S. is one of the very few countries in the world that taxes its citizens on their worldwide income, so regardless of where they reside, it might be harder to find a true “tax haven” than you imagine. Certain countries are still more tax-friendly than others, though, in terms of their taxation of foreign income and the benefits that some retiree visas can provide. With that in mind, here are the top options.
Panama
Panama does not tax foreign-sourced income. If you plan to retire in the Central American country, you won’t have to worry about paying taxes on your Social Security, 401(k) or other income to Panama. This eliminates the hassle of trying to claim it back as a foreign tax credit when you file your U.S. tax return.
Where Panama really shines for retirees, however, is with its Pensionado visa. In fact, the Pensionado visa is one of the few that can provide actual, concrete tax benefits to retiring Americans, in the form of an exemption from import taxes on household goods and a duty exemption for importing a car every two years. In terms of quality of life, however, the Pensionado Visa is the gold standard. Here are just a few of the benefits that retirees can enjoy:
50% discount for expenses or closing fees on financial transactions for commercial or personal loans
15% discount on personal and commercial loans
1% discount on the interest rate of home mortgage
25% discount on domestic and international airline tickets
50% discount on hotel rooms from Monday through Thursday and 30% discount on weekends
20% discount on prescription drugs
15% discount on dental and optometry exams
30% discount on the rate of intercity buses, boats, ships and trains
25% discount on the cost of food in restaurants
15% discount in fast food restaurants, if those are national or international franchises
15% discount of the total bill for services in hospitals and private clinics
20% discount on physicians and surgeon fees
20% discount on fees for technical and professional services
20% discount on all prosthesis, and all devised and assistive accessories as well
25% discount on electricity, telephone and water bills
50% discount on recreation and leisure activities such as movies, concerts, theaters, sporting events and other public events every day
50% discount on airport tax
This list of benefits is hard to top in any country, and you get all the charms of Panama, from its beaches and marine life to its beautiful mountains — not to mention its low cost of living to boot.
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Portugal
Portugal is often cited as one of the best places for Americans to retire, thanks to its low cost of living and high quality of life. From food and culture to arts and beaches — you name it, and Portugal has it.
From a tax perspective, Portugal’s Non-Habitual Resident (NHR) scheme excludes any foreign income you might earn for 10 years. The Portugal visa will also allow you access to the company’s free healthcare system and even the educational system if you have any dependents. Ultimately, you may be able to acquire permanent resident status after just five years.
The Philippines
With over 7,000 islands, the Philippines is the very definition of a tropical paradise. With some of the most famous beaches in the world, from Boracay to Palawan and beyond, many expats are living a dream retirement in the country.
In addition to being an inexpensive place to live in general, the Philippines also offers expats a Special Resident Retiree’s visa that offers some tax benefits as well, such as an exemption from taxes on annuities and pensions and a waiver of import taxes and duties on up to $7,000 in personal effects. Expats also have access to the PHILHEALTH system and won’t have to pay the Philippine Travel Tax if they leave the country when holding this resident retiree’s visa.
Mexico
Mexico has the most American expats of any other country. Some of this is due to the fact that as America’s southerly neighbor, it’s extremely convenient to retire to Mexico. But its warm climate, good food and beautiful beaches are legendary as well.
According to “Expat Insider,” Mexico actually ranks #1 in terms of expat satisfaction, with a whopping 90% of expats saying they are happy to live there. The one tax break that Mexico offers expats — and it can be a big one — is that it does not tax Social Security income from the U.S.
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This article originally appeared on GOBankingRates.com: 4 Tax-Friendly Places To Retire Abroad
