Countries offering retirement visas

[Alan]

Quote:

Originally Posted by explanade When would the tax liability be triggered? As soon as you apply for and get any visa that lets you stay beyond 90 consecutive days? Or if you obtain a retirement visa, which sounds like it’s in a different category? Or after you get a number of 1-year visas? I heard in some countries you have to renew 1 year visas a couple of times before being eligible to apply for 5-year and longer visas and eventually citizenship if you want it. Or do retirement visas avoid this laddering scheme?

Tax liability will vary depending on the country. For example the UK has a “statutory residence test” that determines when a person is liable to UK taxes.

[Lagniappe]

Quote:

Originally Posted by Alan Tax liability will vary depending on the country. For example the UK has a “statutory residence test” that determines when a person is liable to UK taxes.

And in Portugal, you are considered a tax resident if you spend more than 183 days per year in the country (there are other criteria, but this is the clearest).

[ncbill]

Tax treaties are what matters.

Met a non-U.S. expat down in Mexico some years ago...IIRC, he faced only a maximum 15% tax on any income from his home country, including withdrawals from tax-deferred retirement accounts...I'm still jealous of his sweet deal.

[Focus]

Quote:

Originally Posted by Alan Before moving to any country plenty of research should be done around taxation. As a US citizen you are always taxed on worldwide income no matter where you live and if a treaty says a stream of US income is taxable in the other country then you still have to pay tax on it and then claim FTCs to reduce the US taxes.

Right you are. I had my heart set on moving to Spain, a country I know well. At first, it seemed like a no-brainer: higher quality of life and lower cost of living. However, the deeper I looked, the riskier it seemed financially. A tax attorney there confirmed the worst, adding that many expats move to Spain oblivious of what will hit them.

To mention just a few issues: Spain's tax rates are essentially double the U.S.'s. The country taxes Roth 401k/IRA withdrawals. It forces you to file an "information only" annual form detailing all of your worldwide assets, and it imposes a significant wealth tax on those assets (although Madrid currently gives you a pass). It is the very opposite of retirement friendly, unlike neighboring Portugal.

[Alan]

Quote:

Originally Posted by Focus Right you are. I had my heart set on moving to Spain, a country I know well. At first, it seemed like a no-brainer: higher quality of life and lower cost of living. However, the deeper I looked, the riskier it seemed financially. A tax attorney there confirmed the worst, adding that many expats move to Spain oblivious of what will hit them. To mention just a few issues: Spain's tax rates are essentially double the U.S.'s. The country taxes Roth 401k/IRA withdrawals. It forces you to file an "information only" annual form detailing all of your worldwide assets, and it imposes a significant wealth tax on those assets (although Madrid currently gives you a pass). It is the very opposite of retirement friendly, unlike neighboring Portugal.

Wow, the taxation of Roth distributions is nasty. At least with the US-UK treaty then that is not an issue. Lump sum Roth conversions are also only taxable in the US but IRA withdrawals are taxable in the UK which is why we seriously ramped up our Roth conversions. I’m all Roth now and we are working on DW’s Roth conversions. She is in a much lower marginal tax bracket than I am in the UK (20%) so not quite so urgent.

[Focus]

Quote:

Originally Posted by Alan Wow, the taxation of Roth distributions is nasty. At least with the US-UK treaty then that is not an issue. Lump sum Roth conversions are also only taxable in the US but IRA withdrawals are taxable in the UK which is why we seriously ramped up our Roth conversions. I’m all Roth now and we are working on DW’s Roth conversions. She is in a much lower marginal tax bracket than I am in the UK (20%) so not quite so urgent.

What some people do is withdraw all their Roth funds before moving to Spain and reinvest the money in a taxable account. Of course, that's less than ideal.

[Alan]

Quote:

Originally Posted by Focus What some people do is withdraw all their Roth funds before moving to Spain and reinvest the money in a taxable account. Of course, that's less than ideal.

The point you are also making is to do your research thoroughly before moving to another country. I am a member of a couple of UK-US expat sites and whether it is a Brit returning home or a USC moving with a UK spouse, so many fail to do the research ahead of time and find themselves in a tax pickle. Often they don’t convert their MFs to ETFs that report into HMRC and find themselves with funds that are foreign investments to HMRC and lose all the good tax advantages of equity dividends and capital gains. From the UK a USC can’t even create a SS online account or open a US bank or brokerage account to roll over their 401k to a company familiar with, and accepting of, overseas customers. This all needs to be done before the move

[explanade]

6-month visas sound good if the cutoff for hitting the tax liability threshold is 180 days.

[Alan]

Quote:

Originally Posted by explanade 6-month visas sound good if the cutoff for hitting the tax liability threshold is 180 days.

We did this for Australia in 2014, actually only stayed 5 months.

[explanade]

It’s a minimum 1 year visa right?

So stay 5-6 months in one country and then move on to another country, try to get a 1 year visa there or just maximize the 90 day Schengen limit?

[Alan]

Quote:

Originally Posted by explanade It’s a minimum 1 year visa right? So stay 5-6 months in one country and then move on to another country, try to get a 1 year visa there or just maximize the 90 day Schengen limit?

The visa we had was strange, we could stay 6 months but not contiguous, 3 months at a time. It was an ESTA and free, so no need to send off passport to Australian embassy. Worked fine for us as we had a week in Vanuatu out of Brisbane, returning and resetting the clock on the visa. We also took a 2 week cruise from Sydney to New Zealand. The visa was on our British passport even though we flew out from the USA where we were living at the time.

[explanade]

Another article on retiring abroad. Brief summaries of various topics but it has a lot of links, not all of which I've tracked down.

It did have this section that perked my interest:

Quote:

In Italy, small towns have been selling homes for one euro to attract retirees, while the country’s southern portion is enticing them with a seven-percent flat tax rate incentive. This overrides Italy’s national income tax, which ranges from a whopping 23 to 43 percent. Greece has also been working to secure its own seven-percent flat tax rate for pensioners from abroad.

https://www.cntraveler.com/story/how-to-retire-abroad

It did have a link to AetnaInternational health insurance.

So I tried to get a quote (beware, you have to give up your contact info and I've gotten a couple of pestering emails within 24 hours).

I plugged in my birthdate and chose France as the country I'd be living in.

$4 million limit with $1000 deductible, either 80% or 100% coverage on a lot of items like CT scans.

So either $1100 a month or $1362 a month.

Talk about sticker shock.

An American on Medicare or even an ACA plan would really have to want to live overseas to pay those kinds of premiums, which presumably wouldn't have the tax benefits that ACA plans have.

[Letj]

Quote:

Originally Posted by Focus Right you are. I had my heart set on moving to Spain, a country I know well. At first, it seemed like a no-brainer: higher quality of life and lower cost of living. However, the deeper I looked, the riskier it seemed financially. A tax attorney there confirmed the worst, adding that many expats move to Spain oblivious of what will hit them. To mention just a few issues: Spain's tax rates are essentially double the U.S.'s. The country taxes Roth 401k/IRA withdrawals. It forces you to file an "information only" annual form detailing all of your worldwide assets, and it imposes a significant wealth tax on those assets (although Madrid currently gives you a pass). It is the very opposite of retirement friendly, unlike neighboring Portugal.

Agree totally. I had my sights set on Portugal or Spain. It’s quite onerous in Spain and it’s quite a bit in Portugal after 10 years. Portugal also taxes Roth IRAs so the Roth would be included in the 10%.

[Dd852]

Quote:

Originally Posted by explanade Another article on retiring abroad. Brief summaries of various topics but it has a lot of links, not all of which I've tracked down. It did have this section that perked my interest: https://www.cntraveler.com/story/how-to-retire-abroad It did have a link to AetnaInternational health insurance. So I tried to get a quote (beware, you have to give up your contact info and I've gotten a couple of pestering emails within 24 hours). I plugged in my birthdate and chose France as the country I'd be living in. $4 million limit with $1000 deductible, either 80% or 100% coverage on a lot of items like CT scans. So either $1100 a month or $1362 a month. Talk about sticker shock. An American on Medicare or even an ACA plan would really have to want to live overseas to pay those kinds of premiums, which presumably wouldn't have the tax benefits that ACA plans have.

Insurance will cost you! If you can settle in a place where you have national heath as basic, that’s good. We do have NHS in the UK but we’ve supplemented with an international gold plated coverage from BUPA （which gives us full coverage everywhere in the world except for the US, where it is emergency only) and it is by far our largest monthly expense. But it has proved its value for sure and it would be the last thing I’d ever cut back on.

[explanade]

How do you get NHS benefits?

Did you acquire citizenship or something like permanent residency?

But it sounds like you have to spend a lot for your own insurance.

[Alan]

Quote:

Originally Posted by explanade How do you get NHS benefits? Did you acquire citizenship or something like permanent residency? But it sounds like you have to spend a lot for your own insurance.

Once you get a visa to stay you have to pay about $1k per year as part of the visa which gives full NHS coverage. Once you get the equivalent of a greencard to stay indefinitely it is included at no additional cost.

We are in our mid sixties and pay £120/month for the 2 of us for private health insurance including vision and dental. The coverage is worldwide including the USA emergency care. However it is only if there is a 6 week delay on the NHS, so for example my heart AFib care and ablation surgery was done on the NHS, plus the removal and testing of suspicious moles, but this year I went private for my knee surgery to repair a torn cartilage. My wife went private on her first cataract surgery but the 2nd was more complicated and needed a toric lens so the surgeon asked her if he could do it on the NHS as it would be more expensive since the NHS would cover the special lens and insurance would not. As she was on his list already then no delay.

[Kroeran]

Quote:

Originally Posted by UnrealizedPotential How are foreigners able to open US based accounts when I have heard it is so hard to do once you are an expat ? Yes, I know having a US based address helps in some cases for expats, but how can foreigners do it without SS number ? Maybe money talks based on the amount for those foreigners, not that I am suggesting anything.

Pretty routine for Canadian snowbirds with no SSN to have accounts in US.

[ItDontMeanAThing]

Quote:

Originally Posted by Lagniappe And in Portugal, you are considered a tax resident if you spend more than 183 days per year in the country (there are other criteria, but this is the clearest).

Commonly believed, but not quite true. The law says in Article 16 of CIRS (translated by Google Translate):
"1 - People who reside in Portuguese territory are those who, in the year to which their income relates:
a) There have been more than 183 days, consecutive or interpolated, in any 12-month period beginning or ending in the year in question;
b) Having stayed for a shorter period of time, there, on any given day of the period referred to in the preceding paragraph, have housing under conditions that suggest that they currently intend to maintain and occupy it as their habitual residence;"
...
"3 - Persons who fulfill the conditions provided for in paragraphs a) or b) of paragraph 1 become residents from the first day of the period of stay in Portuguese territory, except when they have been resident there on any day of the previous year, in which case they consider themselves to be residents in this territory since the first day of the year in which any of the conditions provided for in paragraph 1 are met."

http://info.portaldasfinancas.gov.pt...ges/irs16.aspx

[explanade]

So if you own property or even lease one, you could be liable for income taxes?

[ItDontMeanAThing]

Quote:

Originally Posted by explanade So if you own property or even lease one, you could be liable for income taxes?

Not if you spend less than 183 days in a 12 month period in Portugal AND you maintain a permanent residence outside the country.