Countries offering retirement visas

[MichaelB]

There nothing wrong with buying property or transferring assets outside the US, even to middle or lower income countries. Living abroad is not always simple, and when local inflation and interest rates pick up, keeping one’s assets in $$ in the US is financially difficult. One can get fleeced anywhere in the world.

What is foolish is to move assets to, or acquire property in, another country without first understanding the currency risk and legal environment of the destination country.

 

[Jollyquick]

List of countries offering retirement visas?

This sounds suspiciously FATCA/FBAR related. The reason is apparently law abiding, financially savvy, US citizens, went with an unusual solution to access their local, foreign financial institution. These situations are happening around the world to US citizens as foreign financial institutions are increasingly canceling existing accounts and/or denying new applications.

I don’t think these people were especially foolish. I think they were dealing with the unexpected anti-US citizen prejudice FATCA has created in the financial world...to include our own US institutions.

As an EXPAT myself I am regularly denied financial access due to FATCA. On the US side, Vanguard recently denied me service based on my residency status in spite of them email spamming me with offers for the very service they denied. On the EU side we can no longer invest in US ETFs due to an EU law on PFIICs. Something as simple as setting up a direct deposit with a EU bank for your paycheck in Euros can be shockingly unpleasant for Americans living outside the continental US and its territories.

It’s like we US citizens are now all marked with a financial “Scarlet Letter”.

US State Department/IRS to US citizens: “Excuse me, are you moving overseas? Ahh, that’s nice. Please put this on...”

Bottom line/TLDR: It sucks for what happened to those people in Mexico that lost all their money in a scam. However I believe it’s a symptom of US citizens and green card holders turning to shady options / loop holes due to the growing global anti-US citizen prejudice FATCA is causing.

 

[Alan]

This sounds suspiciously FATCA/FBAR related. The reason is apparently law abiding, financially savvy, US citizens, went with an unusual solution to access their local, foreign financial institution. These situations are happening around the world to US citizens as foreign financial institutions are increasingly canceling existing accounts and/or denying new applications.

I don’t think these people were especially foolish. I think they were dealing with the unexpected anti-US citizen prejudice FATCA has created in the financial world...to include our own US institutions.

As an EXPAT myself I am regularly denied financial access due to FATCA. On the US side, Vanguard recently denied me service based on my residency status in spite of them email spamming me with offers for the very service they denied. On the EU side we can no longer invest in US ETFs due to an EU law on PFIICs. Something as simple as setting up a direct deposit with a EU bank for your paycheck in Euros can be shockingly unpleasant for Americans living outside the continental US and its territories.

It’s like we US citizens are now all marked with a financial “Scarlet Letter”.

US State Department/IRS to US citizens: “Excuse me, are you moving overseas? Ahh, that’s nice. Please put this on...”

Bottom line/TLDR: It sucks for what happened to those people in Mexico that lost all their money in a scam. However I believe it’s a symptom of US citizens and green card holders turning to shady options / loop holes due to the growing global anti-US citizen prejudice FATCA is causing.

That sucks that you can’t invest in US ETF’s, because the US also doesn’t allow their citizens to invest in non-US ETF’s without treating them as PFIC’s. If the UK takes the same approach as the EU towards US ETF’s I’m going to have a lot of thinking to do on investing. (I had converted our MF’s to ETF’s before moving back as the UK recognizes US ETF’s to be the same as UK ETF’s).

 

[ragabnh]

And where did you pull this gem out of? If anything you should be just as careful with US Banks, AKA Wells Fargo. There are probably lots of other examples also.

Amazing how folks can generalize, remember there are a lot of gullible people out there who will believe you and pass it on.

I see your point, but I have lived in seven foreign countries for a total of 33 years, despite Wells Fargo bad business practices I would trust US financial system much more than other countries, Western Europe comes 2nd.

 

[ItDontMeanAThing]

... I think they were dealing with the unexpected anti-US citizen prejudice FATCA has created in the financial world...to include our own US institutions. ...

I think financial institutions compare the costs and benefits of modifying or creating systems to deal with FATCA. It's not prejudice if they decide not to accept customers who require FATCA compliance. It's a sound business decision of the costs outweighing the benefits.

 

[Jollyquick]

List of countries offering retirement visas?

Call the denial or exploitation of financial institution service based solely on one’s citizenship what ever you prefer. Perhaps “disenfranchise” sounds more politically correct. Whatever you call it, historically it’s been a slippery slope when governments and institutions begin to deny or limit access to certain portions of their populations. Remember we’re discussing denial of service to legal EU residents here, not refugees, tourists, or transients.

We’ve lived in Europe since 1986 and have always felt welcome here. However the recent changes in EU/US tax laws implementation/enforcement has had a huge negative impact on how US EXPATS are being treated by financial institutions. Especially in the last two years. They are closing accounts of current customers. They are calling in loans and mortgages, denying service and freezing bank accounts. Not to mention the invasion of privacy issues.

From what I can tell from the news, this isn’t just an EU issue either. This is a global issue and it’s developing rapidly. US Expats may become extinct as folks just give up and either move back to the US, or worse, renounce their citizenship.

“We don’t service you people here anymore.” Sounds an awful lot like prejudice to me...or something worse. If you want to call it a sound business decision, that’s your prerogative.

 

[justexperienced]

The best country for me to have a retirement would be somewhere in Southeast Asia probobably Thailand, Philippines, or Indonesia. And would love to stay in front of a beach in laid back community.

 

[ItDontMeanAThing]

...
However the recent changes in EU/US tax laws implementation/enforcement has had a huge negative impact on how US EXPATS are being treated by financial institutions. Especially in the last two years. They are closing accounts of current customers. They are calling in loans and mortgages, denying service and freezing bank accounts.
...

...
If you want to call it a sound business decision, that’s your prerogative.
...

If you want to call business decisions based on "recent changes in EU/US tax laws implementation/enforcement" anything other than a sound business decision, that's your prerogative.

 

[explanade]

How about Malta, anyone?

They speak English. It used to belong to the Brits and only gained independence in 1964, and is now a member of the EU. I happened to read about their welcoming retirees, and so did spend some time to check it out. The financial requirements are reasonable. The Maltese are nice friendly people, and they have a very low crime rate. It appears quite a few Britons retire there. The cost of living appears to be not too bad, compared to mainland Europe.

The drawback is being on such a small island may give one a bad case of island fever. I entertained the idea of using it as a home base for a year or two to explore other places in the Mediterranean. It turned out that, with Malta being such a small nation, there are few direct flights to/from it. An trip from Malta to Sicily means several hours in Rome waiting for a connection. Boats are faster?

Having two houses and family roots in my home state, I have found it difficult to move to the Puget Sound, leave alone going to a new country. Thought I would bring it up for people to research it as a pipe dream, if nothing else.

It is definitely a place for me to visit, but I am still working on combining it with some other places in one itinerary (Sicily, Sardinia, or Corsica?)

Retire in Malta | Malta-Tax | Malta Retirement Schemes - Residence Scheme residency malta resident retirement residency malta permanent retire

Found this article from 2019.

If you get a Maltese passport and eventually an EU passport, it gives you the right to live anywhere in the EU.

Critics say that while countries like Cyprus and Malta are reaping the benefits of handing out passports, what they are really offering is the right to live anywhere in the European Union. And they say such programs can attract shady characters.

But others say that getting visas through real estate transactions involves vetting for criminal records, for instance, which is a far more restrictive process than the scrutiny faced by the million people a year who are given European Union passports through marriage or the reuniting of family.

“Anyone who is a real security threat or a major criminal would not put themselves through that scrutiny — they have other ways to get a passport or go where they want,” said Mr. Kälin, of Henley & Partners.

There are tax advantages in having residence rights in countries like Antigua, Cyprus and Malta, which charge little income tax on offshore assets and do not require the investor to live in the country for any significant period.

https://www.nytimes.com/2019/05/21/realestate/visas-residency-passports-property-investment.html

Malta is absolutely beautiful. Lot of sun year round.

Probably not a great place for a pandemic because health care capacity is probably limited. I remember one Brit got infected in Singapore at a business conference and then went for a short holiday in Chamonix to ski.

So from those ski lodge evenings, he infected someone who took it back to Malta. He didn't have symptoms until he returned to the UK.

Who knows if these policies will change in light of the pandemic. There will probably be more demand by people outside of Europe to try to get one of these visas.

But what do they mean about limited taxation of offshore assets?

 

[projectmaximus]

But what do they mean about limited taxation of offshore assets?

A lot of these countries, like Malta, have little or no tax on income generated outside their borders. So if you run a business that generates revenue offshore (outside of the country at hand) you can live there and significantly reduce your tax liabilities. Sadly, this does not apply to US citizens who are taxed on worldwide income. The only way around this is to get a second citizenship in one of these countries and then renounce US citizenship...which is actually gaining popularity these days.

 

[Markola]

A lot of these countries, like Malta, have little or no tax on income generated outside their borders. So if you run a business that generates revenue offshore (outside of the country at hand) you can live there and significantly reduce your tax liabilities. Sadly, this does not apply to US citizens who are taxed on worldwide income. The only way around this is to get a second citizenship in one of these countries and then renounce US citizenship...which is actually gaining popularity these days.

I wonder what happens when someone who has most of their assets in IRAs at Vanguard, Fidelity, etc. obtains a second citizenship and renounces their U.S. citizenship? Do they have to liquidate and pay giant U.S. taxes? I can’t imagine such assets are unaffected but it’s an honest question.

 

[projectmaximus]

I wonder what happens when someone who has most of their assets in IRAs at Vanguard, Fidelity, etc. obtains a second citizenship and renounces their U.S. citizenship? Do they have to liquidate and pay giant U.S. taxes? I can’t imagine such assets are unaffected but it’s an honest question.

I would assume there are some repercussions but I don't know any details. I've never had any interest in renouncing so never looked into it.

Coincidentally, I think the Nomad Capitalist just put out a video on this in the last day or two. Even though I follow him very enthusiastically I skipped over that video for the reason stated above.

(if anyone can confirm that linking to youtube videos is allowed I'll find the link)

 

[Dd852]

I wonder what happens when someone who has most of their assets in IRAs at Vanguard, Fidelity, etc. obtains a second citizenship and renounces their U.S. citizenship? Do they have to liquidate and pay giant U.S. taxes? I can’t imagine such assets are unaffected but it’s an honest question.

The short answer is you don’t have to liquidate but you have to pay a tax as if you had (if your net assets are above 2m or you have high annual income). The complete answer is here https://www.irs.gov/individuals/international-taxpayers/expatriation-tax

 

[FIREd]

The short answer is you don’t have to liquidate but you have to pay a tax as if you had (if your net assets are above 2m or you have high annual income). The complete answer is here https://www.irs.gov/individuals/international-taxpayers/expatriation-tax

As someone who has gone through that process recently, I can say that it can get complicated in a hurry.

 

[explanade]

I think something like the first 85k of income are exempt from double taxation?

So if you earn money in the US, you don't pay taxes to another country.

And if you earn in another country, you wouldn't be taxed up to whatever the threshold is?

 

[Alan]

I think something like the first 85k of income are exempt from double taxation?

So if you earn money in the US, you don't pay taxes to another country.

And if you earn in another country, you wouldn't be taxed up to whatever the threshold is?

That is not how it works with the UK and USA double taxation agreement.

The USA will exempt earned income up to $100k. Everything else, Pension’s, dividends etc are taxed as if the USC was resident in the USA, i.e. all worldwide income. The UK also taxes all worldwide income. When filing taxes in each country you can claim foreign taxes to claim back excess taxes. In other words you pay the higher of the taxes. For us then USA cap gain taxes are higher than in the UK so my wife claims credits on her UK return. My UK taxes on my pensions are higher in the UK so I claim foreign taxes against our US return.

 

[braumeister]

Also probably worth noting that every country is different in terms of its tax treaty with the US.

United States Income Tax Treaties

 

[explanade]

That is not how it works with the UK and USA double taxation agreement.

The USA will exempt earned income up to $100k. Everything else, Pension’s, dividends etc are taxed as if the USC was resident in the USA, i.e. all worldwide income. The UK also taxes all worldwide income. When filing taxes in each country you can claim foreign taxes to claim back excess taxes. In other words you pay the higher of the taxes. For us then USA cap gain taxes are higher than in the UK so my wife claims credits on her UK return. My UK taxes on my pensions are higher in the UK so I claim foreign taxes against our US return.

Interesting.

I thought London was such a magnet for Russians and Arabs because UK didn't tax worldwide income.


Also is there a difference between someone who becomes a dual citizen vs. merely obtaining a visa for longer than the 90 day visa exemption?

 

[Alan]

Interesting.

I thought London was such a magnet for Russians and Arabs because UK didn't tax worldwide income.


Also is there a difference between someone who becomes a dual citizen vs. merely obtaining a visa for longer than the 90 day visa exemption?

It is based on residency not citizenship, similar to a foreign national working in the USA. The residency test is shown below and can be complicated.

https://www.gov.uk/tax-foreign-income/residence

https://www.gov.uk/government/publi...ce-note-for-statutory-residence-test-srt-rdr3

 

[projectmaximus]

It is based on residency not citizenship, similar to a foreign national working in the USA. The residency test is shown below and can be complicated.

https://www.gov.uk/tax-foreign-income/residence

https://www.gov.uk/government/publi...ce-note-for-statutory-residence-test-srt-rdr3

Yeah so this isn't the same as the US. US is citizenship-based not territorial so if you are a US citizen, no matter where you live, you are taxed on your worldwide income. (after the first $100k exclusion)

 

[bmcgonig]

As someone who has gone through that process recently, I can say that it can get complicated in a hurry.

Like to share the details?

 

[Alan]

Yeah so this isn't the same as the US. US is citizenship-based not territorial so if you are a US citizen, no matter where you live, you are taxed on your worldwide income. (after the first $100k exclusion)

If you read what you quoted you will have seen I clearly said I was only referring to foreign nationals living in the US, nothing about US citizens.

As I also pointed out in another post, for a USC living abroad the first $100k of earned income is excluded. For a USC looking to retire abroad all income including all pensions is taxed by the US, an exception being US SS which is only taxed in the UK. The SS exception may or may not apply to other countries depending on the DTA between those countries. UK SS is fully taxed by the US for a USC living in the UK.

 

[FIREd]

Like to share the details?

I'm not gonna go into specifics. My situation was rather well suited for an expatriation situation. On the day I officially expatriated, I only had 2 kinds of assets: cash (in bank accounts) and my primary residence (which I had just purchased abroad). So the process was rather straight forward for me, even though I fell in the "covered expatriate" category. But adding retirement accounts, pensions, and annuities to the mix would have complicated things a lot more. For a bit of fun, take a look at IRS form 8854.

ETA:
Before expatriation, my only retirement account was a Roth IRA. I had converted my 401K and traditional IRA to the Roth some years prior. In addition, I had been retired for some time and I was harvesting LTCGs to take full advantage of the 0% bracket each year, so I wasn't sitting on large CGs. Overall, it didn't cost me much to convert everything to cash.

 

[projectmaximus]

If you read what you quoted you will have seen I clearly said I was only referring to foreign nationals living in the US, nothing about US citizens.

Sorry, I got ya now!

 

[Ed_The_Gypsy]

That sucks that you can’t invest in US ETF’s, because the US also doesn’t allow their citizens to invest in non-US ETF’s without treating them as PFIC’s. If the UK takes the same approach as the EU towards US ETF’s I’m going to have a lot of thinking to do on investing. (I had converted our MF’s to ETF’s before moving back as the UK recognizes US ETF’s to be the same as UK ETF’s).

When I was working in Baku, Vanguard wouldn't let me do something (sorry, I forgot what). I discovered that if I declared myself to be retired (but I wasn't) they allowed me. This was about 5 years ago.