For many individual’s retirement is a growing concern. Questions like, will I have enough money to retire comfortably? Or where could I afford to live? Are commonplace. The cost of living has increased significantly over the last few years as the effects of inflation has eroded the real value of people’s savings. As such pensioners nest eggs are becoming increasingly strained. As a result of this people are now more than ever exploring their options overseas. This blog will outline the top five tax-friendly destinations for retirees.
If you are looking to spend your retirement in paradise, then look no further than the white sandy beaches of the Bahamas. The Bahamas is known for providing an excellent quality of life for its residents with stunning coastlines, beautiful restaurants, fresh produce and a busy social calendar to suit most tastes. Situated just 50-miles off the East Coast of Florida, the Bahamas is an easy spot to travel to and from.
What’s the tax situation? Quite simply, the Bahamas has no income tax, corporate tax or capital gains tax.
Our next stop on the retirement tour is Portugal. A nation with rich culture, a warm Mediterranean climate and stunning scenery is a favourable destination for many. In the South you will find the Algarve region which is home to beautiful beaches, hospitable communities and some of the world’s best golf courses. As you move further North, you will find the historic cities of Porto and Lisbon which are bursting full of amazing culture, allowing for a relaxing urban lifestyle. Portugal is suitable for a wide variety of budgets with property and living costs comparatively low against its European peers.
You may be eligible to receive up to 10 years of tax benefits, which stands to aid your retirement budget. The Portuguese government has incentivised retirees, by offering Non-habitual Residence (NHR) status, which, if you qualify, makes your income (work, investments, CGT, pensions and rental income) exempt from tax for ten years.
Moving East, our next stop is the teeny-weeny principality of Monaco. Sitting well outside the budget of most, Monaco is the ultimate millionaire’s playground. Nestled on the Mediterranean coast, the city-state of Monaco has built its reputation on its tax benefits. Monaco is considered a tax-haven due to its personal and business tax laws. Monaco has no personal income tax, and that has been the case since 1870. Not only this, Monaco also does not collect capital gains tax, nor does it levy any net wealth taxes. Sounds great, right? Well only if you can afford to live there. According to the New York Times, Monaco is the most expensive property market in the world. Even a modest one-bedroom apartment on the waterfront will set you back well over $6m. If that’s within your price range and you fancy watching the F1 from a yacht, Monaco is a great fit for you.
Staying with the European theme, the next stop is another principality that if you were looking at a map, you would be forgiven for not seeing. Andorra may be of similar size to Monaco, the landscape, however, is significantly different. Bordering both France and Spain located high in the Pyrenees, Andorra is the world’s 17th smallest country. With easy links to Barcelona and Toulouse, Andorra is in a fantastic spot for those wishing to be located in Europe. The scenic mountains of Andorra provide for great snow sports in the winter, along with mountaineering in the summer, great for staying active in your golden years. Andorra’s high standard of living along with its impressive security and fiscal framework make it an excellent spot to retire. Andorra’s low-income tax rate of 10% along with its favourable pension legislation have earned it a place in our top 5.
Our final stop on the tour is Panama. Located in Central America and being home to one of the most important shipping lanes in the world, Panama has also built quite a name in world of retirement planning. Offering stunning coastlines, incredible mountains and awesome jungles, Panama’s 12 months of summer are great for those looking for an outdoorsy lifestyle.
Panama offer a catalogue of benefits and discounts for retirees; this is known as the Pensionado Program. The program is open to application for people with ‘lifetime’ pensions. The program allows for foreigners to obtain legal residency in Panama on the condition that have a guaranteed income for life. The scheme has countless benefits including; one time duty tax exemption for household goods up to a total of $10,000, 50% off entitlement anywhere in the country (movies concerts, sports), 25% of airline tickets. An annual income of under 11,000USD is tax free, with income above that rate is just 15% up the 50,000USD mark.