What countries offer the best tax benefits for potential retirees/expats that reside there?
Are there any countries that I should look at or any that I should avoid in relation to incentives/packages for retirees?
Bonnie Hayman – Nicaragua Correspondent
Nicaragua offers great tax and retiree benefits. If you purchase a house, the real estate taxes are unbelievable low compared to what they are in the U.S. and Canada. (Example: 2 bedroom/2 bath ocean view home on an acre of land – $141 USD per year.) Nicaragua does NOT tax you on any income earned in any other country.
If you wanted to open a business, the government has instituted new laws in which you can claim sweeping exemptions like no property tax on purchased property for 10 years, no Nicaraguan income tax for 10 years, etc.
And once you get your retiree resident’s card, you have additional benefits:
Bring in a car from the U.S. once every 5 years duty free.
Bring $20,000 of personal goods in once – duty free.
Bring $50,000 of building materials for your house or business and not pay sales tax.
Open a bank account
Buy on credit
Buy a smartphone with plan
Own a firearm
I hope this answers some of your questions. Nicaragua is a wonderful place to retire.
Jason Holland – Roving Latin America Correspondent
Unfortunately, Costa Rica did away with the big incentive programs it used to have for retirees years ago. But there are plenty of benefits to be aware of.
Once you are a legal resident, you join the Caja, which is the government-run universal health care system. You pay a monthly fee based on income and get free care after that, including doctor visits, specialist visits, prescriptions, testing, surgery… everything. That can be a big savings.
You won’t be taxed on your income in Costa Rica unless you have a business based in the country. Income from online businesses or freelancing for clients outside Costa Rica is not taxed. And property taxes are just 0.25% of the assessed value of your home – paid annually.
And for those residents over age 65, there is a program called “Gold Citizen” that gives you discounts on groceries, eyeglasses, clothing, etc. There are thousands of participating retailers across the country. You also get free local public transportation and discounts on museum tickets and things like that.
Edd Staton – Cuenca Correspondent
A huge tax advantage in Ecuador involves ownership of property. Property taxes are amazingly low – I’ve never heard of anyone paying more than $100/year. Residents 65 and older are eligible for lots of discounts. All public transportation inside the country’s borders are half price as are admission prices for many entertainment events. International airfare is discounted an average of 25-30%. Seniors are rebated their monthly sales tax, and if you own your residence you also qualify for half price utilities and a free land line telephone.
Keith Hockton – Malaysia Correspondent
Malaysia doesn’t offer tax breaks but none of your income generated outside Malaysia is taxed here. So effectively you can bring in what you like and you will not be taxed on it.
Additionally interest earned on your investments here are not taxed either. And the cash rate here is currently 3%.
That being said you have to have MM2H status (10 year visa) to qualify. When and if you take that road and you have been accepted you can ship your household goods tax free to Malaysia, you can buy an imported car of your choice tax free, or bring in a car with you tax free.
Also the money that you must leave on deposit, in an interest bearing account, the interest earned is also tax free.
Hope this helps.
David Hammond – Uruguay Correspondent
Uruguay has personal income tax, but it only applies to Uruguayan-source income, including rental income of properties inside Uruguay. There is also a flat tax of 12% imposed on interest and dividend income from abroad, which may apply to both Uruguayans and foreign residents living in Uruguay, although you can exclude any tax paid to other countries (so, Uruguay does not double tax you).
There are no specific tax incentives offered to retirees in Uruguay.
The problem in Uruguay for several years has been it’s ability to process all the residency applications coming in a timely manner. There is promise this has started improving with a streamlining of the sytem in place.
Glynna Prentice – Mexico and Spain Correspondent
Mexico doesn’t offer specific tax benefits for foreign residents, but nevertheless, there are some good benefits.
Property taxes, for instance, are very low in general; it’s unusual to pay more than a few hundred dollars a year on property taxes. And if you’re a legal resident and at least 60 years ole, you can apply for a pensioner’s discount card, and, depending on the Mexican state you live in, you may get a hefty discount off those already-low property taxes (as well as off many other tings).
Amanda Walkins – Honduras Correspondent
Honduras offers some pretty great incentives for retirees to become residents here. If you move to Roatan as a retiree and gain residency, you are entitled to a tax-free shipment of household goods as well as the tax-free import of a vehicle. Gaining residency as a retiree is a fairly simple and affordable process. Simply prove you have a monthly income of $1,500 from any private or public source back home, and you can apply for residency. It typically only costs about $2,500 with all legal and application fees included, and usually only takes about 6 months in total. Beyond the specific retiree benefits, property taxes are low here and the general cost of living is very affordable. The retiree expat community is incredibly welcoming and very socially active on Roatan as well.
Hope that helps!
Jessica Ramesch – Panama Correspondent
Thanks for posting. As International Living’s Panama Editor I can comment on Panama. A great many of the expats resident in Panama are here on the Pensionado program, which rather than tax breaks offers members the same discounts that retired Panamanian citizens enjoy. These discounts cover a wide range of expenses, from health care and utility bills to travel and entertainment.
Income tax in Panama is territorial, which means you do not pay tax on income generated outside Panamanian territory (nor are savings accounts taxed here).
Overall, Panama is known for having a very low tax burden. Of course, as you can see from the other responses from my colleagues, there are plenty of countries where you will have access to a low cost of living and/or tax breaks/financial incentives…so you can choose a destination that’s cost effective but that you also really love.
Please remember, though, that no matter where you move, you may still have tax obligations back home…in your country of citizenship or any countries in which you maintain resident status.
Hope this helps.
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