US Taxes News and Information | Retirement Abroad 1

How to Get A Golden Visa: Your Complete Guide to 5 Popular Programs

Katelynn Minott, CPA & CEO — Fri, 02 Feb 2024 19:46:19 +0000

With the term golden visa increasingly appearing in the media, on social networks, and in everyday conversations, you may very well have already heard it before — and for a good reason. Golden visas are an excellent opportunity for investors looking to gain residence (and sometimes even citizenship) abroad.

But how exactly do you apply for a golden visa? We’ll go over the requirements, processes, and timelines for a few of the most popular options below. While submitting an application and navigating the tax implications of residence abroad often require the assistance of an immigration lawyer and tax professional, our guide below serves as a great jumping-off point.

Understanding the Golden Visa Landscape

Before we dive into detailed questions like “How much is the Dubai golden visa,” let’s start with a brief overview of golden visas: what they are, why they’re beneficial, and how they differ compared to other pathways to residency and citizenship.

The term “golden visa” is an unofficial one, used to refer to visas that offer residence in exchange for making a substantial investment in a given country. Governments that offer golden visa programs view them as a win-win: Investors bring in tax revenue, economic opportunities, and local spending to their countries, while investors receive visas that allow them to work and do business in them.

Immigration by investment is an attractive alternative to traditional visa options like work visas, which require job offers in a given country; reunification visas, which require family ties to a given country; or student visas, which often restrict holders’ ability to engage in professional activities in that country.

Benefits of Golden Visas

Some of the top benefits of holding a golden visa include the ability to:

Expand your horizons: Living (or at least spending a significant amount of time) in another country allows you to immerse yourself in another culture, meet new people, and even learn a different language.
Access social infrastructure: Golden visas often provide you with access to a country’s social benefits, like healthcare, public schools for children, and participation in the pension system.
Travel with ease: Holding a residence permit in one country typically makes it easier to visit the countries with which they have a travel agreement. Being based out of a centrally-located country will also make it cheaper and easier to visit nearby countries — it’s a lot quicker and more affordable to fly to Paris when you live in Portugal vs. New York, for example.
Open up new economic opportunities: With the ability to work and do business in a given country, you gain access to new investment opportunities, business ventures, client bases, etc.
Bring family: Immediate family members of a golden visa holder — like spouses or partners, minor children, and sometimes parents — can often apply for their own visas as dependents.
Golden residency & golden citizenship: Many countries with golden visas offer holders a pathway to citizenship through naturalization after living there for a certain number of years. Some countries, like Turkey, even offer direct citizenship by investment programs.
Tax benefits: Some golden visas offer favorable tax treatment for holders, such as taxation at below-standard rates or excluding foreign income from taxation.

Golden Visa Eligibility & Requirements

Each country has its own rules for golden visa eligibility, but frequently, golden visas require that you:

Be 18 years or older
Be in good health
Have a clean criminal record
Make a minimum investment of a certain dollar amount, such as in the form of:
- Real estate
- Capital transfer
- Government bonds
- Capital injection into a business based out of that country

Detailed Look at Golden Visa Programs: Top 5 Countries

🇬🇷 Greece Golden Visa

Overview

Eligibility: Open to non-EU citizens 18 years or older in good health

Duration: 5 years

Path to naturalization: 5 years to apply for permanent residence, 7 years to apply for citizenship

Dependents: Spouses/partners, children under 21, & parents may apply as dependents

Qualifying investment requirements: As low as €250,000 (~$272,000) to as much as €800,000 (~$870,000) depending on investment type (e.g., real estate, bank deposit, capital contribution, shares & bonds)

Notable perks: No need to spend a minimum number of days in Greece in order to maintain a visa

A note:

Keep in mind that the US government typically taxes foreign mutual funds harshly.

Application Process & Timeline

To apply for Greece’s golden visa, you must:

Secure an AFM (Greek tax number) & open a Greek bank account
Make your investment
Gather all required documents
- Valid passport & copy
- Application form
- 4 passport photos
- Private health insurance policy
- Fees:
  - €2,000 (~$2,175) for application (plus €150 (~$163) for each dependent)
  - €16 (~$17.5) for the residence permit
- Notarized proof of qualifying investment (specific required documents vary by investment)
Schedule & attend an appointment to submit your application & have biometrics taken at an immigration office in Greece.
Receive approval & collect your visa.

After submitting your application, you will typically hear back within three to five months.

Learn more: Your Guide to the Greece Golden Visa: Its Appeal, Requirements, & More

🇵🇹 Portugal Golden Visa

Overview

Eligibility: Open to non-EU citizens 18 years or older with a clean criminal record

Duration: 2 years, with the ability to renew for another 3 years

Path to naturalization: 5 years to apply for permanent residence or citizenship

Dependents: Spouses/partners, children under 18 (or children under 26 enrolled as full-time students), & parents may apply as dependents

Qualifying investment requirements: As low as €200,000 (~$217,000) to as much as €500,000 (~$544,000) depending on the type of investment (e.g., donation to a cultural project, contribution toward scientific research, capital contribution)

Notable perks: Only have to spend 7 days per year in Portugal to maintain a visa; among the quickest paths to citizenship in Europe

Application Process & Timeline

To apply for Portugal’s golden visa, you must:

Secure an NIF (Portuguese tax number) & open a Portuguese bank account
Make your investment
Gather all required documents
- Valid passport & copy
- Clean criminal background check from your home country
- Authorization for Portuguese immigration officials to perform a criminal background check
- Proof of insurance coverage (private or public)
- Good standing certificate from Portuguese tax and social security authorities
- Proof of qualifying investment (specific required documents vary by investment)
- Sworn statement that you will maintain qualifying investment for the entire duration of your visa
- Fees:
  - Processing fee of €533 (~$580) (plus €84 (~$91) per dependent)
Submit your application online
Receive initial approval
Schedule & attend an appointment to be interviewed & have biometrics taken at an immigration office in Portugal.
Upon final approval, pay a fee of €5,325 (~$5,792)
Receive your visa

It typically takes three to six months to receive initial approval on the online application, three weeks to three months to schedule and attend an in-person immigration appointment, and 10 days to receive final approval afterward.

Learn more: Taxes In Portugal for US Expats: Everything You Need To Know

🇨🇦 Canada Golden Visa

Overview

Eligibility: Open to investors with a clean criminal record

Duration: Up to 3 years

Path to naturalization: 1-2 years for permanent residence, 3 years for citizenship

Dependents: Spouses/partners and unmarried children under 22 may apply as dependents.

Qualifying investment requirements: $250,000 (~$187,000) to $350,000 CAD (~$224,000) for an Entrepreneur visa; at least $200,000 CAD (~$150,000) for the Start-Up Visa

Notable perks: Quick path to permanent residence and citizenship

B!T note: Canada has two visas that fall under the golden visa category: the Entrepreneur visa (C 11) and the Start-Up Visa (SUV), both of which are more hands-on than traditional golden visas in that they require you to start, own, or operate a business.

Application Process & Timeline

The process for the C 11 visa vs. the SUV may vary slightly, but generally, you must:

Start a new business or buy and/or invest in an existing business in Canada
Prepare a business plan
Prepare an execution plan demonstrating intent to start or maintain operations (e.g., open a Canadian bank account, choose an office location, etc.)
Gather all required documents:
- Valid passport & copy
- Passport-size photos
- Completed application form
- Medical exam certificate
- Copy of degree
- Proof of sufficient funds
- Documents related to business (e.g., resume, Labour Market Impact Assessment, proof of ownership/equity, letters of support from Canadian business organizations)
- Support documents from designated Canadian business organizations
- Fees (variable)
Receive approval & collect your visa

After submitting your Canadian investment visa application, you will typically hear back within one to three months.

Learn more: Filing Taxes in Canada: The Ultimate US Expat Guide

🇦🇪 UAE/Dubai Golden Visa

Overview

Eligibility: Open to investors with a clean criminal record

Duration: 5 to 10 years, depending on immigration category

Path to naturalization: 5-10 years for permanent residence, 30 years for citizenship

Dependents: Spouses, children of any age, parents, & other family members (on a case-by-case basis) may apply as dependents

Qualifying investment requirements: At least 2 million AED (~$545,000) toward a public investment or real estate property

Notable perks: No personal income taxes

Application Process & Timeline

To apply for the UAE’s golden visa, you must:

Make a qualifying investment
Submit application & required documents
- Valid passport & copy
- Passport photos
- Proof of qualifying investment (e.g., letter from investment fund, letter from land department confirming real estate purchase)
- Fees:
  - 9,684.75 AED (~$2,637) for principal, 5,668.50 AED (~$1,543) for additional family members
Undergo a medical exam in UAE.
Receive approval & collect visa.

The UAE processes golden visa applications very quickly — typically within seven to 10 business days.

Learn more: How to Move to Dubai from the USA: Visa Options for Freelancers

🇪🇸 Spain Golden Visa

Overview

Eligibility: Open to non-EU citizens 18 years or older with a clean criminal record

Duration: 1 year; renewable indefinitely every 2 years after

Path to naturalization: 5 years to permanent residence, 10 years to citizenship

Dependents: Spouses/partners, children under 18, & dependent parents may apply as dependents

Qualifying investment requirements: As little as €500,000 (~$544,000) to as much as €2 million (~$2,175,470), depending on investment type (e.g., real estate, public debt, shares, bank deposit)

Notable perks: Only have to visit Spain once a year to maintain the permit

Application Process & Timeline

To apply for Spain’s golden visa, you must:

Obtain a NIE (Spanish tax number) & open a Spanish bank account.
Make your investment
Gather all required documents
- Valid passport & copy
- Application form
- Passport photo
- Proof of qualifying investment (e.g., declaration of investment, bank certificate, favorable report from Economic & Commercial Office)
- Proof of sufficient funds
- A clean criminal background check
- Private health insurance policy
- Fee of $190 (~$207)
Submit the application in person at your nearest Consular Office (may require an appointment) or through an authorized legal representative.
Receive approval & collect visa.

After submitting your application, the government will respond within 20 working days.

Learn more: Can Americans Buy Property in Spain? (Short Answer: Yes!)

Role of tax experts in golden visa applications

While obtaining a golden visa brings many benefits, it can also complicate your taxes. All American citizens and permanent residents who meet the minimum income reporting requirements — no matter where in the world they live — must file a US tax return and may need to pay taxes as well. It may also trigger or alter US reporting requirements, such as for the FBAR or Form 8938.

If you hold a golden visa, and especially if you reside in another country, you may have to file and pay taxes to that government as well — which adds an additional layer of complexity to the matter. To avoid double taxation, ensure compliance, and minimize your tax liability, it’s best to consult a tax professional.

“Exceptional service. The IRS made a mistake with ‘finished’ returns from previous years, and Bright!Tax helped me fix the problem quickly, avoiding headaches and stress. The company is a Godsend for me, as an expat.”

– Katharine R, Portugal 🇵🇹

References:

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The post How to Get A Golden Visa: Your Complete Guide to 5 Popular Programs appeared first on Bright!Tax Expat Tax Services.

Retire in Brazil: Visas, Healthcare, Taxes, & More

Katelynn Minott, CPA & CEO — Thu, 01 Feb 2024 15:22:13 +0000

If you’re looking for an adventurous retirement destination, you might want to retire in Brazil. Beyond its beautiful beaches, warm weather, and affordability, however, Brazil also offers incredible cuisine, lively celebrations, and gorgeous natural vistas. And with over 85,000 Americans already living in Brazil, you’ll be in good company.

But what exactly does retiring in Brazil look like, and how can you do it? Below, we’ll walk through the need-to-know details.

Pros & cons of retiring in Brazil

As with any place, living in Brazil comes with benefits and potential challenges.

Benefits of retiring in Brazil

Some of the pros of retiring in Brazil include the following:

Climate

Brazil has equatorial and tropical climates generally characterized by hot summers and mild winters — perfect for those who want to avoid the cold.

Natural beauty

Brazil’s beaches are the stuff of legends, with sites like Ipanema, Copacabana, and Baia do Sancho regularly named among the world’s best. The country also boasts lush rainforests, stunning waterfalls, awe-inspiring mountains, enchanting caves, and white-sand dunes.

Cost of living

By some estimates, the cost of living in Brazil is about 70% less expensive than that of the United States, with significantly lower prices for groceries, restaurants, real estate, healthcare costs, and more.

Culture

Any way you slice it, Brazil has a rich and diverse culture. Dishes like feijoada (black bean stew), pão de queijo (cheesy bread made with tapioca starch), and Brazilian barbecue have become popular the world over, as have musical genres like bossa nova and dance styles like samba. Other points of national pride in the country include their indigenous crafts, carnival celebrations, and futebol games.

Potential challenges of retiring in Brazil

Of course, living in Brazil is not without its challenges. Some potential drawbacks may include:

Learning Portuguese

English is not widely spoken in Brazil, with just 1% of the population fluent in it, and another 5% proficient. While those numbers are undoubtedly higher in areas popular among tourists and expats, many foreigners find that learning Portuguese makes their day-to-day lives a lot easier.

Safety in Brazil

Brazil does have a higher level of crime than the US, although violent crime tends to be concentrated in certain areas. The favelas — low-income, underserved settlements common in urban areas — of São Paulo and Rio de Janeiro are particularly well-known for high rates of violent crime like armed robbery. In areas frequented by expats and tourists, however, crime tends to be petty (e.g., pickpocketing) rather than violent. And some parts of Brazil are, in fact, quite safe.

That being said, it’s always worth exercising an extra degree of caution in Brazil: Keep valuables at home, dress humbly, don’t walk alone at night, etc.

Infrastructure

A history of economic instability and political corruption has resulted in relatively poor infrastructure in Brazil — the country was ranked 123rd out of 144 countries in a World Economic Forum report on the quality and level of infrastructure development. This is one of the major challenges President Lula aims to combat with his $200 billion USD infrastructure plan.

Weather

Those who are sensitive to heat and humidity may struggle with hot, muggy Brazilian summers. Most places in Brazil also have a months-long rainy season, although rainfall tends to be short and sporadic.

Healthcare in Brazil for US Expats

Brazil offers both public and private healthcare systems. The universal healthcare system covers all Brazilians and generally offers high-quality care, although the system sometimes struggles with overcrowding, long wait times, and lower quality care/accessibility in rural or less developed areas.

Nearly 25% of Brazilians opt for private health insurance, which typically allows them to access nicer, more advanced facilities and receive care more quickly. When it comes to private healthcare plans in Brazil, expats can choose between international plans, local Brazilian plans, or travel insurance plans. Costs vary widely depending on the company, level of coverage, your age, and your health, but plans are still more affordable than US health insurance.

Best places to retire in Brazil

Brazil is the fifth-largest country in the world. It gives expats a wide variety of geographies, regions, and climates to choose from. A few of the top destinations for retirees in particular include:

Retiring in Florianópolis

Florianópolis — or Floripa, as locals affectionately call it — is a unique city, divided between the mainland on Brazil’s southern coast and the western part of Santa Catarina Island. This charming beach town offers plenty of adventure, like surfing and hiking, but also secluded natural areas great for relaxing. It also has both a bustling, modern downtown and quaint, historical nearby villages. But one of its biggest draws is its food, characterized by delicious seafood dishes like fresh oysters, moqueca (coconut milk fish stew), and all kinds of shrimp.

Retiring in Curitiba

Curitiba, a city in the southern state of Paraná, is sometimes referred to as the most European city in Brazil due to its modern urban planning, sprawling green parks, and excellent public transportation system. Besides its safety and walkability, Curitiba is also lauded for its arts and cultural scene, with scores of art galleries, museums, and theaters to choose from. Make sure to go for a stroll in the Botanical Garden, catch a play in the Wire Opera House, and visit the avant-garde Oscar Niemeyer Museum.

Retiring in Fortaleza

Fortaleza, a coastal city in the northeast of Brazil, boasts white-sand beaches, crystal-clear waters, and warm, sunny weather year-round. History buffs will appreciate the city’s colonial architecture and museums, while shoppers will enjoy the many high-end malls and vibrant street markets. A blend of indigenous, African, and Portuguese influences, Fortaleza’s diverse culture is known for its unique cuisine, forró music, and native crafts.

How to retire in Brazil

Brazilian immigration law only allows Americans to stay in the country without a visa for up to 90 days in a calendar year, so retirees looking to live in Brazil full-time will need to secure a visa before their move. Fortunately, the country offers a dedicated retirement visa.

Brazil retirement visa

Brazil’s retirement visa allows holders to stay in the country for up to one year and can be renewed for one additional year, after which point holders can apply for permanent residency in Brazil. After four years of permanent residency, you can apply for citizenship.

To apply for this visa, you need a:

Monthly transfer of at least $2,000 USD to a Brazilian bank account
Clean criminal background check
Private health insurance

Pro tip:

To bring dependents with you, you’ll need additional income — unfortunately, Brazil’s government has not specified the exact requirements, so you’ll need to contact the nearest Brazilian embassy or consulate to learn more.

How long does it take to get a visa to live in Brazil?

Once you have submitted your application for the Brazilian retirement visa, you should hear back in about two to four weeks. Keep in mind, though, that it can take several weeks or more to gather all of the required documents for the application:

Valid passport
Proof of residence
Completed application form
Passport photo
Visa fee of $290 USD
Birth certificate (original and copy)
FBI background check
Private health insurance
Flight itinerary
Proof of retirement and ability to transfer funds
Proof of monthly income

Related: The 5 Best Places to Retire in South America for US Expats

How much does it cost to retire in Brazil?

Given that the average monthly income in Brazil is R$1,625 (~$331 USD), it stands to reason that the cost of living would be lower than it is in the US. While your budget will, of course, depend on your specific location and lifestyle, expats report their cost of living to be between $800 and $1,900 USD per month.

To qualify for the retirement visa, it’s worth noting, though…

These figures will fluctuate based on the strength of the US dollar to the Brazilian real.
You’ll need to be able to transfer at least $2,000 per month to a Brazilian bank account.

Pro tip:

Traditional wire transfer services can be slow and expensive, so most expats opt for an online transfer service like Wise.

The average US social security check is $1,907 USD per month. For comparison, pensions in Brazil range from a minimum of R$1,320 (~$270 USD) per month to a maximum of R$ 7,507.49 (~$1,527 USD).

While it is possible to live on less than the average social security check in many places in Brazil, it’s safer to have income from additional sources (e.g. 401ks, IRAs, rental income, etc.). Keep in mind, too, that US social security distributions are subject to taxation in Brazil.

Do Americans pay tax in Brazil?

Many Americans living in Brazil as retirees are subject to taxes by both the Brazilian and US governments. But don’t worry — that doesn’t necessarily mean you’ll be taxed on the same income twice. Here’s how it works:

Brazil taxes

Americans on non-employment-related visas who spend at least 183 days in Brazil in a given year meet the definition of tax residency. They are taxed on their global income at rates of 0% to 27.5%, depending on their income. Americans who don’t meet the definition of tax residency, on the other hand, are taxed only on Brazilian-sourced income.

Unfortunately, there is no Brazil/US tax treaty. But there are still ways to avoid double taxation that we’ll go into below. What’s more, there is a Brazil/US totalization agreement in place, which prevents Americans living in Brazil from having to pay social security taxes in both countries.

Related: US Expat Taxes for Americans Living in Brazil – What You Need to Know

US Taxes

Due to the US’s unique citizenship-based tax system, all US citizens and permanent residents — even those living abroad — are subject to taxation on their worldwide income as long as they meet the minimum income thresholds.

There are tax breaks that can offer relief for expat retirees, however, such as:

The Foreign Tax Credit (FTC): The FTC allows US expats to essentially subtract what they have paid in income taxes to a foreign government from their US tax bill (though, as with all things US-tax related, it’s not quite that simple)
The Foreign Housing Exclusion (FHE): Expats who meet either the Physical Presence Test or the Bona Fide Residence Test can use the FHE to write off qualifying housing expenses like rent, utilities, property insurance, and more

And don’t forget that:

Withdrawals from post-tax retirement accounts, like Roth IRAs and Roth 401(k)s, are tax-free.
Only up to 85% of your social security payments are subject to taxation.

Retirees should be aware, however, that living abroad may trigger additional reporting requirements. As a quick example, consider the Foreign Bank Account Report (FBAR) and Form 8938.

References:

The post Retire in Brazil: Visas, Healthcare, Taxes, & More appeared first on Bright!Tax Expat Tax Services.

Retire in Colombia: Visas, Healthcare, Taxes, & More

Katelynn Minott, CPA & CEO — Tue, 24 Oct 2023 11:58:25 +0000

Thanks to its dedicated retirement visa, pleasant year-round climate, and rich culture and history, Colombia is becoming a top retirement destination for many Americans. Retiring in Colombia can be a great fit for some people, but of course, it’s important to do some research beforehand.

Read our guide below for more info on why Colombia is becoming a US retiree hotspot, what the visa application involves, which healthcare options are available, and more.

The allure of Colombia for Americans

Americans have long been captivated by Colombia, both for its positive attributes, such as world-renowned coffee, and its challenging past, including the cartel activity and high crime rates of the 80s and 90s.

Encouragingly, Colombia has undergone a transformation over the past two decades. Government efforts to establish peace with guerilla groups, reduce crime, and improve infrastructure have been largely successful. In turn, violent crime has fallen dramatically.

For years, Colombia has been recognized as a haven for backpackers. However, the country’s push to innovate in the past few years has also boosted Medellin’s international standing, winning over many foreigners due to its innovative spirit, cultural scene, and award-winning public transportation.

Given Medellin’s past as the epicenter of the country’s cartel activity, its progress is both significant and commendable. Moreover, as Colombia becomes a more popular travel destination, it is also attracting more long-term expats, including retirees.

Related: The 5 Best Places to Retire in South America for US Expats

Benefits of retiring in Colombia

Retirees are drawn to Colombia for several reasons, including:

Cost of living: Several estimates put Colombia’s cost of living at about 70% less than that of the United States

Climate: Low-lying areas of Colombia generally have a warm, tropical climate, while elevated regions enjoy mild weather year-round

Welcoming environment: Colombia is well-known for its friendly locals, while a robust expat scene facilitates integration into the community

Beauty: From pristine beaches to the Andes Mountains to lush rainforests, there’s no shortage of awe-inspiring sites in Colombia

Healthcare: Colombia has an excellent healthcare system that offers high quality at low costs

Culture: A diverse population and fascinating history result in a rich culture known for its art, music, and dance

Travel: Colombia is a great base to travel out of, with international airports in 13 cities

Time Zone: Colombia’s geographic location puts it within the US central time zone, making it easy to stay in touch with friends and family back home

Best places to retire in Colombia

While Colombia boasts numerous captivating cities and towns, here are a few top suggestions for Americans considering retirement.

Retiring in Medellin: A lively and cosmopolitan city

Colombian cities, especially Medellin, once had a negative reputation. Today, however, Medellin is a hub for innovation and creativity. Residents of Colombia’s second-largest city enjoy temperate weather year-round, earning it the nickname the “City of Eternal Spring.”

Gorgeous mountain views, architecture, and street art make it a visual treat, while local markets, excellent museums, and world-class restaurants ensure you have plenty to do.

Retiring in Santa Marta: A quiet coastal option

If you prefer a laid-back vibe over the hustle and bustle of the big city, Santa Marta might be just the place for you. White sand beaches with calm, crystal-clear waters lend this port city a relaxed, coastal, and authentically Caribbean feeling. The historic city center, on the other hand, offers beautiful colonial architecture and lively streets, while the nearby Tayrona National Park provides an idyllic natural retreat.

Retiring in Cartagena: A vibrant coastal option

A popular and lively expat destination, Cartagena is a favorite choice for US citizens looking to lean into an established retired expat community. The city is bursting with color and things to do, thanks to an established tourism scene that entices expats and travelers alike with sunset boat rides, food tours, and, of course, salsa dancing. Due to its geographic location, Cartagena is also extremely accessible for US citizens in Florida, with flights from Miami and Fort Lauderdale taking only two hours.

Retiring in Cali: The destination for Colombian culture aficionados

Cali exudes energy and passion, which makes sense given its status as the salsa capital of the world. Whether you’re walking through the city streets or in a bar, you’ll hear salsa music and see salsa dancing just about anywhere you go. Add to that a tropical climate, an abundance of greenery, and a burgeoning culinary scene, and it’s no wonder that Cali has become a go-to retirement destination for expats.

Retiring in Salento: Where a love of natural beauty fosters expat community

With rolling green hills, world-renowned coffee, and old-world charm, Salento draws travelers and expats the world over. This small but colorful town tucked in the Central Cordillera mountain range boasts walkable neighborhoods, safety, and a tranquil pace of life. Still, you can spend hours exploring the cozy cafés, craftwork vendors, and bustling central plaza.

Ask anyone who lives there, though, and they’ll say the people are the best thing about Salento. If you want to live in a place where locals and expats form one tight-knit community, you’d be hard-pressed to find a better destination than Salento.

Related: Retire in Uruguay: Visas, Healthcare, Taxes, & More

Colombia retirement visa for US citizens

Americans seeking to retire in Colombia will likely find the Pensionado visa to be the best visa pathway.

Pensionado visa

While Colombia’s former TP-7 pensionado (pensioner’s) visa was only valid for one year, the current M-11 pensionado visa lasts three years. And the pensionado visa requirements are fairly lax — to qualify for it, all you have to do is:

Earn at least 3x the minimum wage — about $830 USD total — per month in passive income, which includes retirement distributions, investment income, and any other income you don’t receive from actively working
Dependents may require additional income; contact your nearest consulate or embassy to learn more

Have a clean criminal record
Provide a health certificate proving reasonably good health
Purchase health insurance for the duration of your time in Colombia

After five years of living in Colombia with an M visa, you can apply for residence.

Note: While Ecuador is known for its accessible retirement visa, Colombia’s Pensionado visa presents a compelling and potentially even more affordable alternative.

How long does it take to get a visa to live in Colombia?

Typically, it takes about a month to hear a response after submitting your visa.¹ Keep in mind, though, that you should factor in some additional time to gather the required application documents before submitting and receiving the physical visa afterward.

Healthcare in Colombia for US expats

Retirees thinking about moving to Colombia will be encouraged to hear that healthcare in Colombia is excellent. They have the best hospitals in South America, and on an international scale, their healthcare system ranks as one of the world’s best.² Of course, like most other countries, larger cities like Bogota, Cali, and Medellin tend to have better healthcare than rural areas, so individual health needs should be considered a major factor when selecting a Colombian city or region for retirement.

While residents and citizens have access to government-funded universal healthcare, M visa holders must purchase private health insurance for the duration of their visa. Private Colombian plans start at about $150 USD per month,³ although you can also choose from nomad health plans that cover you in multiple countries — such as SafetyWing — if you plan on traveling a lot.

Health precautions in Colombia

Every country has its health risks. In Colombia, these include:^4,5

Illnesses spread by mosquitoes (Dengue fever, Zika virus, malaria, yellow fever) or animals (rabies, Hantavirus)
Illness from contaminated food or water (typhoid, leptospirosis, Hepatitis A)
Respiratory illnesses (tuberculosis, diphtheria)

As such, it’s important to stay up-to-date on your vaccines, talk with your doctor, and research preventative care measures before visiting Colombia.

How much does it cost to retire in Colombia?

Given that the average income in Colombia ($22,248 USD) is much lower than in the US ($77,463 USD), it’s logical that the cost of living is also reduced. US retirees can generally live comfortably on $1,500 to $2,000 USD per month or even less depending on their lifestyle and location.⁶

Most retirees open a bank account in Colombia, although digital banks like N26 and Ally are catching on in popularity. If you retain ties with US financial institutions, you’ll want to look into a currency conversion platform like Wise to quickly and conveniently transfer money between international accounts.

Retiring in Colombia on Social Security: Considerations

The average Social Security check is about $1,780 USD per month,⁷ making it possible for retirees to live off of their Social Security income alone in Colombia (although a little extra per month can provide some additional creature comforts). What’s more, recently passed legislation allows tax residents to exempt the first ~$10,076 USD in pension income from taxation.⁸

Related: Can US Expats Collect Social Security Benefits?

Do Americans pay tax in Colombia?

Because there’s no tax treaty between the US and Colombia, Americans living in Colombia as retirees are subject to taxes by both the Colombia and US governments. Don’t worry too much, though — that doesn’t necessarily mean you’ll face double taxes on the same income.

Colombia Taxes

Colombia considers anyone who spends 183 days or more in the country to be a tax resident. You’ll likely have to file a tax return (Declaración de Renta) as well if you meet any of the following conditions:*

Earned more than 59,377,000 COP (~$14,110 USD)
Spent/charged more than 59,377,000 COP (~$14,110 USD) to credit cards
Deposited/invested more than 59,377,000 COP (~$14,110 USD)
Had a net worth of more than 190,854,000 COP (~$45,353 USD) by the end of the year⁹

*All figures as of October 2023

Income tax rates in Colombia as of 2023 are as follows:¹⁰

Taxable Income Band (COP)	Taxable Income Band (USD)	Marginal Tax Rate
0 – 1,090 UVT	~$0 – $10,249	0%
1,090 – 1,700 UVT	~$10,250 – $15,985	19%
1,700 – 4,100 UVT	~$15,986 – $38,547	28%
4,100 – 8,670 UVT	~$38,548 – $81,512	33%
8,670 – 18,970 UVT	~$81,513 – $178,336	35%
18,970 – 31,000 UVT	~$178,337 – $291,391	37%
31,000+ UVT	~$291,392+	39%

Additional Colombian taxes you may encounter include:¹⁰

Property taxes: 0.5% to 1.2%
Capital gains taxes: 15%
VAT: 19%, with select items at 5% or 0%

Read more: Taxes in Colombia for US Expats: The Complete Guide

US Taxes

All US citizens and permanent residents, including those residing abroad, must pay taxes on their global income if they meet the minimum income thresholds. There are tax breaks that can offer relief for expat retirees, however, such as:

Foreign Tax Credit (FTC): The Foreign Tax Credit allows US expats to essentially subtract what they have paid in income taxes to a foreign government from what they owe to the US government (though as with all things US-tax related, it’s not quite that simple)
Keep in mind, too, that:
- Withdrawals from post-tax retirement accounts, like Roth IRAs and Roth 401(k)s, are tax-free on your US tax return
- Only up to 85% of your social security payments are subject to taxation in the US

References:

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The post Retire in Colombia: Visas, Healthcare, Taxes, & More appeared first on Bright!Tax Expat Tax Services.

The 5 Best Places to Retire in South America for US Expats

Katelynn Minott, CPA & CEO — Sat, 23 Sep 2023 20:49:20 +0000

As retirement nears, priorities such as quality of life and affordability factor heavily into decisions regarding where to retire, leading to researching the best place to retire in South America.

South American countries feature prominently on the list of possible places to retire due to their affordability, the quality of healthcare in certain countries, and the number of expat retirees already there.

Below, we’ve researched some of the best places to retire in South America, digging into the finer details of cities such as Mendoza, Argentina, and Cuenca, Ecuador, to help you make your final decision.

While there are many considerations to take into account when considering international living, many cities in South America provide US expats with an incredible opportunity to live comfortably and enjoy a quality of life that may be out of reach for them within the United States.

Let’s dig in and explore some great options!

How we identified South American cities for retirement

To come up with our list of the best places to retire in South America, we looked at a number of different factors. For example, the ease of obtaining a visa, affordable prices, quality of medical care, safety, presence of an expat community, and the existence of tax treaties (which make it easier to file your return from abroad).

Keep in mind that the best place to retire in South America largely depends on the individual, so the following list does not reflect any particular order.

A quick note on tax residence:

You’ll see the term “tax resident” used throughout this article. Tax residency is generally established when someone spends 183 days or more in a certain country, although there are other contributing factors. When in doubt, check with your CPA.

Cuenca, Ecuador

With mild weather year-round, storybook architecture, an affordable cost of living, modern infrastructure, and a low crime rate, it’s no wonder that US expats have made Cuenca the top spot to retire in the country. Add to that the fact that the city is a UNESCO-designated World Heritage site, and including it on our list was a must.

Does Ecuador have a retirement visa?

Yes! Known as the jubilado (retired) visa, Ecuador’s retirement visa initially lasts two years and can be renewed or converted to a permanent residence permit.

To be eligible, you must:

Earn at least 3x the minimum wage per month in passive income (~$1,350 USD total)
- Extra $250 USD per month for each dependent you bring along
Have a clean criminal record
Purchase health insurance for at least your first 90 days in the country¹

Important callout on the minimum income required to retire in Ecuador:

Previously, it was possible to retire in Ecuador on $800 per month. However, this is no longer possible due to the increased income requirement, but the new threshold is still quite attainable!

How much does it cost to live in Cuenca?

Here are some average prices for common expenses, according to Numbeo:²

Monthly rent: ~$423 USD for a 1 BR apartment in the city center
Utility bills: ~$38 USD per month
Meal for 2: ~$31 USD for 3 courses at a mid-range restaurant

Quality of healthcare in Ecuador

Healthcare in Ecuador is generally quite good. In fact, it was ranked by Bloomberg as the 20th most efficient healthcare system in the world, above the US.³ It’s especially good in larger cities and places with many tourists and expats — Cuenca, in particular, is known for having many high-quality modern facilities.

Expats may choose from public, private, or nomad insurance. Alternatively, they can pay out of pocket, as costs are generally much lower.

Taxes for US citizens who retire in Ecuador

To say that taxes in Ecuador are favorable for US expats would be an understatement.

While the country doesn’t have an income tax treaty with the US, Ecuadorian tax residents are only subject to taxation on income sourced within the country (at a progressive rate of 0% to 37%).⁴

US-based passive income (e.g., retirement distributions), would generally be exempt.⁵

Other common taxes include:

Capital gains: Generally 10%
Wealth tax: .15% on those with a net worth of $1,000,000 USD or more
Remittance tax: 5% on certain international transfers
VAT: Usually 12%⁶

Related: Retire in Ecuador: Visas, Healthcare, Taxes & More

Mendoza, Argentina

Mendoza is a mid-size city in the foothills of the Andes and a favorite of US expats. Retirees in Mendoza enjoy sunny weather, great restaurants, spas, and some of the best Malbec wines in the world.

Does Argentina have a retirement visa?

Yes, Argentina’s retirement visa is called the pensionado visa. It initially lasts for one year and can be renewed for up to three years (after that, you must request to become a permanent resident).

To initially qualify for the retirement visa in Argentina, you must:

Earn at least 5x the minimum wage in passive income per month (about $1,800 USD total)
- Dependents require an additional (but unspecified) amount of income⁷
Have a clean criminal record⁸

How much does it cost to live in Mendoza?

Here are some average prices for common expenses, according to Numbeo:

Monthly rent: ~$120 USD for a 1 BR apartment in the city center
Utility bills: ~$34 USD per month
Meal for 2: ~$27 USD for 3 courses at a mid-range restaurant

A note on Argentina's currency:

The value of the Argentine peso has been fluctuating significantly in recent years, so prices may vary quite a bit from month to month.

Quality of healthcare in Argentina

Argentina offers some of the best healthcare in South America,⁹ with particularly good options in big cities, including Mendoza and Buenos Aires. Most expats choose private insurance, though public and nomad insurance are options as well.

Taxes for US citizens who retire in Argentina

Argentina does not have an income tax treaty with the US and generally places an income tax on tax residents. However, social security payments may be exempt from this because of how that type of income is classified.¹⁰

Income is taxed at a progressive rate of 5% to 35%, although certain types of income (dividends, interest, real estate, etc.) are taxed differently.¹¹

Other common taxes include:

Capital gains: 25-35% on stocks, bonds, & securities; either 13.5% or 15% in most other cases¹²
Wealth tax: 0.5% to 0.75% on personal assets (cars, real estate, financial accounts, etc.) exceeding the exempt minimum (~$160,010 USD for primary homes, about ~$31,432 USD for other assets)
VAT: Usually 21%; reduced rate of 10.5%¹³

Medellín, Colombia

It may come as no surprise that Medellín, dubbed the City of Eternal Spring, has great weather year-round. Medellín boasts both a bustling city and gorgeous landscapes, with a lively culture and innovative spirit.

Does Colombia have a retirement visa?

Yes. Colombia’s pensionado M-visa lasts for three years and can be continually renewed.

To qualify, you must:

Earn at least 3x the minimum wage per month in passive income (~$740 USD total).¹⁴ Passive income is defined as money you don’t actively earn, such as retirement distributions and investment income.
- Dependents require an additional (but unspecified) amount of income
Have a clean criminal record
Provide a health certificate
Provide proof of insurance for their stay in Colombia¹⁵

How much does it cost to live in Medellín?

Here are the average prices of some common expenses in Medellín, according to Numbeo:¹⁶

Monthly rent: ~$410 USD for a 1 BR apartment in the city center
Utility bills: ~$72 USD per month
Meal for 2: ~$25 USD for 3 courses at a mid-range restaurant

Quality of healthcare in Colombia

Colombia has some of the best healthcare in Central and South America (ranked the 22nd most efficient by the World Health Organization, higher than the US).¹⁷

Again, quality and facilities tend to be best around bigger cities, with Medellín in particular known for having excellent options.

Retirees with the M-visa are not entitled to public healthcare until they become permanent residents, so until then, they must purchase private or nomad insurance.

Taxes for US citizens who retire in Colombia

Colombia does not have an income tax treaty with the US. Colombian tax residents are taxed at a progressive rate of 0% to 39% on their worldwide income. You can exempt up to ~$9,500 USD in retirement/pension income each year.¹⁸

Other common taxes include:

Dividends tax: 35% (if not first taxed at the corporate level; otherwise, 0%)
Capital gains tax: 15% (if not derived from lottery/gaming/etc. winnings; otherwise, 20%)
Wealth tax: 0.5% to 1.5% on individuals with more than ~$766,615 USD in net worth
VAT: Usually 19%; reduced rate of 5%¹⁹

Related: Retire in Colombia: Visas, Healthcare, Taxes, & More

Fortaleza, Brazil

Fortaleza, Brazil’s fourth-largest city, may not get as much press as São Paulo or Rio, but it’s got plenty to offer, including lively music and comedy scenes. And with Fortaleza, you don’t have to choose between the beach or the mountains — you’ve got easy access to both.

Does Brazil have a retirement visa?

Yes! VITEM XIV is a temporary visa that lasts up to a year and can be renewed, however, the specificities here are a little murky as this is a newer visa. So, it’s best to confirm that information with an official Brazilian representative when you initially apply.

To be eligible for VITEM XIV, you must:

Transfer at least $2,000 USD to Brazil bank account each month
- Not specified whether dependents require an additional amount of income
Have a clean criminal record
Purchase health insurance²⁰

Related: Retire in Brazil: Visas, Healthcare, Taxes, & More

How much does it cost to live in Fortaleza?

Here are some average prices for common expenses, according to Numbeo:²²

Monthly rent: ~$259 USD for a 1 BR apartment in the city center
Utility bills: ~$92 USD
Meal for 2: $29 USD for 3 courses at a mid-range restaurant

Quality of healthcare in Brazil

Brazil has a free, universal healthcare plan that covers everybody. However, quality varies from location to location, with big cities and tourist hubs generally having the best options (even then, though, it can be tough to find an English-speaking provider). Most Americans choose private or nomad insurance.

Taxes for US citizens who retire in Brazil

Brazil does not have an income tax treaty with the US, but as of 2018, there is a Totalization Agreement. Brazilian tax residents are taxed on their foreign income at a progressive rate from 0% to 27.5% (lower than the top US tax rate!).²³

Other common taxes include:

Capital gains: Usually 15%
VAT: 17-20%, depending on location²⁴

Related: US Expat Taxes for Americans Living in Brazil – What You Need to Know

Montevideo, Uruguay

Montevideo is the bustling, diverse, and culturally rich capital city of Uruguay. It’s the safest country in South America²⁵ and a major hub for expat retirees. The cost of living is low, but they have a high standard of living, with plenty of great architecture, street art, and restaurants.

Does Uruguay have a retirement visa?

Yes. Uruguay’s pensionado visa allows you to enter the country and apply for permanent residency within six months of your arrival.²⁶To be eligible, you must:

Earn at least $1,500 USD per month in passive income e.g., retirement distributions
- Not specified whether dependents require an additional amount of income
Acquire real estate or purchase Uruguayan public securities valued at $100,000 USD, neither of which can be sold for at least ten years
Have a clean criminal background record²⁷

Related: Retire in Uruguay: Visas, Healthcare, Taxes, & More

How much does it cost to live in Montevideo?

Here are some average prices for common expenses, according to Numbeo:²⁸

Monthly rent: ~$600 USD for a 1 BR apartment in the city center
Utility bills: ~$145 USD
Meal for 2: ~$53 USD for 3 courses at a mid-range restaurant

Quality of healthcare in Uruguay

Uruguay offers high-quality healthcare, with a high ratio of doctors to residents, a variety of different medications available, and easy access to services.²⁹While they offer a free public health insurance program, many choose a private mutualista plan or nomad insurance.

Taxes for US citizens who retire in Uruguay

Uruguayan tax residents are subject to taxation on their foreign-earned passive income, usually at a flat rate of 12%. There is also a wealth tax on individuals with at least $150,000 USD in net worth, ranging from 0.1% to 0.3%.

Related: The 14 Best Countries to Retire in 2023 for Americans Abroad

Taxes for US citizens who retire abroad

All US citizens and permanent residents — even those living abroad — are subject to taxation on their worldwide income, once they meet the minimum income thresholds.

There are tax breaks that can offer relief for expat retirees, however, such as the:

The Foreign Tax Credit

The Foreign Tax Credit allows US expats to essentially subtract what they have paid in income taxes to a foreign government from what they owe in income taxes to the US government (though as with all things US-tax related, there’s more to it than just that).

Foreign Earned Income Exclusion (FEIE)

The Foreign Earned Income Exclusion allows you to exclude a certain amount of foreign-earned income from taxation ($112,000 for tax year 2022, $120,000 for tax year 2023). There are two tests associated with qualifying for this provision, the Physical Presence Test and the Bona Fide Residence Test.

☝️ Key callout about the FEIE:

The FEIE only applies to earned income. So, if you are moving to South America and intend to fully retire i.e., not work, then this provision will likely not factor into your US tax filing strategy. However, if you intend to continue working part-time while easing into retirement, it could be beneficial to consult with an expert in US taxes for Americans abroad so that you can design the most tax-efficient strategy for your activity.

Foreign Bank Account Report (FBAR)

If you have $10,000 or more in aggregate in foreign bank accounts at any point in the year, you’ll need to report the contents of those accounts to the Financial Crimes Enforcement Network (FinCEN) via FinCEN Report 114.

Additionally, the presence, or lack thereof, of a tax treaty impacts expat tax planning. An important callout that US citizens should be aware of is that none of the countries on this list have tax treaties with the US, but this does not mean retiring in South America spells bad news for your taxes!

Rather, it simply means that it’s in your best financial interest to align with an expert in US expat taxes prior to leaving so that you can ensure your retirement distributions and savings are maximized for you and your lifestyle.

Foreign Account Tax Compliance Act (FATCA)

If you have over $200,000 in foreign assets by the last day of the tax year, or over $300,000 in foreign assets at any point during the tax year, you might be required to file Form 8938.

References

The post The 5 Best Places to Retire in South America for US Expats appeared first on Bright!Tax Expat Tax Services.

Retire in Uruguay: Visas, Healthcare, Taxes, & More

Katelynn Minott, CPA & CEO — Fri, 22 Sep 2023 18:07:25 +0000

Uruguay is an attractive retirement destination for many reasons. It has a wonderful culture, beautiful beaches, a pleasant climate, and an excellent healthcare system. And when it comes to places to live, options include Montevideo, quiet and dignified coastal cities, and countryside abodes.

Of course, moving to another country involves a sizeable amount of planning and due diligence. This research involves digging into the finer details of how to move to Uruguay, as well as the broader implications of living abroad as a US citizen.

Below, we’ll guide you through some of the most important considerations when planning a move to Uruguay. We discuss visa options, medical care requirements and facilities, and of course, taxes.

Let’s get started!

Is Uruguay a good place to live as a retiree?

Yes! When it comes to quality of life versus cost of living, it’s hard to beat Uruguay. Between its safety, rich culture, and excellent infrastructure, it makes for a very comfortable place for Americans to live (and retire) as expats.

Related: The 14 Best Countries to Retire in 2023 for Americans Abroad

Benefits of retiring in Uruguay

Some of the benefits of retiring in Uruguay include:

Safety: Uruguay is a politically stable country with low rates of violent crime. In fact, according to the Global Peace Index, Uruguay is the safest country in South America¹ and the second-safest of all Latin America, just behind Costa Rica²
Cost of living: Prices in Uruguay are significantly lower than in the US. Numbeo estimates that consumer prices including rent are 36.6% lower in Uruguay than in the US³
Weather: Uruguay has a subtropical climate located in a temperate zone, so the temperature typically doesn’t swing too wildly in either direction
Healthcare: Uruguay’s healthcare system has been rated among the best in the world,⁴ with high-quality care at a reasonable cost available to all thanks to their universal healthcare model
Beauty: Uruguay boasts rolling green hills, beaches, mountains, colonial architecture, and more
Culture: Uruguay has a rich and storied culture, with tango, South American-style barbecue (asado), and Carnival celebrations all serving as points of pride

Of course, if you retire in Uruguay, there are pros and cons. Public transportation can be limited outside of city centers. Additionally, choosing a rural location may feel isolating. And, the cost of living in Uruguay is higher than in many countries in South America. That being said, many find that the pros outweigh the cons.

Best places to retire in Uruguay

The Uruguayan culture is calm and laidback, with a rich musical and theatrical heritage. There are plenty of great places to live in Uruguay — however, these three are among the best options for retirees.

Retiring in Montevideo, Uruguay

Montevideo, the capital of Uruguay, is a coastal city accessible by ferry from Buenos Aires. It is known for its parks, sandy beaches, and the Rambla, a road that runs along the city’s coastline. The city offers a relaxed ambiance, with locals often seen leisurely fishing, chatting in plazas, or browsing outdoor markets such as the Feria de Tristan Narveja.

Other attractions include the Teatro Solis, the modern Auditorio Nacional Adela Reta, and the historic Ciudad Vieja. The city’s climate is temperate, with mild summers and winters making it ideal for retirement.

Retiring in Punta del Este, Uruguay

Punta del Este is South America’s premier beach resort, boasting a stunning coastline and a high quality of life. The Peninsula, the heart of Punta del Este, offers numerous restaurants, nightclubs, and cultural landmarks like the artisan’s plaza and lighthouse. Its nickname is the “Monaco of the South.”

Nearby Maldonado provides essential services, including bilingual healthcare. Activities abound, from cultural events to water sports. Punta tends to cater to expats seeking upscale living with full-service residential towers. The range of options allows retirees to enjoy the beach lifestyle without breaking the bank.

Retiring in Piriápolis, Uruguay

Piriapolis was established in 1890 by Francisco Piria, a Uruguayan inventor and businessman of Italian descent. It is a quaint beachside town cherished by expats who seek peace and calm. Its unique charm stems from the rolling hills that dot its landscape, distinguishing it from other Uruguayan locales. A notable landmark is a hilltop castle adorned with statues of Greek deities.

Real estate values in Piriapolis tend to be much less inflated than those in Punta del Este due to both a smaller overall population and a lower concentration of expats. With a population of 3,500, Piriapolis is less urbanized than Punta del Este, necessitating occasional trips to nearby towns for certain amenities.

Uruguay retirement visa: How to move to Uruguay as a US citizen

The primary visa for retirees looking to move to Uruguay is the Pensionado visa. The visa permits you to enter the country and apply for permanent residence within six months of moving there.⁵ Requirements include:

Proof of retirement
A monthly passive income e.g., investment or retirement distributions of at least $1,500 USD
- Dependents may require additional income
A purchase of real estate, public securities, or a combination of the two worth at least $100,000 USD which must be held for at least ten years before selling
A clean background check⁶

Related: US Taxes for Expats Buying or Selling Real Estate Abroad

How long does it take to get a visa to live in Uruguay?

Once you’ve submitted your visa application, the Uruguayan government will take at least 20 working days to respond,⁷ although some sources report it taking as long as 6-12 months.⁸

Keep in mind that you’ll also need to allow yourself time before that to gather, notarize, and translate the required documents into Spanish.

These required documents include:

A completed visa application form
A valid passport
Proof of:
- Monthly income
- Retirement status
- Real estate/securities purchase
A clean criminal background check
A passport-sized photograph
A medical report⁹

You may submit these online or in person at your nearest Uruguayan embassy or consulate (check to see if you need an appointment first).

Pro tip:

While Uruguay’s pensionado visa will allow you to enter the country, you must apply to become a permanent resident of Uruguay within six months of your arrival. Doing so will require you to collect a few additional documents (e.g. birth certificate, vaccination record, health card, etc.), pay certain fees, and attend an in-person appointment. Receiving an official decision typically takes between 12 to 18 months. (10)

Healthcare in Uruguay for US expats

As mentioned earlier, Uruguay has an excellent public healthcare system, called the Administracion de los Servicios de Salud del Estado (ASSE), translated to English as the Administration of State Health Services.

All permanent residents and citizens in Uruguay have the right to participate in this system, with expats typically paying about $70 USD per month for it.

Many supplement this healthcare with a Mutualista policy that grants them access to state-of-the-art private hospitals with shorter wait times.¹¹ These plans typically cost around $100 USD per month.¹²

Some expats also choose international health insurance (e.g. Cigna Global) or nomad insurance providers (e.g. SafetyWing).

How much does it cost to retire in Uruguay?

While Uruguay’s retirement visa requires you to earn at least $1,500 USD per month in passive income — about 43% more than Uruguay’s median monthly income of 36,968 UYU (~$970 USD)¹³ — your monthly expenses may exceed that.

Some report that it costs about $3,000 USD per month for a couple to live comfortably in Uruguay,¹⁴although of course, expenses can vary a great deal based on someone’s location and lifestyle.

And keep in mind, this is on top of the $100,000 USD you must invest in Uruguayan real estate and/or securities in order to qualify for the visa.

Retiring in Uruguay on Social Security: Considerations

Given that the average monthly Social Security check is about $1,827 USD,¹⁵ you could qualify for Uruguay’s retirement visa based on that alone. That said, to live a comfortable lifestyle you will likely want to have additional sources of passive income such as retirement accounts, investments, rental income, etc.

Related: US Taxes and Pensions: What to Know to Retire Abroad in 2023

Uruguay taxes

Uruguay has a territorial-based taxation system, which is very beneficial for US retirees.

In a territorial-based taxation system, the Uruguayan government only levies taxes on most types of income if it is sourced (paid) from within Uruguay (at a progressive rate of 10% to 36%).

That being said, they do typically level a flat tax of 12% on passive income from capital gains and investments like interest, rental income, royalties, etc., no matter where in the world it comes from.¹⁶

Pro tip:

Passive income is defined as income that is not actively earned. It is also referred to as “unearned income,” which is something of a misnomer because income such as retirement distributions certainly feels earned, and yet for the purpose of distinguishing between “earned” income and “passive” income, we can think of passive income as income that is not actively worked for.

The Uruguayan system exempts some types of payments from taxation entirely (such as social security and most retirement account payments), and 12% is a lower tax rate than you’ll pay in many other countries. Other types of Uruguayan taxes you may encounter include:¹⁷

VAT: Usually 22%
Net wealth tax: 0.1% to 3% on individuals earning more than 5,831,000 UYU (~$153,000 USD) per year¹⁸

Do Americans pay tax in Uruguay?

Americans living in Uruguay as retirees are subject to taxes by both the Uruguayan and US governments, but don’t worry — that doesn’t necessarily mean you’ll be taxed on the same income twice (more on that below).

US Taxes

All US citizens and permanent residents — even those living abroad — are subject to taxation on their worldwide income, as long as they meet the minimum income thresholds. There are tax breaks that can offer relief for expat retirees, however, such as:

The Foreign Tax Credit

Foreign Earned Income Exclusion (FEIE)

Note: The FEIE only applies to earned income. So, if you are moving to Uruguay and intend to fully retire i.e., not work, then this provision will likely not factor into your US tax filing strategy. However, if you intend to continue working part-time while easing into retirement, it could be beneficial to consult with an expert in US taxes for Americans abroad so that you can design the most tax-efficient strategy for your activity.

Foreign Bank Account Report (FBAR)

Related: FBAR Filing Online in 2023: A Guide for Expats

Foreign Account Tax Compliance Act (FATCA)

If you have over $200,000 in foreign assets by the last day of the tax year, or over $300,000 in foreign assets at any point during the tax year, you might be required to file Form 8938.

References:

The post Retire in Uruguay: Visas, Healthcare, Taxes, & More appeared first on Bright!Tax Expat Tax Services.

Americans Retiring in France: Visas, Healthcare, Taxes, & More

Katelynn Minott, CPA & CEO — Tue, 05 Sep 2023 09:57:06 +0000

For those fortunate enough to do so, retiring in France looks like waking up to the irresistible aroma of freshly baked croissants, strolling through cobblestone streets lined with lively cafes, and savoring world-class wines while watching the sunset over the vineyards.

It’s no wonder France is one of the most popular places to retire in Europe.

With its renowned healthcare system, rich cultural heritage, relaxed pace of life, and potentially lower cost of living, France is a retirement haven blending Old World charm with modern comfort.

Read on to learn about how you can retire in France with peace of mind surrounding your visa and navigating the intricacies of taxation for expats.

Benefits of retiring in France as an American

Some of the things France is most known for include:

Culinary excellence
Cafe culture: savoring life’s small moments with an espresso or glass of wine
Beautiful landscapes, including mountains, ocean- and sea-side coastlines, lakes, lavender fields, and forests
A robust public transportation system, both within and between cities
The cultural richness from history to art, to architecture, and beyond

Apart from its beauty, history, and joie de vivre, France offers top-notch universal healthcare and a friendly residency program for long-term visitors, making it a fantastic place to relish the rewards of retirement.

What is the retirement age in France?

The retirement age in France is subject to variation based on one’s birth year. A recent reform has come into play for individuals born in 1968 and beyond, elevating the retirement age from 62 to 64.¹

While this might not seem shocking in the US where the full retirement age is 67 for those born after 1960, it stirred up significant controversy when implemented in early 2023 after bypassing a vote in the National Assembly.

The decision was met with protests and riots nationwide, embodying the French spirit of defending their right to leisure in the golden years.

Best places to retire in France

Historically, some of the more popular places for Americans to retire in France include:

Paris: With its rich cultural offerings, international community, and numerous green spaces, Paris holds an allure for retirees seeking cultural enrichment and city living.
Brittany: Coastal beauty, charming villages, and a mild climate characterize Brittany, offering a serene retirement setting.
Provence: Provence is known for its sunny Mediterranean weather, and stunning landscapes, including lavender fields, vineyards, and olive groves.

If you’re looking for something a little more up-and-coming, however, you might consider:

Occitanie: Situated in the southwest, Occitanie boasts a blend of Mediterranean beaches, historic cities like Toulouse, and picturesque villages.
Dordogne: Tranquil and picturesque, Dordogne showcases natural beauty and a laid-back ambiance, ideal for those seeking a peaceful retirement.
Alsace: Nestled along the German border, Alsace enchants with its charming villages filled with half-timbered houses (which inspired the animation for Disney’s Beauty and the Beast), wine culture, and renowned Christmas markets in the cosmopolitan city of Strasbourg.

Related: The 14 Best Countries to Retire in 2023 for Americans Abroad

What is the equivalent of a retirement visa in France?

While France does not offer an official retirement visa, there is a common route for US citizens to obtain a visa that will allow them to come to France and settle long-term.

In most instances, retirees moving to France will apply for a VLS-TS Visiteur, or Long Stay Visitor Visa equivalent to a residence permit, which must be validated online within three months of arrival.²

Application requirements for a long-stay visa in France as a US retiree

To initiate the process of obtaining a Long Stay Visitor Visa, you will need to schedule an appointment at a Visa Facilitation Services (VFS) center. During this appointment, you’ll be required to present documentation related to your identity, the purpose of your stay, your accommodation, and travel health insurance. You’ll also need proof of sufficient financial resources to cover you during your stay, which should meet or exceed France’s minimum wage, known as the SMIC. The SMIC is currently €16,214 net per year.³ You can find personalized information regarding your situation by utilizing the French government’s Visa Wizard tool.⁴

The visitor residency status is subject to renewal within France and will evolve into a residency card, or carte de séjour, upon your first renewal.⁵

After five years of continuous residency in France, you may be eligible for a 10-year residency card.⁶

What is the processing time for the French long-stay visa?

Visa applications are typically processed within about 15 days,⁷ but you’ll need to factor in the time it takes to schedule an appointment and gather and complete the following documents:

A passport containing at least two blank pages with a validity period of at least three months longer than the expiration date of your requested visa
ID photograph
Pension certificate
Promise not to exercise any professional activity while in France
Proof of funds
Proof of accommodation (a property deed, tenancy agreement, certificate from your host, reservation, etc.)
Travel health insurance for a minimum amount of €30,000

For answers to any other questions related to the visa application, you can refer to this official FAQ.

Healthcare in France for US Expats

France’s exceptional healthcare system is universally accessible to all residents, including those with long-stay visitor visas who have demonstrated three months of continuous residency.⁸

Recognized as one of the best in the world, the French system is funded through a combination of social security contributions, central government funds, and a modest patient contribution. Typically, medical visits to professionals practicing in sector 1, or those who charge a fixed fee without exceeding the government’s social security agreement, are eligible for a reimbursement rate of 70%.

For instance, a visit to a General Practitioner in sector 1, priced at €25 for a consultation, would result in a reimbursement-adjusted payment of €7.5.

Note for retirees:

Gaining enrollment in France’s healthcare system can be a slow process. For more information, check out Ameli, the French government healthcare website. (9)

How much does it cost to retire in France?

While personal preferences such as retirement destination and standard of living will come into play here, France can be an affordable place to spend your leisure years. The cost of living in France is, on average, around 9% lower than in the United States, and rent is a whopping 51% lower than in the US.¹⁰

Excluding rent, the estimated monthly cost of living in France is under €1,000 for a single person and over €3,000 for a family of four. Rent costs, unsurprisingly, vary depending on where and how you choose to live. A humble home in the countryside won’t set you back the same way as a palatial Parisian penthouse, where you can count on spending upwards of €30 of monthly rent per square meter.

Related: What Americans Need to Know about Buying and Selling Property Overseas

What is the average income in France?

France’s minimum wage, as previously mentioned, is €16,214 net (€20,814.73 gross) annually, equivalent to €1,383.09 net per month.¹¹

The average salary in the private sector exceeds this, standing at around €2,524 net per month.¹²

Americans who scoff at the low salaries in France will likely be taken aback by the fact that French retirees tend to be better off than their American counterparts in the US. The average income in France exceeds the average annual Social Security benefit for 67-year-old Americans in 2023 ($1,924.60/month).¹³

While sustaining a lifestyle solely on social security might pose challenges depending on your chosen retirement location, the fact that this allowance still exceeds France’s minimum wage ensures its feasibility as a potential retirement income source.

Do Americans pay taxes in France?

Americans living in France as retirees are subject to taxes by both the French and US governments, but don’t worry — that doesn’t necessarily mean you’ll be taxed on the same income twice.

France Taxes

French residents are obligated to report their worldwide income on their tax return. But, don’t fret, declaration doesn’t necessarily entail payment.

Article 18 of the tax treaty signed between the United States and France establishes that pensions are taxable only in the source state of that income, so U.S.-source retirement benefits remain taxable only in the United States.¹⁴ That said, benefits must still be reported on your French tax return to calculate your tax rate.

When is the French tax season?

Tax filing in France kicks off in April, with deadlines ranging from mid-May to early June for paper submissions compared to online submissions.

During your first year of tax filing in France, you will use a paper form, which is notably shorter and less complex compared to the IRS forms.

Here’s a helpful tip: Pay close attention to the section involving the declaration of your foreign bank accounts. While minimal information is required, many individuals overlook this detail, putting themselves at risk of financial penalties. Unlike the FBAR, there is no minimum balance for reporting.

Once you have filed for the first time, you will receive a fiscal number and online filing password for future submissions. This streamlined process grants you the convenience of online filing in subsequent years.

Related: Taxes in France for Americans – A Guide

US Taxes

The FTC allows US expats to essentially subtract what they have paid in income taxes to a foreign government from what they owe to the US government (though as with all things US-tax related, it’s not quite that simple). For a full breakdown of US expat tax considerations, review our step-by-step guide.

References

1. À partir de quel âge un salarié peut-il partir en retraite ? | Service-public.fr

2. Visa de long séjour (séjour de plus de 3 mois à 1 an) | Service-public.fr

3. Smic (salaire minimum de croissance) | Service-public.fr

4. Visa wizard – France-Visas

5. Carte de séjour temporaire “visiteur” d’un étranger en France | Service-public.fr

6. Carte de résident de longue durée-UE (étranger en France depuis 5 ans) | Service-public.fr

7. Visa application process – France-Visas

8. Assurance maladie d’un étranger en France | Service-public.fr

9. English pages | ameli.fr | Assuré

10. Cost of Living in France

11. Smic

12. Les salaires dans le secteur privé en 2021 – Insee Première – 1938

13. What Is the Average Social Security Benefit at Every Age?

14. Convention between the Government of the United States of America and the Government of the French Republic

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Retire in Ecuador: Visas, Healthcare, Taxes & More

Katelynn Minott, CPA & CEO — Thu, 24 Aug 2023 11:17:49 +0000

Ever dreamed of retiring abroad? Then we’ve got good news. Not only is it possible to do so — it often makes financial sense as well. One increasingly popular option is to retire in Ecuador.

Of course, you’ll want to do your research first to see if it’s the right fit for you. To help you out, we’ve rounded up all of the need-to-know information about retiring in Ecuador: temporary residency visa details, health care options, the best places for retirees, and more.

Is Ecuador a good place to live as a retired expat?

It certainly can be! While Ecuador isn’t for everyone (nothing is, of course), thousands of Americans currently live there — many of whom love it.

Related: The 14 Best Countries to Retire in 2023 for Americans Abroad

Benefits of retiring in Ecuador

Some of the best parts of retiring in Ecuador include:

Cost of living: By some estimates, the cost of living is about 65% less than in the United States¹
Weather: You can choose between a tropical climate along the coast and lowlands or a mild, spring-like climate at high altitudes
Natural beauty: The country boasts gorgeous beaches, glaciers, volcanoes, mountains, waterfalls, and more
Culture: Between pre-Incan ruins, colorful local festivals, and impressive colonial architecture, you won’t find yourself lacking culture when living in Ecuador
Established community: Some 10,000 American expats (many of them retirees) already call Ecuador home, making it easier for newcomers to find their community there
Healthcare: You can find high-quality healthcare at affordable prices (more details on that below)

Best places to retire in Ecuador

From big cities like Quito and Guayaquil to quaint village towns, there are many great places to settle in Ecuador — but these three stand out above the rest:

Retiring in Cuenca, Ecuador

Cuenca is the top hotspot for American expat retirees, and it’s not hard to see why. Retirees who move there enjoy a spring-like climate, charming colonial feel, modern healthcare facilities, and a low rate of crime. This city has been designated a UNESCO World Heritage site, thanks to its rich culture and historical significance.

Retiring in Quito, Ecuador

Those who prefer an urban lifestyle, meanwhile, should consider the capital city of Quito. Quito’s Historic Quarter retains old-world charm, while La Carolina is the hub of modern architecture and excellent restaurants. The most popular neighborhoods for expats to live in include La Carolina, La Floresta, and La Paz.

Retiring in Salinas, Ecuador

If you’re looking for a laid-back coastal town, Salinas might just be the perfect fit for you. Known for its stunning beaches, seafood, water sports, and whale-watching, Salinas balances a relaxed pace of life with plenty of things to do outdoors.

Ecuador retirement visa: Options for moving to Ecuador as a US citizen

Most Americans who choose to retire in Ecuador apply for the Jubilado visa, known in English as the Ecuador retirement visa or pensioner visa.

This temporary visa initially is valid for two years, at which point it can be renewed for another two years or converted into a permanent residence visa.

In order to apply for the retirement visa, you must:

Complete and submit the Formulario de Solicitud de Visa (visa application form)
Earn at least three times more than the Salarios Básicos Unificados del trabajador en general (minimum salary).
Have a clean criminal record
Purchase health insurance for at least your first 90 days in the country²

📣 Important to know about the minimum income required to retire in Ecuador

For 2023, the minimum salary in Ecuador is $450 per month. This means that applicants for the Jubilado retirement visa will need to prove an ongoing, minimum income of $1350 USD per month, plus an additional $250 USD per month for each dependent. Dependents may be spouses to whom you are legally married (and able to prove with a marriage certificate) or biological children (able to prove with a birth certificate).

How long does it take to get a visa to live in Ecuador?

After submitting your visa application, you’ll typically wait anywhere between two weeks and three months before you receive a decision.³

Keep in mind too that prior to submitting the visa application, you’ll also need to allow time to gather the required documents, schedule appointments, and collect the visa.

Healthcare in Ecuador for US expats

Healthcare is generally high-quality, with Bloomberg ranking it as the 20th most efficient healthcare system in the world (ahead of the US).⁴ That being said, major cities tend to have the best facilities and most robust options.

Expats have a few different healthcare options:

Public healthcare: A government-funded plan that holders of the retirement visa can access for a fee of 17.6% of their income per month, with an additional 3.41% per month for each dependent. While the quality is generally good and coverage relatively affordable, those who choose the public option may deal with longer wait times.

Private healthcare: Most expats opt for private healthcare, which grants them access to a more up-to-date healthcare system and shorter wait times. Prices vary based on your age and health condition, but those between 50 and 70 who are generally in good health can expect to pay between $50 and $150 USD per month.⁵
Paying out of pocket: Given that healthcare costs are much lower, some expats choose to pay for their expenses out of pocket. An appointment with a general practitioner, for example, typically costs between $20 and $35 USD. Still, many purchase basic insurance to cover accidents and emergencies.

How much does it cost to retire in Ecuador?

Previously, it was possible to retire to Ecuador for as little as $800 USD a month. This is no longer possible, however, the minimum threshold is still very attainable. As mentioned earlier, applicants must be able to prove an ongoing, monthly income equal to at least three times the minimum salary (which in 2023 is $450 USD per month).

Let’s look at an example of an American who wants to retire to Ecuador

John is a retired US citizen who would like to retire in Ecuador. He receives monthly Social Security distributions totaling $1,680 per month.

In order to determine whether he meets the income requirement for the Jubilado visa, he simply needs to multiply the minimum salary by three (450 x 3), which equals 1350.

Thus, the current minimum monthly income requirement to retire in Ecuador is $1350 USD.

Because John’s monthly income is equal to or more than $1350, he fulfills the minimum income requirement for the Ecuador retirement visa.

A final note on the affordability of retiring in Ecuador for Americans: Given that the average income for Ecuadorians is about $525 USD per month, retired American couples making the minimum income required to obtain the Ecuador retirement visa can live very comfortably.

Frugal couples may spend just $800 USD a month, while those seeking an elevated lifestyle only need about $1,500 USD per month.⁶

Do Americans pay tax in Ecuador?

American expats are subject to taxes by both the Ecuador and US governments. However, that doesn’t necessarily mean you’ll be taxed on the same income twice.

Ecuador Taxes

Moving to Ecuador can be a major financial boost for Americans, as foreign residents are only taxed on Ecuadorian-sourced income — so US Social Security checks and US-based retirement plan/pension payouts would be exempt.⁷ Income sourced from within the country, however, will be taxed at a progressive rate ranging from 0% to 37%.⁸

And if that weren’t enough, the VAT rate is among the lowest in Latin America. Those interested in real estate, meanwhile, will be glad to know that property taxes are notably low as well.

Read more: US Expat Taxes for Americans Living in Ecuador – What You Need to Know

US Taxes

All US citizens and permanent residents — even those living abroad — are subject to taxation on their worldwide income, once they meet the minimum income thresholds. There are tax breaks that can offer relief for expat retirees, however, such as the:

Foreign Tax Credit (FTC): The Foreign Tax Credit allows US expats to essentially subtract what they have paid in income taxes to a foreign government from what they owe to the US government (though as with all things US-tax related, it’s not quite that simple)
Foreign Earned Income Exclusion (FEIE): Allows those who qualify to exclude up to $120,000 of foreign-earned income (for tax year 2023) from taxation

Keep in mind, too, that withdrawals from post-tax retirement accounts, like Roth IRAs and Roth 401(k)s, are tax-free, and only up to 85% of your social security payments are subject to taxation.

References:

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Retire in Panama: Visas, Healthcare, Taxes, & More

Katelynn Minott, CPA & CEO — Fri, 18 Aug 2023 06:04:20 +0000

More and more United States citizens are considering retiring in Panama — leading them to wonder what everyday life in Panama is like, what kind of health insurance is available, whether there are any established expat communities there, etc. And it’s no wonder — Panama is a beautiful country that offers an excellent quality of life at a fraction of the cost of the US.

But leaving your home country in North America to start a new life in Latin America is a big decision — one that requires lots of research and reflection before you can truly make up your mind. Fortunately, we’re here to help you out.

Read on for a guide on how to retire in Panama, the best places for retirees to live, how taxes work, and more.

Benefits of retirement in Panama

So, what exactly is it that makes so many people eager to retire in Panama? Here are a few of the top reasons:

Cost of living: Panama is, by some estimates, as much as 47% less expensive than the US.¹
Tax benefits: Panama only taxes income sourced from within the country — any foreign-sourced income is exempt.²
Climate: Panama has a tropical climate with temperatures typically ranging from 75° F to 90° F.³
Safety: While there are some places that should be avoided, Panama is the second-safest country in Central America, second only to Costa Rica.⁴
Landscapes: Panama is a beautiful country with lots of geographic diversity, from beaches to rainforests, mountains, volcanoes, and more.

Related: The 14 Best Countries to Retire in 2023 for Americans Abroad

Best places to live in Panama for retirees

You can find retirees all throughout Panama, but these tend to be some of the most popular destinations:

Panama City: For those who prefer city life, Panama’s capital offers it all, from beaches and watersports to excellent dining, museums, and parks. The neighborhoods of San Francisco, Casco Viejo, and Punta Pacifica are particularly popular among US expats. Check out the historic Panama Canal for views of both the Pacific Ocean and the Caribbean Sea!
Coronado: This beach town, located a little over an hour away from Panama City by car, has become a US expat hotspot. Those who live there enjoy the gated community, golf course, and access to great healthcare facilities.
Boquete: This small, safe mountain town sits at a high elevation, resulting in spring-like weather year-round. It also has a sizable US expat community. Popular activities include hiking, birdwatching, and coffee plantation tours.
Chitre: Chitre has all of the charm of a small town with the amenities and infrastructure of a larger one, such as a hospital and movie theater. The area is particularly well-known for its festivals and holiday celebrations.
Bocas del Toro: Those seeking a true tropical escape will find themselves right at home in Bocas del Toro, a province that encompasses both the Panamanian mainland and several islands. The area is laid-back and relatively undeveloped, despite having some of the best beaches in the country.

Related: Buying Property in Panama: A Guide for US Retirees & Expats

American retirement communities in Panama

While there aren’t many planned communities solely for retirees in Panama, the following communities are popular among US retirees:

Red Frog Beach in Bocas del Toro
Tucan Country Club just outside of Panama City
Costa Pedasi in Pedasi

Panama vs. Costa Rica: Retirement Edition

When considering retirement options in Central America, many US expats think about Costa Rica as well. While both countries offer retirement visas and have similar landscapes, each one has its unique strengths:

Costa Rica is the safest country in Central America, while Panama is the second-safest
Panama is generally less expensive than Costa Rica
Costa Rica is slightly more eco-conscious than Panama
Panama offers better tax benefits than Costa Rica
Panama’s retirement visa offers discounts and benefits from the government (e.g. 25% discount on flights, 10% discount on medicine)

Related: US Expat Taxes for Americans Living in Costa Rica– What You Need to Know

The Panama Pensionado Visa: Retiring in Panama as a US citizen

Panama offers a special visa for retirees called the pensionado visa. To be eligible, you must meet the following qualifications:

Have a monthly pension of at least $1,000 USD, OR $750 USD if you’ve bought property in Panama valued at $100,000 or more
- For each dependent you bring, you must make an additional $250 per month
Have a clean criminal record
Be at least 18 years old

The visa application process involves:

Authenticating the following documents at your nearest Panamanian consulate in the US:
- Birth certificate
- Notarized proof of income
- Certified marriage certificate (if applicable)
- FBI background check
Flying to Panama
Having a Panamanian attorney file your application, which — besides the aforementioned documents — should also include:
- Completed registration form
- Health certificate issued by a Panamanian doctor
- Four passport-sized photographs
- Original passport & copy
- Background statement drafted by a lawyer
- Documents for dependents, if applicable
Collecting your pensionado visa in person in Panama, once approved

How much does it cost to retire in Panama?

Panama’s average income is about $1,279 USD per month⁵ — nearly $300 USD more than the minimum income required for the pensionado visa. With this in mind, $1,000 USD per month alone may not be enough to support your lifestyle in Panama. However, it shouldn’t take too much more — retired couples living in Panama can often get by on about $1,200-$3,000 USD per month.⁶

The average monthly Social Security check is about $1,827 USD,⁷ which means it is feasible to live off of your Social Security income alone. That being said, you’ll probably feel more comfortable having a little bit extra for unexpected costs and extras, like vacations.

Related: Can US Expats Collect Social Security Benefits?

Healthcare in Panama for US Expats

US expats who hold a pensionado visa have a few different options for healthcare:⁸

Public healthcare: Panama’s government offers two primary health insurance options:
- The public system is managed by the Social Security Fund, which covers those whose payroll taxes contribute toward the fund (about 79% of the population)
- A low-cost system run by the Ministry of Health for anyone who doesn’t contribute to the public system through payroll taxes (e.g. independent contractors)
Private healthcare: Many expats, however, opt for private insurance, as private facilities tend to have higher-quality amenities and provide care without long delays between appointments. They can generally choose between one of two options:
- Panama-specific coverage: While these plans are quite affordable — often just $50-$90 USD a month⁹ — they don’t provide coverage in any other country, which could be a problem if you often go back to visit the US (or any other country, for that matter).
- International coverage: Premiums for insurance plans with international coverage are typically $200-$900 USD a month, with an average premium of $500 USD.¹⁰ The exact amount will vary depending on things like your health, age, amount of coverage, etc.

Retiring in Panama: Pros and Cons

As with any decision, there are pros and cons to retiring in Panama. Some of the pros include:

A lower cost of living
No risk of double taxation on income from outside of Panama
Beautiful, diverse landscapes
Great weather
Safer than many other Central American countries
Established US expat/retiree communities
Government discounts and incentives
High-quality healthcare
Close proximity to the US

Some of the cons include:

Some parts of the country should be avoided due to crime
Although the country’s infrastructure is highly developed for Central America, it may not be as advanced in certain areas (especially rural ones)
You may have an easier time accessing cutting-edge healthcare technologies in the US

Do Americans pay tax in Panama?

Americans living in Panama as retirees are subject to taxes by both the Panama and US governments, but don’t worry — that doesn’t necessarily mean you’ll be taxed on the same income twice.

US Taxes

Foreign Earned Income Exclusion (FEIE): Allows those who qualify to exclude up to $120,000 of foreign-earned income (for tax year 2023) from taxation
Foreign Housing Exclusion: Expats who meet either the Physical Presence Test or the Bona Fide Residence Test can use the Foreign Housing Exclusion to write off qualifying housing expenses like rent, utilities, property insurance, and more

Keep in mind, too, that withdrawals from post-tax retirement accounts, like Roth IRAs and Roth 401(k)s, are tax-free. Additionally, only up to 85% of your Social Security payments are subject to taxation.

References:

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Retire in Mexico: A Guide to Visas, Healthcare, Taxes & More

Katelynn Minott, CPA & CEO — Wed, 17 May 2023 10:08:20 +0000

Between the warm weather, vibrant culture, low property taxes, and reasonable cost of living, Mexico is an excellent retirement option — one that’s well within grasp for many retirees. Of course, before you make the leap, you should consider the practical aspects of moving there.

Read on to learn about everything from visa requirements to healthcare options to tax obligations and more in our guide to retirement in Mexico!

Mexico continues to be a top retirement destination

Mexico is one of the top foreign destinations for retirees. The US Social Security system sent an estimated 62,000 payments to Mexico as of November 2022, the third-most of any foreign country (behind Canada and Japan).¹

Why do Americans move to Mexico?

Some of the most common reasons Americans move to and retire in Mexico include:

The pleasant year-round weather
The affordable cost of living
The ability to immerse yourself in Spanish
The large expat and welcoming local communities
The rich culture

Related: Moving to Mexico – What to Expect as a US Expat

What currency is used in Mexico?

The currency used in Mexico is the Mexican peso. $1 USD is equal to about $17.58 Mexican pesos (MXN).

Visas for retiring in Mexico

The two primary visas that retirees apply for are the temporary residence visa and the permanent residence visa.

The financial requirements for the temporary residence visa are lower, but the visa initially only lasts for one year. After, it can be renewed for up to three years, at which point the holder can apply for a permanent visa.

Permanent residence visas, on the other hand, come with higher financial requirements but last indefinitely.

Is it hard to get a visa to retire in Mexico?

As long as you meet the requirements, getting a residence visa is fairly straightforward for retirees. The most important factor is whether you’re considered economically solvent.

Temporary Residence Visa financial requirements

If applying from your home country, (as most Americans will, unless they have family in Mexico), applicants for the temporary residence visa must either:

Earn a monthly income of $62,232 Mexican pesos (~$3,540 USD)*, OR
Have $1,037,200 Mexican pesos (~$58,996 USD)* in savings

Bringing a dependent spouse requires an additional $20,744 Mexican pesos (~$1,177 USD)* per month in income.

Permanent Residence Visa financial requirements

Similarly to above: If applying from your home country, (as most Americans will, unless they have family in Mexico), applicants for the Permanent Residence Visa must either:

Earn a monthly income of $103,720 Mexican pesos (~$5,885 USD)*, OR
Have $4,148,800 Mexican pesos (~$235,386 USD)* in savings

Again, bringing a dependent spouse requires an additional $20,744 Mexican pesos (~$1,177 USD)* per month in income.²

*Requirements may vary depending on which Mexican consulate you apply at

Additional requirements

Beyond the financial requirements listed above, applicants must also:³

Pay a visa application fee of ~$36 USD & a residence card fee of ~$284 USD
Convert their permanent residence visa into a permanent residence card within 30 days of arriving in Mexico
Submit the required documents:
- Completed visa application form
- Valid passport & copy
- Passport-sized pictures
- A booked flight ticket
- 6-12 months of bank account or financial statements demonstrating economic solvency

How long does it take to get a visa to live in Mexico?

Assuming you meet all the criteria and have provided the correct documentation, you should receive your visa within 10-15 working days of submitting your application.

Best cities in Mexico for retired US expats

There are a number of great places in Mexico for US expats to live in their retirement — from bustling Mexico City to quaint Oaxaca — but a few of the top options include:

Mérida

Mérida, located along the highly desirable Yucatán peninsula, is one of the safest places in Mexico. It’s known for its white stone buildings, Mayan ruins, and beautiful natural sinkholes called cenotes.

How much does it cost to live in Mérida?

Monthly expenses for a couple living in Mérida generally total $1,600 USD per month.⁴

Ajijic, Lake Chapala

With an estimated 20,000 expats living in Ajijic, a small town on Lake Chapala, it’s one of the largest expat communities in Mexico. It’s known for its regular town festivals, temperate weather year-round, and stunning mountain views.

How much does it cost to live in Ajijic, Lake Chapala?

Monthly expenses for a couple living in Ajijic, Lake Chapala, generally total between $1,800-$2,000 USD per month.⁵

Puerto Vallarta

Resort town Puerto Vallarta is a popular destination for tourists and retirees alike. It is well known for its beaches, welcoming community, and stunning art galleries.

How much does it cost to live in Puerto Vallarta?

Monthly expenses for a couple living in Puerto Vallarta generally total between $1,500-$2,000 USD per month.⁶

San Miguel de Allende

San Miguel de Allende may not have any beaches, but it does offer charming Colonial architecture, cobblestone streets, “eternal spring” weather, and breathtaking sunrises and sunsets.

How much does it cost to live in San Miguel de Allende?

Monthly expenses for a couple living in San Miguel de Allende generally total $1,700 USD per month.⁷

Playa del Carmen

Playa del Carmen, a popular resort town located on the Yucatán peninsula, is known for its white sand beaches, turquoise waters, surrounding jungle, and ancient ruins.

How much does it cost to live in Playa del Carmen?

Monthly expenses for a couple living in Playa del Carmen generally total between $1,400-$1,900 USD per month.⁸

Related: The 7 Best Places to Retire Outside the United States

Healthcare in Mexico for expats

Expats in Mexico tend to choose between:

Instituto Mexicano del Seguro Social (IMSS): This is the Mexican government-run health system, available for foreign residents at a cost of around $2,000 to $5,500 Mexican pesos (~$114 to ~$313 USD) per year, depending on your age and health. While costs are low, waits can be long, not all services/medications are covered, and it is administered entirely in Spanish⁹
Private healthcare: Most expats opt for private insurance, which, although more expensive, tends to be more comprehensive. The costs vary widely depending on your age, health, and other factors, but average about $1,700 USD per year with a deductible of $5,000 USD¹⁰

How much money do you need to retire to Mexico from the US?

The exact amount of money you need to comfortably retire in Mexico will depend on your lifestyle and location, but the cost of living tends to run less than $2,500 USD per month for a couple.¹¹ Remember, though, that the definition of “economic solvency” is significantly higher than that, starting at about $3,540 USD per month for a temporary residence visa.

Retiring in Mexico on Social Security: Considerations

Given that the minimum monthly income to qualify for a Mexican residence visa is $3,540 USD per month, and the average monthly social security check is only about $1,827 USD,¹² social security alone won’t be enough to qualify for economic solvency unless you already have a minimum of ~$58,996 USD in savings.

Do Americans pay taxes in Mexico?

Yes. Americans living in Mexico under a temporary or permanent residency visa are considered tax residents of Mexico. In addition, they also must pay US taxes, since America’s tax system requires that all citizens and permanent residents file a federal tax return — provided that they meet the minimum income reporting threshold — regardless of where in the world they live.

Read more Taxes in Mexico: What US Expats Need to Know

Tax planning for American retirees in Mexico

While the numerous benefits of retiring in Mexico make it well worth the effort, it can complicate your US taxes. That’s where Bright!Tax comes in. Leaving US taxes to us means you can spend more time enjoying your hard-earned retirement.

Resources:

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Retire in Portugal: Visas, Healthcare, Taxes & More

Katelynn Minott, CPA & CEO — Wed, 19 Apr 2023 14:24:53 +0000

From bustling cosmopolitan cities like Lisbon and Porto to sun-soaked beach towns such as Costa Nova and Peniche, as well as the lush Douro Valley and Pico Island wine regions, Portugal boasts a range of exciting retirement destinations. Fortunately for Americans, the cost of living in Portugal is a fraction of what it is in the US — making it no surprise that more and more Americans are choosing to retire in Portugal.

Of course, there’s a lot of research to do and angles to consider before deciding to retire abroad. Read on to learn all about taxes, the cost of living, and healthcare in Portugal for expats.

Benefits of retiring in Portugal

Some of the things Portugal is most known for include:

Beautiful sunny weather year-round
Stunning geography (cliffsides, plains, beaches, mountains, forests)
A variety of picturesque cities, towns, and villages
Delicious food, like pastéis de nata (custard tarts), piri-piri chicken, and tons of fresh seafood
World-famous Port and Madeira wines
A rich culture, from fado music to azulejo tile art

Combine that with the affordable cost of living, high quality of life, and excellent healthcare system, and Portugal is a wonderful place to retire.

Related: The 14 Best Countries to Retire in 2023

Best place to retire in Portugal

Some of the more popular places for Americans to retire in Portugal include:

Porto: The second-largest city, known for its signature Port wine, Baroque architecture, São João festival, and indulgent cuisine
Madeira: An island chain known for its signature Madeira wine, mild weather, natural landscapes, and hiking trails
The Algarve: The southernmost region in Portugal, known for its sandy beaches, fishing villages, golf courses, and thriving expat community
Alentejo: A rural region known for its rolling hills, relaxed pace of life, sprawling villas, and olive groves
Lisbon: The capital city, known for its colonial architecture, historic neighborhoods, scenic hilltop vistas, and bustling markets

Portugal retirement visa US expats

Retirement in Portugal for US citizens requires a long-term stay visa. The most popular Portugal retirement visa for US citizens is the D7 visa.¹

The D7 visa is for non-EU residents who have enough savings or passive income to sustain themselves financially in Portugal. While the term “D7 visa” is often used interchangeably with “Non-Habitual Resident (NHR),” it’s crucial to understand that the D7 visa and NHR are distinct from one another. The difference:

The D7 visa is the means by which non-EU residents may obtain a residence permit to live in Portugal long-term.
NHR is a beneficial tax regime that requires a separate application process, which eligible expats undertake upon arrival in Portugal.

What is the Non-Habitual Resident (NHR) tax scheme?

The NHR tax scheme was established in 2009 to attract wealthy individuals from around the world to Portugal. Key benefits of the regime include the provision of a 10-year tax break, which we detail further below. Additionally, holders retain the ability to engage in professional activity in Portugal and pay no wealth tax.

To reiterate: The NHR can only be obtained via application from within Portugal once you’ve arrived. This means that if you intend to retire in Portugal on the D7 visa, you would take the following steps, in order:

Obtain the visa
Arrive in Portugal
Coordinate your application for the NHR.

How to qualify for the D7 visa

The Portugal retirement visa income requirement is €760 (~$840) per month in passive income for individuals, or 12 months’ worth of savings (€9,120, or ~$10,080 ). Applicants must also show proof of accommodation in Portugal and stay in the country for over 183 consecutive days per calendar year.

Previously, Portugal also offered the Golden Visa (D2 visa), geared toward investors. However, they recently shut the program down, citing rising housing costs.²

📢 October 2023 update on the Non-Habitual Resident (NHR) tax regime

In an interview with CNN Brazil on October 4, 2023, Portugal’s Prime Minister, Antonio Costa, announced that the government is ending the NHR tax scheme.

Reasons behind the ending of NHR

A standout pressure point is the ever-rising cost of housing in cities such as Lisbon and Porto. The influx of wealthy foreigners combined with opportunistic landlords produced severe housing inflation. For years now, Portuguese people have been priced out of their own neighborhoods and cities.

The resulting political backlash has been intense. Many viewed the ending of the Golden Visa in its current form as a signal that the NHR tax regime could be next. Now that it’s officially on the chopping block, many foreigners are racing to submit their visa applications in the hopes of arriving in time to apply for the NHR scheme.

US citizens planning to move to Portugal should know that the D7 visa remains an immigration pathway. However, the main change is that the tax rate on their retirement income (and earned income, if applicable) will dramatically increase if they’re not eligible for NHR, or NHR ceases to exist. It’s crucial that retirement expectations be aligned with this news moving forward, particularly as it relates to planning and budgeting for retirement in Portugal.
–Alex Ingrim, Chartered MSCI at Chase Buchanan USA

How long does it take to get a visa to live in Portugal?

The typical processing time for Portugal’s retirement visa is approximately four months. However, given the current circumstances, interested applicants may benefit from working with a certified immigration lawyer to expedite the process. (Kindly note our caveat on this advice below.)

As a baseline, you will need to gather and complete the required documents:

Visa application form
Background check authorization
Valid passport
Two passport-sized photos
Proof of travel & health insurance
Six months’ worth of bank statements
Proof of income
Proof of accommodation
A clean criminal record

🚩A word of caution:

Some companies are charging exhorbitant prices guaranteeing a streamlined D7 visa application and subsequent acceptance into the NHR tax scheme. Always be wary of "guarantees" and take care to research these companies thoroughly. We also recommend cross-referencing sales and success-rate claims with objective professionals in the global mobility field to insulate yourself as much as possible from scams.

Healthcare in Portugal for US expats

Many retirees wonder: Is healthcare free in Portugal? For citizens and permanent residents, it is effectively free (besides the taxes that fund the system).

Portugal’s national healthcare system, known as the Serviço Nacional de Saúde (SNS), is free for all residents. It is free to all residents of Portugal. However, holders of Portugal’s retirement visa aren’t entitled to Portugal’s healthcare system right away.

When you receive your D7 visa, you will need to validate it when you arrive in Portugal. Validating your visa activates your Portuguese residency status. This in turn allows you to register yourself in the national healthcare system. However, all visa applicants will be asked to provide proof of private health insurance at the beginning of their stay. This is to ensure that they are covered in the interim between arriving and validating their visa.

The good news is that private healthcare for expats in Portugal is generally high-quality and more affordable than it is in the US. The cost of private healthcare in Portugal is typically between €20 and €50 per month,³ but it may be more depending on factors like your age and pre-existing conditions.

How much does it cost to retire in Portugal?

In smaller towns, the cost of living in Portugal for retirees is often about €1,400 to €1,800 (~$1,500 to $2,000) per month.⁴ In bigger cities, you’ll likely spend between €1,800 and €3,200 (~$2,000 to $3,500) per month.⁵ Of course, that estimate can vary greatly depending on your lifestyle.

What is the average income in Portugal?

A report by the publisher ECO⁶ found that the average salary in Portugal for 2021 was below €22,000 (~$24,300).

Retiring in Portugal on Social Security: Considerations

In 2023, the average income in Portugal is less than the annual Social Security benefit for 65-year-old Americans, set at $30,708.⁷ This translates to $2,559 a month, suggesting that, in theory, one could live in Portugal solely on Social Security, though it might be a tight budget. Coming out to $2,559 a month, you could theoretically live off of Social Security alone in Portugal, although it would likely be pretty tight. Keep in mind, too, that some receive less in Social Security benefits than others, and benefits are often still taxable.

If you pad those Social Security payments out with some savings, however, you can live quite comfortably in Portugal.

Related: Can US Expats Collect Social Security Benefits?

Do Americans pay tax in Portugal?

Americans in Portugal with the D7 retirement visa might face taxation from both Portuguese and US governments. However, this doesn’t automatically imply double taxation on identical income.

Portuguese taxes

D7 visa holders currently enjoy specific tax benefits in Portugal. Under the Non-Habitual Resident (NHR) tax scheme, they are taxed at 20% for Portuguese-sourced income and 10% for foreign-sourced income, which encompasses foreign retirement and social security payments.⁸

Considering that typical Portuguese income tax rates reach up to 48%, this can lead to significant savings through residency under the D7 visa. What’s more, the NHR tax scheme lasts for a full ten years. So, even if you’re granted permanent residence in Portugal after five years of living there, you can continue to benefit from NHR status for five additional years.

Read more: Taxes In Portugal for US Expats: Everything You Need To Know

US taxes

Foreign Tax Credit (FTC): The Foreign Tax Credit allows US expats to essentially subtract what they have paid in income taxes to a foreign government from what they owe to the US government (though as with all things US-tax related, it’s not quite that simple).
Foreign Earned Income Exclusion (FEIE): Allows those who qualify to exclude up to $120,000 of foreign-earned income (for tax year 2023) from taxation.
Foreign Housing Exclusion: Expats who meet either the Physical Presence Test or the Bona Fide Residence Test can use the Foreign Housing Exclusion to write off qualifying housing expenses like rent, utilities, property insurance, and more.

Also, remember that:

Withdrawals from post-tax retirement accounts, like Roth IRAs and Roth 401(k)s, are tax-free
Only up to 85% of your social security payments are subject to taxation

References:

The post Retire in Portugal: Visas, Healthcare, Taxes & More appeared first on Bright!Tax Expat Tax Services.

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