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Home » The Most Tax-Friendly Places to Retire Abroad

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The Most Tax-Friendly Places to Retire Abroad

Source: usnews.com Author: KATHLEEN PEDDICORD READ FULL ARTICLE AT usnews.com

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You don’t want to organize a new life overseas around the tax code, but sometimes lower taxes can converge with a pleasant retirement locale. It is possible to relocate to the overseas Shangri-la of your fondest daydreams while, at the same time, reducing your tax burden, maybe to zero.

Many countries are relatively tax-friendly when it comes to retirees. A foreign resident’s pension or Social Security income is often not taxed. This is the case in Panama, Belize, Costa Rica, Uruguay, Ecuador, and Malaysia. Retire to one of these countries with only pension or Social Security income, and you will have no local income tax liability.
Things get more complicated when you have passive (investment) or earned (wages or business, including self-employment) income. The first thing to understand when considering your tax burden as a retiree overseas is that tax rules vary greatly from jurisdiction to jurisdiction. A few countries including the United States tax residents on their worldwide income. These are places where becoming a legal foreign resident is expensive.
Some countries tax foreign residents on a remittance basis, which means they expect their share of any money you bring into the country, such as Thailand. This can work to your advantage if you earn your money outside the country and are able to live on little. In this case, you could earn millions of dollars a year, from either passive or earned income, but, as long as you kept most of your millions outside the jurisdiction where you’re residing, you wouldn’t owe any tax on it locally.

Some countries tax foreign residents only on income earned locally. In this case, you could not only earn millions outside the country, you could even theoretically bring your millions into the country to spend as you like. As long as you didn’t earn the money...

Full article: The Most Tax-Friendly Places to Retire Abroad

More About: Retirement

Dec 5 2011 submitted by Jason Edwards

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