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What does your dream retirement look like? Does it involve white sandy beaches; idyllic mountain ranges or perhaps quiet countryside?
Wherever you see yourself living, it’s important to stretch your retirement pot as far as possible and for many people, that means saving on tax. With that in mind, this blog will explore 5 of the best tax-efficient retirement destinations.
The first stop on the tour is the Bahamas. If the idea of living in tropical paradise appeals, then the Bahamas might be the place for you.
This stunning collection of tropical islands can be found South East of Florida. With daily flights connecting the Bahamas with Miami International Airport, residents are far from cut off from the outside world.
The Bahamas is known for providing it’s residents with an excellent quality of life. The islands boast ownership of some of the world’s top beaches along with beautiful tropical forestry. If being close to nature is important to you, the Bahamas might be a good choice.
Tax: The Bahamas has no income tax, corporate tax or capital gains tax.
n.b. Living in the Bahamas may not exclude you from taxes in other countries, for example, UK Inheritance Tax.
Next up is Portugal. A nation with a rich culture, a warm Mediterranean climate and stunning scenery is a favourable destination for many. In the South of the country, you will find the popular Algarve region, which is home to long windswept beaches, hospitable communities and a collection of first-class golf courses.
As you move further North, you will find the historic cities of Porto and Lisbon, both cities are bursting full of culture and rich in history. For those who want to remain in a city, but prefer a slower pace, Portugal’s cities are a great option. For a Western European country, Portugal is surprisingly cheap making it suitable for a range of budgets.
The Portuguese government have made the country an attractive proposition for retirees. By moving to Portugal you may be eligible to receive up to 10 years of tax benefits, which stands to aid your retirement budget. Retirees are often eligible to gain non-habitual residence (NHR) status, which, if they qualify, makes income from employment, investments and pensions free from tax for ten years.
Next on the European leg of the tour is the world-famous Principality of Monaco. Few places on earth are as expensive as Monaco which is why it has rightfully earned the reputation of being the ultimate millionaire’s playground. Nestled on France’s South Coast and just a few miles from nearby Italy, Monaco offers a fantastic mix of urban and rural scenery, whilst also being situated on the stunning Mediterranean coastline. Drive just 3 miles out of town and you’ll find yourself in the French countryside, drive a further 100 miles and you’ll arrive in the Alps.
For tax purposes, Monaco is another winner. Monaco has no personal income tax, and that has been the case since 1870. Not only this, but Monaco also does not collect capital gains tax, nor does it levy any net wealth taxes.
All sounds rather appealing, assuming you can afford it. According to the New York Times, Monaco is the most expensive property market in the world. Even a modest one-bedroom apartment on the waterfront will set you back well over $6m.
Our final European stop of the tour is another country that you could easily miss on a map. Whilst Andorra is similar in size to Monaco, it couldn’t be more different. Nestled in the Pyrenees, this mountainous country is known for offering European skiers are better rate than what they would find in the Alps.
If you’re into walking and snow sports, Andorra is a great option. Despite being located high in the Pyrenees, the major cities of Toulouse and Barcelona are more than accessible by rail or car, meaning international transit is fairly straightforward.
Andorra’s relatively low-income tax rate of 10% along with its favourable pension legislation has earned it a spot in our top 5.
The final stop on our tax-efficient retirement tour is the Central American country of Panama. Famed mainly for its canal which connects the Atlantic with the Pacific, Panama has also built a strong reputation for offering favourable financial freedoms to retirees.
Panama is home to the Pensionado Program. This program which has run for several years attracts many retirees from the US and Canada. The program offers a range of discounts for retirees with lifetime pensions.
The scheme has countless benefits including; one-time duty tax exemption for household goods up to a total of $10,000, 50% off a large list of activities in the country including movies concerts and sports events and an impressive 25% off most airline tickets.