Thinking of retiring abroad? If so, you may wish to know about the favourable tax schemes that some European countries have put in place to attract retirees. We take a look at the requirements for these and why they could your move overseas even more appealing.
Get a quote from us today by completing our simple form. We’ll take a look at your requirements and arrange to speak to you at a suitable time to offer the best possible solution for all of your upcoming currency transfers.
Greece is offering a 7% tax rate to retirees who choose to move there, which applies to both EU and non-EU residents. If a foreign retiree relocates their tax residency to Greece, they will get a flat tax rate of 7% – and it doesn’t just apply to pensions! Any foreign income, whether it be from investments, business activities, property or more, will be eligible for the flat 7% rate. This remains in place for 10 years.
One of the best aspects of this scheme is that it’s very low commitment. You can either rent or buy a house to take advantage and do not need to acquire a residence permit. You do, however, need to agree that you will stay in Greece for at least 6 months of the year.
Portugal offers favourable tax conditions through its Non-Habitual Residency scheme, which is for both non-retired and retired people if they meet certain criteria. You must live abroad, not have been a resident in Portugal within the last five years and want to move to Portugal.
With Non-Habitual Residency, you can benefit from just 10% tax on your pension. The usual Portuguese income tax ranges from 14.5% to 48%, so this could save you a lot of money.
Like Greece, Portugal’s scheme doesn’t just apply to pensions. Most foreign income should qualify.
Italy has approached things slightly differently. Villages in southern Italy with populations under 20,000, are offering a 7% flat rate tax for nine years when you become resident there in retirement.
The regions included in the scheme are Abruzzo, Molise, Campania, Puglia, Basilicata and Calabria, as well as the islands of Sicily and Sardinia.
This 7% rate can apply to your pension, any overseas business or rental income. However, it only applies to income received from abroad, not Italian income. To apply, you need to have been a tax resident outside of Italy for at least 5 years, you will need to transfer your tax residence to one of the above regions, in an area with fewer than 20,000 inhabitants.
Becoming a tax resident in Cyprus after retiring also has its benefits. If you spend more than 183 days in the country in a calendar year, you will become a tax resident of the Republic of Cyprus.
A foreign pension received in Cyprus is then taxed at a flat rate of 5% for amounts exceeding €3420 per annum. It is, therefore, a little more restrictive than the countries above. However, if your pension meets this requirement, then you can benefit from a 5% rate. A pension commencement lump sum from a UK pension can be taken free of tax in both Cyprus and UK.
You also have a choice between paying a fixed tax rate of 5% a year on pension income or to opt for Cyprus’ tiered income tax system. A retired person can switch between these options on a yearly basis.
Protect your pension from currency fluctuations
If you are receiving income from a different currency, such as a UK-based pension or investment income, you’ll want to ensure that you never have to be concerned about the value of these payments due to fluctuating exchange rates.
We can put solutions in place to ensure that you don’t lose money on your pension payments. For more information about this, simply give us a call on +44 (0)20 7898 0541 or fill in this short form.