Spending your retirement abroad


#21

By the way, the taxation is one of the reasons why I think it’d make more sense to have a permanent residence in Zug and (at least officially) spend 183 days there and rest of the year in Poland.

PS. A friend of mine is considering similar case but with Mexico. His lawyer told him that if he returns every 2-3 weeks to Zug for about half a year, and makes some photos every visit, the tax authorities won’t have any questions.


#22

Yeah, I believe if you retired with 1 million franks and moved to Poland, the capital gains tax would become a pain. Let’s say you lived by the 4% rule, 2% being taken from the dividends, and 2% from selling a part of your stash. On this 40’000 you would need to pay around 8’000, including ZUS (pension) and NFZ (healthcare).

How much would you pay in Zug? Some 2’000 in taxes, 3’000 in healthcare. And you would need a good friend who would provide you with an address. :smile:

Btw do you know any other countries with no capital gains tax? A list maybe?


#23

How about Malta or Mauritius? Not only there’s no capital gains tax but also no dividend taxes as long as you don’t bring the income inland, so you can keep reinvesting practically tax free (obviously there’ s still US withholding tax which you can do very little about, short of reducing it to 15% via IE funds maybe). And did I already mention somewhere English is a first class language on both? No need to learn some third world aboriginal language to settle here


#24

What about the spending in Malta ? Housing, grocery, ect. You will need to declare some income in Malta.

Malta is really interesting because it is in the EU. You can move there and become resident easily.
Cheap flights from Malta to Europe with low-cost airlines companies (Ryanair, Vueling, Easy-jet) are also a good point

Another option would be tio become a Perpertual traveler:


#25

Here’s a nice list of capital and income tax free countries:


#26

I’ve heard about Malta. I guess when considering a location, one needs to look at the following:

  • Quality of life
  • Cost of living
  • Income tax and social contributions
  • Capital gains tax
  • Estate tax treaty with USA
  • Double taxation agreement with USA

So for example Switzerland would tick all points except cost of living. When looking at the list of countries with estate treaties with USA, the only country with a really low cost of living is South Africa. Maybe it’s also a nice option.

Thanks for the link. It’s an interesting description. What I don’t understand is the point 4. asset heaven. Don’t you have to usually pay taxes on assets in the place of your legal residence (point 2.)? There are websites dedicated to perpetual travellers, like Nomad Capitalist (mentioned by @1000000CHF) or Nomad List. Nomad Capitalist is a business that advises in exactly what were discussing. I wonder how much they charge.


#27

You could live at the border of Switzerland next to Germany and/or France and enjoy your cheap EU shopping

Unless you’re going to actively manage your portfolio and pick stocks, irrelevant - you can stick to buying IE-domiciled funds and get along just fine on both of these points

Or get a swiss passport, then your heirs can invoke the swiss treaty whereever you would die.

Also don’t forget to consider gift and inheritance taxes of your new country itself - even in Switzerland there are limits how far you can go before the tax authorities would take a bite of your estate too


#28

That’s a good idea, the problem is that you would still need to rent a flat. Plus you would probably still need to go at least a few minutes over the border to do the shopping - a bit inconvenient.

The Ireland-domiciled ETFs pay 15% withholding tax on dividends. So the worst scenario would be losing 0.3% per year. If you moved to a country where they don’t tax income, then it would indeed be OK, because I believe in Switzerland your final tax rate on US dividends is max(15%, your income tax rate). And what about the higher TER, lower liquidity etc.? No longer an issue?


#29

TER will be higher, yes, but still ~ 0.1% is laughably small compared to what any serious banker would try to charge you. Liquidity is smaller, but it’s only a minor annoyance if you only trade once a year or so. Both are simply the tradeoffs one has to make when domicilied in a less tax-connected country

And health insurance. Rents in a small village in the middle of nowhere though are much lower than what you’re used to paying in a big city.


#30

Many great opportunities come with relocations prior to retirement - imagine reaching FI and instead of holding all your assets to your name (higher taxes) - holding it through a company paying yourself “business expenses” instead of a salary or dividends which could be taxed.
Once you leave country A (e.g. Switzerland), certain retirement accounts can be unlocked (e.g. through tax efficient procedures - see PFS services for 2nd pillar accounts in canton Schwyz - https://www.123-pensionierung.ch/de/pensionskasse/auswandern-bvg/kapitalbezug-auswandern/) and in case you move to a place where these withdrawals are NOT taxed AND they have a DOUBLE-TAX TREATY with Switzerland (e.g. Singapore) you don’t even get a single frank deducted for taking our 2nd and 3rd pillars: 0% Taxes! International mobility and flexibility is the key to unlock FI earlier!


#31

The point is not to have any legal residence. You are a tourist everywhere. Not having a residency, could be an issue in some cases. However, if an address is needed a PO box should be sufficient.


#32

You need legal residence, for example your broker needs to know it. Or?


#33

@Bojack, have a legal (tax-) residence in a place that doesn’t tax your dividends, interests and capital income (e.g. Singapore or Hong Kong are such lovely cases) and don’t spend more than 180 days in any of the other places. Your bank will have their legal residence, your tax domicile will leave you alone and you are free to do whatever. Very often setting up such a domicile is rather simple by opening a company and giving yourself a working permit, paying yourself a minimum salary which gets taxed but you’ll avoid the taxation on the larger chunk of your financial income.


#34

I know some of you plan to eventually retire in Poland, so I thought I’d share a tidbit I saw today in the news from an OCDE report, saying that 33% in Poland avoid seeing a doctor due to costs (in Switzerland that rate is 20%): https://www.rts.ch/info/suisse/9075208-un-suisse-sur-cinq-renonce-a-se-soigner-pour-des-raisons-financieres.html.


#35

I don’t know what that should mean. In Poland you don’t pay for healthcare. But you have very long waiting lines for certain diagnoses and procedures. Emergencies are handled swiftly (broken leg, heart attack etc). So if you want to get something done quickly, you go privately. This is what you also have to de facto do in Switzerland, if you have a high “franchise”. The difference is, in Switzerland you pay 150 for a doctor visit, in poland 30, Swiss dentist 300, Polish dentist 50, Swiss gastroscopy 600, Polish 50. What is very popular if you work in an office job, is that they have all their employees insured in a private healthcare service. So if you have some small health issues, you can go there and don’t have to wait in line with public healthcare.

So yes, for small things people pay themselves, and probably the poor people don’t do it if they would have to pay. As a rich mustachian, you should not care about this statistic.


#36

Yeah, I figured this wouldn’t be an issue for a retiring Mustachian, but was still curious about what would make the Polish case an outliar in the OCDE report. I figured the health system in Poland wouldn’t be much different than in Portugal, and your description seems to confirm that.


#37

An interesting graphic I found on OECD website. You should take it with a grain of salt, it’s about subjective perception of your own health.

g3-19


#38

Can you please clarify what you mean here? Go privately for what?


#39

I guess what he means is you go into a private hospital or clinic (because public hospital have so long waiting list).
Since you go to a private establishment, you subscribe as well to a private health insurance, which is the healthcare model in Switzerland.


#40

What I mean is:
In Poland you are theoretically covered, but there are long waiting lists. So if you want to take care of something quick, you have to pay individually.

In Switzerland you are theoretically covered, but you may even have to pay up to 2500 CHF yourself.

So in the end it’s quite similar. The difference is, in Poland a doctor’s visit is much cheaper and all prices are transparent. In Switzerland, they’re not able to tell you the price even if you call them. And you learn the price 1-2 months after the visit…

The really bad thing in Poland are costly procedures that are not life-threatening. For example, say you’re slowly going blind and need an eye surgery. The waiting list says your next available slot is… in 2 years. If you’re poor, your eyesight is getting worse and worse and there is nothing you can do, just wait.