When I saw this article on the Yahoo Finance homepage, the first thing that popped into my mind is “why would anyone move to Europe, the dollar is totally in the crapper.” It only recently moved from record lows against the Euro and our trade deficit isn’t making future prospects look particularly bright. Well, Forbes clearly knew that and also pointed out some other potential deal breakers with Europe, notably taxes, and listed their twelve favorite retirement locations.
The first one mentioned was Vienna, Austria because it offers “foreign retirees a tax status that’s near zero” coupled with a low cost of living, the two biggest things on a retiree’s mind. So they recommend establishing citizenship in a country that doesn’t tax worldwide income, such as the Bahamas, and only live in Austria for six months out of the year if you want the most favorable tax treatment. As a barometer for cost of living, they use the example of how much it costs to rent a 1,200 sq ft. apartment and in Vienna’s most post district, it’s a mere $1,200.
Second on the list is none other than Switzerland, home of the much celebrated Swiss bank account, because they sport a tax rate of a mere 11.5% plus no federal tax on capital gains. There are downsides though because much like there is a state tax in the US, there is a canton tax, based on your property and net wealth, that you must negotiate. A 1,200 sq. ft. apartment will run you about $2,500 in downtown Geneva.
The Principality of Andorra, the quaint little landlocked country between Spain and France, is the third one mentioned and they have no income tax if you can find a place in the 468 square miles of country. Italy taxes investment income at 12.5%, does not have an inheritance tax, and if you live in Campione d’Italia, on Lake Lugano, you avoid personal income tax and municipal taxes.
Now, UK appears on the list because you only pay taxes on income you bring into the country. So if you made a million bucks but only bring in fifty bucks, you’re only taxed on the fifty dollars. Not bad!