Retiring Abroad: Understand the Laws of Your Destination First
June 8, 2018
You've been there for the birthdays, family reunions, graduations and emergencies. Now, you're about to retire overseas, and you're looking forward to being the main event. Before packing your bags, however, you should consider one simple question: Do you know what to expect when you get there?
No, we're not talking about palm trees, remote cabin locations or other perks of life away from the daily grind. When moving to a new country for good, it's critical to get a read on the legal climate beforehand. This quick primer should help you understand how to decipher the laws and rules.
Your Legal Status as a U.S. Retiree Abroad
Being retired, elderly or American doesn't grant you any special status or entitlements, regardless what your new resort-style life makes you inclined to believe. In some places, your nationality might even transform you into a target, so it's usually wise to check out the Bureau of Consular Affairs' current Travel Advisories before heading somewhere new. Follow these four planning rules to avoid making waves:
1. Research the Laws Ahead of Time
Find out what the rules are concerning things like money transfers, property ownership, tenancy and taxes. Instead of relying on secondhand information, always check out official websites run by the government of the country you've chosen to move to.
If you're planning on doing something unusual, discuss it with a legal expert. Preferably, they should operate in the target destination. For instance, before trying to bring your favorite hotrod project car over to Belize or Bermuda, you should ask a local lawyer or government official what kinds of tariffs, declarations, emissions regulations and other hoops you might need to jump through.
2. Don't Assume That You'll Be Free to Do Business as Usual
Setting up a business is complicated everywhere. Being a foreign national can make the process even harder. If the ideal retirement for you includes continuing to work on your passion, or you end up running out of money, you’ll want to understand your options.
According to the North American Free Trade Agreement, or NAFTA, you can't start a domestic company as a foreigner. Additionally, business plan requirements are stricter, and the rules change often. In the E.U., you'll also have to follow different labor laws. To even consider starting a business, you’d need a partner you trust who holds citizenship.
3. Prepare for Unique Financial Rules, Systems and Taxes
Your new country isn't going to welcome you with open arms and expect nothing in return. For instance, expats who reside in sunny Spain must pay income taxes after generating annual earnings that surpass a certain threshold, although there are rules designed to prevent you from being double taxed by Spain and the U.S. To obtain a residency permit to retire in France, you'll usually need to verify that you have financial support and healthcare.
4. Understand Property Ownership
Owning property in a foreign country can be tricky. For instance, different nations may require you to register investment properties with central banks or set up local companies to purchase land. In some cases, merely being a foreign national will exclude you from owning property in areas deemed of interest to national security.
Moving Towards a Better Retirement
There's a lot to consider before you retire abroad. Familiarizing yourself with the rules is more than just a smart move. These four steps could make all the difference, and they're pretty easy to accomplish, so what's your excuse for not making your retirement better? You may be raring to start a new laid-back life, but do your due diligence first.