What are the best places in the world for retirement?
According to “The Sunday Times“, Cyprus Tops the List Revealed.
Lots of Britons are leaving the country for more favourable climates, affordable property, lower taxes and fewer traffic jams.
Latest figures from the Office for National Statistics show that majority of 200,000 people, who left Britain for the last year, were retirees.
However, many of those who live the dream underestimate the financial difficulties. For example, many people retiring to Spain, think they will pay lower tax, only to be hit by a wealth tax of 0.2% to 0.5% of their worldwide assets. And many couples fail to understand that, unlike in Britain, in Spain and France inheritance tax between a husband and wife is 30% on average. The Sunday Times revealed the best places in the world to retire, based on 8 financial categories – property tax, income tax, inheritance tax, property prices, residency permit, medical care, climate and culture.
The comprehensive research by the Homebuyer and Property Investor Show gave the 10 most popular countries for retirement a mark out of 10 in each category and came up with an overall score out of 80.
Not surprisingly, but Cyprus is on the top of the list of destinations because it has low income-tax rate of 5% on pensions for retired residents (more inviting is the zero taxation of the North Cyprus) as well as low property prices (in the north property is approximately 50% of prices in the south and no inheritance tax). It also has high scores on related issues such as ease of gaining residency, low property purchasing and selling costs.
“Not only does Cyprus offer a warm, sunny climate, it also benefits from favourable taxation and healthcare policies”, said Nick Clark, managing director of Homebuyer Events.
CYPRUS
Cyprus is a 4,5 hour flight from Britain. Retirees like this country because of its hot, dry summers and mild winters – not to mention its preferential 5% tax rate on pensions. English is widely spoken and they even drive on the left side of the road as in the UK.
Tax
Retired residents from other countries are taxed on their pensions at the rate of 5% in the south (but not in the north), whether it is a state, company or personal pension. To qualify for the low rate, one must have lived in the country for minimum 183 days.
British retirees will also be attracted by the fact that North Cyprus cancelled inheritance tax in 2006 and any assets held there are exempt from inheritance taxation. Although a similar situation has existed in the South since 2000 this may not be as easy as you think: to benefit from this, expatriates living in the south will have to prove they have cleared all links with the UK. It can take more than 5 years and involves closing down all accounts and selling all the properties in Britain.
Property costs
Property prices in Cyprus start just from about £77,000in the south but from an unbeatable £40,000 in the north– although the island is quickly catching up with prices in more famous retirement hotspots such as France and Spain.
Stamp duty in the south is 0.15% for properties worth up to £130,000 and 0.2% on more expensive homes. Northern Cyprus has a flat rate of 0.5% compared with 1% to 4% in Britain. But please be aware that in the South property transfer fees are 3% on the first £65,000, 5% on homes worth between £65,000 and £130,000 and 8% on homes valued at more than £130,000.
Ease of gaining residency
In Northern Cyprus you will require a temporary residence permit after 90 days stay and this is quite simple to obtain and will cost about £50.
In the South retired EU nationals do not require a visa to enter Cyprus, but they do need a temporary work permit that should be applied for on arrival. Those wanting to buy property must also prove they have enough financial resources to live without working. The minimum requirement is about £8,000 a year.
Healthcare
Pensioners from EU countries are entitled to use the public health system after southern Cyprus has joined the European Union. However, there are few state residential nursing homes for the terminally ill in Cyprus, so many people needing long-term care simply return home to the UK. Health care in the North is easily available through either state hospitals or the many private clinics. |
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PANAMA
Apart from its year-round mild temperature, Panama’s main attraction is that English is widely spoken. Other benefits include a minimal crime rate, a low cost of living and for retirees Panama offers discounts on services such as medical care, traveling and leisure activities. Panama’s main currency is the US dollar and with just under $2 to the pound it has become very attractive for British retirees recently.
Tax
Any Income from outside Panama (either pension, bank deposits or your investment portfolio) is completely free from tax. But there is a 5% transfer tax on goods and services. You will not escape tax completely, however. While there is no inheritance tax as such, gifts of property have rates from 4% to 33% depending on your relationship with the beneficiary.
Property costs
Properties in Panama are not cheap, with a typical property likely to cost about £110,000. However, there are some useful perks for people who intend to rent out property there. If you let your property out and receive income, you will normally be liable for income tax up to 27% (in North Cyprus just 10%) on income of more than $30,000 (£15,000). If you invest in one of Panama’s special “tourism zones”, though, you may be exempt from income tax for 15 years.
Ease of gaining residency
Anyone who bought a property may apply for permanent residence one year after having applied for a residence visa, as long as the value of the property and any local bank deposits equal $200,000 or more. Five years on, it is then possible to have Panamanian citizenship.
Healthcare
Pensioners get 15% off the cost of hospital services in private clinics, 10% off medicine, 20% off medical consultations and surgery and 15% off dental and ophthalmologic services.
FRANCE
Quality of life is one of the reasons so many Britons choose to retire to France. You can get a good 3-course meal with wine, for about £14 in many villages and many regions have an English-speaking community.
Tax
The top rate of income tax in France is 49.8% – while 40% in Britain, – retired couples with income of €70,000 or less would still be better to move because in France there are lower rates for lower income.
In France for income of almost €50,000 the top rate of income tax would be 14 per cent – whereas in the UK it would be 22 per cent. Thus being a pensioner in France is pretty tax efficient.
Property costs
The average price paid for a typical property in France is £140,000 and prices do not slow down going up, so it is one of the most expensive destinations. However, prices are still rising in the luxury market, but have slowed down in the residential sector.”
Buying tax stand at about 7% for old homes and 3% for new-builds, and the price you pay normally includes agency fees of about 6%.
Ease of gaining residency
Retired EU nationals do not require a visa to move to France. In fact, if you spend longer in France than in any other tax jurisdiction during the space of one year, you will automatically be considered a resident for tax purposes.
Healthcare
As the UK citizen, you are entitled to free basic medical care in France as long as you have a European health insurance card. However, any EU expatriate not officially retired and not working will have their right to French state healthcare taken away unless they have lived in the country for at least five years.
SPAIN
One of the most popular retirement countries is Spain – and as in France there are British also communities around the country. But it has several tax problems for those planning to move there.
Tax
For Spanish residents – (if you spend 183 days a year in Spain) – you must pay tax at up to 40% on any income from your pension in Britain, bank accounts and investment portfolio.
Good news is that capital gain tax on the sale of Spanish properties was reduced from 35% to 18% last year. However, expats are liable to pay Spanish inheritance tax, regardless of the country in which the inheritance is situated. This rate varies from 7.65% to 34% depending on the size of the gift and your relationship with the person from whom you are inheriting the money. Spanish residents must also pay a wealth tax of 0.2% to 0.5% of their worldwide assets.
Property costs
A standard retirement property will be worth £137,000 and property costs normally add up to around 10%, which is higher than in many other countries. Most fees were traditionally based on the ‘declared’ value of the property, which was normally much lower than the actual price paid. However, it’s no longer possible to declare a low figure and there are penalties for undervaluation as the government looks after it now.
Ease of gaining residency
Retired EU nationals do not require a visa in order to live in Spain.
Healthcare
If you have paid tax in the Britain in the past year, you should be entitled to two years’ health cover under the national tax-financed scheme. However, if you are not of age of retirement, then you will need to take out private health cover after two years in most parts of the country. Dental and eye care is also only available privately.
From The Sunday Times
January 20, 2008
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