Morse Flores
New member
Planning to retire early, where do you see yourself retiring and why?
Retiring early? Where?
- Thread starter Morse Flores
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Badomb
Member
Fantastic topic! I love the idea of retiring in France, for example, but I never thought about what it will mean in terms of taxes. Imagine I will be, for example, living at a budget of 50K/year (whatever currency you choose), what will it mean to me to be taxed for this amount in CH or FR?
What's your destinations?
What's your destinations?
Morse Flores
New member
In the initial years of my retirement, I am planning to do a "geoarbitrage", might move to Asia (Philippines- my home, Japan, Thailand, Vietnam, Malaysia, Indonesia) for 6 months (during winter in Swiss), then in Latin America (Costa Rica/Colombia/Ecuador), then come back in Swiss during summer. Then looking at the "southern part of Europe"- Portugal, Spain and Greece", especially in cities where they have vibrant University towns/cities.
I currently plan to retire in Switzerland. But since my retirement is in 15 years, it may change since then.
Seeing the heat increase in Switzerland, I am thinking about northern countries as well.
Seeing the heat increase in Switzerland, I am thinking about northern countries as well.
Are Northern countries FIRE friendly though?
For me it would probably be Portugal in Europe, or Thailand. but honestly I'd rather stay in Europe, so it will most likely be Portugal. Greece might be a destination, but we'll have to see how the situation is going to evolve over there over the next 15 years...
Not really, but neither is Switzerland
The only thing that bothers me in Switzerland is the heat increasing year after year. The other solution is full solar panel and A/C every room, but not that great either.
The Roving Rodent
New member
We moved to Portugal, just in time to grab non-habitual resident (NHR) status, which means no tax on the majority of foreign-sourced income for 10 years. Quality of life is high and costs are low.
I'll give a shout out to Georgia. We have a family member living in Tbilisi since 5 years ago. It's a nice place to live, super cheap, offers a 365 day visa-free stay for many passports and has territorial taxation (only Georgian-sourced income is taxed). If the markets were to collapse, we would hang out there for a year or two, walk in the mountains and grow fat on khinkali and khachapuri.
I'll give a shout out to Georgia. We have a family member living in Tbilisi since 5 years ago. It's a nice place to live, super cheap, offers a 365 day visa-free stay for many passports and has territorial taxation (only Georgian-sourced income is taxed). If the markets were to collapse, we would hang out there for a year or two, walk in the mountains and grow fat on khinkali and khachapuri.
Interesting, I don't remember about Georgia as a retirement place.
Isn't Spain too hot in Summer? I may be more heat-intolerant than average
Isn't Spain too hot in Summer? I may be more heat-intolerant than average
Badomb
Member
Count on me too. I need AC in very room to be productive.Interesting, I don't remember about Georgia as a retirement place.
Isn't Spain too hot in Summer? I may be more heat-intolerant than average
From the other hand - I dream of France or Thailand as a retirement places. Both need HUGE A/C and $100-200 month bills for electricity. LOL.
The Roving Rodent
New member
I think the trick is to establish bases in at least two countries and migrate just like those clever birds do .
We're in Madeira, where we need neither heating in the winter, nor a/c in the summer.
.We're in Madeira, where we need neither heating in the winter, nor a/c in the summer.
That sounds like a nice strategy, but not the cheapest unless you only have temporary residence (different each year) and very few things to move around.I think the trick is to establish bases in at least two countries and migrate just like those clever birds do
We're in Madeira, where we need neither heating in the winter, nor a/c in the summer.
As far as I know in case we get FIRE in CH, we will be considered professional investors, so we will need to pay capital tax. Do you plan to somehow avoid that situation? Is there any trick currently that could be used to avoid being considered professional investor (because our full income comes from capital)?
The Roving Rodent
New member
I stopped working at the start of February 2019 and filed income tax returns for the years 2019 to 2023 when most or all of my income came from investments. I've never been considered a professional investor or paid tax on capital gains in Switzerland.
The simple fact of living from your investments is not reason enough to be classified as a professional investor. If you don't actively trade and steer clear of derivatives, you should have nothing to worry about.
The Roving Rodent
New member
It's not for everyone, but I found it very beneficial to cut down on possessions. We spent two years essentially living from two suitcases and two rucksacks and it didn't hurt at all.
You have a point about the cost of accommodation, but rent on two properties in the right locations can be considerably cheaper than rent or a mortgage on a single Swiss home. In many countries one can rent long term without being formally resident.
Do you by chance know whether leveraged ETFs are considered derivatives by the tax office?
As @The Roving Rodent said, just living from your investments should not be enough to quality as professional investor.
There are 5 criteria for professional investors. The only one that may change in retirement is that your capital gains will represent a sizeable portion of your income. But you will still get dividends, so this will offset your capital gains.
I think we worry too much about this. Unless one is really trading very actively, I do not think one is going to be considered a professional investor.
In theory, yes. One of the 5 criteria for private investors is to invest with your own money, not with leverage. Leveraged ETFs are likely a little in the gray area since you do not have the debt directly (but you still have the risks). So, unless you are very active, it's unlikely to be enough to consider you a professional investor (but not impossible).
The Roving Rodent
New member
Just for fun, I ran the numbers for France. (I'm not a tax lawyer or accountant, so don't rely on anything I write here.)
As I understand it, you would have to pay social charges of 17.2% on your investment income and capital gains: 8'600€. That leaves 41'400€ of your original 50k, on which you would then pay about 5'705€ income tax if single, less if in a family. So, let's say 14'300€ in deductions. Sound good?
Social Charges in France - Contributions Sociales CSG/CRDS
Information on social charges in France as they affect pensions and other income
www.french-property.com
Tax scale What is the income tax?
The scale is used to calculate the amount of tax. In order to determine the amount to be paid, a rate must be applied to each income bracket.
www.service-public.fr
Thanks for doing the math.
That sounds like a lot of deduction on a 50k income.
I plan to retire in Czech Republic where I've been living for the last decade (and continue learning the Czech language, that's not easy). The country has a lot of nature, Prague is a beautiful city with amazing infrastructure and healthcare, cost of life is reasonable (despite the recent inflation since COVID and energy crisis caused by the war in Ukraine)
Badomb
Member
What are the budgets living there? What are the deductions, if you ever calculated?