Some countries roll out the welcome mat for foreign retirees, offering sometimes significant tax breaks, in-country discounts, and other perks once you’ve qualified for resident retiree status.
Costa Rica was the first country to make a concerted effort to attract foreign retirees with a program of special benefits. Its pensionado program was responsible for bringing tens of thousands of foreign retirees, mostly Americans, to the country in the 1980s and 1990s. While the pensionado visa is still available in Costa Rica, many of the tax breaks and other special perks it once offered have been discontinued. Costa Rica has also become more expensive, both as a place to live and as a place to own a home. For these reasons, while Costa Rica is perhaps the world’s best-known overseas retirement haven, it no longer qualifies as one of the best.
However, these three countries do work hard to attract foreign retirees with tax breaks and other incentives:
Panama. Panama has picked up where Costa Rica left off. Its pensioner program offers some of the deepest retiree discounts available anywhere. Seniors (that is women age 55 and older and men age 60 and older) get up to half off on nearly everything, including movies, motels, doctors’ visits, plane tickets, professional services, and electric bills. Furthermore, these discounts are easily realized. It’s not a big deal to have your pensionado status recognized. As one American retired to Panama with pensionado status puts it: “The only thing I haven’t been able to get a discount on so far are my gin and tonics at the bar down the street from my apartment, and I’m working on that.”
To qualify for pensionado status, you must have a regular pension (from Social Security, any government entity, the armed forces, or a private company) of at least $1,000 per month. Panama pensionado benefits, which are for life, include:
In addition, pensionado status entitles you to a one-time tax exemption on the importation of household goods (up to $10,000) and a tax exemption every two years on the importation or the in-country purchase of a new car. Plus, you’ll never have to wait in line at the bank. Every bank and most government offices have a special express line for retirees.
Belize. Another country that rolls out the welcome mat for foreign retirees is Belize. About a dozen years ago, the government of this country enacted legislation to allow Qualified Retired Persons (QRPs) to obtain permanent residency in this country. In many ways, this program is the most efficient route to foreign residency anywhere in the Americas. And while the QRP visa allows you full-time residency, you can enjoy the benefits of being a QRP even if you spend as little as four weeks a year in Belize.
Belize’s QRP program not only offers the equivalent of a U.S. green card to foreign residents aged 45 and older, but it also grants a host of other incentives designed to encourage foreigners to come and bring their money. These incentives include a permanent exemption from all Belize taxes, including income tax, capital gains tax, estate tax, and import tax on household goods (up to $15,000), automobiles, boats, even airplanes. The only requirements are that you or your spouse be 45 years of age or older, that you consider yourself to be retired, and that you show that you have at least $2,000 a month in income to support yourself in Belize (not necessary from a pension, but from any source).
In practical terms, the “consider yourself to be retired” requirement means that, as a QRP, you can’t apply for a work visa. This is not to say that you couldn’t start an international, Internet, or even local Belize business as an entrepreneur. You just can’t take on traditional employee work.
Malaysia. Perhaps the biggest challenge to retiring in Asia, at least if you’re interested in doing so full-time, is obtaining a residency visa. In this part of the world, the best option usually is to retire part-time. Spend part of the year in Thailand, for example, and part of the year back in the States or perhaps in another overseas location such as Panama or Belize.
The exception when it comes to ease of obtaining foreign residency (and enjoying any special benefits as a result of that status) in Asia is Malaysia, which makes it surprisingly easy for foreigners to live here long-term. Its Malaysia My Second Home (MM2H) program (available without age restriction) offers tax and other incentives. The MM2H multiple-entry visa, good for up to 10 years, allows your spouse, children, and parents to reside in Malaysia along with you and, under certain conditions, even allows you to hold part-time employment or to have a business in the country.
Perhaps the biggest benefit of MM2H status is the tax status it gives you. As an MM2H resident in Malaysia, all your foreign-source income, including pension, interest, and dividend income, as well as foreign-earned income, is exempt from Malaysian taxes. Note, though, that income from employment or a business within Malaysia is taxable.
As an MM2H resident, you also can import one automobile duty-free (as long as it was purchased before you made your application for MM2H status) or buy a locally made automobile free of import duty and sales tax. A retiree qualifies for the MM2H program by showing proof of a monthly pension of at least 10,000 ringgit (about $3,200) a month.
Kathleen Peddicord is the founder of the Live and Invest Overseas publishing group. With more than 25 years experience covering this beat, Kathleen reports daily on current opportunities for living, retiring, and investing overseas in her free e-letter. Her book, How To Retire Overseas—Everything You Need To Know To Live Well Abroad For Less, was recently released by Penguin Books.