Retirement - Spain or Portugal?

For residents of Spain.
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Json
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Retirement - Spain or Portugal?

Post by Json »

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Last edited by Json on Sat Mar 18, 2023 9:50 pm, edited 1 time in total.
fiscallyinterested
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Re: Retirement - Spain or Portugal?

Post by fiscallyinterested »

Sounds like you've done your research, so I don't have too many great ideas to offer.

A few things that come to mind:
  • The NHR in Portugal will also cause your capital gains on stock sales to be taxed at 28%
  • Consider Roth accounts carefully: the consensus on this forum is that Spain would consider your distributions of earnings (though probably not principle) as taxable income, even though the US does not. I'd bet you're aware, but Spain taxes worldwide income even if you're not a Spanish citizen (though I'm not familiar with the residence visa for retirees – so wouldn't be surprised to find that there were exceptions for certain types of income).
  • Would you have access to healthcare in Spain as part of your residency? If so, $12k per year doesn't seem bad if that's you're entire tax bill (and you're presumably getting a cheap education out of it as well, if you're paying even close to what the Spanish pay for education)
Just curious: which state is your 529 plan in? I'm just starting to learn the 529 ins and outs, and wasn't aware yet of such a restriction as yours (where you can use the funds as tuition).
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cinghiale
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Re: Retirement - Spain or Portugal?

Post by cinghiale »

Any consideration of living in Spain fewer than 183 days each year? You could then live where you want (Madrid is big and expensive, with hot summers and cold winters... think Indianapolis) and be unbothered by having to file either Spanish income or wealth taxes.

Our current strategy, now four years along, is as follows: We fill out IRS Form 8802, “Application for United States Residency Certification” each year. The IRS provides this residency certification on Form 6166, a letter of U.S. residency certification. That demonstrates that we are fiscal residents of the US. Also, we keep all key communications (taxes, credit cards, etc.) tied to a US address and visit the US each year for around 1-1.5 months. During the US visit we get our US taxes filed and take care of any necessary medical, dental, or administrative appointments. There’s also a pile of mail to open.

And then, we are fulfilling a long time dream of seeing the rest of Europe with the remaining time that gets us to 183 days.

Now, that plan may not have that much appeal, but please consider the following. Per your own calculations, the wealth tax would likely nick you for 12K. That amount of money can underwrite a whole lot of cheap airfares (Vueling, EasyJet, Ryanair, etc) and a whole passel of lodging options (Air B&B, Booking.com, etc.). Again, YMMV, but with early retirement, sufficient resources, and good health, you might want to put this option on the table.
"We don't see things as they are; we see them as we are." Anais Nin | | "Sometimes the first duty of intelligent men is the restatement of the obvious." George Orwell
martiansteeler
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Re: Retirement - Spain or Portugal?

Post by martiansteeler »

cinghiale wrote: Sun Jul 21, 2019 12:06 pm Any consideration of living in Spain fewer than 183 days each year? You could then live where you want (Madrid is big and expensive, with hot summers and cold winters... think Indianapolis) and be unbothered by having to file either Spanish income or wealth taxes.
I don’t think the comparison of Madrid to Indy is fair. Firstly, Madrid is a dry heat. Secondly...wine is a heck of a lot cheaper. Thirdly, it doesn’t snow. I won’t go on.

OP- FYI, as of the middle of last year, there is an additional option for Golden Visa investment in Portugal. “Transfer capital of at least €350,000, destined to acquire units in investment or venture capital funds aimed at providing capital to companies that meet certain requirements.” Not getting into the details, but there is at least one fund that is qualified by SEF https://www.golden-visa-portugal.info/. I am exploring this option at the moment (as I don’t feel like owning property halfway around the world). The other benefit to the Golden Visa is that you can start the process now, as there is minimal residency involved.
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Watty
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Re: Retirement - Spain or Portugal?

Post by Watty »

Which language do you speak best, Portuguese, Spanish or Catalan?
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cinghiale
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Re: Retirement - Spain or Portugal?

Post by cinghiale »

martiansteeler wrote:
I don’t think the comparison of Madrid to Indy is fair. Firstly, Madrid is a dry heat. Secondly...wine is a heck of a lot cheaper. Thirdly, it doesn’t snow. I won’t go on.
OK... I shot from the hip on the Indianapolis comparison. But Madrid does get snow every now and then, and I stand by the hot summers/cold winters claim. And, to the point, that there so many locations in Spain with much better year-round weather. I love visiting Madrid, a short 2-hour AVE ride away. But it is expensive, it’s not easy to socially integrate there, and the weather is less-that-optimal.

The cheaper price (and splendid quality) of Spanish wine is a given.

Better?
"We don't see things as they are; we see them as we are." Anais Nin | | "Sometimes the first duty of intelligent men is the restatement of the obvious." George Orwell
martiansteeler
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Re: Retirement - Spain or Portugal?

Post by martiansteeler »

cinghiale wrote: Sun Jul 21, 2019 12:44 pm
martiansteeler wrote:
I don’t think the comparison of Madrid to Indy is fair. Firstly, Madrid is a dry heat. Secondly...wine is a heck of a lot cheaper. Thirdly, it doesn’t snow. I won’t go on.
OK... I shot from the hip on the Indianapolis comparison. But Madrid does get snow every now and then, and I stand by the hot summers/cold winters claim. And, to the point, that there so many locations in Spain with much better year-round weather. I love visiting Madrid, a short 2-hour AVE ride away. But it is expensive, it’s not easy to socially integrate there, and the weather is less-that-optimal.

The cheaper price (and splendid quality) of Spanish wine is a given.

Better?
Better. I, unfortunately, have to spend a lot of time in Indy...it is no Madrid (or any other world class city).

And I do agree there are better places in Spain, weather, food and cultural-wise
Topic Author
Json
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Re: Retirement - Spain or Portugal?

Post by Json »

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Last edited by Json on Sat Mar 18, 2023 9:51 pm, edited 1 time in total.
halfnine
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Re: Retirement - Spain or Portugal?

Post by halfnine »

I thought you would have to renounce your other citizenship if opting for Spanish citizenship. However, in the you learn something everyday category, I just learned I was wrong. Me, though, I would have to renounce my citizenships if I took that path. Well, you win some, you lose some. Best of luck whatever your decision.
UpperNwGuy
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Re: Retirement - Spain or Portugal?

Post by UpperNwGuy »

I think Leon would be an excellent mid-point between the heat of Madrid and the rainy climate of Asturias and Galicia. Another city to consider would be Burgos, but it's a bit colder than Leon. Both cities have excellent cuisine and great historic features.
coffeeblack
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Re: Retirement - Spain or Portugal?

Post by coffeeblack »

Json wrote: Sat Jul 20, 2019 8:54 pm Next year I will be doing an early retirement from the Fed gvmt (MRA+10).

I am looking to retire to either Spain or Portugal. My preference is Spain as I could potentially gain citizenship in about 2 years (Nationality by residence - Two years for nationals of Ibero-American countries). http://www.exteriores.gob.es/Portal/en/ ... lidad.aspx
I plan to use the Residence Visa for Retirees. http://www.exteriores.gob.es/Consulados ... irees.aspx

However, the Spanish wealth tax* could be a deciding factor. I will be retiring with about $1M in TSP, $1M in stocks, and about $500K in other assets.

I plan to go back to grad school to take courses or do another degree. I have about $25K in a 529 but so far it seems like the University of Navarra is the only one where I could use the funds in Spain. Going to their main campus will subject me to the wealth tax. Residents of Madrid are 'exempt' from the tax (up to 2M) but no universities there take the 529 funds.

The other option is Portugal. There's quite a bit of information online about the Golden Visa. However, this path requires buying property worth at least €500K or investing over €1M. I do not want to buy a property as I don't plan to just stay in one area within the country. One advantage of Portugal is the non-habitual resident (NHR) tax regime which allows individuals the opportunity to become tax residents of a “white-listed” jurisdiction and still legally eliminate their taxes on most foreign-source income.

So, the challenges are the wealth tax in Spain or the investment requirements in Portugal. I would be very interested in hearing about other options or alternatives that I might not be aware for those 2 countries. And if I'm making too much of a big deal of the impact of the wealth tax.

* Depending on the region the wealth tax could be over an additional $12k a year
Have you thought about Malta as your base and then live in Spain or Portugal part of the year?
a_movable_life
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Re: Retirement - Spain or Portugal?

Post by a_movable_life »

¿Ustedes hablan espanol?

Which reminds me how I should start studying again as well. :)
rj342
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Re: Retirement - Spain or Portugal?

Post by rj342 »

This idea always makes think of 2 questions
1. Children or grandchildren? Seems like a way to remove them from your life , see them maybe once a year?
2. What is exit strategy for if/when its assisted living, memory care, nursing home time?
AlohaJoe
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Re: Retirement - Spain or Portugal?

Post by AlohaJoe »

cinghiale wrote: Sun Jul 21, 2019 12:06 pm Our current strategy, now four years along, is as follows: We fill out IRS Form 8802, “Application for United States Residency Certification” each year. The IRS provides this residency certification on Form 6166, a letter of U.S. residency certification. That demonstrates that we are fiscal residents of the US.
I don't know why you'd bother with the 6166. It doesn't prove anything when it comes to filing taxes; it only helps after you've already filed taxes in a foreign country. The only thing that matters is your passport with the dates of entry & exit to the country. In my many years living outside the US I've never seen a foreign tax office care about anything but your passport when it comes to determining domicile.
wineandplaya
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Re: Retirement - Spain or Portugal?

Post by wineandplaya »

Have you considered Andorra? Beautiful scenery with great skiing in the winter and great hiking in the summer. 3 h by car to Barcelona. Lots of nice places to visit both on the French side and the Spanish side. Much lower taxes than either Spain or Portugal. Language won't be problem if you speak Spanish (Catalan is official).
fiscallyinterested
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Re: Retirement - Spain or Portugal?

Post by fiscallyinterested »

Why is it that you are interested in the Spanish passport? What would it give you that a US passport + EU residency doesn't?
drk
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Re: Retirement - Spain or Portugal?

Post by drk »

cinghiale wrote: Sun Jul 21, 2019 12:44 pm But Madrid does get snow every now and then, and I stand by the hot summers/cold winters claim. And, to the point, that there so many locations in Spain with much better year-round weather.
Not to beat a dead horse, but you're looking for Seattle. Madrid is a little bit warmer and quite a bit sunnier, but the weather is very similar, and this list certainly applies to both:
cinghiale wrote: Sun Jul 21, 2019 12:44 pm But it is expensive, it’s not easy to socially integrate there, and the weather is less-that-optimal.
A useful razor: anyone asking about speculative strategies on Bogleheads.org has no business using them.
DJN
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Re: Retirement - Spain or Portugal?

Post by DJN »

Hi,
there is whole section on Wiki on Non Habitual Residency, it doesn't have any emphasis on US citizens. have a look here: https://www.bogleheads.org/wiki/EU_non- ... _residence
Malta is a good option and they don't tax your capital gains made outside the country.
good luck,
DJN
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8track
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Re: Retirement - Spain or Portugal?

Post by 8track »

rj342 wrote: Sun Jul 21, 2019 9:28 pm 2. What is exit strategy for if/when its assisted living, memory care, nursing home time?
I would also like to know more about how elder care is done in these two countries. In Italy for example elders are generally cared for by their children with the help of hired “badanti”. There are few if any assisted living options for those without family to look out for them.
rj342
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Re: Retirement - Spain or Portugal?

Post by rj342 »

8track wrote: Mon Jul 22, 2019 7:52 am
rj342 wrote: Sun Jul 21, 2019 9:28 pm 2. What is exit strategy for if/when its assisted living, memory care, nursing home time?
I would also like to know more about how elder care is done in these two countries. In Italy for example elders are generally cared for by their children with the help of hired “badanti”. There are few if any assisted living options for those without family to look out for them.
I could see problems if something came up quickly, decided to move back to US for that stage, and possible state residency requirements for Medicaid -- or if you have been gone for years and not been paying into Medicare?
Maybe the options in the new country are decent, but I would be very careful -- 'free' national healthcare for a broken arm or appendix is different than nursing home LTC for an outsider.
fiscallyinterested
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Re: Retirement - Spain or Portugal?

Post by fiscallyinterested »

or if you have been gone for years and not been paying into Medicare?.
Sounds like OP has been paying into Social Security and Medicare long enough (Medicare) to qualify for Medicare, without having to pay more into the system.

I don't understand Medicaid enough to be able to comment, though.

Regarding Social Security, it's worth pointing out, OP, in case you're not aware: https://www.ssa.gov/international/Agree ... spain.html
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Watty
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Re: Retirement - Spain or Portugal?

Post by Watty »

Json wrote: Sun Jul 21, 2019 2:59 pm Spanish - fluent; Portuguese - read/write mid-level, need more practice with the spoken word; Catalan - entry level. Also, have a basic level of Galician.
Living in Spain would be a big advantage.

I was never good at languages and eventually gave up when I realized that if I worked really hard I might be able to do OK with the pronunciation and grammar but I would never be able be adequate in the idioms and slang. It would be more challenging for you to pick that up in one of the languages other than Spanish.
Topic Author
Json
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Re: Retirement - Spain or Portugal?

Post by Json »

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Last edited by Json on Sat Mar 18, 2023 9:51 pm, edited 1 time in total.
wineandplaya
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Re: Retirement - Spain or Portugal?

Post by wineandplaya »

Json wrote: Mon Jul 22, 2019 2:37 pm
Have you considered Andorra?
Andorra would be a great option. However a somewhat issue is that they don't have an international airport. That means you would need to have the right visa when landing in Spain or France.
Barcelona would be the closest big international airport, with good direct flights to the US. I don't think you should worry about visas too much. With a US passport, you shouldn't need a visa to begin with. If you for some reason do need a visa, they will probably give you a multiple entry Schengen visa, valid for maybe 10 years.
halfnine
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Re: Retirement - Spain or Portugal?

Post by halfnine »

Json wrote: Mon Jul 22, 2019 2:37 pm
I thought you would have to renounce your other citizenship if opting for Spanish citizenship.
Nope, as you found out US citizens retain their citizenship and basically become dual citizens
Actually what I found out is that there are some exemptions that allow individuals to obtain Spanish citizenship without having to renounce their other citizenship(s) with the Spanish authorities. For a US Citizen who applies based on a 10 year residency period they would have to state that they intend to renounce their US citizenship with the Spanish authorities and possibly take an oath to this extent. Of course, an oath to Spain won't in itself actually renounce one's US citizenship. That would require renouncing it with the US embassy. To each his own, but I find this quite a slippery slope.
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Json
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Re: Retirement - Spain or Portugal?

Post by Json »

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Curious1
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Re: Retirement - Spain or Portugal?

Post by Curious1 »

cinghiale wrote: Sun Jul 21, 2019 12:06 pm Any consideration of living in Spain fewer than 183 days each year? You could then live where you want (Madrid is big and expensive, with hot summers and cold winters... think Indianapolis) and be unbothered by having to file either Spanish income or wealth taxes.

Our current strategy, now four years along, is as follows: We fill out IRS Form 8802, “Application for United States Residency Certification” each year. The IRS provides this residency certification on Form 6166, a letter of U.S. residency certification. That demonstrates that we are fiscal residents of the US. Also, we keep all key communications (taxes, credit cards, etc.) tied to a US address and visit the US each year for around 1-1.5 months. During the US visit we get our US taxes filed and take care of any necessary medical, dental, or administrative appointments. There’s also a pile of mail to open.

And then, we are fulfilling a long time dream of seeing the rest of Europe with the remaining time that gets us to 183 days.

Now, that plan may not have that much appeal, but please consider the following. Per your own calculations, the wealth tax would likely nick you for 12K. That amount of money can underwrite a whole lot of cheap airfares (Vueling, EasyJet, Ryanair, etc) and a whole passel of lodging options (Air B&B, Booking.com, etc.). Again, YMMV, but with early retirement, sufficient resources, and good health, you might want to put this option on the table.
I have some questions regarding your plan. As you can only stay in a Schenngen country for 90 days w/o a long stay visa, and you only plan to return to the US for 30-45 days, where will you spend the remaining time? I know that there are other non- Schenngen European countries that you could go to to use up the remaining days. Is this what you plan to do?
wineandplaya
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Re: Retirement - Spain or Portugal?

Post by wineandplaya »

Curious1 wrote: Wed Aug 07, 2019 12:07 pm
cinghiale wrote: Sun Jul 21, 2019 12:06 pm Any consideration of living in Spain fewer than 183 days each year?
I have some questions regarding your plan. As you can only stay in a Schenngen country for 90 days w/o a long stay visa, and you only plan to return to the US for 30-45 days, where will you spend the remaining time? I know that there are other non- Schenngen European countries that you could go to to use up the remaining days. Is this what you plan to do?
I don't think spending fewer than 183 days automatically means that Spain won't consider you a resident for tax purposes. If you spend more time in Spain than in any other country, I'd think that they want to tax your worldwide income.

You can read about Shakira case:
https://www.forbes.com/sites/kellyphill ... x-evasion/

Edit: Here is a better explanation: https://www.blevinsfranks.com/news/arti ... -and-taxes
Last edited by wineandplaya on Fri Aug 09, 2019 5:34 pm, edited 1 time in total.
WhiteMaxima
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Re: Retirement - Spain or Portugal?

Post by WhiteMaxima »

If you live less than 6 months per year, you will not be taxed in Spain and Portugal. You are US citizen, you are going to be taxed no matter where you live. So the best options is have a base in the US and move to Spain/Portugal for 6 months (long term visa still needed). The best is to find another US couple to rent a house there and share 6 month each, hopefully US 6 moth share also). In that sense, both family will enjoy the retirement overseas and still connect to the US base (you would still need to come to have dental and physical take care using medicare). You could change destination each year (one year in France, another in Greece or Thailand). Good luck.
wineandplaya
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Re: Retirement - Spain or Portugal?

Post by wineandplaya »

WhiteMaxima wrote: Fri Aug 09, 2019 11:55 am If you live less than 6 months per year, you will not be taxed in Spain and Portugal.
This is incorrect. Spending less than 6 months is a necessary but not sufficient condition for not being taxed.
WhiteMaxima
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Re: Retirement - Spain or Portugal?

Post by WhiteMaxima »

wineandplaya wrote: Fri Aug 09, 2019 5:32 pm
WhiteMaxima wrote: Fri Aug 09, 2019 11:55 am If you live less than 6 months per year, you will not be taxed in Spain and Portugal.
This is incorrect. Spending less than 6 months is a necessary but not sufficient condition for not being taxed.
I google it:
Anyone residing in Portugal for 183 days or more during a single calendar year must pay taxes in Portugal on worldwide and local income. Non-residents – those who reside in Portugal fewer than 183 days per year – are not required to pay tax on worldwide income.
Even if you become a permanent resident, you can still file a tax waiver from income oversea. Any income from Portugal is subjected to tax no matter resident status.
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aspirit
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Re: Retirement - Spain or Portugal?

Post by aspirit »

I recall numerous white collar financial criminals preferred waiting out there 7yr statute of limitations in Portugal in the 80s, same populace, different tax terms. imho.
Good Luck!
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wineandplaya
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Re: Retirement - Spain or Portugal?

Post by wineandplaya »

WhiteMaxima wrote: Fri Aug 09, 2019 5:39 pm
wineandplaya wrote: Fri Aug 09, 2019 5:32 pm
WhiteMaxima wrote: Fri Aug 09, 2019 11:55 am If you live less than 6 months per year, you will not be taxed in Spain and Portugal.
This is incorrect. Spending less than 6 months is a necessary but not sufficient condition for not being taxed.
I google it:
Anyone residing in Portugal for 183 days or more during a single calendar year must pay taxes in Portugal on worldwide and local income. Non-residents – those who reside in Portugal fewer than 183 days per year – are not required to pay tax on worldwide income.
Even if you become a permanent resident, you can still file a tax waiver from income oversea. Any income from Portugal is subjected to tax no matter resident status.
It's possible to be considered a resident while spending less than 183 days in a country. It's explained well, in the case of UK & Spain here:

https://www.blevinsfranks.com/news/arti ... -and-taxes

I know that for Sweden, tax authorities apply a "72 day rule". For Portugal it might be different, I don't know, but for Spain you can certainly be a resident while spending less than 183 days.

If you fulfill the tax residency criteria of both Spain and the US, you need to turn to the US-Spain double taxation treaty:
Where by reason of the provisions of paragraph 1, an individual is a resident of both
Contracting States, then his status shall be determined as follows:
a) he shall be deemed to be a resident of the State in which he has a permanent home
available to him; if he has a permanent home available to him in both States, he shall be
deemed to be a resident of the State with which his personal and economic relations are
closer (center of vital interests);
b) if the State in which he has his center of vital interests cannot be determined, or if he
does not have a permanent home available to him in either State, he shall be deemed to be
a resident of the State in which he has an habitual abode;
c) if he has an habitual abode in both States or in neither of them, he shall be deemed to
be a resident of the State of which he is a national;
d) if he is a national of both States or of neither of them, the competent authorities of the
Contracting States shall settle the question by mutual agreement.
student
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Re: Retirement - Spain or Portugal?

Post by student »

You may want to take a look at https://www.youtube.com/user/nomadcapitalist
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cinghiale
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Re: Retirement - Spain or Portugal?

Post by cinghiale »

Curious1 asked,
I have some questions regarding your plan. As you can only stay in a Schenngen country for 90 days w/o a long stay visa, and you only plan to return to the US for 30-45 days, where will you spend the remaining time? I know that there are other non- Schenngen European countries that you could go to to use up the remaining days. Is this what you plan to do?
In short, yes, and the reason why I didn’t reply sooner is that we have been traveling since early July. I tend not to frequent the BH site that often when we are on the road. Note that one does not have to leave the Schengen area to stay legal with the 90-day limit. And when traveling in Europe, it just takes a few hours (or less) to cross borders and start a new clock.

For most, this would not be a feasible long-term strategy. I doubt it will be for us. But for a few years, its doable and Uber-enjoyable.
"We don't see things as they are; we see them as we are." Anais Nin | | "Sometimes the first duty of intelligent men is the restatement of the obvious." George Orwell
Valuethinker
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Re: Retirement - Spain or Portugal?

Post by Valuethinker »

Json wrote: Sat Jul 20, 2019 8:54 pm Next year I will be doing an early retirement from the Fed gvmt (MRA+10).

I am looking to retire to either Spain or Portugal. My preference is Spain as I could potentially gain citizenship in about 2 years (Nationality by residence - Two years for nationals of Ibero-American countries). http://www.exteriores.gob.es/Portal/en/ ... lidad.aspx
I plan to use the Residence Visa for Retirees. http://www.exteriores.gob.es/Consulados ... irees.aspx

However, the Spanish wealth tax* could be a deciding factor. I will be retiring with about $1M in TSP, $1M in stocks, and about $500K in other assets.

I plan to go back to grad school to take courses or do another degree. I have about $25K in a 529 but so far it seems like the University of Navarra is the only one where I could use the funds in Spain. Going to their main campus will subject me to the wealth tax. Residents of Madrid are 'exempt' from the tax (up to 2M) but no universities there take the 529 funds.

The other option is Portugal. There's quite a bit of information online about the Golden Visa. However, this path requires buying property worth at least €500K or investing over €1M. I do not want to buy a property as I don't plan to just stay in one area within the country. One advantage of Portugal is the non-habitual resident (NHR) tax regime which allows individuals the opportunity to become tax residents of a “white-listed” jurisdiction and still legally eliminate their taxes on most foreign-source income.

So, the challenges are the wealth tax in Spain or the investment requirements in Portugal. I would be very interested in hearing about other options or alternatives that I might not be aware for those 2 countries. And if I'm making too much of a big deal of the impact of the wealth tax.

* Depending on the region the wealth tax could be over an additional $12k a year
To comment.

The "hip" place in Europe was once London. Then it was Berlin when rising property prices and rents drove the edgy out of London.

Now it is Lisbon.

If you want to live in a city "discovered" by the euro youth it is Lisbon. Cheaper and better climate than Madrid.
shcnno
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Re: Retirement - Spain or Portugal?

Post by shcnno »

Didn't Andalucia remove wealth taxes last year?
moneybags
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Re: Retirement - Spain or Portugal?

Post by moneybags »

I realize this is an old thread but it's of high interest to me as we are considering the exact same question when we FIRE in ~7 years. My wife would also qualify for citizenship in Spain after 2 years due to current citizenship. Not looking to choose where we'll live the rest of our lives but simply the next 3-5 and then the country to have a second citizenship of to provide us with the option of living elsewhere in the Schengen Area and outside the US.

FYI for Portugal, you could attain citizenship in 5 years of legal residence without paying for it. You can get a non-lucrative residence visa, which allow you to legally live in Portugal provided you show sufficient assets.

These are the pros I see for each.

Spain:
Citizenship in 2 years (vs 5 years)
Language is easier to learn and more useful outside of Spain
Food is better IMO

Portugal:
No wealth tax
NHR for 10 years provides lower foreign-income taxation (looks like no longer 0%)
Residents speak better English.
We really love Porto!
Valuethinker
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Re: Retirement - Spain or Portugal?

Post by Valuethinker »

moneybags wrote: Sat Oct 31, 2020 1:16 pm I realize this is an old thread but it's of high interest to me as we are considering the exact same question when we FIRE in ~7 years. My wife would also qualify for citizenship in Spain after 2 years due to current citizenship. Not looking to choose where we'll live the rest of our lives but simply the next 3-5 and then the country to have a second citizenship of to provide us with the option of living elsewhere in the Schengen Area and outside the US.

FYI for Portugal, you could attain citizenship in 5 years of legal residence without paying for it. You can get a non-lucrative residence visa, which allow you to legally live in Portugal provided you show sufficient assets.

These are the pros I see for each.

Spain:
Citizenship in 2 years (vs 5 years)
Language is easier to learn and more useful outside of Spain
Food is better IMO

Portugal:
No wealth tax
NHR for 10 years provides lower foreign-income taxation (looks like no longer 0%)
Residents speak better English.
We really love Porto!
Get Spanish citizenship and then move to Portugal?

I would go for the quicker route, because the rules could easily change against you.
ohboy!
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Re: Retirement - Spain or Portugal?

Post by ohboy! »

drk wrote: Sun Jul 21, 2019 11:49 pm
cinghiale wrote: Sun Jul 21, 2019 12:44 pm But Madrid does get snow every now and then, and I stand by the hot summers/cold winters claim. And, to the point, that there so many locations in Spain with much better year-round weather.
Not to beat a dead horse, but you're looking for Seattle. Madrid is a little bit warmer and quite a bit sunnier, but the weather is very similar, and this list certainly applies to both:
cinghiale wrote: Sun Jul 21, 2019 12:44 pm But it is expensive, it’s not easy to socially integrate there, and the weather is less-that-optimal.
Madrid is sweltering compared to Seattle.
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Bernard
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Re: Retirement - Spain or Portugal?

Post by Bernard »

I have 3 passports: USA, Sweden, and Germany. Theoretically, I could live pretty much everywhere I want. There are a few scenarios where retiring outside the US makes sense.

1) you live of SS only. In this case, your US dollar goes a long way in Mexico, Thailand, Portugal, etc.

2) you have money but you want to experience another culture. In that case I would aim for Monaco, the South of France, Northern Italy, for climate reasons alone.

That out of the way, Portugal is a bit cheaper, less traveled, but learning the language is a difficult [implied expletive removed by mod Misenplace]. Spanish is much easier.

I watch a few YouTube channels, among them "Our Rich Live." These two are Bogleheads, with two children. They were government employees in the Bay Area (he an urban planer, she an attorney), and they retired at age 40 with a $2.5M portfolio to Portugal:

https://www.youtube.com/watch?v=u5lrxxctEfs
palanzo
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Re: Retirement - Spain or Portugal?

Post by palanzo »

cinghiale wrote: Sat Sep 14, 2019 9:31 am Note that one does not have to leave the Schengen area to stay legal with the 90-day limit. And when traveling in Europe, it just takes a few hours (or less) to cross borders and start a new clock.
Can you explain how you stay legal with the 90-day limit?
Chicken Little
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Re: Retirement - Spain or Portugal?

Post by Chicken Little »

Watty wrote: Mon Jul 22, 2019 11:01 amI was never good at languages and eventually gave up when I realized that if I worked really hard I might be able to do OK with the pronunciation and grammar but I would never be able be adequate in the idioms and slang. It would be more challenging for you to pick that up in one of the languages other than Spanish.
A little off topic, but my experience was the opposite.

Every great memory that depended on language was predicated on idioms and slang, and every practical interaction that arguably might depend on proper grammar or pronunciation could be accomplished in either English, de novo sign language, or collaboration with whoever happened to be around.

When I finally got out of the classroom and away from the textbook, things really took off. Not in a general sense, but specifically in converting to words and expressions that people actually used, and in the way that they used them. I don't know how properly I was speaking, but I didn't worry about it because I sounded like everybody else.

That's been the biggest barrier to learning a third language. None of the educational resources and learning platforms teach you to sound like everybody else. The vocabulary, not pronunciation.
drk
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Re: Retirement - Spain or Portugal?

Post by drk »

ohboy! wrote: Sun Nov 01, 2020 1:14 am Madrid is sweltering compared to Seattle.
Have you lived in both?
A useful razor: anyone asking about speculative strategies on Bogleheads.org has no business using them.
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Bernard
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Re: Retirement - Spain or Portugal?

Post by Bernard »

I don't know how you did it, but they must have read your post:

https://www.youtube.com/watch?v=A5smfrkvcFo
ohboy!
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Re: Retirement - Spain or Portugal?

Post by ohboy! »

drk wrote: Sun Nov 01, 2020 9:26 pm
ohboy! wrote: Sun Nov 01, 2020 1:14 am Madrid is sweltering compared to Seattle.
Have you lived in both?
:confused
I have visited both in the summer. You can check historical averages. Madrid averages 10+ degrees hotter for June through September
Sean628
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Re: Retirement - Spain or Portugal?

Post by Sean628 »

cinghiale wrote: Sun Jul 21, 2019 12:06 pm Any consideration of living in Spain fewer than 183 days each year? You could then live where you want (Madrid is big and expensive, with hot summers and cold winters... think Indianapolis) and be unbothered by having to file either Spanish income or wealth taxes.

Our current strategy, now four years along, is as follows: We fill out IRS Form 8802, “Application for United States Residency Certification” each year. The IRS provides this residency certification on Form 6166, a letter of U.S. residency certification. That demonstrates that we are fiscal residents of the US. Also, we keep all key communications (taxes, credit cards, etc.) tied to a US address and visit the US each year for around 1-1.5 months. During the US visit we get our US taxes filed and take care of any necessary medical, dental, or administrative appointments. There’s also a pile of mail to open.

And then, we are fulfilling a long time dream of seeing the rest of Europe with the remaining time that gets us to 183 days.

Now, that plan may not have that much appeal, but please consider the following. Per your own calculations, the wealth tax would likely nick you for 12K. That amount of money can underwrite a whole lot of cheap airfares (Vueling, EasyJet, Ryanair, etc) and a whole passel of lodging options (Air B&B, Booking.com, etc.). Again, YMMV, but with early retirement, sufficient resources, and good health, you might want to put this option on the table.
New User here. I am interested in your suggestion of staying under the 183 limit for the first couple of years. We have lots of places to visit in Europe as well as returning to States to see our kids and parents. I am unclear on how retirement accounts are taxed in Spain (and Portugal). Are IRA withdrawals taxed as income? Are IRA balances taxed as wealth? Are there any asset types excluded from the wealth tax such as U.S. property, Brokerage, trust accounts? What challenges have you found in moving around enough to stay under the 183 threshold? Seems like living on the road would be expensive and could offset the savings of living abroad. Thanks in advance.
coffeeblack
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Re: Retirement - Spain or Portugal?

Post by coffeeblack »

cinghiale wrote: Sun Jul 21, 2019 12:06 pm Any consideration of living in Spain fewer than 183 days each year? You could then live where you want (Madrid is big and expensive, with hot summers and cold winters... think Indianapolis) and be unbothered by having to file either Spanish income or wealth taxes.

Our current strategy, now four years along, is as follows: We fill out IRS Form 8802, “Application for United States Residency Certification” each year. The IRS provides this residency certification on Form 6166, a letter of U.S. residency certification. That demonstrates that we are fiscal residents of the US. Also, we keep all key communications (taxes, credit cards, etc.) tied to a US address and visit the US each year for around 1-1.5 months. During the US visit we get our US taxes filed and take care of any necessary medical, dental, or administrative appointments. There’s also a pile of mail to open.

And then, we are fulfilling a long time dream of seeing the rest of Europe with the remaining time that gets us to 183 days.

Now, that plan may not have that much appeal, but please consider the following. Per your own calculations, the wealth tax would likely nick you for 12K. That amount of money can underwrite a whole lot of cheap airfares (Vueling, EasyJet, Ryanair, etc) and a whole passel of lodging options (Air B&B, Booking.com, etc.). Again, YMMV, but with early retirement, sufficient resources, and good health, you might want to put this option on the table.
Perhaps I'm missing something but your numbers don't seem to add up. 183 day in Europe. 1.5 months or 90 days in the US. What happens to the rest of the days?
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cinghiale
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Re: Retirement - Spain or Portugal?

Post by cinghiale »

Looks like mea culpa time. I need to both clarify a point and submit an apology.

We hold EU passports. Sorry, but as poster Curious1 asked about further upthread, I was mistaking what an EU citizen can do, Schengen-wise, and what a non-EU citizen can do. Once in the Schengen region for 90 days, a US citizen would need to be out of it for the next 90 days. Yes, one could spend time in the British Isles, Bulgaria, Romania, Macedonia, and beyond, but that is an aside to what I had asserted. For a US citizen, the “183 days in Spain Strategy” only works if the rest of the time is spent outside the Schengen region. Sorry for the confusion.
"We don't see things as they are; we see them as we are." Anais Nin | | "Sometimes the first duty of intelligent men is the restatement of the obvious." George Orwell
Stork
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Re: Retirement - Spain or Portugal?

Post by Stork »

Bernard wrote: Sun Nov 01, 2020 1:55 am I have 3 passports: USA, Sweden, and Germany. Theoretically, I could live pretty much everywhere I want. There are a few scenarios where retiring outside the US makes sense.

1) you live of SS only. In this case, your US dollar goes a long way in Mexico, Thailand, Portugal, etc.

2) you have money but you want to experience another culture. In that case I would aim for Monaco, the South of France, Northern Italy, for climate reasons alone.

That out of the way, Portugal is a bit cheaper, less traveled, but learning the language is a difficult [implied expletive removed by mod Misenplace]. Spanish is much easier.

I watch a few YouTube channels, among them "Our Rich Live." These two are Bogleheads, with two children. They were government employees in the Bay Area (he an urban planer, she an attorney), and they retired at age 40 with a $2.5M portfolio to Portugal:

https://www.youtube.com/watch?v=u5lrxxctEfs
I know this is 1/2 year after the post, but anyway: I think English bring you further in Portugal than in Spain; there is a longer tradition that foreign languages are necessary. When you do try in incorrect Portuguese, the reaction is generally very positive. OTOH, Spanish is simpler and more direct as the languages are used in practice.

OH, and no wealth tax in Portugal
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