As of: February 3, 2024, 4:55 a.m
By: Bjarne Kommnick, Nico Reiter
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A financially worry-free retirement is a dream for many.
In some countries this could become a reality – thanks to tax-free pensions.
Frankfurt – Anyone who has paid into the pension system for many years should be financially secure in old age.
42 percent of all pensioners in Germany still receive less than 1,250 euros per month.
Recently, the President of the Confederation of German Employers' Associations also warned of a gap in the pension fund.
As a result, some retirees decide to move to another country in the hope of fewer financial difficulties.
In some cases, this step can actually be beneficial.
But where are pensioners most likely to live without financial worries?
Financial paradise in retirement – Portugal is no longer one of them
Portugal has long been viewed as a retirement paradise.
But as
swz.de
reports, this has been over since January 1, 2024.
At the turn of the year, the Portuguese government allowed a law that was passed by the government at the time to expire in 2009.
This law exempted pensioners from abroad from income tax on their pension for ten years from the time of their move.
If pensioners lived in Portugal for more than ten years, a tax rate of 10 to 20 percent was subsequently levied.
Most retirees would like to have a financially worry-free retirement - but that is often not even possible.
© Christian Charisius/dpa
It is extremely unlikely that the government will reintroduce this regulation, which has now expired.
As
taz.de
reports, the socialist Prime Minister António Costa said in an interview: “Maintaining this measure would extend the tax law and would also drive up prices on the real estate market further.”
Living abroad without taxes – these conditions must be met
The portal
wohnsitzausland.com
, which aims to provide “transparent information about a large number of tax-favorable countries of residence”, explains that there are currently seven countries in which German pensioners can live tax-free.
To do this, two conditions must be met: “First, the pensioner’s country of residence must have the right to tax the German pension in accordance with the double taxation agreement with Germany.”
This is not the case in most countries “and Germany has the right to tax even if the recipient of the pension lives abroad”.
In addition, the country is not allowed to tax the pension, although it would have the right to do so under double taxation agreements.
Seven countries do not levy taxes on pensions - Albania as a pensioner's paradise?
Although 37 countries have the right to tax German pensions according to the double taxation agreement, according to the portal, seven countries waive this and therefore meet the conditions for a tax-free pension.
For example, pensions in Albania are tax-free for state and EU citizens.
Low cost of living and good weather could entice pensioners to spend their retirement in Albania.
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Despite double taxation agreements, these countries do not levy taxes on German pensions
Albania
Moldova/Republic of Moldova
Japan
Kuwait
Mauritius
Thailand
Vietnam
The same applies to Moldova, where pension income for foreigners is also tax-free.
Seniors must apply for a Type D visa, which allows them to travel to the country and stay there for a longer period of time.
Thailand offers a “retirement visa” for pensioners for tax-free benefits
In Thailand, pensioners can also benefit from low living costs and tax-free pensions.
To do this, they must apply for the so-called retirement visa, which can be extended annually - provided the people do not become criminals.
Vietnam also offers tax-free pensions.
According to
wohnsitzausland.com,
the country is easily accessible, but it is significantly more difficult to obtain permanent residency.
There is no pensioner visa for foreign seniors.
However, pensioners can apply for a visa for five years if their parents, spouse or spouse have Vietnamese citizenship.
Kuwait, Mauritius and Japan are tax-free for pensioners - but still complicated or expensive
In Kuwait, Mauritius and Japan, pensions for people from abroad are also tax-free.
However, according to the portal, high living costs and complex applications are more of an obstacle to using the tax havens.
Extremely high temperatures in Kuwait and, for some, possibly a general ban on pork and alcohol could hamper emigration.
Pensioners wishing to settle in Mauritius are required to transfer at least $18,000 annually to their account in order to enjoy the country's financial benefits.
A fee of $1,500 is charged when submitting the application.
In Japan, on the other hand, the cost of living, which is between 2,000 and 2,500 euros, could put the tax advantages into perspective for many people.
Pension paradise Greece – only under certain conditions
Despite the taxation of pension benefits, Greece is considered a retirement paradise.
According to the law firm Juhn Partner, the income tax on German pensions is only seven percent.
This also applies to rental income, interest, dividends and capital gains from foreign sources.
However, income from Greek sources is subject to separate Greek tax law.
In order to enjoy tax advantages in Greece in the current calendar year, an application must be submitted to the tax office in Athens by March 31st.
In addition, there must not have been unlimited tax liability in Greece in five of the last six years.
Another required proof concerns foreign pension or retirement benefits, whereby the amount of income must also be stated.
The editor wrote this article and then used an AI language model for optimization at his own discretion. All information has been carefully checked.
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