Passive income in EU (Spain et al)

[pomo]

I have built up a bit of capital (about 1.25M EUR) and started thinking about "retiring" now at 45. I could work a few more years to improve my position but I have a heart problem and need to avoid stress, life is quite short after all.

I was planning to settle in Thailand, and even applied for the Elite visa before the price increase. They just sent me the approval and invoice but the closure of the tax loophole and the fact that I can't get PR there (+ costly health insurance) has me doubting if it's the right choice.

As I am a EU citizen, I'm looking at Mediterranean countries as an alternative that doesn't require visas and gives access to public healthcare.

Ideally I would buy a place for 2-300k EUR and then live off the rest, which should hopefully yield at least 30k per year.

Cyprus looked like a good alternative but the recent influx has driven rent and property problems up quite a bit considering my budget. I also don't know how stable it is politically over time.

Spain is a place I've spent a bit of time in and enjoyed, and fairly affordable but here it's often called a communist tax hell. Capital gains tax seems to be around 20% for my bracket which doesn't look so bad for EU (and comparable to the thai tax rate)?

Anyone have any tips/stories?

 

[JohnnyDoe]

Your life will be miserable in the EU. Move to the Dominican Republic, with that capital you will live as a king.

 

[wellington]

I have built up a bit of capital (about 1.25M EUR) and started thinking about "retiring" now at 45. I could work a few more years to improve my position but I have a heart problem and need to avoid stress, life is quite short after all.

I was planning to settle in Thailand, and even applied for the Elite visa before the price increase. They just sent me the approval and invoice but the closure of the tax loophole and the fact that I can't get PR there (+ costly health insurance) has me doubting if it's the right choice.

As I am a EU citizen, I'm looking at Mediterranean countries as an alternative that doesn't require visas and gives access to public healthcare.

Ideally I would buy a place for 2-300k EUR and then live off the rest, which should hopefully yield at least 30k per year.

Cyprus looked like a good alternative but the recent influx has driven rent and property problems up quite a bit considering my budget. I also don't know how stable it is politically over time.

Spain is a place I've spent a bit of time in and enjoyed, and fairly affordable but here it's often called a communist tax hell. Capital gains tax seems to be around 20% for my bracket which doesn't look so bad for EU (and comparable to the thai tax rate)?

Anyone have any tips/stories?

Savings previously earned and can be shown are tax free for remittances

Ref Thailand

 

[pomo]

Your life will be miserable in the EU. Move to the Dominican Republic, with that capital you will live as a king.

I'm sure there are plenty of places where you can live like a king like DR but it still needs a visa, healthcare looks dicey and they tax global income (at least on paper)?

 

[Sols]

If universal healthcare and Mediterranean are non-negotiable then just take your pick of Spain, Italy, France, and Greece. If you count Portugal as Mediterranean, you can add that to your list of considerations.

Headline CGT rates are 15% in Greece, 28% in Portugal, 19% in France and Spain, and 26% in Italy. Headline is often different from reality. You might be able to structure your income to achieve a lower rate.

Would not recommend Cyprus if healthcare is a key consideration. It's fine if you're otherwise healthy but if you know you have issues, the Cypriot healthcare system is not great for foreigners.

Maybe Malta, though, if you're not looking to acquire a luxury villa with a lot of land. It's a small island but you can still find reasonably priced properties outside the central region.

 

[void]

if you're ok with South European tax hell and want to live in "Europe" then have a look at Reunion island, which is full fat French department in the Indian ocean with all the pros and cons - beautiful nature of all flavors, warm weather all year round, perfect place to retire
couple of overnight flights to Paris daily

 

[pomo]

Savings previously earned and can be shown are tax free for remittances

Ref Thailand

that should last me a bit using cash savings but selling stock would make it cap gain income that year I assume? Maybe will be possible to be out half a year every now and then and bring in a chunk to live on for the next few years.

If universal healthcare and Mediterranean are non-negotiable then just take your pick of Spain, Italy, France, and Greece. If you count Portugal as Mediterranean, you can add that to your list of considerations.

Headline CGT rates are 15% in Greece, 28% in Portugal, 19% in France and Spain, and 26% in Italy. Headline is often different from reality. You might be able to structure your income to achieve a lower rate.

Would not recommend Cyprus if healthcare is a key consideration. It's fine if you're otherwise healthy but if you know you have issues, the Cypriot healthcare system is not great for foreigners.

Maybe Malta, though, if you're not looking to acquire a luxury villa with a lot of land. It's a small island but you can still find reasonably priced properties outside the central region.

Thanks for the exhaustive answer. Universal healthcare is not a strict requirement right now since I have good international private insurance but it goes up every year and I know from acquaintances that it can become unaffordable when (if) you approach 70.

Portugal, Malta and Italy do look interesting, I will research more about PR and healthcare. For Spain, five years residence and the "convenio especial" seems straightforward to get access to the system.

 

[JohnnyDoe]

I'm sure there are plenty of places where you can live like a king like DR but it still needs a visa,

Very easy to get one and you can overstay on a tourist visa by just paying a fine

healthcare looks dicey

Not really. In any case, you should better have a medical insurance.

and they tax global income (at least on paper)?

No

 

[Martin Everson]

Spain is a place I've spent a bit of time in and enjoyed, and fairly affordable but here it's often called a communist tax hell. Capital gains tax seems to be around 20% for my bracket which doesn't look so bad for EU (and comparable to the thai tax rate)?

Anyone have any tips/stories?

Spain???

Spain is incompatible with what you said below.....

I have a heart problem and need to avoid stress, life is quite short after all.

Don't get me wrong Spain is a nice place to visit but look at another EU country if healthcare is important.

 

[Sols]

Thanks for the exhaustive answer. Universal healthcare is not a strict requirement right now since I have good international private insurance but it goes up every year and I know from acquaintances that it can become unaffordable when (if) you approach 70.

If for no other reason than leaving no stone unturned, you could look into Andorra as well. Low taxes, very calm and quiet living, and universal healthcare. A good fit if you know you might need occasional non-urgent specialist care and your international health insurance covers Spain and/or France, as both Barcelona and Toulouse are about three hours away.

It's a bit isolated, though, lacking an airport. And you don't quite get the weather of lower altitude Mediterranean options.

 

[polonieth]

Why not take a mini-retirement and spend a couple of months in each of the places you shortlist before taking the plunge to relocate permanently?

 

[pomo]

Why not take a mini-retirement and spend a couple of months in each of the places you shortlist before taking the plunge to relocate permanently?

That makes sense but as a visitor/tourist you don't really deal with bureaucracy, tax and hospitals, which is why I'm looking for some feedback.

I did spend about 9-10 months over the last decade in Spain and close to five years living full time in Thailand, so I'm happy with the general living conditions there.

Spain???

Spain is incompatible with what you said below.....



Don't get me wrong Spain is a nice place to visit but look at another EU country if healthcare is important.

That's a good point - I've heard mixed experiences from acquaintances living there. Some with kids were not happy with accessibility but an older friend that had a stroke was impressed with the care and follow-up rehabilitation he got.

 

[scooterguy]

Tbh Spain (especially the south) is not that bad when living off investments, but you may want to consider Thailand for the next 15-20 years (using your private health insurance), and then consider Spain once the health insurance costs become too prohibitive.

This plan will also allow your portfolio to grow much more than if you were in Spain during those 15-20 years, because of the low cost of living in Thailand and its lower taxes.

There is also the chance that you end up meeting someone in Thailand and getting married, getting your PR somehow with a part-time job or business venture, etc., and getting the best of both worlds (i.e., low cost of living and portfolio growth + free health insurance).

Note also that in Thailand you can get a retirement visa once you're 50, so the Thai Elite might be an unnecessary cost in your situation. You may want to look into ED visas, which are much cheaper and can easily buy you time until you can apply for the retirement visa.

If you have been invoiced for the 5-year Thai Elite visa at the old price, that's a pretty good deal though.

 

[pomo]

This plan will also allow your portfolio to grow much more than if you were in Spain during those 15-20 years, because of the low cost of living in Thailand and its lower taxes.

I didn't consider this in my calculations but the difference will definitely compound over time!

There is also the chance that you end up meeting someone in Thailand and getting married, getting your PR somehow with a part-time job or business venture, etc., and getting the best of both worlds (i.e., low cost of living and portfolio growth + free health insurance).

I thought about doing some part-time gig, and I would definitely be more comfortable doing it in Thailand rather than Spain. Non-remitted funds are still tax free in TH.

Note also that in Thailand you can get a retirement visa once you're 50, so the Thai Elite might be an unnecessary cost in your situation. You may want to look into ED visas, which are much cheaper and can easily buy you time until you can apply for the retirement visa.

I looked at ED but it may be a stretch for the five years I need until 50, higher risk for immigration hassle. After 50, I might qualify for LTR pensioner which has a full tax exemption also.

If you have been invoiced for the 5-year Thai Elite visa at the old price, that's a pretty good deal though.

They took their sweet time so I have until 15th of Jan to pay with the old price (600k for five years, extendable to 20 for another 400k).

The other option I considered was filtering incoming money through an EOR like Iglu to qualify both for visa, social security and possibly PR. While the tax loophole was there it didn't make sense financially but if you have to pay the same tax rate on elite you might as well get something for it. The monthly cost seems to come out about the same, $300/month fixed fee plus the tax.

 

[Radko]

Spain is a place I've spent a bit of time in and enjoyed, and fairly affordable but here it's often called a communist tax hell. Capital gains tax seems to be around 20% for my bracket which doesn't look so bad for EU (and comparable to the thai tax rate)

What part of Spain do you plan on buying a place for 200K-300K? That won't get you much if you plan on living by the coast (and Property Tax, plus Trash Tax, plus Community fees are not cheap), forget about buying a villa with 300K€ by the Coast.

And you better have Private Health insurance if you want to survive in Communist Spain with a heart problem (Social Security waiting list to see an specialist is now around 3 to 6 months depending on the province).

You will need 2,500€/month just to get by, Spain is no longer cheap, not after COVID-19

And yes, it has become a Socialist/Communist country, so you will have to pay Wealth Tax, besides Capital gains which can go from 20% to 26%, plus extra taxes in your utility bills, courtesy of the Communist government.

You'll be much better of in Portugal, way cheaper, safe, nice weather, nice people, not nearly as packed as Communist Spain.

I bet you won't stay in Spain for more than 2-3 before you move to another nicer cheaper place, so be careful what you get yourself into. Spain was paradise 15 years ago, since then it has gradually gone down the drain, and it will not come back from a Debt to GDP of 120% and an unemployment rate of 15% (highest of the EUSSR), once again courtesy of the Communist government (plus taxes will go higher this year).

I'm sure you know the useless Spanish president belongs to the Socialist party, and the vice presiden, aka lady Gaga, to the Communist party.

This is the best time to leave Spain, not to come.

In any case, best of luck .

 

[pomo]

What part of Spain do you plan on buying a place for 200K-300K? That won't get you much if you plan on living by the coast (and Property Tax, plus Trash Tax, plus Community fees are not cheap), forget about buying a villa with 300K€ by the Coast.

As a single guy I'm not looking for a house or villa, just a 2BR flat would be enough. There does seem to be a decent supply of those in that price range, even in larger cities like Valencia.

And you better have Private Health insurance if you want to survive in Communist Spain with a heart problem (Social Security waiting list to see an specialist is now around 3 to 6 months depending on the province).

Thanks, this is valuable information! If I need to maintain private insurance in Spain it's again less interesting. It's already 350 EUR a month now, increasing every year and I can't change company because of pre-existing conditions.

You will need 2,500€/month just to get by, Spain is no longer cheap, not after COVID-19

And yes, it has become a Socialist/Communist country, so you will have to pay Wealth Tax, besides Capital gains which can go from 20% to 26%, plus extra taxes in your utility bills, courtesy of the Communist government.

You'll be much better of in Portugal, way cheaper, safe, nice weather, nice people, not nearly as packed as Communist Spain.

I didn't look much at Portugal as my impression was that the NHR attracted to much people and pushed up rents and alienate local population, at least in Lisbon. I should give it a closer look. Any particular area/city that you would recommend?

 

[Radko]

Any particular area/city that you would recommend?

I like warm weather, so I was in Portimao a couple of months ago and it was really, really nice. Everything was less expensive than in Spain, by quite a bit, even extra virgin olive oil was cheaper over there.

Go on YouTube and check some videos on the Algarve area of Portugal. It will only take you a two hour drive from Portimao to Seville if you want to visit Seville.

You can easily get a nice villa for 200K-300K over there.

In the meantime here are some pictures of Portimao coast.

 

[scooterguy]

Nice pictures but the bias here is clouding the facts.

At the end of the day, Portuguese taxes are higher than those of Spain (capital gains tax is higher in Portugal, income tax brackets go higher, etc.), healthcare is worse (Spain ranks much better in this regard, life expectancy in Spain is higher, etc.), and Portugal is more packed (population density is higher in Portugal, but beware of comparing a small coastal city with a population of 60K against Madrid or Barcelona).

Move to a small coastal city in Spain and you can enjoy a cheap, high quality life, and pay less taxes than in Portugal.

Yes, OP, you will pay wealth tax in Spain, but with a 1.2M portfolio you will barely pay anything at all. The first 700K EUR are free, and your primary residence doesn't count either (up to 300K). So, with your plan you will only pay wealth tax on 200K EUR at the 0.2% rate, which is 400 EUR a year on your 1.2M portfolio.

By the way, there are much better options than Spain for OP, but Spain is objectively better than Portugal when it comes to taxes, expenses and healthcare.

 

[Radko]

Nice pictures but the bias here is clouding the facts.

At the end of the day, Portuguese taxes are higher than those of Spain (capital gains tax is higher in Portugal, income tax brackets go higher, etc.), healthcare is worse (Spain ranks much better in this regard, life expectancy in Spain is higher, etc.), and Portugal is more packed (population density is higher in Portugal, but beware of comparing a small coastal city with a population of 60K against Madrid or Barcelona).

Move to a small coastal city in Spain and you can enjoy a cheap, high quality life, and pay less taxes than in Portugal.

Yes, OP, you will pay wealth tax in Spain, but with a 1.2M portfolio you will barely pay anything at all. The first 700K EUR are free, and your primary residence doesn't count either (up to 300K). So, with your plan you will only pay wealth tax on 200K EUR at the 0.2% rate, which is 400 EUR a year on your 1.2M portfolio.

By the way, there are much better options than Spain for OP, but Spain is objectively better than Portugal when it comes to taxes, expenses and healthcare.

As someone that was born in Spain and currently lives in a "small costal city" and has lived for a few years in Portugal I strongly disagree.

It's just not factual what you're saying.

 

[scooterguy]

As someone that was born in Spain and currently lives in a "small costal city" and has lived for a few years in Portugal I strongly disagree.

It's just not factual what you're saying.

As someone who was born on Earth, I will give you some facts:

Capital gains tax in Portugal: Flat 28%. Spain: Progressive up to 23%.

Income tax brackets: Portugal, progressive up to 48%. Spain, progressive up to 47%.

Population density in Portugal: 112 per km2. Spain: 93 per km2.

Life expectancy in Portugal: 80 years. Spain: 82 years.

For housing, go to idealista and compare the prices in similar cities. Spain has much better housing and at better prices. The Portuguese housing market is completely broken; this is not only constantly reported but you can also see it by yourself in the major real estate portals like idealista.

Feel free to prove me wrong with actual numbers, such as tax rates, healthcare statistics, etc.