Do you have questions about spending part of your retirement abroad? Perhaps this article will encourage you to join the 7.6% of the 15 million French pensioners who spend their retirement abroad, half of them in Europe. These data come from the Caisse Nationale d'Assurance Vieillesse 2022 and are confirmed by EOR, a firm specializing in formalities and retirement assistance for expatriates from around the world.
Beware, retiring abroad can be a real administrative headache: should you apply for your retirement while still in France or wait until you are already abroad and apply from the consulate of your new country of residence? Indeed, the administrative and financial consequences are not the same. Let's face it: a large part of these retirees who go abroad do so for tax reasons and for purchasing power, especially those who go to Europe. And even if 20 years ago there were only 5 exceptional and advantageous European tax regimes for retirees, there are now 28 different tax regimes in Europe that compete to attract retirees.
These destinations in Europe that attract retirees
For almost 10 years now, Portugal has been the Eldorado and the favorite retirement destination for the French. At the last census, there were 17,000 people registered in the consular register of expats, and it is estimated that this number is more than twice as high since many French people who settle there do not register with the French embassy. Whereas before there was 0 tax on all foreign income in Portugal, the rate has now increased to 10% since April1, 2020, which is a blessing in disguise, since it is intended to stabilize the tax situation of French people who have settled there. Indeed, until now, these French expatriates in Portugal for retirement risked double taxation on the grounds that most of their income was not taxed at all, allowing the French administration to challenge the expatriate status for lack of taxation on income (more details on expatriate retirement here.)
New destinations in the South are of interest to the French and have been talked about a lot lately: Greece and Italy. These two countries are largely inspired by the Portuguese model. With a tax rate of 7% on income and mandatory geographical conditions for Italy, since it is necessary to settle in municipalities of less than 20,000 inhabitants and in the South of the country. These conditions are therefore quite restrictive.
For a complete picture of attractive European destinations that have signed a tax convention with France, but also more attractive than the northern countries such as Belgium or the Netherlands, we find Malta and Cyprus, with, it should be noted, a lot of English retirees! Another original destination in Europe with cheap real estate, a very good purchasing power and famous hospitals: the unknown Bulgaria!
And outside Europe?
To be complete, we can of course talk about countries outside Europe. Expertise Optimisation Retraite Paris VIIIe has seen many people expatriate to Thailand, a destination that remains very attractive with its climate, its beaches that make you dream, its cheap real estate and very high quality hospitals, to Western standards and particularly American. But beware of the cost! Even if the social security covers you for all the basic part, you must take a mutual insurance adapted to both your status as a retiree and an expatriate mutual insurance adapted to the country of residence.
Other things to know
Other points to study before leaving, and we can never repeat it enough because EOR Consultants sees many expatriates each year and deals with many retirements of working people abroad, the tax reason should not be the only one because it is above all a life choice. You have to think about your children and grandchildren, your friends of course, and your networks that you will see less of, if at all, and then the places you frequent (sports clubs, associations, vacation spots). From a patrimonial point of view, one must think about all that one has accumulated during one's career and that one will have to arbitrate between keeping or giving to one's children or even more radically selling. Indeed, keeping income in France will not be of much interest since it will be taxed in France before being repatriated to the country of expatriation. It is therefore advisable to reorient one's wealth to favor investments abroad, since those that remain in France will always be taxed in France. The tax appeal then loses its interest. The last point to consider is that in these countries, the standard of living is lower, so you gain directly in purchasing power by expatriating (a very fashionable subject in 2022 with the presidential elections).
Do you have questions about moving to Portugal or other European countries, or even the world? Do you want to know more about expatriate retirement? Don't hesitate to ask your questions to EOR's retirement advisors, who are there to help you with the complex administrative formalities in order to receive your pension abroad.
Text written by J.-F. Chauffeté, founder of EOR Consultants, specialists in expatriate retirement calculations, information and settlement for over 25 years! Retirement support services here.