If you could establish residency anywhere....

[dannc]

Originally Posted by Statistical

....

So taxes should not be your primary consideration.

Taxes should be a consideration. A primary consideration? I think it depends on the impact of the tax.

Having to pay VAT on a boat could have a huge financial impact. In our case, with my current understanding of how boat VAT is applied, it most certainly turns into a primary consideration for residency.

Other taxes that might be a concern for residency is inheritance, both what one might inherit, but also what one might want their descendants to inherit.

It is complicated.

[Dockhead]

Originally Posted by dannc

Taxes should be a consideration. A primary consideration? I think it depends on the impact of the tax.

Having to pay VAT on a boat could have a huge financial impact. In our case, with my current understanding of how boat VAT is applied, it most certainly turns into a primary consideration for residency.

Other taxes that might be a concern for residency is inheritance, both what one might inherit, but also what one might want their descendants to inherit.

It is complicated.

In the EU, you would normally not have to pay VAT on a boat you already own, when you bring the boat with you when you transfer residency from outside the EU.

[Dockhead]

Originally Posted by Statistical

One thing to consider is that if you are a US citizen you owe taxes on global income regardless of where it is earned and regardless of where you currently reside. The US is very unusual in this case.

This changes the tax residence situation. Your goal should be simply somewhere that taxes you less than the US because you will get foreign tax credit for any taxes paid which offset your US taxes.

If taxes locally are $20k and your US taxes are $25k you would get a credit for the $20k and pay $5k in US taxes. Total taxes are $25k. If you find a tax haven with 0% income taxes then you will pay $25k in US taxes. Total taxes are $25k.

The only way out of this is to renounce US citizenship which is a huge decision with plenty of pitfalls and at a minimum you are now looking not just for a country where you can reside but where you can become a citizen in a reasonable amount of time/cost.

So taxes should not be your primary consideration.

Yes, but you do get a Foreign Earned Income Exclusion up to a hundred-odd k. So, depending on how much more than that your income is, taxes in the new country can have a huge impact.

The way this exclusion works is you knock off -- above the line, as accountants say, so not like an itemized deduction -- the first hundred odd k, and start running the brackets from 0. If you have earned income of more than a few hundred k, this won't help you that much, but if you are in $100k - $200k range like most people it does help you hugely, provided the taxes are lower in your new home.

Note that this does not apply to CAPITAL income, only earned income (salary or business income), so won't help you with dividends or rental income. And doesn't apply to any U.S.-source income.

Ireland has a really good non-dom status where as a tax resident, but not domiciled, you are not taxed at all on foreign source income except to the extent it's remitted into Ireland. That means you get your FEIE and up to a hundred odd k of income not generated in Ireland (or the U.S.) and not remitted to Ireland is completely tax free, both in Ireland and in the U.S. It used to be like this in the UK, but the status has been progressively whittled down and apparently will be abolished next year.

So I do not agree that taxation in your new country doesn't matter for U.S. citizens.

[dannc]

Originally Posted by Dockhead

In the EU, you would normally not have to pay VAT on a boat you already own, when you bring the boat with you when you transfer residency from outside the EU.

Glad to hear you verify what is my understanding.

Our problem is that we want to build in the EU, and my understanding is if we already have residency, we would have to pay VAT. That would be a very big tax bill to pay.

So, one plan is to build the boat, flag outside of the EU, own it for a 6-12 months, then get residency and import the boat.

Our two issues with having a boat and residency is taxes and insurance. Residency would seemingly help with insurance but then we have tax issues to resolve.

Taxes and insurance is wrapped up in residency and certainly is a major consideration. From what we can tell so far, income type taxes are a really not an issue. The income tax expense seems to be balanced out by other lower expenses. VAT and inheritance tax are different animal.

[hpeer]

Originally Posted by cdocsail

Does this cover the 20% that Medicare does not? I carry a supplement just for that.

No, it simply gets you back to a USA hospital.

Well, that is what we were sold. Have yet to try it.

We spend 9 -10 months a year outside USA, Caribbean and Canada. Canada could be as big an issue as Caribbean.

[Mapoz]

Don't forget that if you're a US citizen, the US is one of only two countries in the world that will try to tax you anywhere (IIRC, the other is Eritrea). As such, living in a tax free/low tax country doesn't allow you to fully escape Uncle Sam, unless you renounce your US citizenship. There are many websites (and reddit threads) dedicated to this as well: nomadiccapitalist, expatfire all with people with stories and opinions. Good luck with the search - I'll be watching & reading.

[Dockhead]

Originally Posted by dannc

Glad to hear you verify what is my understanding.

Our problem is that we want to build in the EU, and my understanding is if we already have residency, we would have to pay VAT. That would be a very big tax bill to pay.

So, one plan is to build the boat, flag outside of the EU, own it for a 6-12 months, then get residency and import the boat.

Our two issues with having a boat and residency is taxes and insurance. Residency would seemingly help with insurance but then we have tax issues to resolve.

Taxes and insurance is wrapped up in residency and certainly is a major consideration. From what we can tell so far, income type taxes are a really not an issue. The income tax expense seems to be balanced out by other lower expenses. VAT and inheritance tax are different animal.

Pantaenius has never asked me about residency. I pay very reasonable rates compared to what people pay in the U.S. -- about £2200 a year now, for an agreed value of about half a million, and very wide cruising area up to 100nm above the Arctic Circle. That includes legal cover, personal injury, personal effects. Less than I used to pay for an old Pearson 365 in the U.S.


Most countries in N. Europe don't have any inheritance or wealth taxes. Don't know about the rest of Europe.

[Statistical]

Originally Posted by Dockhead

So I do not agree that taxation in your new country doesn't matter for U.S. citizens.

Never said it doesn't matter just that it isn't the most important criteria and one will not every get 0% tax rate as a US citizen even if you resided in a country with a 0% tax rate.

The OP seems opposed to the idea of paying any taxes not just paying taxes to the US. Short or renouncing citizenship that is not going to happen.

He could retire and reside in a tax haven country which has 0% tax on investments and he will still pay to the penny exactly the same amount to Uncle Sam that he would if he was living in the US. As you point out the FEIE only applies to earned income not investments, interest, dividends, rents, royalties, etc.

So yes one can retire to the Bahamas and be taxed at exactly 0% on foreign investment income. Great never going to pay income taxes to the Bohemian government. He will still pay exactly the same on those investments to Uncle Sam. I would add that tax haven countries with very low or zero tax on income often have high sales or VAT tax.

[hpeer]

That is less than our liability only in Caribbean.

[more]

Originally Posted by Dockhead

In the EU, you would normally not have to pay VAT on a boat you already own, when you bring the boat with you when you transfer residency from outside the EU.

you are wrong, EU citizen must pay vat first time touch EU water. if you lose proff vat paid you must pay again,if you after 2 time pay vat and go outside EU water 3 year when you return must again pay vat

[Statistical]

Originally Posted by more

you are wrong, EU citizen must pay vat first time touch EU water. if you lose proff vat paid you must pay again,if you after 2 time pay vat and go outside EU water 3 year when you return must again pay vat

The person in question though is not an EU citizen.

[Dockhead]

Originally Posted by more

you are wrong, EU citizen must pay vat first time touch EU water. if you lose proff vat paid you must pay again,if you after 2 time pay vat and go outside EU water 3 year when you return must again pay vat

Sorry, not always.


Even an EU citizen, if he was tax resident abroad, can bring his household back to the EU without paying VAT, provided he is re-establishing residence. You are free not only of VAT, but of import duty.

[Dockhead]

Originally Posted by Statistical

The person in question though is not an EU citizen.

Whether or not you are an EU citizen, you can bring your boat with you as part of change of residence from outside the EU to inside the EU, VAT free. At least in most countries. Also cars, household goods, etc.

[boatman61]

Originally Posted by Dockhead

Pantaenius has never asked me about residency. I pay very reasonable rates compared to what people pay in the U.S. -- about £2200 a year now, for an agreed value of about half a million,

Are you Pantaenius UK.. if so you must have a UK address as they have refused me insurance post Brexit because I am a Portuguese resident and as such they cannot cover me regardless of having used them for a couple of decades on and off.

[Tron Alpha]

G'day to you.
I am an aussie from Queensland Australia and i have been living on boats from 2003 to the present day.
I live with a couple of disabilities, so i receive the disability support pension. I will give you an over view of life hear in Australia.
Once you gain citizenship there are many options open to you. I live in a marina, some marinas do not allow this it depends on were they are located, size of the boat and pets ,that's another issue you have check up on, no tax for pensioner s and rental assistance is available, cost of living is expensive, hoever, if you are looking for stable life style, I would choose queensland because you can live on an boat all year round, in an marina, Australia at present is the most stable country in regarding politics, social, and economically and geology stable. You will get an very good exchange rate over hear for the dollar. We also have an agreement with the usa. Please do not ask me about that i do not know.when you do become citizens bulk billing at medical clinics, and free hospital will be available. Weather, is usually pretty good right now is what we call our cruising season another thing, it does get cold but not to the point were you have to lift out and winterize your boat and you could go sailing all year. I would recommend Hervey bay, for fraser island and whale watching, early August to october, then the whitsundays for diving remember to wear an skin siut when you go swimming because of the box jelly fish. Australia is very close to Asia, P.n.g Solomon islands and Fiji, Vanawatu and the pacific islands.
I hope my overview has oped your thoughts on Australia.
We do also have lots of parks camping and hiking multi day or day hikes fi that your cuppa as well.
Gerard.
SV GEMSTAR.