living aboard/world circum and country of residency as a pensioneer

[CaptainRivet]

HI all,


i hope some of you can help and point me in the right direction.
What country as residency to choose as a liveabord, so no taxes on foreign income/foreign pension and they don't bother you being 183days min in their country???
Just need to proof residency in any state I want and I bank account to swiss and german pension fund to transfer my pension to which state I want. So which country to choose???



Background:
I have a German passport and at the moment residency in switzerland.
From 2o2o on I will retire early and get a pension from switzerland and Germany but I won't be living anymore in switzerland/no residency soon.

I will liveaboard and do a slow world circum for min 5 years starting in March 2020.
Both countries will transfer my pension to any country I will get residency.
What country as residency to choose as a liveabord, so no taxes on foreign income/foreign pension and they don't bother you being 183days min in their country???
Heard BVI should be a good place and easy to get a residency visa/residency, true?

[Paul L]

Outside of the EU, I doubt you will find many countries that are easy to just declare residency, yet not actually live there - that is without moving millions into a local account.
If you change your residency will you still have access to health insurance?

[CaptainRivet]

Originally Posted by Paul L

Outside of the EU, I doubt you will find many countries that are easy to just declare residency, yet not actually live there - that is without moving millions into a local account.
If you change your residency will you still have access to health insurance?

well how are all the retired cruiser that circum solving this ?
There must be a solution as I am for sure not the only one with this "problem"

found this:
https://www.investopedia.com/article...-countries.asp
can get a 1 room apartement as permanent adress and "postbox" if needed...

with german passport I can always register in 5min at my parents or uncles adress and get access to health insurance. Will get a worldwide valid health insurance, looking into that too.

[JAFO]

You could start here... it has plenty of useful information. This info is what I'm using as the basis for making my own plans.

Where to Register Your Yacht Offshore: the Ultimate Guide

Ignore the product they're selling, just use the information as a starting point to choose the country that fits your needs.

[Paul L]

Originally Posted by CaptainRivet

well how are all the retired cruiser that circum solving this ?
There must be a solution as I am for sure not the only one with this "problem"

found this:
https://www.investopedia.com/article...-countries.asp
can get a 1 room apartement as permanent adress and "postbox" if needed...

with german passport I can always register in 5min at my parents or uncles adress and get access to health insurance. Will get a worldwide valid health insurance, looking into that too.

Most long distance cruisers remain a legal resident of their original country. For most their income is low enough that taxes are not that complicated.

[NorthernMac]

Originally Posted by CaptainRivet

well how are all the retired cruiser that circum solving this ?
There must be a solution as I am for sure not the only one with this "problem"

found this:
https://www.investopedia.com/article...-countries.asp
can get a 1 room apartement as permanent adress and "postbox" if needed...

with german passport I can always register in 5min at my parents or uncles adress and get access to health insurance. Will get a worldwide valid health insurance, looking into that too.

So you’re trying to avoid paying taxes on your pension, but if you get sick or hurt your fall back plan is to claim you live with your parents so you can get tax payer funded medical care?

[Topspin]

Hi CaptainRivet,

There are some problems here, but it is not that difficult.



First of all, check, whether the tax thresholds for Germany and Switzerland are different. If you get german pension, there is surely a pretty high threshold and there are international agreement on taxation "Doppelbesteuerungsabkommen" to avoid being taxed in both countries. Or simply ask your tax agent. It all comes back to having and maintaining a bank account in your country. I would also involve an agent when you apply for the German pension, so he would know.



Second, you need a flag for your boat. The German one is not that expensive. You just need the german licenses (SBF and radio license) and everything else is pretty cheap. Other irritating issues like European VAT are solvable.

So having the German flag would not be too difficult. But you could have other options, for instance flagging the boat in Malaysia or some other helpful countries. In BVI you need to open a business to flag your boat, but this is not a big problem. Info here: https://www.yachtworld.com/bviyachts...tsales_10.html



Third you need insurance for your boat and for yourself. This is also pretty affordable in Germany. You might want to get some information from here:

https://www.trans-ocean.org/
an organization you should join, if you want to do serious bluewater sailing.



Regards and good luck for your plan,



-Richard (same plan, starting in 2022)

[Topspin]

Originally Posted by CaptainRivet

well how are all the retired cruiser that circum solving this ?


https://www.investopedia.com/article...-countries.asp
can get a 1 room apartement as permanent adress and "postbox" if needed...

with german passport I can always register in 5min at my parents or uncles adress and get access to health insurance. Will get a worldwide valid health insurance, looking into that too.

Hi Captain Rivet,

I just peeked into that article, and answering here from the floor, where I was rolling and laughing....

At least for Australia, this article is very poorly researched.


Don´t know about the other countries, but in Australia, you will have no chance to get a retirement visa following a visitor visa. This may be possible after getting an investor visa, but for that you need something around 5 Million Dollars.......


Why do you think there is a need for immigration into another country if you are on a yacht? Keep your residency in Germany or Switzerland !


-Richard (from Australia)

[Sojourner]

Originally Posted by NorthernMac

So you’re trying to avoid paying taxes on your pension, but if you get sick or hurt your fall back plan is to claim you live with your parents so you can get tax payer funded medical care?

To be fair (and I do this in my native Hungary), yes, but because a) he probably put plenty of money into that same state healthcare system over the many years until his retirement, and b) when not working (like me) but abroad, I have to pay back into hungary's national health care system at a rate assuming I had the minimum wage. So in that case, it's about 40 bucks a month I pay, which is what my employer contribution would be if I worked there currently at the minimum wage to be eligible for healthcare.

Either way, it's perfectly fair.

[CaptainRivet]

HI all,
thanks so much for your advice, really appreciate it.
The reason switzerland as residency is not an option due to
a) residency and the obligations that come with it is quite expensive
b) they request being min. 183days there and checking that, as I don't have a swiss passport that will fall throug sooner or later
c) most important, I am very early retiring (only 48) and besides the offical pension from the swiss 2 pension pilar system I have a 3rd and 4th pillar privately with some state supported tax advantages. But I only get this 3rd and 4th pillar money if I am 65 or if I leave the country. And this junk of money would be much better invested differently and gain more interest then in this half private and state supported swiss environment. Was good as low interest was support by tax reductions on income, so quite a good interest at the end. But now I don't have income anymore, so no tax benefits.

Why not Germany (not now but maybe in 5-10years as 2nd residency):

- And in Germany this private pension fund money (see c) above) would be taxed with 30%-50% if I register there, its counted as income.

- for german registered it will be the same pension fund authorities in Zürich then when I live in switzerland and as I am German and the swiss nationals don't like them/work in the same swiss mentatlity you get screwed over or bureaucrazy solves things super slow on purpose (friends and myself had already really bad experience here). If I am out of the 4 countries that have a boarder with switzerland (Germany/Austria/Italy/France), the foreign pension fund authorieties in Geneva take over which are super international and have experience in dealing with international setups like mine, means not unusual and therefor not suspecious. Got that tip from another sailor who got into troubles and after switching residency and Geneva took over things ran smoothly, fast and without any hickup while it was a nightmare in Zürich. And the last thing I wanna deal with while cirumnavigate....


Not super wealthy but that tax in Germany could finance 3-5 years sailing and I paid a lot tax in both countries...now its time I cash some of it out and avoid paying tax on it as much as I can. I am not living there, so why should I pay into that system.

As I need to do it anyway I can choose the best financiable option in residency regarding taxes anyhow now. Not willing to invest into one of this residence country or pay huge sums to get residency. just need one for now where my pesnion is transfered and let's see what comes later.

One aim of cirum is also to find my future place where I really like to live/stay after the circum (definitly somewhere close to beach/sea and having the boat closeby or liveaboard)

And as I already posses some of my parents house in Germany plus German passport I can always register in Germany if its needed or the **** hits the fan. Better have a worst case fallback plan upfront...things can go very wrong.

[Cadence]

Originally Posted by CaptainRivet

HI all,


i hope some of you can help and point me in the right direction.
What country as residency to choose as a liveabord, so no taxes on foreign income/foreign pension and they don't bother you being 183days min in their country???
Just need to proof residency in any state I want and I bank account to swiss and german pension fund to transfer my pension to which state I want. So which country to choose???



Background:
I have a German passport and at the moment residency in switzerland.
From 2o2o on I will retire early and get a pension from switzerland and Germany but I won't be living anymore in switzerland/no residency soon.

I will liveaboard and do a slow world circum for min 5 years starting in March 2020.
Both countries will transfer my pension to any country I will get residency.
What country as residency to choose as a liveabord, so no taxes on foreign income/foreign pension and they don't bother you being 183days min in their country???
Heard BVI should be a good place and easy to get a residency visa/residency, true?

As I understand it you are lucky with an EU passport for a circum. since you won't have limits on stays at EU member holdings.

[philiosophy]

For me this may well be the most important discussion on this forum yet. Every full time world cruiser that is retired is dealing with these issues. So many countries require 183 presence to receive their pension and medical benifits. Solving that issue is huge.
Mexico seemed to have an easy system to allow residency. I may revisit that down the road. Australia allows the boat to stay three years before importation. Long visas seem to be doable with due diligence. Will know more on that in the next few weeks. I hope this very important discussion stays alive. Thank you for asking.

[Montanan]

Specific guidance regarding your German citizenship and tax liabilities along with residency / non-residency status thereof.

Are investment income and capital gains taxed in Germany? If so, how?

Worldwide investment income is subject to German income tax at 25 percent plus solidarity surcharge plus church tax (where applicable). The tax is generally withheld at the source. The tax withheld is final unless one of the following applies.
The taxpayer's individual income tax rate is lower than 25 percent.
Not all investment income was subject to withholding (such as foreign investment income).
Church tax was not considered in the withholding although applicable.
A standard annual deduction of EUR801/EUR1,602 (single/married) is offset against the taxable part of worldwide investment income. Investment income includes interest, dividends and gains from the sale of shares.
Special rules apply to shares purchased prior to 1 January 2009. Additionally, specific rules are in place for mutual investment funds.
Special rules are in place for mutual funds which do not fulfil the registration / publication requirements in Germany.

Gains derived by an individual from the sale of non-business property other than shares are not subject to tax, except in cases where the asset has not been held for the required holding period or where certain thresholds are exceeded. For real property, tax will be due on the gain if on the date of sale the property has been held 10 years or less (exemptions exist for the sale of the taxpayer's residence). Even if the asset has not been held for the required holding periods mentioned earlier, the gain will be tax-free if all gains in a calendar year are less than EUR600 in total.
Dividends, interest, and rental income

See earlier for taxation of dividends and interest.

Rental income is taxable unless exempt under a double tax treaty.
Foreign exchange gains and losses
Depending on certain circumstances, foreign exchange gains will be treated as a “speculative” transaction, which is taxable.
Capital losses

The use of capital losses for tax purposes is subject to various restrictions and limitations.

Gifts

Inheritance and gift tax is levied on transfers of property by reason of death, gifts during lifetime, and transfers for certain specified purposes (gift tax), as well as on the net worth of certain family foundations and trusts. The tax is generally assessed on the net worth of the property transferred after deducting certain exemptions as well as personal exemptions depending on the family relationship. Taxable transfers of property are subject to tax at graduated rates (ranging between 7 percent and 50 percent).


Gains from stock option exercises

[Cpt Pat]

Correct me if I'm wrong here but, it is my belief that since I have a U.S. documented vessel, if I am living aboard that boat, I am "resident" in the United States, regardless of the vessel's location.

[Montanan]

Since 2005, pensioners living abroad who draw retirement income from Germany within the meaning of § 22, No. 1 Sentence 3a of the German Income Tax Act have generally been subject to limited income tax liability (§ 49, Sec. 1, No. 7 of the German Income Tax Act). As of 2009, certain retirement income drawn from Germany within the meaning of § 22, No. 5, Sentence 1 of the German Income Tax Act (§ 49, Sec. 1, No. 10 of the German Income Tax Act) is also subject to limited income tax liability. Whether this income is in fact taxed in Germany, however, depends on whether the provisions of the bilateral double-taxation Agreement provides for taxation by Germany as source state.

So one needs to review the specifics of the pertinent bilateral double taxation agreement / treaty as to Germany as a source state and your resident status state.

A specific example regarding having residency in the USA:
Since 2008, the double-taxation Agreement with the U.S. no longer provides for taxation in the source state. Consequently, the pensioner’s country of residence has had the exclusive right of taxation since 2008. Therefore, as of the 2008 assessment period, it is no longer necessary for persons living in the U.S. who exclusively draw retirement income from Germany within the meaning of § 22, No. 1, Sentence 3a of the German Income Tax Act or § 22, No. 5, Sentence 1 of the German Income Tax Act (in particular pensions paid out of the German Pension Insurance) to file a tax return in Germany (starting in 2009). It must be pointed out, however, that, although the Finance Office is currently forgoing the filing of tax returns, it is generally entitled to require the filing. If a taxpayer receives such a request, he or she is obligated to submit a tax return.