Things have been hectic and busy here at the Tax Rebate Blog this month, which has not given us as much time as we would have liked to update the blog.

There have been a number of interesting posts in the tax world recently. With the up and coming American election I thought it might be interesting to focus on the best of these:

TaxGirl - Writes about which of the presidential candidates has the best plan for “middle class” America and how depending on where you live in America, middle class can be very different. An excellent post, be sure to give it a 5 minutes read when you get a chance.

The Wandering Tax Pro - Writes about the tax returns of the presidential candidates, Barack Obama and John McCain, providing links on the location for their tax returns for 2006 and 2007. A similar system for the UK would make our Members of Parliament much more accountable after the current expenses debacle.

Have you had enough of the rat race, and are thinking of retiring soon? The times this week revealed the top 5 places to retire to based on eight key financial categories – income tax, inheritance tax, property tax, property costs, ease of gaining residency, healthcare, climate and culture.

1. Cyprus

Cyprus tops the list of exotic destinations mainly because it has an income-tax rate of only 5% on all pensions for retired residents, as well as low property prices and no inheritance tax. It is also favored for its hot, dry summers, warm winters as well as its English speaking population. You can purchase property in Cyprus from around £77,000 – though the island’s property market is quickly catching up with prices in more established retirement hotspots such as France and Spain. Though this could be considered a benefit as a good investment opportunity considering the state of the housing market in the rest of the world. Now that southern Cyprus has joined the European Union, pensioners from other EU countries are entitled to use the public health system.

2. Panama

Panama’s main attraction, (not including its year-round 30 Deg Celsius temperature), is the fact that English is widely spoken among the population, you have worked hard enough through your life, you don’t really want to be learning a new language when you retire! There are numerous other benefits including a lower cost of living compare to Cyprus and other countries listed, a minimal crime rate and, for retirees, its “pensio-nado” scheme – which offers numerous discounts on services including as healthcare, leisure activities and public transport. Another advantage is that Income from capital outside of Panama, whether they be your pension, bank deposits or your investment portfolio, is completely free from tax. Don’t presume you will escape tax altogether, however. There may be no inheritance tax as such, however, gifts of property attract rates from 4% to 33% depending on your relationship with the beneficiary, so make sure that you check before considering any such gifts. Anyone purchasing property may apply for permanent residence in Panama, one year after having applied for a residence visa, as long as the total value of the property and any bank deposits equals in excess of $200,000.

3. France

The country with the best quality of living on the list has to go to France. Despite the obvious language barrier, this will easily be made up for with the culture and cuisine this amazing country has to offer. If you are planning to retire with a large income, then France might not be the best option as the top rate of income tax in France is 49.8%, however retired couples with income of €70,000 or less would still be better off making the move because in France there are lower rates the lower your income. Housing prices have increased dramatically in recent years, but this increased cost will be made up for by one of the best health care systems in the whole world. Something you really might need to consider when you reach retirement.

4.Belize

As you can see from the photo, Belize has a tropical climate with temperatures ranging between a steady 24 and 27 degrees celcius, however people should be aware of Belize’s rainy season, which is likely to put some people off. Despite this, however, it has always been a popular destination for American retirees.

The income tax rate for citizens living in Belize is set at a low 1.75%, but income such as pensions is completely untaxed. On top of this there is no capital gains tax or inheritance tax for people looking into retiring to Belize. For those who can not wait until they are 65 there are advantages to early retirees also. Investors in the island can direct foreign business activities from the country, as long as they have an income of $2,000 a month and are at least 45 years old. They can also import a car, light aircraft, boat and any personal belongings duty free. Compared to other places in the Caribbean, Belize is quite resaonable for property prices, with a 3 bedroom, beachfront villa costing $350,000. Anyone who is aged 45 or over can apply for residency through a retirement programme set up by the Belize government.

5. SPAIN

Spain is similar to France in that it has a good number of British speaking communities dotted around the country and it is one of the most popular retirement destinations for English people. There are however a number of tax traps for those thinking of selling their property and moving to Spain which is why it has taken 5th place.

If you are resident of Spain (I.E. spend more than 183 days there a year) – you must pay tax at up to 40% on any income from your UK pension, bank accounts and investment portfolio. Capital gains tax may have been reduced last year from 35% to 18% however there is also a wealth tax of 0.2% to 0.5% of all citizens worldwide assets to consider. One final thing for expats to consider is that they are liable to pay Spanish inheritance tax, regardless of the country in which the inheritance is situated.

Spain is a wonderful, stable country, with an amazing culture but the above tax implications should be a big consideration for anyone thinking about retiring there. A Typical property will cost you around £137,000 and property costs amount to around 10%, which is higher than in many other countries.

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