Germany, France, Switzerland and the Netherlands on one side, Cyprus Malta and Tunisia on the other attract different types of Italian retirees. The wealthiest choose Cyprus, Malta and Tunisia. Why? Advantageous economic and fiscal conditions. On the other hand, it takes very little to compete with the Italian tax system. But be careful, because low taxation is not the only element that must be taken into consideration before leaving Italy.
The cost of living, infrastructure and the sanitary system are some elements that must be considered by the retiree (or consultant) who is looking for a tax haven in which to enjoy his retirement.
But let's go in order. According to a study done by Kpmg, in Italy a pensioner with a taxable income of 20.000 euros pays taxes (including personal income tax and surtaxes) for a total of 5.206 euros. In Germany, with a taxable income of 20 euros, the taxes paid are 1.679 euros, in France 1.461, in Switzerland 0, and in the Netherlands 483 euros. Cyprus offers a maximum taxation of 4%, Malta 15%, while Tunisia offers all foreign pensioners 80% of their pension tax-free. In practice, Italians who move to Tunisia pay taxes on only 20% of their gross pension.
But that's not all, because according to INPS data, 2016 pensions were paid in Europe in 211.312, with an average amount of 237,39 euros. 94.410 those paid in North America, with an average amount of 145,85 euros per month. 41.840 from South America, an average amount of 368,32 euros per month. And 47.826 in Oceania with an average amount of 145,91 euros.
Going into the details of the individual continents, it can be seen that in France there are 46.021 pensions with an average monthly cost of 195,4 euros. In Germany 51.138 pensions of 136,85 euros on average per month, in the Netherlands 2.580 pensions of 185,64 euros on average per month and in Switzerland 48.381 pensions of 187,95 euros on average per month. The situation is diametrically opposite if we look at Cyprus where there are 170 pensions of 5.315 euros on average per month, Malta with 210 pensions of 2.100 euros on average per month and Tunisia with 599 pensions of 1.427,72 euros.
But will it really be worth moving to these countries to enjoy your retirement?
GERMANY
In Germany, to have the same lifestyle as in Milan with 3.871,72 euros, you need to have a salary of 3.300,00 euros in Berlin. A comparison made on Numbeo shows how rent, restaurants and supermarkets have higher prices in Milan than in Berlin. In detail we speak of a + 17,32% as regards rentals, a + 40,61% for restaurants and a + 20,98% for supermarket products.
However, Berlin beats Milan for the prices of public transport. While in Milan a metro ticket costs 1,50 euros in Berlin 2,80 euros. However, it should be emphasized that the German public transport system is more efficient than the Italian one as a whole.
FRANCE
In France the situation is diametrically opposite to Germany. The cost of living is higher. To have the same lifestyle that one has in Milan with 3.865,93 euros, in Paris one must have a salary of 4.400 euros. Rents and supermarkets are cheaper in Milan, but eating in restaurants is cheaper in Paris, even if the difference is very slight. It goes without saying that utilities (electricity, heating, water and garbage) for an 00 m85 apartment in Paris also reach 2 euros, while in Milan they are around 148,24 euros.
SWITZERLAND
Switzerland has very low taxation but the salaries of the Swiss are much higher than the Italians, because they are proportionate to their cost of living. In fact, to have the same lifestyle as in Milan with 3.887,72 euros (4.512,58 Fr) in Switzerland you need to have a salary of 7.400,00 Fr. Rent, restaurants and food shopping are therefore more convenient in Italy .
HOLLAND
Holland is also following in the footsteps of the other countries. To have the same lifestyle as in Milan with a salary of 3.854,81 euros in Amsterdam you have to earn 4.500,00 euros. Rent, restaurants and utilities have higher prices than in Milan. The only exception is supermarket products which are 2% more expensive in Milan.
MALTA
Here the trend reverses. In Malta, with a salary of 2.900,00 euros, you have the same lifestyle as in Milan with 3.835,24 euros. But the benefits don't end there. As mentioned above, the tax system is very advantageous (maximum rate at 15%). In addition to this, the Maltese government has launched the Malta retirement program (a program for pensioners) which aims to attract all EU and Swiss pensioners. The requirements to access this tax relief are:
- Receive your full pension in Malta
- Own real estate with a minimum value of €275.000 in Malta or €250.000 in Gozo. Alternatively, rent of no less than 9.600 euros a year in Malta or 8.750 euros in Gozo must be paid.
- You must not qualify for other programs (such as the High Net Worth Individuals Scheme or the Highly Qualified Individuals Scheme)
- You must have health insurance, for yourself and for your dependents throughout the EU.
TUNISIA
On the same Maltese boat is Tunisia. Here too the cost of living is significantly lower than in Italy and the country offers ad hoc advantages for foreign pensioners. Indeed, Tunisia allows the adoption of a particular tax regime in which 80% of the gross pension is tax-free. Taxes are therefore paid only on 20% of the pension. To access this subsidized regime, it is sufficient to be a foreign pensioner.
CYPRUS
To have the same lifestyle as in Milan with 3.840,00 euros in Cyprus you need to have a salary of 2.600,00 euros. In addition, the Government of Cyprus offers favorable tax conditions to all its tax residents. Before 2016, those with a pension income of more than €3.420 paid a 5% tax. Below this threshold, income was tax-free. Since 2016, to deal with a national crisis, the government has introduced other income brackets.
Taxation is equal to 0% if you have a gross monthly pension of up to 1.500 euros, it passes to 2,5% for gross pensions ranging between 1.500 and 2.500 euros, 3% is applied to pensions between 2.500 and 3.500 and finally we arrive at a 3,5% tax on all those pensions that are higher than 3.500 euros.
excellent
Let's try to remedy the vagueness, imprecision and inaccuracies about Tunisia. In addition to an important omission.
First: to have the 80% exemption, you need to transfer your pension to a Tunisian current account (in Euros and convertible Dinars) and sign a commitment not to work in Tunisia (subject to the possibility of creating a company).
Second: a cost of living comparison is not reported, as in the other cases. Let's proceed, starting from the consideration that 1 Euro today changes to about 3 Tunisian Dinars. Furthermore, on average in Tunisia 1 Dinar buys what in Italy can be bought with 2 Euros (in Milan even more). It follows that 1.000 Euros become 3.000 Dinars and that 3.000 Dinars buy what in Italy requires the availability of 6.000 Euros.
In other words: in Tunisia with an income of 1.000 Euros one has the same lifestyle that in Milan would require 6.000 or more. Some things cost over 20 times less. A Taxi in Milan, just to turn on the meter, starts from 5.50 Euros. In Tunisia from 0.15 Euros (yes, exactly 15 Euro cents). A 10-minute ride to Milan costs about 20 Euros. In Tunisia it costs 4 Dinars, about 1.3 Euros.
Finally, an essential peculiarity allowed by the special convention to avoid double taxation in force between Italy and Tunisia was omitted:
Tunisia is in fact practically the only country to also allow former civil servants (EX INPDAP, etc.) to have their pensions exempted from taxation like retirees in the private sector.
This is not possible in any of the other countries mentioned in the article.