You Could Get a 50% Tax Break for Living in Europe…

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Posted by The Savvy Retiree on December 16, 2020 in Live Better

Finally—a remote-worker incentive plan that actually makes a lot of sense.

Greece!

I’m sure you’ve seen in recent months all the Caribbean locations that are offering special visas to Americans (and others) who want to live and work from the beach as digital nomads. That’s all well and good, and the Caribbean is certainly a beautiful place to wake up every morning and face another “day at the office.” But from the perspective of a remote worker who has actually gone through the visa process and spends his days researching freelance and residence visas around the world, I can tell you that these Caribbean programs are not terribly appealing. But I’ll come back to that in a moment.

However, the new plan that Greece is now in the process of assembling…it looks to be one of the smartest remote-worker visas I’ve come across, assuming it all comes together. That’s because under the Greek plan as currently envisioned, a “digital migrant,” as the Greeks call us, will be eligible for a 50% exemption on earned income for the first seven years. In essence, you owe local taxes on only half your income.

For someone who’s still in the workforce and looking to maximize their savings opportunities as they approach retirement, sharply reducing your tax burden for seven years represents an intriguing opportunity to squirrel away more money.

And then there’s the cost of living that can also help you save even more.

I’m going to use Chania, Greece, for this example. It’s an ancient, Venetian harbor town that’s been around for 5,000 years. It sits on the northwest coast of Crete, the largest of the Greek isles, and is a beach town—though, to be totally fair, it’s not a Caribbean-style beach town by any stretch. I was there last year for interviews and to gather research. As I wrote in a piece for International Living, the city’s quaint port looks like something Disney’s Imagineers would have built for a movie set. You’ll find nice, one-bedroom apartments there in the town center for less than $550 a month. Apartments overlooking the harbor and the Sea of Crete are less than $900. Utilities are vaguely $150 a month, and food costs are relatively modest.

Overall, Chania lands at a 60.5 on the cost-of-living index put together by Numbeo.com, a crowd-sourced cost-comparison site. (New York sets the standard at 100.) But how does Chania compare to the Caribbean? 

Hamilton, Bermuda (one of the Caribbean islands offering a digital nomad visa) is the costliest city in the world according to Numbeo’s cost-of-living index. In practical terms, that means the $3,100 you need to live a middle-class life in Chania would cost you $9,500 a month in Hamilton.

But’s let not use Chania and the most expensive city in the world, since that seems like cherry-picking. Let’s look at Greece overall, relative to Caribbean islands that are offering remote-worker visas. Greece is about 27% cheaper than Barbados, about 30% cheaper than Aruba, nearly 60% cheaper than the Cayman Islands, and basically the same price as Jamaica.

And then there’s this: The Caribbean visas are good for six months to two years. Just as you’re really getting settled into your new life…poof! You have to vanish. 

Though Greece hasn’t finalized details of its plan yet, the Greek approach looks to allow for longer living arrangements, given the seven years of tax breaks. And it just so happens that “long-term migrants,” which is what you’d be as a digital worker, are eligible for Greek citizenship after seven years. Which means you could apply for a Greek passport…which is an EU passport…which would give you unfettered access to live and work across the rest of the European Union, no different than if you were moving from Tampa to Tucson.

Moreover, in several of these Caribbean countries, you have to pay thousands of dollars to apply for the visa, well in excess of what a typical visa costs. That tells me that certain Caribbean states see remote workers as little more than a money machine to tap into during a pandemic-induced trend toward digital nomadism. Greece, on the other hand, appears to see remote workers as a chance to help rejuvenate the Greek economy by drawing new talent to the country. As such, they’re willing to offer a meaningful enticement to lure those workers. It’s a “worker first” mentality.

All of that, to me, makes this Greek proposal intriguing.

There’s just one catch: This looks to be a one-time program available only to applicants in 2021. So, if you’ve ever had thoughts of living and working abroad, and Greece appeals to you, then keep this on your radar. The country aims to have all the rules in place before the end of the year. As I find out more about the plan and whatever requirements emerge, I’ll keep you updated.

By Jeff D. Opdyke

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