Four European destinations to make your pension go further
by Alexander Beard, on May 16, 2016 4:29:04 AM
If you’re looking for ways to ensure you can enjoy as much of your hard-earned pension as possible when you retire, then moving elsewhere in Europe could be your best bet. The benefits aren’t limited to a different culture to explore and better weather than the UK; all the retirement destinations we discuss below offer a range of financial advantages too. Here are our top four places in Europe to boost your retirement funds:
- Spain – Occupational and state pensions are counted as general income, making them eligible for progressive tax rates starting at 19% and going all the way up to 45%. Any pension lump sums are also taxable for residents of Spain, so it may be best to take these whilst you’re still living in the UK. Spanish property prices are the biggest draw, with a two bedroom flat starting at £30,000, a three bedroom house at £60,000 and up, and a four bedroom detached property from as little as £75,000.
- Portugal – Not just attractive for those looking to spend their retirement spoiling a good walk on the golf course, Portugal levies no tax on pension income – including lump sums – for non-habitual residents during the first ten years of living there. After that, you’re only liable for the marginal tax rates Portugal enjoys. Add to that a restaurant price index of 41.56 (less than half of the UK’s 86.68) and a Portuguese retirement becomes a very attractive proposition indeed.
- Cyprus – Famous as a retirement tax haven, Cyprus gives you the choice of paying either a flat tax rate of 5% on pension income over €3,420 (around £2,720) or the regular scaling rates, meaning you can make a decision that benefits you. Pension lump sums are tax free in most circumstances too. Other perks include an attractive property market (two bed flats from £45,000, three bed houses from £80,000) and petrol at just 85p per litre.
- Ireland – The Emerald Isle taxes pension income under Irish income tax bands of 20% and 40%, which may seem less generous than our previous entries. Unlike many countries in Europe, however, Ireland allows UK retirees access to a 25% lump sum of their pension tax-free.