Purchasing power, living environment, climate, favorable taxation... More and more French people want to spend their retirement abroad. According to a survey by OpinionWay, one in three future retirees is considering moving overseas. Data from the French Retirement Insurance shows that as of December 31, 2020, out of 14 million retirees in France, 1.2 million were receiving their pensions while living in another country. Where to retire for the best value for money is a question that the French, who prize the art of living above all, often compare.
TOP 1 Portugal: The Golden Destination for Retirement in the Eyes of the French
For a long time, Portugal has been regarded by the French as a golden destination: one third of French expatriates living in the country are retirees. From 2013 to 2021, beneficiaries under the general scheme and self-employed individuals with Non-Habitual Resident (NHR) status were fully exempt from income tax for ten years. However, this regime came to an end on April 1, 2021. Now, new residents with NHR status are taxed at a rate of 10% on their income for ten years, after which they are subject to Portugal’s progressive tax system (which is less favorable than France’s). Nevertheless, the country remains the top choice for French retirees, as the cost of living there is on average 30% to 35% lower than in France, and real estate prices, despite rising, remain affordable for the French.
TOP 2 Spain: Close Proximity and Lower Cost of Living
Due to its proximity to France and its very affordable cost of living, Spain remains a popular destination for French retirees. The country has not implemented favorable tax policies to attract foreigners, and its tax rates are even slightly higher than those in France. However, bilateral agreements exist to prevent double taxation for taxpayers. All income, whether from France or abroad, must be declared to the Spanish tax authorities. The Franco-Spanish tax agreement specifies which country has the right to tax each type of income. For example, rental income from real estate located in France is taxed in France. On the other hand, French residents receiving private-sector pensions will be taxed in Spain.
TOP 3 Morocco: Mediterranean Climate, French-Speaking Environment + Tax Exemptions
Morocco has long been one of the favorite destinations for French retirees looking to relocate. In fact, more than 50,000 French retirees have already settled there. The country offers an attractive tax regime, a low cost of living, and affordable real estate. Under the Morocco-France tax agreement, pensions are taxed in the country of residence. Therefore, if a French citizen stays in Morocco for more than 183 days per year, all of their pensions, including annuity payments from supplementary plans (life insurance, Perco, Perp, PER Entreprise, etc.), are subject to Moroccan income tax. Additionally, retirees benefit from a flat reduction of 55% on the total annual pension amount, capped at 168,000 dirhams (approximately €16,000). For amounts exceeding this cap, the reduction rate becomes 40%. On the other hand, if pensions are received in dirhams and deposited into a Moroccan account, the reduction increases to 80%.
TOP 4 Greece: Mediterranean Climate + Tax Haven
Greece is setting its sights on European retirees. For them, the country introduced a flat 7% tax rate in July 2020. This rate applies for 15 years. This tax measure has attracted retirees from many European countries! To benefit from it, the retiree can be a tenant but must become a Greek tax resident and must not have been a tax resident in Greece for five of the previous six years. Retirees who began their retirement in the country before July 2020 remain subject to Greek income tax under its progressive scale, which is higher than that of France. In addition to its favorable climate, Greece can also rely on a cost of living that is about 30% lower than in France to attract future retirees.
TOP 5 Italy: La Dolce Vita
Italy applies a flat 7% tax on foreign-source income. Attractive at first glance, this offer proves to be much more restrictive than Greece's. To benefit from it, you must settle in a municipality with fewer than 20,000 inhabitants in the southern part of the country, and only eight regions are eligible. Furthermore, this benefit is valid for only five years. The tax agreement between France and Italy stipulates that mandatory retirement pensions are taxed in the country of origin. As a result, your pensions remain subject to French tax. The only exception is for French retirees receiving private pensions that are independent of the social security system. This arrangement is appealing for households with substantial income and those holding a portfolio of stocks or real estate assets. Italy also offers favorable tax provisions for retirees looking to anticipate their transfer, particularly in the areas of gifts, inheritance, or income from movable assets.