Feliz ano novo (Happy New Year) as they say in Portugal. And, well, Brazil too, for that matter.
Nevertheless, our focus is the bottom of the Iberian Peninsula.
My wife, Yulia, is suddenly increasingly interested in relocating our lives to Portugal, and it seems 2023 might just be the year we pack up and move along.
To refresh your memory, we spent the vast majority of summer 2022 checking out countries where we might like to live—countries, in particular, that offer digital nomad visas, which I need in order to legally live and work locally, and which would then allow me to bring Yulia and my step-son along too.
Croatia was great. We love the Istrian Peninsula and the beaches. But the digital nomad visa process, I’m told by those who’ve endured it, is only slightly worse than a back-to-back proctology exam/root canal.
Greece (technically that wasn’t a summer trip but one we completed a couple years back) is also a lovely destination…a place where we’d be exceedingly happy to live for a while because of the beaches and the fabulous food and wine culture. But there’s the not-so-niggling issue of tax rates. At my income level, marginal rates are 45%! That’s state-sanctioned fleecing.
Sure, Greece offers a 50% reduction in taxes for the first two years, but then it’s back to the usurious rates just at the moment you’re finally settling in and feeling at home.
Spain…1,000% love that country. Malaga is Miami Beach, only with warmer sea waters, tapas and sangria, and a far-cheaper lifestyle with richer history. But, again, taxes rear their nasty little noggin, though frankly not as dramatically.
Non-resident nomads pay a rate of just 15% for four years, which isn’t horrible. After four years, it’s back to higher rates at 25%…again not horrible. Moreover, Spain’s digital nomad visa would be renewable for two, two-year periods, and after five years we’d be able to apply for residency. However, citizenship and a European Union passport, which is what we both want, would require another five-year stint.
Italy, which has a new digital nomad visa, is off the table because it has the same 10-year road to citizenship that Spain has. Italy, does, however have a nice tax incentive for five years: You get to write off 70% of your income so that you pay taxes on only 30% for the first five years. After that, however, it’s back to normal rates and that’s 43% on anything over $50,000…much too much.
And then there’s Portugal…
There, I can structure a digital nomad visa that’s good for five years, and after those five years I can apply for citizenship and a Portuguese passport, which is a European Union passport and the #6 passport globally (slightly ahead of the U.S. at #7).
Better still, there’s the tax situation: 0% on non-Portuguese income for the first decade!
I could pair that with Uncle Sam’s Foreign Earned Income Exclusion, which lets me legally avoid personal taxes on the first $120,000 of income for 2023 (though I still need to pay 15% for self-employment taxes), and my tax obligations suddenly and happily become quite minimal.
When Yulia first saw Lisbon this past summer, she was, as I noted in a dispatch at that time, sort of wishy-washy on it. I adore Lisbon. I think it’s a gorgeous, Old World city with huge amounts of character and charm. Yulia, however, was annoyed by the crowded streets and the noise.
Over the last few months, however, the idea of Lisbon has grown on her. She grew up next to the sea in Crimea and really wants to be near the water again. Her 9-year-old son is constantly unwell her in Prague with nasal/breathing issues that he never had before, and she wants to end that challenge.
And she realizes that financially we’d be even better off because of the sharply reduced taxes we’d have to pay. The cost of living is pretty much identical to Prague, with Lisbon being slightly more affordable in terms of basic utility costs.
Plus, there’s the sea right on Lisbon’s front door, and fantastic beaches a three-hour drive south into the Algarve.
This isn’t a done deal. We’re not 100% moving just yet. But Yulia is increasingly vocal about wanting to be somewhere in Europe where she can obtain an EU passport relatively quickly, where her son will be healthier, and where she can wake up once again to sea breezes.
More on this to come as 2023 progresses…
In the meantime, a very happy New Year!
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