By Patrick Connelly

Getting pensions transferred to Brazil can be a big headache if one is not prepared before hand. I’ve heard the process called “impossible” and “exhausting”, among other things, but these comments usually come from people who haven’t actually gone through it. In reality, with careful planning the process is quite easy, if not a bit long.

Pension Requirements

First off, Brazilian pension requirements for U.S. retirees are a bit steep at $2,000 U.S/month. This number is always subject to change, and with an increasing number of retirees looking to Brazil, it may certainly lower. This $2000 requirement covers the pension holder and two dependents, all of which will receive permanent resident visas. Additional dependents require proof of an additional $1000 in pension funds per month.

What You Need

This is the tricky part. Paperwork, paperwork, paperwork. The cost of living in paradise.

Background Information:

1. Visa application forms. The Brazilian embassy says you need two per applicant, but I’ve also heard three are necessary. Better to be safe than sorry.

For dependents under the age of 18, a copy of the birth certificate is needed as well. Also, their visa application forms must all be co-signed by the minor’s parents or legal guardians and then notarized by a Notary Public.

2. Photos. Again, the embassy says two per applicant, but I’ve also heard three. Either way, passport-style photos are the best, the ones you can get made at any Kinko’s or Walgreens. Just don’t bring a cut out photo of you at the office Christmas party. That probably won’t fly with Brazilian authorities. Avoid the headache, get the pictures made where they take passport photos.

3.Marriage, birth certificates. Depending on the number of dependents attached to the pension. Spouses need both the birth and marriage certificate, while children only need the birth documents. If you are flying solo, of course, only your birth certificate is necessary.

4. Copy of passport information. Just a copy of the information pages of the passport. The pension holder and all dependents must have a copy of their own. I’m really happy you went to Fiji last year, but don’t make copies of the country stamp pages. Not needed.

5. Criminal Record. Well, a non-criminal record would be better. This is time-sensitive, so plan accordingly. A complete criminal record check by the Federal Bureau of Investigation must be done within 90 days of your planned move to Brazil. Any record check older than 90 days is useless and the process will have to start again. The records check is necessary for all dependents over the age of 16. Check this link out for more info in the FBI background check:

http://travel.state.gov/travel/tips/emergencies/emergencies_1201.html

6. Proof of Residence in wherever it is that you currently live in the U.S.

Pension Information : With all the red tape done, its time for your pension paperwork.

7. Proof of Retirement. A statement from the Social Security Administration saying that indeed you are retired and receive x amount in pensions. If applicable, the form should state both the lifetime portion and the temporary portion. For more on this statement, click here:

https://secure.ssa.gov/apps6z/isss/main.html

8. Proof of Pension. Documented proof, provided by your pension provider, of the amount that you receive on a monthly basis. Of course, this must equal or exceed $2000 U.S./month. Additional dependents must be covered by the amount as well, an additional $1000 U.S. a month. Again, it is good if your provider can state the long-term and temporary portions of your pension.

9. Bank Statement. A statement from your bank is necessary, stating that $2,000 (or more) of your pension fund can be transferred to Brazil on a monthly basis.

Photo from flickr

I have exchanged a few emails with Bret Dudl, property developer in Costa Rica. He recently gave me some insight into the tax ramifications when buying Costa Rica property.
Here is what he writes:

The advantages of buying property in a corporation in Costa Rica are many, but it’s very important to use the right kind of corporation and to know what the tax ramifications are for each.

• When you buy property in a corporation and subsequently sell it you can avoid the transfer tax

• Corporations in Costa Rica don’t pay income tax.  This can be a major advantage if the corporation is going to retain profits for a future investment

• There is a big difference between a SRL (similar to a U.S. LLC.) and a SA (similar to a C-Corporation).  You use a SRL if you are a US Citizen and want to receive the benefits of pass through losses to offset gains.  You use the SA if you have more than one officer of the corporation and want to sell shares of stock to others.

By Patrick Connelly

The Costa Rican government recently proposed several new measures in regards to immigration that could severely change the retiree and expat situation. Their aim, in theory, is to dually combat the large influx of mainly Nicaraguan migrant workers as well as the increasing stream of North American moving to the country. With the proposed increase in monetary qualifications for both prospective rentistas and pensioners, many would-be North American expats may be turned off by such a move, particularly in the current financial environment.

The Costa Rican immigration authority, Migracíon, has recently been quoted as saying that the immigration situation in the country is “out of control” and that stricter requirements are desperately needed. In response, the government has proposed to increase immigration requirements for pensioners from $600 a month to $2000 a month, while rentistas face an increase from $1000/month to $5000/month. Basically, to qualify for Costa Rican residency you will have be able to prove that your pension or monthly income equals or exceeds the amount for whichever category you fall into, rentista or pensioner.

In light of these astronomical increases, it is clearly evident that potential retirees and expats could get hosed on this one. According to the U.S. Social Security Administration, the average pensioner in the U.S. receives around $1100 a month, far below the prescribed requirement. And, as the U.S. has one of the highest pension averages in the world, these requirements would have a worldwide effect; for example, Canada – a major contributor to the Costa Rican expat and retiree scene – has an average of around $700 a month.

The government in San Jose continues to claim that these requirements are “easily attainable”, which, from their point of view, is understandable. Milk the cow. If a steady cash flow continues to arrive via North America, it is not surprising that a government would try to keep pressing to see what the ceiling is; that is merely good business. However, in this case it would appear as if the proposed requirements far and away exceed any rationality.

And therein lies the silver lining in this possible four car pileup of increased immigration requirements. This is not an isolated incident; in fact, as recently as 2004 a similar bill was introduced. Met with immediate uproar from the expat community, it failed to pass into law. Recently, when informed that the average U.S. pensioner receives $900 less than the desired requirement, a Costa Rican assembly member was unaware of these figures. Now, this could be a simple mistake on part of the Costa Rican government or an attempt to slide one past the North American community; either way, it poses potentially serious problems for would-be expats in Costa Rica. However, the government recognizes the importance of the expat and retiree communities and the income it brings in, and will certainly proceed with caution as to not disrupt such a vital part of the economy. Certainly a situation worth monitoring in the coming months.

Click on the link to read more analysis on how expats are affected by Costa Rican immigration laws

Have additional input or information on this topic? Feel free to contribute on our board below

The FM2 is the Inmigrant Visa for those having the intention of living in Mexico for a long period of time or for those who intend to seek permanent residency in beautiful Mexico. After you are granted an FM2 you are authorized to only undertake specific activities.

Those interested in investing in Mexico´s industries or services can receive an immigration permit as long as the invested amount equals a minimum of 26,000 times the minimum daily wage.

Professional certificates can be validated by the Mexican Consulate allowing you to apply for an immigration visa to live in Mexico and seek permanent residence.

If you are moving to Mexico after your retirement, say 50 years of age, and want to engage in non-remunerative activities and you are receiving funds from abroad, for instance a pension or another kind of income  at least to the value of 400 times the daily minimum daily wage per month and a further 200 times daily minimum wage per month for each dependent you can apply for a Retiree Immigration Permit.

Bear in mind that you must hold a FM2 for a five-year period (consecutive) before you can actually apply for the Mexican Citizenship. Following this period, you may apply for full resident status. After your citizenship is granted you are entitled to full rights and responsibilities as any other Mexican Citizen, with the exception of the right to vote. Foreigners are not allowed to involve themselves in Mexican affairs like politics and they may not be post-holders of any public office.

Under Mexican law, you don´t need to surrender your national passport so you can use it when you return to your homeland.

By Patrick Connelly

Recently, legislation proposed by the Costa Rican government to dramatically increase the income requirements to become a CR resident have caused quite a stir within the expat and retiree population, and rightfully so. This is no miniscule rise by a few percentage points to boost the bottom line; these increases, including a five hundred percent increase in rentista income requirements, are not only unfeasible but also send out the wrong message. Has Costa Rica, the longtime destination for North American retirees and expats, hit the crest of the wave and no longer wants its gringo neighbors to keep moving southward?

Of course not. It is unrealistic that the government would – or could – sacrifice such a vital stream of revenue. For better or worse, the Costa Rican economy is largely based on the influx of outside dollars; to suddenly pass regulations that significantly inhibit this flow of money would be economic suicide. But that is what these new regulations would seemingly do. Pensioner requirements for residency are slated to increase from six hundred dollars to two thousand, or a mere nine hundred dollars more than the average U.S. pension. Those falling into the rentista category face similar changes, with requirements increasing from one thousand dollars a month to five thousand.

So what has caused this sudden shift in immigration policy? The government in San Jose says that the main reason is national security; with an ever increasing population of Nicaraguan migrant workers, Costa Rica is desperate to get the immigration situation under control before significant social problems arise. Which is a completely understandable goal, given the increased attention both Costa Rica and the U.S. have given to the drug trade on the coasts.

But if security is really the issue here, the government seems to be targeting the wrong crowd, and at the same time sending a negative message to established expats and retirees. If foreigners who cannot meet the proposed requirements – which, according to the U.S. Social Security Administration, would be most people outside of the super-rich – are deemed security risks by the Costa Rican government, what does that make those who made the move to the Central American country under the existing requirements? Are they a perceived security risk? Intentional or not, it is certainly a strange message coming from an usually meek-sounding government.

Costa Rica, of course, is a sovereign country and free to create and tinker with its policies as it sees fit. But the manner in which the government is trying to pass this legislature is flawed. First of all, the requirement increases are simply too great to be feasible, especially in today’s economic climate and with favorable living conditions developing in other countries in the region. If the core reason is money, then slight residency requirement increases would be met with far less opposition and still garner the same outcome: increased revenue.

Additionally, the Costa Rican government has been surprisingly blind to the long term economic consequences of hiked-up residency requirements. Regardless of their status, from expat to retiree, foreigners living abroad inevitably create job opportunity and revenue for the local population. It is similar to what the Detroit automakers are experiencing; close down a Ford factory, and the damage trickles down far past the auto factory workers, all the way to the company that supplies the nuts that go on the wheels. Significantly interrupting the expat and retiree flow will have the same negative effects, from construction labor to lumber and concrete to housekeeping jobs to the small local businesses where North Americans spend their hard earned dollars.

Foreign investments, another major vein of cash flow into Costa Rica, will also be pinched if these requirements are put into practice. Many in the expat community claim that outside investments will all but dry up; however, this seems a bit extreme. Nevertheless, a negative perception of the country stemming from an immigration policy that is practically impossible to obtain for the average retiree would inevitably have adverse effects on foreign investments.

There is nothing wrong, xenophobic, or mean-spirited about a country wanting to control its borders with a tight fist. It is simply good, responsible governing. But there are better ways to handle such a situation, ones that ruffle less feathers yet still accomplish the initial goals. Hopefully for the Costa Rican government, known for its centralism and level-headedness, a revamped version of the proposed legislation will come about that can satisfy both the Costa Rican people and the valuable expat and retiree community, all of which together have a strong and long-lasting relationship.

Read more about the state of Costa Rican immigration here

The first in a series of articles comparing Central America’s two leading expat and retiree destinations.  Costa Rica is the more established of the two, but Panama is the upstart new kid on the block with a full head of steam and a pocket full of dollars.  Who will come out on top? Read more and find out.

Click here for Round 2: Climate

Click here for Round 3: People and Culture

Click here for Round 4: Things To Do

Round 1: Retirement Benefits

There’s no debating the fact that a country’s economic benefits offered to retirees play a huge roll in their ability to attract foreigners.  The decision to move from the U.S., Canada, or Europe to a far away land is a major life decision, and whoever wins the battle of the benefits will likely have a one-up on the competition.  In this article the retirement benefits for foreigners offered by Panama and Costa Rica will be examined and a winner declared.  Remember, these are perks offered by the government and not benefits resulting from just living in a different country, i.e. cheap housemaids or electric bills.  Nor do these benefits include tax breaks on real estate available to both expats and retirees; that will come later.  Round one, begin!

Costa Rica

–Pensionados (retirees with pensions) only need to have a $600 USD pension per month to qualify for retirement Visas.  These must be renewed every year and proof must be presented that $7.200 USD was changed into Costa Rican currency ($600×12 months).

–Anyone over the age of 45 can apply for retirement resisdency

–Costa Rican health care is not only affordable, but widely available to retirees from other countries

–No taxes on retirement income

–Foreigners living in CR do not have to pay taxes on money earned abroad

Unfortunately, many of the benefits that made Costa Rica such a retirement haven in the 80’s and 90’s have now been removed, such as advantageous car importation, as the country established itself as the prime destination for retirees.

Panama

–Pensionados need to prove a $1000.00 USD monthly pension to qualify for retirement residency.  This Visa is indefinite but must be renewed every year.

–A wide array of public discounts, up to 50% off, including:  movie theaters, sporting events, hotels, pharmacies, medical visits, restaurants, cultural events, and utility bills

–Tax exemption to import a car every 2 years

–Tax exemption to import household goods (up to $10,000 USD)

–Certain loans, both personal and commercial, will be exempted from taxes

–NO property tax if it is the retiree’s only property, foreign or domestic

–Discount on the closing costs of commision loans

Round 1 winner: Panama. Honestly not much of a contest here.  Panama, being the less developed of the two in terms of retiree and expat havens, is literally throwing the kitchen sink at prospective gringos.  Conversely, Costa Rica has removed some of its benefits and cannot match the discounts Panama offers in the public sphere; being retired in Panama City must be like having the world’s biggest damn coupon book in your hand.  Add to that the ability to bring in your car tax free (in Costa Rica the costs are insane) and Panama takes this round handily.  However, the $1,000 USD pension does make Panama lose a few points.

Voice your opinion below.  Agree, disagree, or have additional info thats been left out?  We want to hear from you…