Expert Retirement Planning

Retiring to Brazil has some wonderful advantages, including the beautiful weather, friendly people and all kinds of places to live in and visit, from buzzing metropolises through to the Amazonian rainforest. So is this the right place for your grand retirement adventure? In this article we'll deal with some of the basic issues you'll face in moving to Brazil, including visas, taxes, property and quality of life.

Retirement Visas

Non-Brazilians wishing to retire to Brazil can be eligible for a special retirement visa in the right circumstances. Basically, one person with two dependants can retire to Brazil if they can prove they will receive more than US$2000 per month in income. If the retiree has more than two dependents, an extra US$1000 is required for each person.

To get the visa you'll need to apply at a Brazilian embassy or consulate. You'll need to provide proof of your income, a police record report and various other documents, as to be expected when you're applying to live in another country. The approval procedure may take up to two months and if the visa is granted, you'll need to pay a fee of US$200 per applicant, plus an additional US$130 fee on top of that.

Once the visa has been issued, you must then enter the country within 90 days. For more information check the Requirements for Permanent Visa page at the Brazilian Embassy in Washington's website.

Tax Issues for Retirees in Brazil

You certainly wouldn't come to Brazil for tax breaks alone. For a start, Brazil taxes worldwide income and does not have a tax treaty with the US, which means you'll be getting taxed at both ends if you're a US citizen residing permanently in Brazil. You're considered a permanent resident for taxation purposes if you stay in the country for 183 days in 12 months.

The US and Brazilian governments have been in negotiations to establish a tax treaty and were recently reported as having made significant progress towards this. But for now there is no treaty in place. The tax rate in Brazil is staggered, with a maximum rate of 27.5 percent kicking in at BRL31,501 (around US$18,000, depending on the exchange rate).

The country also levies certain value added taxes and local government taxes. 

Owning Property in Brazil

Purchasing property in Brazil is relatively straightforward. Foreign buyers are allowed to own property in their own name on a 100 percent freehold basis. You'll need to obtain a Brazilian tax number (Cadastro das Pessoas Físicas, or CPF) and open a local bank account, so that the transfer of funds to the seller is traceable. You'll also need to hire a lawyer who can go through the details of the contract and check for clean title.

There are a number of taxes levied on property purchases in Brazil. You'll face stamp duty of about 2 to 3 percent of the purchase price, as well as registration fees. If for some reason you rent your property out at any stage, you will need to pay taxes on the earnings. And if you sell your Brazilian home, you'll have to pay tax on any capital gains. The tax rate will most likely be 27.5 percent, as on a retirement visa you'll be pulling in a monthly income of US$2000 anyway.

Standard of Living

There is public healthcare available in Brazil, which anyone can access, regardless of nationality. But the system is not particularly well funded and hospitals tend to be crowded. As a retiree, you'll probably want to take advantage of the private system that runs in parallel with the public system. The costs are quite high, so you'll need insurance, but generally the standard of care in the private system is very good.

Brazil is a relatively cheap place to live - certainly the cost of living is far lower than in the US, the UK or Australia. With your minimum of US$2000 per month, you should be able to live very comfortably indeed.

The country has a reputation for street crime, which is deserved in some of the major metropolises. However, other parts of Brazil are relatively safe and you should not let fear of being robbed dissuade you from considering the country as a retirement destination.