The Ultimate guide to Passive Income Visas

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In the immigration world, there are two temporary resident permit types given to foreigners who can sustain themselves without needing a job abroad: passive income visas and retirement visas. The difference between passive income and retirement visas is ordinarily separated by the type of income. A retirement visa will mainly be aimed at those with a lifetime guaranteed pension. They can also have a minimum age requirement. passive income visas, on the other hand, are for those living off passive income of many different types. In some cases, employment income might even be considered as a qualifying income.

These two types of permits are relatively easy to obtain for Americans and can be an inexpensive entry point into the destination country. Unlike golden visas, passive income and retirement visas do not require an investment, such as buying property. A downside is not being allowed to take employment in the country, and sometimes they require a longer amount of time spent in the host country, which means they’re less flexible than the typical golden visa.

Taking any form of employment in the host country is strictly prohibited under passive income visas. This means becoming a registered employee in a local company (e.g., working in a boutique as a clerk) is not allowed, but you are still allowed to conduct your own business activities, register a local company, invest in local companies and manage your assets. That said, you cannot have a self-employed position such as a lawyer, doctor or any profession that is deemed to be “working in the country.”

Passive income and retirement visas should not be confused with long-stay visas, which are extensions of tourist visas lasting up to a year. Although they also require proof of financial means and do not provide access to the labor market, long-stay visas are not resident permits and are not renewable.

Passive income and retirement visa are commonly found in Latin America and Europe. As you will see below in our list, many European countries have a form of passive income visa. Retirement visas can be obtained in Central American countries like Panama and Costa Rica, both of which are home to many American retirees. Over 50 countries in the world have a retirement or passive income visa, but we have decided to focus on the most popular ones. It’s also important to note the tax exposure one faces in those countries, especially given that many will require you to become a tax resident to maintain your immigration status.

 

The Americas

Argentina Passive income and Retirement Visas

Argentina is a Spanish-speaking country located in South America. Buenos Aires, the capital, is a world-renowned city with an exciting lifestyle and vibrant artistic culture. The weather is warm all year long and the city possesses some beautiful beaches.

The Argentina passive income visa provides temporary residency to those who demonstrate enough monthly income from investments. The country also has a retirement visa that requires pension income. If approved, you will receive a three-year renewable resident permit. If you decide to spend at least six months a year in Argentina, you will be able to apply for permanent residency at the end of those three years. If you continue living in Argentina for a further two years, you can apply for Argentinian citizenship. If you are American, be aware that tax residency in Argentina might expose you to additional taxation since the U.S. and Argentina do not have a tax treaty.

  • Minimum income
    • Retirem ent: None
    • Passive income: Roughly $315 a month
  • Source of income
    • Retirement: Pension
    • Passive income: Investments in foreign banks, remittances from banking or financial institutions abroad, investments in foreign companies, investments in national securities
  • Minimum stay: None
  • Processing time: One week
  • Taxation: Capped at 35% on income

 

Costa Rica Passive income and Retirement Visas

Costa Rica a Central American country bordered by the Pacific Ocean on one side and the Atlantic Ocean on the other. The country is one of the most popular destinations in the world for retirees, and it’s often viewed as the most stable and safest country of the region. The cost of living is very affordable and beaches are beautiful.

The Costa Rica passive income and retirement visas are both available to those showing secure and stable income from abroad. Both programs have a minimum income requirement, but the passive income also allows you to show income readily available in advance if you cannot prove stable income from passive investments. Approved applicants receive a renewable three-year visa that they can turn into permanent residency if they spend at least four months in Costa Rica each year. After seven years of residency you are eligible for citizenship.

Costa Rica has territorial taxation, so only income sourced in Costa Rica is taxed. Foreign income is therefore tax-free.

  • Minimum income
    • Retirement: At least $1,000 a month
    • Passive income: At least $2,500 a month for Americans (the amount can differ for citizens of other countries) or $60,000 in bank deposits to cover living expenses
  • Source of income:
    • Retirement: Pension
    • Passive income: Mutual funds, stocks, 401k, equities, bonds, rental income, savings withdrawals
  • Minimum stay: Four months a year
  • Processing time: Two to three months
  • Taxation: None on foreign income

 

Mexico Passive income and Retirement Visas

Mexico, located south of the U.S., has long been regarded by Americans as an ideal vacation and retirement destination. A million Americans are living in Mexico, and many more and contemplating making the move as they near retirement. Mexico has big advantages due to its lower cost of living and regions of scenic beauty. Many parts of Mexico remain safe and are home to large expat communities.

Many Americans have used Mexico’s passive income and retirement visas to relocate to Mexico most of the year. The retirement visa requires a proof of having a pension, whereas the passive income requires proof of employment income. In both cases the income can be substituted by showing enough savings. For both retirement and passive income visas, the minimum income amount increases by 25% for any extra dependents, such as a spouse and children. The resident permit must be renewed at the end of each year.

Permanent residency is possible after four years of residency in Mexico. Direct permanent residency is also available to retirees and those over 62 years old, but at a higher minimum income and savings requirements. Mexican citizenship is available after only five years of residency. Taxes on employment income and foreign income are capped at 35%. The U.S. and Mexico have a tax treaty, which minimizes double taxation.

  • Minimum income
    • Temporary
      • At least $2,237 a month
      • At least $37,289 in savings
    • Permanent
      • At least $$3,729 a month
      • At least $149,158 in savings
    • Source of income
      • Retirement: Pension
      • Passive income: Employment income
    • Minimum stay
      • Temporary: Four months a year
      • Permanent: None
    • Processing time: Two to three weeks
    • Taxation: Capped 35% on income

 

Panama Passive income and Retirement Visas

Panama is another favorite of American retirees. The country is the financial hub of the region and is also home to an amazing coastline. The weather is warm all year long and the U.S. dollar is widely used.

Panama offers many residency programs for investors and financially independent foreigners. The country offers both a Passive income and retirement visa. That said, the retirement visa is much more attractive and very popular with American expats. Both programs lead directly to permanent residency after two years.

The permit is initially given for five years, with the requirements to travel at least once every two years to Panama. After five years of permanent residency you are eligible for citizenship. Even though Panama does recognize dual citizenship, Americans remain legal U.S. citizens even after Panama naturalization. Panama does not levy any tax on foreign income.

  • Minimum income
    • Retirement: At least $1,050 a month or $750 a month if a $100,000-plus property was purchased
    • Passive income: At least $850 a month
  • Source of income
    • Retirement: Pension
    • Passive income: From the interest earned on deposits at the National Bank of Panama or the savings bank. As of 2021, the interest rates are 2% on bank deposits in Panama. Therefore, an estimated $500,000 deposit to be held for at least five years
  • Minimum stay: One visit every two years
  • Processing time: Two months
  • Taxation: None on foreign income

Europe

Austria Passive income Visa

Austria, located in central Europe, is famous for its snow-capped mountains, amazing scenery and capital city of Vienna, a classical music hub of the world.

The country offers a passive income visa to financially independent foreigners. Under this visa, you are not allowed to take any employment in the country. The visa can be renewed annually. Those who pass a German language test after the second year can receive a three-year permit instead. After five years, you can apply for permanent residency and with a further five years, you are eligible for Austrian citizenship. Austria will require you to renounce your citizenship, a situation that does affect American citizens. Taxes are high in Austria, but passive incomes have no minimum stay requirements and therefore are not required to become tax residents.

  • Minimum income
    • €2,000.96 for a single applicant
    • €3,156.72 for a couple
    • €308.74 for each additional child
  • Source of income: Pay slips, pay certificates, employment contracts, certificates of state pension, pension insurance or other insurance benefits, evidence of adequate amounts of invested capital or owned assets
  • Minimum stay: none
  • Processing time: Two months
  • Taxation: 47.5% on personal income and foreign income

 

Greece Passive income Visa

Greece, with icons like the Parthenon and the hillsides of Santorini, has captured the world’s imagination for its rich, influential history. A low cost of living and vibrant lifestyle make it an attractive place to call home.

Greece offers residency to financially independent foreigners without giving them the right to take employment in Greece. The resident permit is valid for two years and can be renewed after that for a three-year permit. For renewal, you will need to spend at least 183 days a year physically in Greece. After five years, you can apply for permanent residency or directly to citizenship after seven years. In both cases, you will need to have learned the Greek language.

Greece has a low tax rate on foreign income. The U.S. has a tax treaty with Greece, which will make it unlikely for you to have any additional tax liability. Nevertheless, you can always opt for the lump sum taxation scheme on your foreign income by paying €100,000 a year.

  • Minimum income
    • €2,000 per month for a single applicant
    • €2,400 per month for a couple
    • An additional €300 per month for every child
  • Source of income (choose one)
    • Make a bank deposit (€48,000 or more) covering at least two years of expenses
    • Show a foreign employment contract by demonstrating a salary equal or above the minimum threshold
  • Minimum stay: 183 days a year
  • Processing time: Two weeks
  • Taxation: 15% on foreign income or lump sum taxation

 

Venice, Italy.
Venice, Italy.

Italy Passive income Visa

There are few places in the world with as many beloved destinations as Italy, from Rome and Naples to Turin and Tuscany. The vibrant country with a renowned cuisine would be a welcome new home for those willing to make the move.

Italy’s passive income visa is officially dubbed the elective residence visa. It allows temporary residency in the country for non-EU nationals. It’s a resident permit that needs to be renewed each year. Under the Italy elective residence visa, you need to spend 183 days a year in Italy to renew your status. The permit can lead to permanent residency after five years if you pass an Italian language test. Citizenship requires 10 years of residency. Many Americans can also claim Italian citizenship by their ancestry.

Italy has a low tax rate on foreign income. The U.S. has a tax treaty with Italy, which will make it unlikely for you to have any additional tax liability. Like Greece, you can always opt for the lump sum taxation scheme on your foreign income by paying €100,000 a year.

  • Minimum income
    • €31,000 per year for a single applicant
    • €38,000 per year for a couple
    • An additional €600 per year for every child
  • Source of income: Private income such as pensions and annuities, property, rental income, stable economic and commercial activities, investments and other passive sources
  • Minimum stay: 183 days a year
  • Processing time: Three to four weeks
  • Taxation: 24% on foreign income or lump sum taxation

 

portugal-golden-visa-e

Portugal Passive income Visa

Many Europeans vacation in Portugal to enjoy its scenic Mediterranean coastline, but the tiny, easily accessible country also boasts wine-making, a rich history and the cosmopolitan life of Lisbon, the country’s capital.

The Portugal passive income visa operates under its official name, the D7 Visa. The visa is most often used by retirees, but it is also granted to foreigners with passive income or foreign employment. The initial permit is valid for two years. You can then renew the D7 with a validity period of three years. Permanent residency and citizenship are both available after only five years, provided that a Portuguese language test is passed. Portugal is very attractive for retirees as, under the non-domiciled tax regime, there are no taxes on foreign income and only a 10% tax on foreign pension income.

  • Minimum income
    • €7,200 per year for a single applicant
    • €3,600 more per year for a couple
    • An additional €2,160 per year for every child
  • Source of income: Pension, salary, investment or bank deposit
  • Minimum stay: 183 days a year
  • Processing time: Two months
  • Taxation: None on foreign income or 10% on pension

 

Spain Passive income Visa

Whether you’re into the coastal vibrancy of Barcelona or the urban feel of Madrid, Spain offers anything a new resident could want and more. Combined with an enviable lifestyle and cuisine, it’s a country waiting to be explored and fully appreciated.

Spain offers a passive income visa, better known as the Spain non-lucrative visa. This visa provides temporary residency to the financially independent, but limits their access to the employment market. The Spain non-lucrative visa is initially valid for two years. After that you can then renew it for five-year periods at a time. To maintain your status, you will need to spend six months a year in Spain.

Spanish tax on foreign income can reach 26%, which can be minimized by the U.S.-Spain tax treaty. Spain imposes a passive income tax, with an exemption asset amount of €700,000 a year per person. It’s often advisable to keep your investment in Spain below that threshold.

  • Minimum income
    • €2,151 per month for a single applicant
    • An additional €538 per month for every dependent
  • Source of income: Pension income, salary from abroad, bank deposits and other means
  • Minimum stay: 183 days a year
  • Processing time: One month
  • Taxation: 26% on foreign income

 

Middle East

FILE PHOTO: UAE flag flies over a boat at Dubai Marina, Dubai, United Arab Emirates May 22, 2015. REUTERS/Ahmed Jadallah/File Photo

UAE Retirement Visa

The United Arab Emirates (UAE) in the Middle East is a Persian Gulf country best known for the rich extravagance of places like Dubai. For those willing to explore this part of the world, the rewards are limitless.

The UAE launched a retirement visa in 2018 to attract foreign retirees who have a secure and stable income. To qualify, you will need to be at least 55 years old. When approved, you receive a renewable five-year resident permit. To maintain your status, you cannot be outside of the country for more than six consecutive months. You are also able to take up employment in the UAE. The UAE does not provide permanent residency and its citizenship naturalization is very limited, even after the 2020 announcement.

  • Minimum income
    • AED 20,000 ($5,500) monthly income
    • AED 1 million ($275,000) savings
    • AED 2 million ($550,000) property
    • A combination of the second and third option for at least AED 2 million ($550,000)
  • Source of income: The monthly income must come from a pension, be it from the government or a private company
  • Minimum stay: Visit at least once every six months
  • Processing time: One month
  • Taxation: no income tax

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