Have you been offered the job of a lifetime abroad? Hankering to spend a year teaching English overseas? Thinking about becoming an ex-pat to reduce your cost of living during retirement? These are a few of the common reasons why Americans may consider living and working abroad. Climate, ambiance, safety, and cost-of-living are four of the areas potential ex-pats consider, but what about taxes? So many Americans have bought into the idea that the U.S. has the highest tax rate in the world, but data do not back that up. What data shows us is that despite the tax code disparities that shelter the ultra-rich, Americans still have it doggone good when it comes to taxes.
Portugal is the vacation destination of choice for the U.K., but living there? Think again. Portugal has the highest taxation rate in the world—59%! But, if you’re considering retiring to Portugal, there are some definite benefits. A retired couple can settle into a cost of living of a little over $2,000 US a month. If you’re still working, despite the lower cost, the high taxes will definitely bite a chunk out of your paycheck.
Aruba, Dutch Antilles
Aruba is beautiful and one of the safest Caribbean islands, but it’s costly in terms of both cost of living and taxes. Like other islands, the cost of food, gasoline, and other necessities is much higher than on the mainland since they are shipped in. Aruba’s top income tax rate is 58.95%–nearly identical to Portugal’s. Great place to visit, as they say, but you probably wouldn’t want to live there.
Sweden is the largest Scandinavian country and a wonderful place to visit, despite its income tax rate of 57%. Expat Americans say they experience some culture shock, despite the highly rated quality of life. Much of this is due to social norms and is especially an issue for singles. Some retirees love Sweden, despite its higher cost of living. It provides excellent health care to all and free college to its citizens (those high taxes at work!)
At 55.95%, Japan also has one of the highest tax rates in the world and a very high cost of living. Interestingly, Japan’s population has been declining year after year since 2015. This is because of aging residents and low fertility rates among young women of child-bearing age. The country’s natural beauty and inimitable culture make it an intriguing place to live, either permanently or temporarily.
Like Sweden, Denmark also has an impressively high tax rate of 55.86%. Denmark ranks third on the World Bank’s Ease of Doing Business Index, so it can be a great destination for entrepreneurs. Denmark boasts strong infrastructure and a low rate of corruption, as well as free college for citizens. The cost of living is higher than in the States, apart from housing. Denmark is considered one of the happiest countries in the world, making it an attractive place to live and work.
As one of the most expensive countries in the world, and with a top individual tax rate of 55%, Switzerland can be an intriguing place to visit or live. The country's plusses are many: beauty; its location close to Germany, Austria, France, Italy, and tiny Lichtenstein; multiculturalism, and the highest life expectancy in the world. The Swiss tend to be highly educated and multi-lingual, usually in German, French, and Italian, although a small portion speaks Romansch.
One of Switzerland’s next-door neighbors, Austria, also has a high individual tax rate of 55%. Like Switzerland, it is in the Alps, so winter sports are very popular. Austria is rated one of the top three most livable countries in the world. Rents are on par with the U.S., or slightly below (depending on the area in which one lives.) For Austrians and citizens of other European Union countries, healthcare is free, although supplemental private plans are also available.
Another Nordic country, Finland, is bordered by Russia, Sweden, and Norway. A quarter of Finland lies within the Arctic Circle, meaning polar night, when the sun never rises, occurs annually, especially in northernmost Lapland. The Finns are quite welcoming to trained and skilled immigrants or ex-pats, but Finland does not accept ex-pat retirees. Like its Scandinavian neighbors, Finland has a top individual tax rate of 54.25%.
Our northern neighbor boasts a top tax rate of 54%. Canada is a huge and diverse country ranging, like the U.S., from the Pacific to the Atlantic Coasts. Canada has the seventeenth highest per capita income in the world, as well as a strong economy. Its much-ballyhooed health care system is considered one of the best in the western world. Canada legalized LGBTQ+ marriage in 2005, so has a reasonably progressive government. The two top languages spoken are English and French. Canada’s cost of living tends to be lower than in the U.S.
Potential retirees: fuhgeddaboudit. South Korea doesn’t offer visas to retirees, which is a shame since the country is vibrant, multicultural, and not that expensive to live in. Its highest tax rate is 53.40%. But, if you’re seeking a year or two abroad, especially as a teacher, you’ll be able to get by for much less, especially if your school underwrites housing costs. The overall cost of living in South Korea is lower than in the U.S.