A side effect of a stagnant economy and population shrinkage is that Bulgarian property is really cheap. You can purchase a modern flat starting around $15,000 (or rent for really cheap) in a ski community with a very strong remote worker presence (Bansko).
If you do this right, you can also become a resident and benefit from a flat 10% income tax which is lowest in the EU. No affiliation; I just find this type of arbitrage fascinating (and am currently doing something similar on the Black Sea coast of a different non-eu country).
I have a company in Bulgaria while working remotely for a high-salary EU country, and it's almost shocking to realise how much you spend on taxes in most European countries when you see the difference in your bank account.
It's quite a good deal if you want to be a digital nomad since it's an EU country and you can get a really small apartment for almost nothing to use as your official address while travelling. (You'll have to be at least fiscally resident there)
Feel free to PM me if you want some tips on how to get things set up there.
How bad is it? I pay more than 50 percent of my income in various taxes in the United States.
Before anyone asks, federal income, Medicare, Medicaid, social security, state income, state sales tax, local property tax, and lesser- luxury and gas tax.
For comparison sake, sales tax, gas tax and so on would not be considered under tax by someone living in Europe in that sort of calculation. People would mean income and social tax.
Some Americans don't even count the FICA taxes (social security/medicare contributions) as taxes. That way they can claim that the poor don't pay any taxes.
They're fundamentally different, one is a progressive tax designed to support a civil society (income tax) and the other is a regressive usage-based tax designed to dis-incentivize behavior such as smoking, drinking and using gas/private automobiles. One's a benefit driver, the other is designed a penalty or market force.
Ok, but they are both taxes, yes? And they both diminish your effective income. So, when calculating the relative tax burden between countries, they both count.
They do both diminish your income, but only if you insist on doing things society doesn't want you to do. Driving is optional, smoking is optional, drinking is optional. You can opt out by changing your lifestyle to be healthier and more sustainable -- in which case you'd not pay that tax in either country. Income tax isn't optional.
Sure, but you either are or are not willing to make those changes, and you presumably already have made them to the extent that you're willing. Whatever burden ends up being imposed based on your consumption habits simply is what it is.
True of course, but hard to factor in. If you move from rural America where a car is required the gas tax burden is going to drop substantially if you move to Amsterdam where nobody has cars, even if the gas tax is 3X higher. I definitely see your point, it's not easy to directly translate.
Ya you just have to scale by lifestyle factors. If the lifestyle factors are likely to change with location, then you definitely need to account for that with respect to your personal situation.
Denmark has a law that you can't be taxed more than 56% of your income. Then there is 25% VAT (sales tax), so if you're in the top bracket and spend your entire income you can theoretically be taxed 67%. Cars have a special 160% tax (you pay 260% of base price). And there's no capital gains loopholes. There's no payroll tax per se, but the employer contributes to a maternity/paternity fund in addition to some other small items.
It's very true that the Danes receive good free health care and have good universities, but the longer I live here the more I see that a huge amount of tax revenue is squandered on administration. I'm pro taxation, but it's hard to be exposed to such waste.
> If you pay taxes abroad the US will still haunt you to show that you paid - and if it's lower than you would have paid back home claim the difference.
That's only if you're lucky, and move to a country with a no-double-taxation treaty. There's only a few of them. No tax treaty, you pay the full amount due to both governments (after excluding your US foreign earned income allowance ~$90K).
Worse, if you live in a foreign country and start a business you now own what the US considers a "foreign controlled corporation" and your new nightmare begins. Not to mention many banks won't do business with you abroad because of FATCA and you have to report your balances annually to FinCEN or risk forfeiture of 50% of the balance in the account. And you can't open a brokerage account in a foreign country because you can't have an account not overseen by the SEC.
Then if your child is born abroad with no other connection to America they'll suffer the same fate for the rest of their lives unless they renounce, which itself comes with substantial costs.
I think the number of renunciations is fairly low because most dont make >90K in foreign countries, and FATCA is new-ish.
which states that, worldwide, just over 5,000 Americans renounced citizenship in 2017. There are also about 9 million Americans living abroad and ~1 million living in Europe. So, no, I don't think that even if all 5,000 were in Europe that 0.5% renounced their citizenship would count as "many".
I'm curious, where are you heading with this counter argument? That perhaps, something like 900k Americans living in Europe are in the US Armed Forces, leaving 100k regular US citizens. So then, if all 5k of the US citizen renouncers worldwide are in Europe, then 5% of the remaining 100k _does_ count as "many"?
Look mate, I know a lot of American expats and in my circle not a single one has relinquished citizenship. The few that are aware of our dumb tax laws just see it as another cost of being american. Except for the extremely rich, the cost to return the passport is much higher than simply keeping and renewing it.
Why are white people expats when the rest of us are immigrants ?
" Defined that way, you should expect that any person going to work outside of his or her country for a period of time would be an expat, regardless of his skin colour or country. But that is not the case in reality; expat is a term reserved exclusively for western white people going to work abroad.
Africans are immigrants. Arabs are immigrants. Asians are immigrants. However, Europeans are expats because they can’t be at the same level as other ethnicities. They are superior. Immigrants is a term set aside for ‘inferior races’. "
In terms of finding things to be angry about this one is the particularly pathetic. Thai people call outsiders Farang. The Japanese are hostile to foreigners of any other nationality. Take up your cause with them first before you start accusing an entire continent with a rich modern history of tolerance of thinking they are superior.
When most people say "50% of their income" they tend to mean on a marginal basis.
Now that Donny capped state, local and property tax deductions at $10,000 per year (meaning you get double-taxed on the rest) and reduced the mortgage interest tax deduction cap from $1M to $750K, that number got much closer.
At $300,000 you're paying 48.65% marginal. That doesn't include, in SF, a 9% sales tax, a 1.188% property tax (that of course even renters pay as owners use rental income to offset that cost), and to your point, luxury and gas taxes.
That seems steep? What about health insurance? I worked for a few years in The Netherlands and paid a little over 50% of my salary in taxes, however in return I had access to amazing government resources and some of the best health care in the world. At 50% I'd expect the US to provide at least some healthcare :(
Surprising to most, the US governments spend a higher percent of GDP on healthcare than most European countries[1]. Then we also have high private sector spending on healthcare. Its pretty crazy.
Luckily for you the OECD [1] and WHO [2] did just that and the results are awful for America, performing markedly worse than systems that cost one third as much.
I'm not sure what warrants that tone, when I was simply stating something obvious (you can't judge a healthcare system by its cost if you don't look at the outcomes).
Thank you for contributing more valuable data/information.
It's interesting to see that the WHO methodology also got criticized. This points to the complexity of actually picking the right metrics/outcomes you want to optimize for.
Sorry if it didn't come across that way, it was meant to be light-hearted ^_^ tone doesn't always carry well over the internet. I wasn't criticizing you at all.
The OECD data is pretty damning. America leads its peers in obesity, smoking, air pollution and bankruptcies, and lags dramatically (1-2 standard deviations) in consultations skipped due to cost, population coverage, life expectancy, doctors per capita and beds per capita. Mission failed, IMO.
All for the low, low price of twice to three times what most other countries spend.
Does it really matter how much better it is when you can go immediately bankrupt from a simple procedure? I imagine there is immense pressure and loss of wealth by simple virtue that people probably don't maintain good health but go in when it gets bad enough that going bankrupt is worse than dying or being violently ill with no end in sight.
You're muddying several issues here. I'm simply stating that the value of a healthcare system in terms of outcomes must be compared to how much it costs. What you're talking about is how the system is financed, which is a different issue.
For example, as a French citizen, I would expect that if we're in the top 5 in terms of spending (regardless of whether it's done privately or publicly), we should have a system that's in the top 5 in terms of outcomes.
I wasn't in any way trying to suggest the US healthcare system is the "best" or whatever, just pointing out that pure cost comparisons are meaningless.
That does provide healthcare - Medicare and Medicaid, which I believe covers about half of the US population. One reason some are opposed to going to a government paid system is the fact that we spend so much on that where if the costs were simply doubled it'd be a rediculous expense.
Well, by looking at more advanced countries that do have universal healthcare at fairly reasonable tax rates, there are models for how it can be done without doubling our taxes..
> One reason some are opposed to going to a government paid system is the fact that we spend so much on that where if the costs were simply doubled it'd be a rediculous expense.
They're wrong because Medicare and Medicaid are more efficient and control costs better than the private sector. Costs are already more than doubled once you add in the private sector. Even if taxes were doubled y'all would still end up paying less on the net because your employers are already paying for healthcare, which is a private tax.
>One reason some are opposed to going to a government paid system is the fact that we spend so much on that where if the costs were simply doubled it'd be a rediculous expense.
Or maybe people would realize a County like Germany is able to cover the entire County (2x as many people as Medicare) while spending half the Medicare budget. Then, questions of waste and fraud might pop up, which no one involved wants to happen.
>Issues are often just ignored until they go away.
In someways thats part of the reason our Medicare program is so expensive.
In the US we essentially go an entire lifetime without regular/preventative care, then when patients become eligible for Medicare, they have a lifetime worth of chronic illness that is treated on the tax payers dime.
7 out of 10 Medicare have at least 1 chronic condition, and chronic conditions are notoriously expensive to treat. Whereas nearly 100% of chronic conditions could be avoided if the patient had regular/preventative care (for example identifying prediabetics or patients with high blood pressure, or heart disease) while they were young enough to make the lifestyle changes to avoid these conditions altogether. Our system is essentially designed to ensure patients are both chronically ill and expensive before they are eligible for coverage.
well for comparison, in beautiful Greece, your total income tax & social security ranges from 50% - 75%. In return you get lots of sun, bureaucracy and sweat.
That's incorrect. Essentially all decent paying jobs in the US take care of most or all of the healthcare cost you're referring to. That is especially true for eg software developers who earn six figures at the median.
To balance a proper comparison if you're going to include the EU taxes re healthcare, you would have to inflate US wages even higher to account for the benefit that employees receive (money that otherwise would be available for labor competition in the form of salary), which is often a large sum of money given the cost of US healthcare.
US healthcare per capita is typically 100% (double) more expensive than in Western Europe. It's about 130% more expensive versus Britain. It's 200%+ more expensive versus Italy.
A software developer earning $125,000 - $150,000 per year is receiving a minimum of an additional 10% equivalent of their salary in the form of healthcare coverage. More likely 15-20% these days. The cost to put a small family on a good health plan will easily run you $20,000+ per year.
you might want to check the stats for the claims in your first paragraph, unless "decent job" in this case is top 5%. Only 49% of Americans have employer sponsored health plans and most of those are not entirely paid for by the employer. and only 91% of Americans are insured.
My family healthcare coverage at my "decent paying job" at a software company in the US cost me about $13,000 out of pocket in 2018 including employee premium and medical cost before reaching deductible. I would certainly consider that to be an additional tax when comparing against the EU tax rates that include healthcare.
Don't you have to spend > 50% of your time in Bulgaria in order to be considered a tax resident there? I suspect a lot of the "too good to be true" tax evasion stories in this thread depend on lying about your true place of residence?
There's definitely some hoops you may have to jump through, and as I mentioned I'm recommending this for digital nomads, not some random tax evasion scheme if you actually live permanently in some other location. This is probably doable, but illegal and risky.
In my case I officially rent a very cheap place in Sofia, Bulgaria's capital (< $100) which I don't use much, and travel a lot to other places (even within Bulgaria, as it's so affordable, so I actually do end up spending a good chunk of time there anyway though).
As a nomad, all you really need to do is make sure no other country has any claims on your tax revenue. Conditions varies - and it may be a good idea to not even own property in some countries. But mostly as long as you don't spend >50% of your time in any other given location they won't consider you liable to pay taxes there.
Note that Bulgaria of course does not have any complaints about me paying taxes in Bulgaria, regardless of whether I'm there or not. I'm basically just giving the tax money - this would probably be different if I wanted, say, citizenship, but that's a different issue.
You have to spend less than half a year in your home country to lose its tax residency AND you have to spend over 6 months in some other country. This applies for most if not all European countries: https://europa.eu/youreurope/citizens/work/taxes/income-taxe...
Therefore such tax optimisations won't work if you can't actually move to the other place and I guess for 99% of us it's not worth the hustle even if it allows you to save much more.
> I suspect a lot of the "too good to be true" tax evasion stories in this thread
Considered by whom and for what purpose? Bulgaria certainly aren't going to complain if you start declaring your income as arising there, for example via a Bulgarian company.
Much more important is where any other country who might have a claim on your tax think you are resident, and if you manage to not be resident elsewhere, you're doing fine.
That would still be illegal, just because no one is enforcing it doesn't make it legal.
FWIW, some of the other low tax jurisdictions in Europe actually do audit expats living there, to ensure they are actually spending time there. I know Monaco does.
> That would still be illegal, just because no one is enforcing it doesn't make it legal
What is it you think would be illegal? You appear to be pretty confused between "liable to pay tax", "resident enough to convince your home tax jurisdiction that you're no longer resident there" and "resident enough to qualify for citizenship programme", all of which are quite different.
That 10% income tax is slightly misleading in that you'll also have to pay social security on your personal income, which is up to 26%. So it's not as if you can pay yourself 100k€ and get 90k€ in your pocket (and while a 10% corporate tax is attractive, it's not out of line with other EU countries like Ireland, Hungary, Estonia, Malta...).
You can pay the social insurance for the equivalent of the minimum salary (around 75€ monthly) and pay yourself a dividend. Personal tax on the dividends is 5%.
You can be registered in your own company as a manager on the minimum wage, pay a fixed sum of social insurance every month (~100 EUR), and then basically set aside 15% of your invoices income for tax, and the rest is yours.
This is exactly what I do for years, it's not fiction and it's working.
That's very similar to other countries. Slovakia and Czechia. The social insurance is bit higher and scales with income but itsnot like Bulgaria is only cheap eu country.
Same thing in Romania. If you have a bachelor degree and you're employed as a programmer or data analyst or something in that area you get an income tax discount. For everyone else, there's a flat 16% income tax. A programmer or disabled? 10%
It has some advantages. I like Tbilisi (the capital) but in the end it is too far off the beaten track to be my base. I need an airport. A good airport!
Ukraine is an interesting place too (not for taxes).
I'm curious to hear more. Are you a Russian national? If not, how is living and working in Russia as a non-citizen? Is corruption not as much of a concern in that part of the country?
I'm a US citizen who's partner is a dual US Russian citizen (and I'm eventually considering becoming a Russian citizen via marriage). Right now I'm on a 3-year business visa, which is pretty straight forward to obtain.
Western media depicts Russia in a much more negative light than how things are actually on the ground. So far I've experienced zero crime and very little antisocial behavior. Russian people are well behaved (the vodka swigging stereotype is greatly exaggerated; we also have great local craft beer and wine) but some are still holding on to some quirky Soviet behaviors that might seem rude to a Westerner. Also, the streets are cleaner than most large US cities and public spaces are nice.
Yes, there are political and curruption problems, but they haven't directly affected me. I'm working for a US company so I can't speak for what it's like working for a Russian company. Prices are generally 40% lower and you can buy nearly anything except good Mexican food (but we have amazing Georgian food). Also, where we are, the climate is similar to the Bay Area (it's a wine region) and the Black Sea coast is beautiful. Overall, my quality of life here is very high VS the US.
I once read a fictional story about a 20 year old selling his remaining lifespan except 3 months for 30 yen. Imagine how awful that life must be if it only sells for 30 yen. He didn't know it when he sold his lifespan, but his future self would have spent his remaining life in a hospital after an accident. The moral of the story is that it turned out to be a good deal.
Those flats are the same. The $15,000 is probably an absolutely fantastic deal for the seller. There is a reason why the apartment is so cheap. You get what you pay for and it's most likely crap.
They're cheap because of the population decline, lack of local jobs and overbuilding / speculation leading up to 2008. The flats are fine and many have never even been occupied.
In Bansko, most are within walking distance to the main ski lift, the old downtown area, coworking and other public spaces.
It's really a unique opportunity for those who work remotely and want to live in an outdoors-oriented place in Europe with low cost of living and amazing food.
It compares favorably to most New England ski resorts I have been to, but I have been told that West Coast ski resorts are much better than New England ones.
And assuming the EU's freedom of movement holds eventually people and business will realize this and move there. Then they'll do what everyone else does shoot themselves in the foot by making everything expensive. Eventually the new growth will happen elsewhere and the cycle will repeat.
> And assuming the EU's freedom of movement holds eventually people and business will realize this and move there.
Most people don't move to a country like Bulgaria just for a job. It's fine when you're 2X years old, can work remotely and have time to get into the culture, language, &c. As soon as you have a serious gf/bf or a family you can forget it. One of my colleague is Bulgarian, he moved to Germany because of corruption, lack of quality school, lack of good paying jobs, and that was in Sofia, not some random small town.
There is a reason why it's cheap and everyone is leaving. Also, people underestimate the personal cost of moving to completely culturally different country, you'll never feel at home there unless you live in some kind of gated community or expat district.
I wouldn't call this a cycle as much as consolidation. People are moving away from certain areas because their culture requires things which do not exist there anymore and other people with different culture then go there for other reasons. These new people cause some local things to start adapting to the new culture growing in that area.
I guess we are talking about farming families moving to Germany and cities looking for jobs because big industry doesn't exist in the villages anymore and they aren't the business type which can adapt to modern farming and way of doing business. Then there's highly educated people who wish to move away from the city and start doing remote work from some nice countryside or business people from the city who want to start a modern farming or tourism industry somewhere. I wouldn't say this is a cycle because this is one cultural transformation which has been going on in transitioning countries for the past 2-3 decades and not something which is happening every 10 years causing people to move back.
You don't know much about Europeans. You don't know much about businesses either.
What sense would it make for a plumber business or restaurant to move there? None.
What sense would it make for a high tech business to move there? None. No VC, no subsidiaries, and most important, no other business that you need. A hardware start up need tons of expertise from highly skilled suppliers.
Yes, for digital nomads it might work. But so does Panama or wherever.
Does that actually work that way? AFAIK the US freedom of movement is mostly resulting in greater and greater concentration... the only non-urban areas that are getting more and more popular are general "nice" (i.e. geographically advantageous) areas, like Florida and ski resorts.
I'm not sure I would call Florida geographically advantaged although a lot of people actually like it. (My understanding is taxes also make it attractive to retirees and second home owners.) Lot of growth in the desert Southwest (Arizona, Nevada) and Texas. It's mostly the Midwest that is conspicuously lacking.
The last few years there has been a significant increase in people moving from California to Texas. Texas now has the fastest state population growth rate.
Makes sense - I was in Wimberly about 4 years ago and it was so peaceful and quaint - it was a retirement town. Went over there again about 5 months ago and the downtown was bursting at the seams with cars. Same time of year - you can no longer walk across the street without looking - it's a danger zone now. Filled with hipsters and their wives and 2.2 kids.
There was an article on HN a few weeks ago about people moving to Boise to get away from the high cost of living in Silicon Valley. Is it a hellhole as in crime ridden or more because there's nothing there?
Interesting that you say that, lets look at Poland. They saw a decrease in skilled workers and young who moved around the EU for better opertunities. This saw many parts of Poland become ghost towns. This got to a head and the goverment in Poland got to the point that they introduced a new TAX system. One comparable to USA TAX for nationals in that it didn't matter what part of the World you lived in or earned your money, you as a national would now pay tax. This saw many return home and Poland is now in many parts a growing area of opertunity, many who left initialy returned to a country much more robust, things had improved and with that, they happily returned and for them - life is now much better than the opportunities that saw them be tempted to leave in the first place. This with other initiatives like scrapping income tax for young, to give them a kickstart and remove the easy temptation to get skilled up and then leave, have made a big difference. Though the aspect of having to pay tax twice upon income, really did drive things home in many ways overall from those I know.
This is based upon many fine Polish nationals I've had the pleasure to know over my years and keeping up with current events.
> One comparable to USA TAX for nationals in that it didn't matter what part of the World you lived in or earned your money, you as a national would now pay tax.
"An individual is defined as resident of Poland, if at least one below-mentioned condition is fulfilled:
the individual has closer personal or economic relations with Poland (center of vital interests)
or
The individual stays on the territory of Poland longer than 183 days in a given fiscal year."
So if you have somebody working abroad, paying tax abroad and sends home money to family, then they are open to being double taxed.
I'm sure there is some better article about all this, but this is what I've been told from Polish nationals a few times and one who was giving up a job in another EU country to move back to Poland, due to this and that opportunities for work had improved greatly from a decade ago when they initially left.
The keyword is "center" (though something may have been lost in translation): the same treaty conditions against double taxation exist between other EU countries and what matters is always what is the country you have the tightest relationship with.
Sending home money is definetly secondary compared to pay for bills, rent, groceries, etc in the country you are actually living in.
Croatian tax authority has been trying something similar for people working in countries that don't have a double-taxation-prevention treaties in place. So people working in UAE, USA and other non-EU countries find themselves double-taxed e.g. if they have any property and/or family (spouse and children) back in Croatia, as many do.
Yes, which is odd as only a few months ago was talking to a Polish electrician who was complaining about it, and had a friends over the years go on about it. So there are many conversations I wish I could time travel and go, really?
Sorry for my confusions, though all did have families back home, so may of been a factor or some tax aspect perhaps as I didn't delve. Though did recall reading an article upon the bbc (though had no luck finding it), but that may of been over 10 years ago knowing me at times.
Generally, it works like this (IANAL): when the country one is working with has the necessary legislation regarding double taxation, the tax paid in the country one is working in, is deducted from the Polish tax. Most often, when people leave Poland to live and work in an EU country, they will pay full tax in the EU country they live in and have zero taxable income in Poland. This means one does not even have to file a tax return in Poland. When I left Poland in 2006, the legislation was not in place yet.
I think, can't remember exactly, the legislation was introduced in 2007, I never had to pay any taxes in Poland while working in other EU countries, I filed a zero tax return in Poland only once, as the taxes have been paid in the other EU country.
This would infuriate me to no end. It's not enough that I'm forced to leave my home because of corruption and other problems? You dare come after me and ask for money? I would give up my citizenship the fastest I could.
If you do this right, you can also become a resident and benefit from a flat 10% income tax which is lowest in the EU. No affiliation; I just find this type of arbitrage fascinating (and am currently doing something similar on the Black Sea coast of a different non-eu country).
- https://www.travelingwithkristin.com/digital-nomad-blog/2019...
- https://medium.com/@matthiasezeitler/where-nomads-can-buy-an...
- https://medium.com/@coworkingbansko/how-any-non-eu-citizen-b...
- https://medium.com/@coworkingbansko/getting-bulgarian-tax-re...