Monday, July 20, 2015

My Head is Spinning

D-L and I are trying to decide where we want to live, or at least spend most of our time, long-term - Country A or Country B, both in Europe.

The lifestyles of the two are quite different, one a small village adjacent to beach and mountains, the other a manageable-size but very international city on a lake. We're considering such factors as healthcare (we're neither of us young), business environment, cost of living, even the expected economic stability of the countries' currencies.

Where the choice gets most complicated is taxes. Not just the tax structure in each country, but the tax "penalties" invoked by virtue of me being an American or us being married. For example, the US does not tax social security benefits - or at least not if you earn less than a certain threshold. However, if I am resident in another country, the IRS may decide to withhold 30% of the monthly payment ... just in case I might owe taxes on it ... and I have to try to get it back when filing my annual income tax return. In addition, both Country A and Country B impose a tax on US Social Security benefits (by treaty); if we lived in the UK, Ireland, or Canada, no tax on US SS in those countries.

Here's a weird one. In order to collect half my SS benefit amount, D-L and I must have been married a year. However, if we are only married 9 months (3 months fewer) and I die, she can collect my entire amount!

Factor in my life insurance, and she has about a one-month window of opportunity to cash in on both my SS and the insurance proceeds. (Maybe I'd better disappear for that month!)

What it really comes down to, though, as friend J so wisely pointed out, is where do we want to be? Where do we want to spend most of our time while we're together, and where do we want to spend the rest of our life if something happens to the other in our couple?

We're fortunate to have a choice. We're fortunate that the nature of what we do - writing - can be done pretty much anywhere in the world (with decent internet and phone connections). If we so chose, we wouldn't need any fixed-based "home" - we could just roam from place to place, spending a few weeks here, a few weeks there. Most of it at no housing cost if we did house-sits. (We'd still be taxed based on our country of residence, and I'll be taxed by the US no matter where I live.)

We both think it's important to have a "home" (not necessarily a house) - a place where you feel reasonably safe, secure, and at peace, away from the outside world.

With the current EU rules, we're also fortunate that we can change our mind in the future. Maybe we start in Country A, but in a couple of years switch our residence to Country B. The caveat there is I need continuous residence of at least five years if I wish to seek citizenship in either country. So switching in effect restarts the clock and delays the citizenship option. (And the option to renounce US citizenship and shed that annual tax preparation burden.)

It shouldn't be this complicated. I appreciate that there need to be rules for allowing visitors and immigrants to a country. People from other places shouldn't just be allowed to walk/swim/sneak across the border and stay indefinitely (oh, yeah, forgot they do that in the US). The EU rules, however, seemed designed to assume they don't want you, and you need to present an abundance of documentation that you are worthy to live among them. Right now, anti-migrant sentiment is rising everywhere - especially in Europe where the economies continue to struggle (more from banker manipulation and boneheaded, in-the-corporate-pocket politicians than the impact of Eastern Europeans and Africans who want a better way of life).

We've pretty much decided our country of first choice, assuming certain things happen in the coming weeks. If those things don't happen, we'll end up in our second choice. Both places are pretty wonderful, except for the bureaucracies, of course. So the spinning should stop soon and we can settle in to one or the other for the long haul.

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