Tax-Free Living: Belize’s New Retiree Law Is One of The Best Programs Offered

Reprinted from International Living

Recently, Belize's new "retiree" legislation became law - offering what is arguably the most attractive incentive programs anywhere for foreign retirees. If you’re looking for tax-free living, put Belize at the top of your list. The law aims to “encourage and promote the inflow of foreign capital into Belize by offering certain tax exemptions and incentives to Qualified Retired Persons...”

It’s a win-win situation for you and for the Belize government. Similar to Costa Rica’s now-defunct pensionado program, the new Belize law targets North American and UK nationals who would spend part or all of the year in Belize, maintain a residence there, and bring their hard-earned dollars to spend in the local economy.

Unlike other immigration programs, this one falls squarely under the authority of the Ministry of Tourism, which is working in conjunction with the Belize Tourist Board to make the program simple and user-friendly.

Duty-Free Imports and No Local Taxes

To entice you to come to Belize, the law allows you as a "Qualified Retired Person" to import your car and personal and household effects duty-free. (Thereafter, you may import another vehicle duty-free into Belize every five years, as long as your previous vehicle is sold, re-exported, or disposed of in an approved manner.)

The program will also allow you to import light aircraft, boats, and other modes of transportation without duty, according to Anthony Mahler, senior product development officer with the Belize Tourist Board, the quasi-governmental agency administering the program. As for household effects, there are no specifications or limitations as to what constitutes such personal property. Only in cases of abuse, such as when an individual tries to import six refrigerators or 10 air conditioners, would the exempt status be denied, according to Mahler.

The new law also exempts completely the Qualified Retired Person (QRP) from the Income and Business Tax Act and from “the payment of all taxes and levies on all income or receipts that accrue to him from a source outside of Belize...whether such income is earned or passive income and whether or not such income is remitted to him in Belize.” Essentially, that means that you’ll be accorded the same tax-free status granted to International Business Companies (IBCs) and trusts.

Base Your Business Here ... Tax-Free

While you cannot be gainfully employed under the new law, some room has been left for ORPs to start or operate existing businesses under this status. Much like an offshore entity, an ORP cannot do business in the local economy with Belize nationals on a tax-free basis. But you could direct foreign business activities and operations from within Belize and still maintain your tax-free status.

Given the evolution in the world economy toward e-commerce, “virtual” businesses, and the use of the Internet, it is conceivable that almost any business could operate as a Belizean IBC. And now any qualifying individual can live and work on a tax-free basis in Belize. So it is fair to say that the law is not only for retired people but also for any other qualified individual wishing to lead a “tax-free” life.  

If you’re an QRP interested in simply managing your own financial affairs, the law is ideal - because neither active nor passive income is subject to taxation under this law. If your assets and ongoing business activities are placed under a proper trust/corporate structure, it may also be possible to eliminate or greatly reduce your U.S. taxes when you live the requisite number of days outside of the United States. (See my article next month on U.S. taxation of Americans living abroad.)

The number of days spent outside the United States and the number of days spent inside Belize are not related, so Belizean QRP status may also be of interest to perpetual travelers and others who spend the year in several locations and who may only infrequently visit Belize.

We'll discuss the other benefits of Belize’s New Retiree Law in part two of this article on Thursday.

Copyright 2002 Nagel & Associates, LLC