Which countries in Europe have the lowest tax rates for a US retiree looking to draw income solely from bank?

Question

interest from that countries banks. Which countries exchange tax information with the US and which don't...and how would i know if they do and go about doing so.

Answer 1

Neither Europe or the US being part of Canada at the moment, you may find better answers by asking in US tax forum.  That said check out the UK in your research as I think they tax on a remittance basis in some case which could mean no tax at all if, for example, you had the income remitted someplace else - say Jersey, Guernsey or Isle of Man. Or my home in beautiful Abu Dhabi.

And Allah is all seeing and all knowing, so do not think you will be able to evade your taxes in godless lands such as Liechtenstein, lack of information exchange articles in tax treaty notwithstanding.

Answer 2

If you are a US citizen, you are required to report all income to the IRS.  Many foreign entities (banks etc) share information with the IRS if they also have US branches.  So to do what it sounds like you want, which is avoid US taxation, you'd have to avoid any bank or other entity with any sort of US presence.  Be aware that this also means you would likely be dealing with smaller, more regional entities, which increases your risk.

Also be aware that if you ever return to the US, the IRS will be looking closely at you to see where your income came from during the years you were 'missing'.

The penalty for failure to report income is the same for foreign source income as it is for US income: fines and possible jail time.

As for tax rates, most countries in Europe have much higher taxation rates than the US, but also provide more in the way of social services (medical especially).  However, those services are not always available to ex-pats from abroad, so you might find yourself paying high taxes for little or no benefit.  Most countries also limit residency to foreigners.  

You need to carefully examine the taxation (and immigration) rules for each country before making such a serious decision.

Answer 3

Monaco does not levy a personal income tax.

Liechtenstein-The basic rate for the personal income tax is 1.2%.

The USA does not have tax treaties with the above 2 countries for exchange of information.  Here are the tax treaties:  http://www.irs.gov/businesses/internatio...

Note however that american citizens are supposed to pay file US tax returns even if they live outside USA, and therefore you may need to report your investment income from foreign bank deposits.