Lux Investing

If an american retires in europe, do they have to pay taxes to that country as well on invested income?

Public Comments

1. The US is fairly unique in taxing its citizens worldwide. Most countries tax based on residency. So yes, if the US person retires to Europe and becomes a resident, they will be double taxed. The US tax return gives them a foreign tax credit to reduce the burden.
2. Yes, but the US generally gives a tax credit for the amount of foreign taxes paid. A US citizen is generally always liable for US tax, unless they make under a certain amount, etc. However, suprisingly enough, the US generally has lower income tax rates than most countries so the foreign tax credit should cover most US taxes. I'm not saying our overall taxes are lower, when you factor in sales tax, property taxes and other taxes we are up there, but overall income taxes are lower.