Tax Law Changes In Uruguay

“Kathleen, you seem to treat Honduras and the Bay Islands as the ugly stepchild. Why is this not an area you recommend for retirement? You say Belize is where to go; however, Belize shares the Caribbean with Roatan, and it is not that expensive to live in Roatan or La Cebia and the mainland. Is there something we all should know before we move to this country?”

— Rich M., United States

Belize and Honduras share the Caribbean, true…along with a bunch of other countries.

How to compare the two places otherwise?

The Honduran mainland is not appealing in my estimation. I’ve spent time in different parts of mainland Honduras over the years, trying to find a redeeming area. I never did. There are safety issues in some parts of mainland Honduras. That aside, the whole of the mainland is poor and down-at-the-heels. La Ceiba is one of the least appealing places I’ve spent time.

That said, remember  the importance of thin-slicing your overseas retirement destinations. In the case of Honduras, the Bay Islands, including Roatan, are a separate world from the mainland…and far more appealing and interesting. Roatan is home to one of the most established expatriate communities anywhere in the world. It’s also a white sand-fringed island with all the tropical sunshine, azure water, and swaying palm trees your Caribbean heart could hope for.

In other words, I do think Roatan is worth a look if your agenda is a Caribbean lifestyle. But there are downsides. First, it is not as easy to obtain residency in Honduras as it is in Belize.

Second, Honduras is not a place you want to keep any money (while Belize is one of my favorite places worldwide to bank right now). This banking haven feature, though, may not be important to you.

Third, Roatan grew very expensive, both as a place to live (relative to other places we recommend) and as a place to own a beachfront home, over the past two decades. This has changed in the past 18 to 24 months. The bubble Roatan property market has fallen hard, from all accounts. Prices are more in a range where I think they make sense again. And, in fact, I have recently enthusiastically recommended Roatan to one of our Personal Consulting. I think it fits his needs, objectives, and agendas well.

Still, overall, all things considered, Belize is typically the better choice.

***

“Kathleen, as you reported yesterday, the e-mails to do with the proposed tax law changes in Uruguay are spreading like wildfire. I appreciate your mention of the situation and respect your checking on things before stating any’facts.’

“We arrived in Uruguay in March, and, if these proposed changes are made law, this could be quite a blow. We’ve already shipped all our household goods, two kids, and two dogs. We are well into the process of integrating into schools and life and are on the road to citizenship. But now I am not sure I will even want the residency!

“I hope this is a passing idea. But Uruguay is quickly getting a black eye. It reminds me of the mistake Panama made briefly with its switch to 30-day tourist visas a couple of years ago. But they corrected that quickly enough.”

— Maryanne R., Uruguay

We continue our research, but my sources are indicating that the proposed legislation could, in fact, go through. I agree. If it does, it will be a big, bad deal for Uruguay.

On the other hand, as a friend living in the country wrote yesterday to say, “There’s a bright side to everything. If Uruguay loses its status as a tax haven, billions in foreign capital will flee the country overnight. With luck, the peso will crash to its 2004 levels, and my cost of living will be cut in half.”

To try to help keep things in perspective, if this new tax legislation passes, Uruguay will no longer be appealing from the point of view of mitigating your total international tax burden. That’s true and a shame. However, this country will remain as appealing as ever as a place to live, especially with a young family.

I’ll file a more complete report on the situation in Uruguay as soon as I’ve confirmed further particulars.

Your New Life In Panama

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