If you watch Andrew Henderson at Nomad Capitalist, which I do suggest, you will very quickly conclude that the issue is tax avoidance. He says it isn't, but it is pretty much all he talks about. Done correctly, can a person substantially reduce their income tax? Yes. But, if you are doing it correctly, it is second after reducing the cost of living.
Let me give an example. As a U.S. citizen we get a tax exclusion of about 240K USD through the Foreign Earned Income Exclusion. With the proper residency, we also are excluded from about 270K USD from Albanian tax of foreign income. This will avoid about 54.4K USD of taxes compared to living in the U.S. and earning income there.
However, much more important is the cost of living savings. Obviously, your lifestyle will affect how much it costs to live in other countries. However, Numbeo.com does have an algorithm for comparing the cost of a standardized lifestyle in various cities. Further, I use this to look at the standardized lifestyle for a single person living in a 1BR downtown apartment in many cities. As I've traveled around, I have found it to render reasonably accurate number.
This results in a cost of living of $3,105 per month in my last American city of Miami. Those readers who are familiar with Miami knows that this will not provide an income much over 'getting by'. In Tirana, the standard cost of living is $885 per month. That means in general, your income goes about 3.5X farther in Tirana. So, a $240K annual income in Miami will spend like 240K X 3.5 = $840K in Tirana. The income tax that you will incur in Miami actually lowers your purchasing power down to $240K - $54.4K = $185.6K. So, the tax avoidance saves you $54.4K, but the cost of living saves you $635.4K.
Avoiding income tax, which in the U.S. will likely be your single largest expense, therefore pales in significance compared to the savings realized from lower cost of living. I know what a lot of you are thinking. "Yeah, but I'd be living in Albania!" This is failing to recognize a profound and fundamental transformation that is taking place in the world. I probably can't get you to fully realize this (it takes an actual visit), nearly every large city in the world has a 1st world section and a 3rd world section.
Every American knows that, inexplicably, every major American city has a portion where you simply don't go. It is scary and getting robbed, stabbed or shot is a very real possibility. The housing is crowded, run down and infested with rats and cockroaches. Of course, every American city has places where McMansions are the norm, every household has two or three late model luxury cars, and cafes, restaurants and boutiques are all upscale. What surprises people who travel is that nearly every large city in the world has such places. Tirana certainly does.
Here is a short video of drone shots of 'Rolling Hills'. It is in the SE portion of tirana about 2.5 KM from downtown and next to the largest and upscale mall, TEG. The community is gated with a community center. The homes tend to be between 400 m and 1,200 m with a typical home being about 600 m and costing about one million Euros. There are other, similar, gated communities, a bit smaller and less expensive.
There also is an upscale neighborhood in the center of the city, Blloku, which is where I live. Apartments tend to be 2BR or 3BR, about 150 m - 200m and rent for between 500 Euro and 1,500 Euro beautifully furnished. It is also worth noting that a full time maid will cost about 600 Euro per month, so most upscale Blloku residents have one. Blloku is lined with upscale cafes, restaurants, pubs and boutiques. High end couture labels are moving in with dedicated boutiques for Lanvin, Lagerfeld, Versace, Armani, et alia. Also, there are very high end boutiques that carry many designers, including Chanel, Ferragamo, Dulce & Gabbana, Tori Burch, et alia. Some of these labels are available in very large stores, verging on high end departments stores, with COIN, next to Air Albania Stadium being the largest.
In many parts of the world you are told, 'don't buy a Mercedes. It will stand out and be a target for thieves'. This is not true in Blloku. About one and three cars is a Mercedes. Even Lambos, Ferraris, Maserattis, Bentleys, etc. are not uncommon.
Of course, Wizzair will take you to Milan in under 2 hours and for less than $300 and many of the Tiranian nouveau riche do that often. They will also take you to Rome for about $110 in a non-stop one hour and forty five minute flight and Vienna for $172 in about the same time.. Pegasus Air will take you to Istanbul in about an hour and a half for $158. Aegian will take you to Athens for around $150 and 70 minutes non-stop. So, living in Tirana pleasant, but it definitely isn't isolated.
One of the advantages of Tirana is that it is just a 30 minute drive to the Adriatic Sea. Just south of the port city of Durres is Shkembi i Kavajes and Golem, two towns with a magnificent 3 mile beach. Chaise lounges and umbrellas are available everywhere associated with 4* and 5* beach resorts or rented for 4 or 5 Euro. There are restaurants, cafes and pubs lining the beach and there is a magnificent walkway along most of its length.
One of the top beach resorts is Grand Blue Fafa, a true 5 star resort, which has rooms for just $100 per night. The night life is spectacular with live music clubs all up and down the beach. Many Italians will take the ferry over from Bari, Italy for a weekend or a longer summer vacation with their cars. Also, the Tiranian Nouveau Riche fill up the beach every summer weekend.
Lastly, virtually everyone in Blloku speaks English. That is because there is five years of required English in school. It is easy to forget that you are in Tirana. Even the Toptani multiplex airs first run American movies in English. When you leave Tirana and specifically downtown and Blloku, yes, few people speak English. However, that is not where you will be living.
Also, if you are American, Albanians like you. That is why you get 12 months of visa free entry compared to the Europeans who get 3 months. The main road that runs in front of Toptani Mall is George W Bush Boulevard. Here in Blloku, one of the central parts is called Woodrow Wilson Circle. There is a Bill Clinton park. Everywhere you turn, it is clear, you, as an American, are welcome.
Clearly, I chose Tirana for a reason. It is a wonderful place with very low cost of living. However, Argentina and Malaysia, as two examples, are nearly as good.
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