Technical article

What a Pensioner Residence Card Waives in the Dominican Republic and Nicaragua

They have heard that a pensioner card cuts taxes on furniture, a car and building materials.

By Neil Solomon · 4 min read

Picture a couple named Dale and Renata. Both are 64, retired, with a pension from home. They are thinking about the Caribbean coast of the Dominican Republic or the Pacific side of Nicaragua. They have heard that a pensioner card cuts taxes on furniture, a car and building materials. They want to know what is written down, and what has strings attached.

Both countries do have a law for foreign pensioners. I read the legal texts that governments publish. For one of the two I could read only part of the story.

Side by side

Dominican Republic

The law covers imports of "efectos personales y del hogar", personal and household goods. You need a copy of the definitive residence card. If you have an approval letter but no card yet, a certified copy of the letter can start the process.

Three limits stand out. The benefit does not reach a spouse or dependents. The goods may not be sold until what is owed to the State is paid. And for the car, Article 12 says the applicant may import "un (1) automóvil". It may not be sold or passed to anyone else within five years of arriving, unless the difference in duties and taxes is paid. A car bought inside the country is exempt from ITBIS, the sales tax, and from the selective consumption tax.

There is more in the same law. Property tax is cut by 50% while the residence permit is valid. Taxes on the first property bought are exempt. Capital gains tax is cut by 50% when that property is sold.

Building materials do not appear in the law. No exemption for them was found.

The immigration page for the pensioner permit names the law but does not describe its benefits. The sources do not show from an official page how the partial car exemption is worked out at the customs counter.

Nicaragua

The rules in Decreto 83-2009 say the household goods exemption is granted "por una sola vez". One shipment, one time. Plan the container before you ship it.

For vehicles, the decree lists the paperwork. A new or used car needs its title with make, model, year, chassis number and engine details. A car bought from a local dealer needs the dealer's quote. If an exempt car is destroyed or stolen, the owner first gets a lien release from customs and then asks the tourism institute (INTUR) in writing, with proof, before getting another. The decree sets no price cap or resale rule. Those sit in the law itself, and it because the legislature's site blocked me could not be read. So I cannot give the number of years between cars, the value limit, or the age and income tests.

For building materials, the decree is clear. Article 23 asks for a title in the pensioner's name, a certificate that the land has no liens, a building permit, environmental approval and a quote for the materials. Article 24 says that if the owner passes the property to others "dentro del período de los diez años", they go to the tax office and cancel the exempted IVA in proportion. In plain terms, the saving is partly given back if you sell inside ten years.

What is left open

• Nicaragua: the text of Ley 694, so age, income and the vehicle rules.
• Dominican Republic: current customs practice and how the car percentage is set.
• Either country: whether any change was made after the texts I read.

An accountant or lawyer who works with Americans abroad could confirm which of these apply to your own case.