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Retirement Benefits in the Dominican Republic

The Dominican Republic does offer retirees special benefits if they choose to make the country their home. The law and entitlement are specific, the key summary points of which can be seen below:

TITLE I - Definitions, Subject Matter and Conditions

ARTICLE 1: For the application of this Law, the following definitions are introduced:

a) Pensioners and Retirees: Foreigners or Dominican nationals benefiting from a monthly income in the form of a pension or retirement benefit from a government, official source or a private company abroad, who are interested in establishing their residence in this country and in receiving their pension or retirement benefits in the Dominican Republic.

b) Pension: Income from abroad from any source constituting a profit or earnings produced by a property or activity as well as all earnings or profits received or resulting from investments made, which are not justified by the taxpayer, regardless of their nature, origin or denomination.

c) Persons of Independent Means: Those persons who enjoy a stable and permanent income from capital generated or coming from abroad for any of the following reasons:

i. Deposits and/or investments in banks abroad;

ii. Remittances from banking or financial institutions abroad;

iii. Investments in companies abroad;

iv. Remittances coming from real estate property;

v. Interest received from bonds in a foreign currency, generated abroad, which are placed in financial institutions legally authorized to operate in the Dominican Republic;

vi. Benefits obtained from investments in bonds issued in foreign and/or national currency, made with the State or its institutions, provided the capital was generated abroad and the currency exchange is made in one of the Dominican financial institutions.

vii. Interest, income, dividends from real estate or other investments made in the Dominican Republic, provided the capital was mainly generated or accrued abroad.

ARTICLE 2: MAIN OBJECTIVE OF THE LAW. -

Retirees and Persons of Independent Means who comply with the requisites and conditions established by this Law will be eligible for the same benefits and exemptions granted foreign and national investors residing abroad, by virtue of the following legal dispositions:

a) Residence Program through Investment, created by Decree no. 950 of September 20, 2001, which allows foreign investors to obtain the permanent Residence Permit within 45 days.

b) Law 14-93 of August 27, 1993, which exempts Household Items and Personal Possessions from paying taxes.

c) Law no. 168 of May 24, 1967, about the Partial Tax Exemption for Motor Vehicles.

In addition, Retirees and Persons of Independent Means who invoke this Law shall have the following benefits in accordance with the conditions and stipulations contained in that Law:

a) A tax exemption for real estate transfers, for the first property acquired.

b) A 50 % tax exemption on mortgages provided the creditors are financial institutions which are duly regulated by the Monetary and Financial Law.

c) A 50 % tax exemption on Real Estate Property, when applicable.

d) Exemption from the taxes levied on the payment of dividends and interest generated in this country or abroad.

e) A 50 % exemption on the Capital Gains Tax, provided the person of independent means is the majority shareholder of the company which is subject to the payment of that tax, and that company is not engaged in any commercial or industrial activities.

ARTICLE 3: MINIMUM AMOUNT FOR THE MONTHLY PENSION OR INCOME.

In order to be able to invoke the preferential treatment established by this Law, the Retiree must receive a monthly income of at least FIFTEEN HUNDRED US DOLLARS (US$1,500.00) and the Person of Independent Means must receive a monthly income of TWO THOUSAND US DOLLARS (US$2,000.00) or its equivalent in our national currency.

PARAGRAPH: For each dependant, as defined in Article 5 of this Law, applying together with the principal applicant, an additional income in the equivalent of TWO HUNDRED FIFTY US DOLLARS (US$250.00) will be required.

ARTICLE 4: In order to be eligible for this program, no minimum age is required for the main applicant who must simply comply with the requisites established by this Law.

TITLE II

Residence Permit through Investment

ARTICLE 5: BENEFICIARIES. -

In accordance with the dispositions of this Law, the following persons qualify: all Retirees and Persons of Independent Means defined in Article 1 of this Law, as well as their spouses and single children under the age of 18, children of age, if they are incapacitated, or children of age, who are university students and depend economically on the main applicant. Minor children for whom the applicant or his/her spouse are the fully recognized guardians may also apply.

ARTICLE 6: APPLICATION PROCEDURE. -

Foreigners becoming retired residents or residents of independent means by virtue of the Residence Permit through Investment Program must comply with all the requisites stipulated for these purposes at the Foreign Investment counter of the Department of Immigration.

PARAGRAPH I: In the case of retirees, the applicants must present a certification from the government, official authority or private enterprise abroad, where they had worked, duly translated to Spanish by a court-certified interpreter and certified by the Dominican Consulate in the country where the document was issued. This certification must contain the general data of the applicant, the time he worked in that company, the position he held and the amount of pension he receives.

PARAGRAPH II: Persons of Independent Means must prove that during the last five years they have been enjoying a permanent and stable income that is generated or coming from abroad, by means of a copy of the proof of income, duly translated to Spanish by a court-certified interpreter and certified by the Dominican Consulate in the country where the document was issued. They must also present income receipts for dividends received in this country, in the form of a copy of the check(s) or transfer notice(s) from financial entities abroad.

ARTICLE 7: -

Once these documents have been deposited at the Foreign Investment Counter, the clerks in charge will verify and authenticate the validity of the same, as per the requisites established by this Law, so as to present the documents as soon as possible to the Director of the Department of Immigration for his approval. If the documents are approved, the Department of Immigration will issue an Approval Letter for the application for a Residence Permit through Investment, stating that the application has been approved and the issuing of a Residence Permit within no more than forty-five (45) working days as of the date of the receipt of the application is authorized.

ARTICLE 8: RENEWAL OF THE RESIDENCY PERMIT. -

When the residence permit expires after one year, the retiree and/or person of independent means must apply for its renewal at the Counter of Foreign Investment of the Department of Immigration. For this purpose the applicant must deposit the following documents:

a) Residence Permit Renewal Form for Retirees and/or Persons of Independent Means

b) Copy of the Dominican I.D. card (“cédula”)

c) Certificate of Good Conduct from the Public Prosecutor’s office (“Procuraduría Fiscal”) of the Applicant’s Judicial District or the National Police of the Dominican Republic.

d) The expired Residence Permit.

PARAGRAPH I: The retiree and/or person of independent means must deposit at the Foreign Investment Counter of the Department of Immigration the documents which prove the receipt of his/or pension or income in the Dominican Republic for the same length of time as the previous residence permit.

PARAGRAPH II: As soon as the renewal application has been approved, the Department of Immigration will issue the Residence Permit within no less than eight (8) working days as of the date of the application. The Residence Permit will be valid for two (2) years or the period of time stipulated by the Department of Immigration, and may be renewed at its expiration.

ARTICLE 9: LOSS OF THE RESIDENCE PERMIT. -

In case the Residence Permit is lost, the interested party must fill out and present at the Foreign Investment Counter of the Department of Immigration the Lost Card Application together with two (2) photos, 2” x 2”, and a Certificate of Loss issued by the National Police.

ARTICLE 10: TAX EXEMPTION REGARDING THE PENSION OR INCOME RECEIVED. -

The amounts declared as income in order to become eligible for the benefits of this Law shall be exempt from any Income Tax (Article 271 of the Tax Code is amended).

TITLE III

The Benefits of Law 14-93 which creates a Tax Exemption for Household Articles and Personal Belongings of Foreigners who establish themselves in the Dominican Republic.

ARTICLE 11:

The Retirees and Persons of Independent Means whose Residence Application has been approved in accordance with the stipulations of this Law may benefit from a customs duty exemptions when importing their personal effects, household articles as well as used trade and professional equipment, as per the stipulations of Law 14-93 which creates a tax exemption for household articles and personal belongings of foreigners who establish themselves in the Dominican Republic. In addition to the requisites and formalities normally required by the Customs Authorities in compliance with Law 14-93, Retirees and Persons of Independent Means must include in their application a copy of their Permanent Residence Permit.

PARAGRAPH I: The Retirees and Persons of Independent Means whose application for a Residence Permit through Investment has been duly approved by the Department of Immigration or who are waiting to have their Residence Permit issued, may file their application for the benefits of Law 14-93 with the Customs Authorities. For this purpose they must present a certified copy of the Letter approving the Residence Permit through Investment issued by the Department of Immigration. This document must be accompanied by all the other requisites normally required by the Customs Authorities for granting the benefits of Law 14-93.

PARAGRAPH II: The dispositions of this Article are for the only and exclusive benefit of those Retirees and Persons of Independent Means whose application for a Residence Permit through Investment has been duly approved by the Department of Immigration. Therefore, the benefits contemplated by Law no. 14-93 do not apply to the applicant’s spouse or dependents.

PARAGRAPH III: All tax-exempt items, such as household articles, may not be sold unless the corresponding taxes have been paid to the Dominican State.

TITLE IV

The Benefits of Law no. 168 about the Partial Tax Exemption for Motor Vehicles, amended by Law no. 146-00 about 

Customs and Tax Compensation Reform.

ARTICLE 12: The Retirees and Persons of Independent Means and their respective spouses whose application for a Permanent Residence Permit has been approved in accordance with the stipulations of this Law may be eligible for the Partial Tax Exemption for Motor Vehicles established by Law no. 168 of May 24, 1967, amended by Law no. 146-00 about the Customs and Tax Compensation Reform. In addition to the requisites and formalities normally required by the Tax Authorities for the application of the Partial Tax Exemption for Motor Vehicles, the interested party must include in its application a copy of its Permanent Residence Permit.

PARAGRAPH I: The Retirees and Persons of Independent Means whose application for a Residence Permit through Investment has been duly approved by the Department of Immigration or who are waiting to have their Residence Permit issued, may file their application for the benefits of Law 168 with the Customs Authorities. For this purpose they must present a certified copy of the Letter approving the Residence Permit through Investment issued by the Department of Immigration. This document must be accompanied by all the other requisites normally required by the Customs Authorities for granting the benefits of Law 168 which was amended by Law no. 146-00 about the Customs and Tax Compensation Reform, which establishes the Partial Tax Exemption for Motor Vehicles.

PARAGRAPH II: The motor vehicles eligible for the benefits of this stipulation cannot be sold or transferred during five (5) years after they were brought into this country, unless the difference with the corresponding full taxes and duties has been paid.

PARAGRAPH III: For the purposes of this disposition motor vehicles will mean the following:

a) Automobile: The applicant is allowed to import one (1) automobile under this program. However, the vehicles bought on the local market shall be exempt from the payment of the Transfer Tax for Industrialized Goods (“ITBIS”) as well as from the Selective Consumer Tax.

TITLE V

Payment Exemption with regard to Transfers, Mortgages, Real Estate Taxes and Capital Gains

ARTICLE 13: T

he Retirees and Persons of Independent Means whose Permanent Residence Permit has been approved in accordance with the dispositions of this Law may be eligible for the payment exemption with regard to taxes on real estate operations for the first property which they acquire. Furthermore, while their Residence Permit through Investment is up to date, they may be eligible for a 50 % exemption on document fees and real estate taxes. They are also eligible for a 50 % exemption on mortgage taxes. Therefore, for the beneficiaries of that law, while their Residence Permit through Investment is up to date, the following taxes shall be modified as indicated:

- Law 18-88 of January 19, 1988, and its amendments

- Law 145-02 which amends Law 18-88

- Law 3341 of July 12, 1952, about Real Estate Operations and its amendments, including Law 288-04 of September 28, 2004.

- Law 33-91 of October 3, 1991

- Law 80-99 of July 29, 1999 about Documents.

ARTICLE 14:

All real estate acquired under this Law by Retirees and Persons of Independent Means shall be exempt from the payment of 50 % of the capital gains tax at the time of its sale to a third party.

TITLE VI - The Possibility of Gainful Employment in this Country

ARTICLE 15: THE POSSIBILITY FOR GAINFUL EMPLOYMENT IN THIS COUNTRY. - Retirees and Persons of Independent Means benefiting from this Law may find gainful employment in this country. However, the salary received for this activity is subject to the payment of the corresponding taxes to the Dominican State, the same as any other Dominican employee, based on the equal treatment principle established by Law no. 16-95 of November 20, 1995, about Foreign Investment.

TITLE VII - General Dispositions

ARTICLE 16: -

The benefits of this Law apply equally to Dominicans who retired from government institutions in other countries and to those who do not fall into this category, but can prove that they have an income that complies with the conditions set forth in Article 1 of this Law, and who have resided abroad for at least ten (10) years.

PARAGRAPH I: Foreigners residing in the country who become Retirees and/or Persons of Independent Means are also eligible for the benefits of this Law.

ARTICLE 17: -

In case the main applicant dies, the rights acquired by him shall be passed on to the spouse or, in the absence of a spouse, to any other dependent as defined in Article 5 of this Law, provided these persons fulfill the legal requisites required from the main applicant, as established in Articles 3 and 6 of this legislation.

ARTICLE 18:

PENALTIES FOR VIOLATING THIS LAW. - The persons who apply for the benefits of this Law and who intentionally submit false information in order to benefit from the exemptions which this Law grants, shall be subject to penalties and must pay a fine in the amount of twice the corresponding taxes due to the Dominican Tax Authorities.

ARTICLE 19: This Law revokes any other disposition which might contradict it in its application.

Text provided by Guzman Ariza. Please contact them for more details. 

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