We're discussing taxation, retirement, and social rights for long-term immigrants in Israel and Latvia. Leo, this is crucial information for anyone considering living in either country.
You're right, Mira. Let's start with Israel. Long-term immigrants often benefit from significant tax advantages for up to ten years. After that, it's a progressive system – higher earners pay more.
That initial ten-year tax break sounds appealing, but the cost of living in Israel, particularly in cities like Tel Aviv, can be high. What about retirement?
In Israel, long-term residents contribute to Bituach Leumi, the national insurance system. It's a mandatory contribution providing a pension in retirement, along with other social benefits. It covers health insurance, unemployment, maternity leave, and child allowances. It's a comprehensive system, but is the pension sufficient for comfortable living? That's a question for our listeners.
Moving on to Latvia, an EU member with a tax system and social rights aligned with European standards. What's the situation for long-term immigrants there?
Latvia has a flat income tax rate, currently 20%, simplifying things considerably. For retirement, they have a three-pillar system: a state pension, a mandatory funded pension, and a voluntary private pension. It offers flexibility but requires proactive management.
So, a simpler tax system in Latvia, but more responsibility for managing retirement savings. What about social safety nets?
Latvia's social security system provides benefits for sickness, maternity, parental leave, unemployment, and pensions. It's robust, but navigating the system might require patience.
To summarize: Israel offers initial tax breaks and a comprehensive social security system, but a high cost of living. Latvia has a simpler tax system and a multi-pillar pension system, placing more responsibility on the individual, within the EU framework. Both countries support long-term residents, but in different ways.