ON PENSIONS AND TAXES: FROM A LETTER TO A FRIEND (February 22, 2003)

You do not pay tax on income that goes toward your pension, but the pension payments are taxed as soon as they kick in. That is how it is in the UK and US. Now, when you no longer reside in either country, you stop paying tax in it. To make sure that everything goes smoothly, I contacted all the relevant tax authorities rather early. The Croatian Embassy in London informed me that the relevant tax office in Istria is in Pazin, its capital. I wrote to them some time ago, explained my situation, and asked them to send me all the relevant forms to ensure that I start paying tax immediately upon my arrival. Yesterday I received the official reply with a huge green stamp across the signature of the top taxman in Pazin. As it turns out, Croatia does not tax pensions earned abroad. Thus, none of my seven pensions from the US, Slovenia, and the UK will be taxed. You can imagine my grief!