Panama continues to be one of the best options for retiring or going offshore… As a resident of Panama, you pay no tax on foreign-earned income, nor on bank interest, certificates of deposit, wealth, inheritance, or U.S. Social Security. Property taxes are low, and newly built units are granted exemptions of up to 15 years.
Panama’s pensionado program grants retirees a one-time US$10,000 exemption on importation of household goods and a US$20,000 exemption every two years on importation or of a new car. Income earned in Panama is taxed in Panama (but could be exempt from U.S. tax if you qualify for the Foreign Earned Income Exclusion) at a progressive rate from 15% to 25%.
All these tax benefits should sound great to anyone looking to live, invest, or retire in Panama. But, remember: If you’re an American in Panama, you have two tax obligations—one in Panama and one back in the States. The IRS continues to complicate and confuse us poor Americans abroad, adding ever-greater layers of paperwork to our annual filing burdens.