Is Panama a good destination for tax residency for digital nomads?

I’m from Europe and is looking for a country where I can declare my residency, mostly for tax purposes. Panama seems to fit everything. The plan is:

  • Get permanent residency using “Friendly Nations Visa”
  • Create a company and get a work permit
  • Get clients to pay me in that company

Since Panama has territorial tax, all income earned outside Panama has zero taxation.

Is it just that good or is there some hidden catch? I live in a Scandinavian country and they just hate to let people go. Will there be problems in paradise?

The plan is to visit Panama once a year and after five years get a passport.

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I’m also interested in more info on this. Sounds like a very interesting option. I do think you have to establish tax residency somehow though? I don’t know the criteria for that but just running a company there remotely or just visiting a few days a year might not count.

Im currently pursuing this as well. Friendly Nations visa is reportedly under review so you’d need to get in fast. I’ve already got all the paperwork done but a deal I was waiting on fell through and and now Im trying to line up remote work to support myself to jump on this while it is still available.

Basing a startup out of Panama is a bad idea though if you need to hire locally. Ive still yet to confirm how many founders can come per company or if it is only one visa per company.

Hopefully in the next few months I can come back and update everyone on how it went. In the meantime, Panama like most LatAm countries seems to be weak on local coding talent and community. No CS in their universities, closest being systems engineering/information systems equivalent. Would be nice if there were more of us there :slight_smile:

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I’m curious about this too. What is the friendly nations visa? I’m also wondering how it would work if your residence is Panama, and you earn money online through US companies (like Google Adsense, for example), both as a US citizen or as a citizen of somewhere else (like France, for example).

Great to see you doing this. Are you doing this on your own?


I sound crazy and out of left field to most I’ve described it to, particularly first worlders. Only people here seem to understand lol. Yourself? were you looking for a comrade-in-arms?

I’m looking for the same… In Portugal the taxes are getting wild, and 45% of your income is for the taxes… too much for me. I’ll study Panama as well.

if you just want to be able to tax 0% you should check out a Hong Kong Limited. I think that although it is a little sketchier you would save a ton of money compared to the Panama approach.
I recommend this blog post:

Especially this can save you a lot of money and hassle:

Foreigners can own 100% of a Hong Kong company and are free to be the sole directors and shareholders of a Hong Kong company. There are no local resident requirements and there are no restrictions on nationality.
To open a Hong Kong company, you don’t need a physical address in Hong Kong and your physical presence is Hong Kong is not required

I’m not seeing how creating an company in Hong Kong solves anything. There is a controlled foreign corporation (CFC) law in nearly every country that taxes you if you have a company like that and that’s why you need a second residency. You tax where you live.


That post does not discuss or take into consideration personal residency taxation.
Corporate taxes are taxes on your corporation and legal entity.
Personal* taxes are usually based on where you are a residency (except for American and Eritrian citizens who are taxed on a worldwide basis regardless of residency)

To open a Hong Kong company, you don’t need a physical address in Hong
Kong and your physical presence is Hong Kong is not required

While you don’t need to be present for the HK company, You are required to be present to open a bank account in Hong Kong. Also there are better options for digital nomads opening up a legal entity. See

Personal taxation are taxes on flow through income to you personally, which is what this article is discussing under the context of Panamanian residency.

Regarding Panama, - yes this country is a good option for residency to lower effective personal income tax rate. You might apply under executive decree 343 which basically requires investment in real estate and a company. More details at Passports.IO/Panama

Final thought on Panamanian companies - not as good as other options as there are 3 directors required and all the documents are in spanish. However - if applying under decree 343 a company and investment in real estate is required.


@FlagTheory If you are the sole controlling member of a corporation, most countries will view your corporation as resident where you are resident. This is what @anonym is referring to. Having a Panama or HK corp without considering your personal residency situation is an incomplete analysis.

If you are the controlling person for a company, your tax residence matters, both at personal and corporate level.

Of course if you are NOT tax resident anywhere then it’s fine. This depends on your nationality and how much time you spend in each country.

We both (and anonym) agree that refuse illusion had an incomplete analysis. Probably just linkbait for that blog as really it doesn’t have anything to do with the initial question.

These are complicated issues, we also agree that most countries will view your corporation resident if you are the sole controlling shareholder/director of a corporation.

These laws are oftentimes called CFC laws (controlled foreign corporation laws) and is also sometimes referred to as “anti-avoidance” legislation.

Here is a post I wrote with more details about this: [Is your Corporation Really Tax Free? Flag 2: Residence][1]

This is really important for digital nomads to consider:

  1. Where they are a resident?

  2. Does that jurisdiction have CFC or anti-avoidance laws?
    3a. If NOT then perhaps an offshore company would be a good fit.
    3b. If YES then perhaps setting up a company in that jurisdiction is better.

  3. Are you american?
    3a. If YES - the above does not apply as americans are subject to tax on a worldwide basis.
    3b. If NO - this could apply, talk to an accountant in your jurisdiction.

This is very simplistic and not tax advice, but can provide a framework to think about these things. Hope this is useful!

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Great clarification Edmund. CFC rules are often overlooked. I pointed this out in my AMA many times. What’s your take on the case where people have no residence, but incorporate somewhere. Usually the DTAs between your home country and the place of incorporation fall back to your citizenship.

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@manu So in such a case, your citizenship permitting, it is better to not incorporate at all?

This is exactly what I found out – after creating an HK company. That company doesn’t have to pay taxes (on all revenue made outside of Hong Kong) but you’ll personally get taxed when you pay yourself. It’s not the solution that I was looking for.

But you will be more protected against bankruptcy, lawsuits and personal taxes, as long as you don’t take out too much of that cash right now. You could consider it your pension fund and it is the asset you are building.

The idea is then to obtain a tax residency in a country where you won’t be taxed a huge amount of the money you want to take out of that HK company. Depending on your current situation, this process will be harder or easier and it might even involve giving up your current nationality, if you have a more drastic approach.

Howdy! Yes, most likely doing it on my own… oh, I have to write at least 70 characters… haha.

Oh whoops I thought that was in response to my response. I’m a little new here. :smiley:

Hi Munly_Leong,

Would love to find out how you got on. Any update on the application, and whether the review went ok?

I haven’t gone out yet though I’m still looking to do it ASAP. Building some location independent income streams before I head out first though so that a remote job is another option and not a necessity for living. Curious to see if anyone else has gone out yet though?

As much as I’d like to go out there asap as soon as I can via work income immediately, I’m trying to be a little smarter about it