Seems like this question was already answered by the whole Panama Papers thing… haha

But yes, Panama does have attractive tax schemes. Actually, much of Latin America has similar regulation. Countries like Malta also have attractive schemes to bring in new residents. I’m not an accountant or tax attorney so this isn’t professional advice but just general knowledge from living abroad for a long time.

As far as I understand it, most EU citizens can change their tax domicile after 180 days in a foreign country (and going through any process at home to change your country of residence). You might not necessarily have to get permanent residency in another country to pay taxes there or be considered a resident for tax purposes. It depends on your country of citizenship and immigration/tourist visa rules, how long you can stay on a passport in the destination country, etc.

Although it may seem too good to be true, some countries like Panama and Costa Rica explicitly don’t tax income that’s generated abroad or repatriated to the country from abroad, or it can depend on a lot of different factors such as where your customers are located. So in many countries there seem to be blatantly legal ways to significantly or completely lower one’s tax liability. Of course, if you’re American you still have to pay taxes on worldwide income and declare everything per the IRS website. But I have known British citizens for example who lived in Costa Rica and were paid to accounts in Panama and allegedly didn’t have to pay taxes anywhere.

The bottom line is to seek professional counsel in your country of citizenship and country of destination so that you can be covered on both sides. Never make personal financial decisions based on what you read in an online forum. Taxation is a very important topic that’s very individual to each person, and only you can make such determinations in collaboration with a tax advisor in each country you’re living or operating a business in. Anyone who can’t yet afford to hire an accountant or tax attorney may want to wait until s/he can before making such a big move. It will definitely cost less than making a mistake and paying fines in the future.

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.

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

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: https://boldanddetermined.com/hong-kong-business-guide/

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 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.

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

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.