September 10, 2015
by Bobby Casey
When considering the various options for internationalizing your life, the question of “where” is always at the top of that list.
However, “where” can have many variations in meaning, depending on your personal situation.
- Where should I live?
- Where should I establish foreign residency?
- Where should I spend my winters/summers/holidays?
- Where should I invest in real estate?
- Where should I do my personal banking?
- Where should I have my “home base”?
Here at Global Wealth Protection, we get a lot of people looking to internationalize their lives for many reasons, but with a myriad of choices in front if you, sometimes it feels like you are at a buffet with all your favorite foods.
We consider establishing foreign residency to be one of the most important first steps you can take. Even if you don’t plan to permanently leave the comfort of your suburban home, having that second residency can open up a lot of doors and provide previously unavailable options.
First and foremost is having a place to call home. For whatever reason, you may decide that it is time to pack up the suitcase and call it quits on your current home either permanently or just for an extended holiday.
Maybe you are sick of being afraid of the police in America and constantly living in fear. Maybe you no longer approved of the way your government spends YOUR tax dollars and you are looking for another home in a country that is less intrusive.
Maybe you are looking for warmer weather or a lower cost of living. Or maybe you are just looking for adventure and expanding you and your family’s personal horizons and life experiences.
Whatever reason you choose, it is best to have a place to call home. Even for you digital nomads out there, having a home base offers significant benefits.
In many cases, we consider Panama to be the most attractive permanent residency option available today.
For starters, Panama does not tax foreign source income. If you are British, Canadian or from one of the other commonwealth countries, Panama offers the benefit of giving you that much needed alternative residency allowing you to give up your home residency – but obtaining residency in a country that does not tax foreign earnings.
Put another way, give up your British or Canadian residency status when you obtain Panamanian residency, set up your business in an offshore jurisdiction like Anguilla and voila – you are living income tax free and don’t even need to file a tax report with any country!
If you are American, you may qualify for the Foreign Earned Income Exclusion (FEIE) and earn $100,800 tax free. When you add in the housing allowance and the possibility of eliminating your self employment tax, you can also live tax free or virtually tax free by using an offshore company in Anguilla.
To qualify for the FEIE, you must qualify under one of two requirements;
- Physical presence test – be out of the US 330 days in a 365 period
- Bonafide residency test – obtain foreign residency in another country (this allows you to be in the US up to 120 days per year)
By establishing residency in Panama, you can qualify under the bonafide residency test giving you the FEIE. Since Panama does not tax foreign source income, you have no tax obligation there.
If you operate your business through an offshore jurisdiction like Anguilla, you would owe no tax there as well and could possibly keep any income over the threshold amount – tax deferred.
Not as easy as for Brits and Canadians, but still very attractive.
Of course you can obtain residency in any number of countries that will accept you as a resident, so Panama is not your only option.
However, Panama is exceptionally attractive because their Friendly Nations Visa has made it very simple for citizens of one of the 48 listed countries to easily obtain permanent residency.
Most countries around the world require a minimum amount of time in the country to qualify for and maintain residency.
Panama however only requires that you visit the country once every 2 years.
Most countries have stringent requirements on the reason for obtaining residency. For example;
- Do you have a job offer there?
- Do you own a business there?
- Have you invested significant capital in the country?
- Do you own real estate there?
Under the Panama Friendly Nations Visa, there is a vague requirement for having “Professional or Financial” connection to Panama.
We have streamlined this process and you can easily qualify for this by doing 2 things;
- Deposit $5000 (+$2000 per dependent) in a Panamanian bank account
- Register a Panamanian IBC with you as shareholder and director
I know of no other country that makes it this easy to qualify AND does not require any minimum number of days per year in the country.
In order to qualify you must meet the above requirements, plus produce a clean criminal record report from your country of citizenship or residency for the previous 2 years, a clean health report (available by a Panamanian doctor) and your identity documentation.
Ultimately, having a foreign residency in Panama or any other country gives you options. Options on where you can easily live, do your banking, conduct business, work, own property and more.
Next week on September 17th at noon EST, we are hosting a live webinar for our GWP Insiders members to discuss the details of obtaining residency in Panama under the Friendly Nations Visa.
We will go through each step of the process, discuss the requirements, options and answer any questions. In addition, members are eligible for a huge discount if they want to obtain their permanent residence status in Panama.
It is a no risk membership and if you feel it is not for you, you have 30 days to cancel for a full refund. In the interim, you can get access 60+ articles, videos, podcasts and webinars, not to mention free one-on-one consultations.
Until next time, live well.