Finance and economics mentoring
New Horizons Paraguay
Ticker tape by TradingView

Panama Company with Residency Drawbacks?

Status
Not open for further replies.
N

nethostler

New Member
Oct 15, 2019
27
0
161
I am a UK citizen and tax resident who's been a perpetual tourist for 2 years.

This year I'm looking to acquire Panamanian residency via the friendly nations visa, and tax residency by the 183 day rule.

As the residency program essentially requires the formation of a Panamanian company. I'm considering the use of the corporation for my new business venture.

However, from my research Panamanian corps appear to be difficult to acquire banking for, so my plan would be to start with an EMI and seek onshore banking in Panama (or perhaps elsewhere) once the company grows its reputation.

Business Activity
Affiliate marketing of digital services ( mostly financial and e-Comm, no gambling, adult content, pharmaceuticals etc)

Payment requirements:
Receive mainly USD and EUR, some GBP, AUD
Receive PayPal via business account (nice but not essential).

Customer location (merchants)
%30-$40 US, %30-%40 EU, %20 Canada, Australia and rest of world

Revenue
$0 its pre-launch

My wishlist :
1. "ease of operation" e.g minimal reporting requirements, red tape etc
2. Limited liability
3. Flexibility (The ability to close or migrate the company with ease)
4. Tax efficiency
...

I've looked into US LLC's but they seem overkill for my situation (few remote account opening options, complex tax code, high penalties, EIN wait times, ETOB, ECI etc) , and I'd rather a clean break up with HMRC than get into UK ltds or LLPs.

What are the potential advantages and disadvantages of the Panamanian set-up?
 
Panama is viewed poorly if it's just one piece of the puzzle. If you are‌ both resident in Panama (home address, utility bill, phone number, IP address, all in Panama),‍ have a company there, and a local bank account (personal and corporate), your overall risk⁠ profile goes down. You still suffer some from Panama's generally tarnished reputation, but it's usually⁤ better than Panama resident with EU company and EU bank account (if you can get⁣ one at all).
 
Why do you need‍ the panama (tax) residency? UK lets you become non tax resident without needing to prove⁠ another residency (as long as you fulfill the criteria).
 
That would be nice, but the requirement is for a personal account according to⁠ the lawyers I've spoken to.
I'd gladly︂ take the Panamanian set-up despite the reputational drawback. I'd rather spend my time growing the︃ business than chasing down banking in the EU.
I'd spend the 183+︆ days there anyway, the tax residency would be a bit of free insurance should I︇ need to prove my tax residency sometime in the future.

Thanks for the input all.︈ I'm going for the Panamanian corp + residency,
 
but won't you pay like 15% on income you make as the UBO of your‌ panama company as income tax if you are tax resident there? Personal tax there is‍ 15% on anything under 50 grand, and 25% on the money over that.

So you⁠ might not pay any corporate tax, but when you withdraw money from your panama bank,⁤ isn't that considered a dividend payment to yourself the UBO, and therefore you will incur⁣ the personal tax there?

I hope I'm wrong, let me know -- because I'm considering⁢ going with panama or UAE at this point to cover all bases at once.
 
That's a question I couldn't answer but I plan to get︁ in touch with a few local lawyers this week to determine the viability of this︂ set-up, I'll keep you posted.
 
I am on the same path, man. Discovering my⁠ options, but I am from Canada. Interesting what the lawyer says. Keep us posted. Thanks!⁤
 
Wouldn't there also be 25% corporate tax, if you⁠ manage and run the company from panama?
 
You pay tax when salary come from a panama⁠ sa corp.
However you can run most expense thru the corp anyway IF it earns⁤ purely from abroad you do not need to do acc.

Also you can pay yourself⁣ 12k salary year which is at the 0% tax rate and some above for showing⁢ your goodwill to panama which will hopefully grant you the passport down the road.

things might have changed by now. They changed quite a few things since 2018.
 
i want to know more about the panama method as well. Companies who help form‌ these panama corps via friendly visa are telling me that no, i would not be‍ required to pay any corporate tax, nor personal income tax at all with the panama⁠ set up. they also claim getting the merchant corporate bank account will be easy.

Panama sounds like you essentially get the full UAE treatment -- but much cheaper to form⁤ the company, and much cheaper annually to keep it in good standing -- but a⁣ less reputable jurisdiction -- however, you'll be visa resident there, so is it really considered⁢ a greyzone if you have a visa and resident status there, a personal bank and︀ corporate bank there, etc?

Maybe panama is like a cheaper better version of what UAE︁ offers frankly.

Thoughts?
 

Panama Has Its Share of Bureaucratic Problems​

Getting anything done at a government office here‌ requires patience and time. Don’t compare how things are done in the any other country‍ to Panama or you will be disappointed. Things are done slowly in Panama and they⁠ don’t move quicker by criticizing it.
 
yeah they did say i need to come for like a month to do it‌ all or something. But I dont really mind.

UAE and panama seem so comparable to‍ me.

both offer tax residency, both allow zero corporate and personal income tax it seems.⁠

both are open to travel right now -- in a world mostly locked down.

both seem to be able to get you personal and corporate banks accounts realistically.

Both give⁤ a visa long term that is easy to maintain with minimal time spent in the⁣ country -- panama you only need 1 day every 2 years.

UAE you need 1⁢ day every six months.

So which jurisdiction would you guys choose?

Panama only costs like︀ $600 per year to maintain the company in good standing i think.

UAE is like︁ 5000+ USD
 
Op do you consider to relocate to Panama? if not it's an interesting approach to‌ take 😉
 
You need to find⁠ an honest Panamanian lawyer and talk with them directly. Many Panamanian lawyers will have you⁤ form a corporation when you really do not need one (e.g., for holding title to⁣ property). Other attorneys will try to charge you large fees to close a corporation when⁢ all you need to do is stop paying the annual registration fees.

https://www.offshorelivingletter.com/panama-corporations-just-not-worth-anymore/

These (non-Panamanian)︀ guys, who advise U.S. expats, have a good reputation and this what they say:

https://onlinetaxman.com/americans-living-in-panama-us-tax-guide/
 
Its 0% on foreign sourced income according to the lawyer I spoke to.

Panama Corp‌ + Residency looks like a very attractive option if you're in the right position but‍ in my case,(pre-launch, $0 revenue) it's just premature optimization . So, revisiting it when it⁠ makes sense spares me a ton of overhead.

I'm looking at an IBC/LLC (insert no-fuss⁤ jurisdiction, any recommendations?) + EMI and staying in perpetual tourist mode for the foreseeable. Should⁣ my country of citizenship claim default taxing rights, I'll take care of that as and⁢ when.

Very grateful for all the responses in ITT though, I hope you all can︀ get a definitive answer WRT the corp and personal tax issues.

NB: The lawyer I︁ spoke to has heard that significant changes are on the horizon for the Friendly Nations︂ Visa and suggests applying asap to grandfathered by the current requirements. Maybe a sales trick,︃ but I thought it's worth mentioning as I've read similar reports elsewhere recently.
 
That is a possibility. The Immigration Department proposed⁤ the changes about five months ago, but ultimately declined. An email from October 19, 2020:⁣
 
Maybe you don't understand the definition on foreign source income. It means‍ when the income is generated outside Panama. If the corporation is run and controlled from⁠ Panama then the income is local sourced, even if clients are foreign.

However I don't⁤ know how this is handled in practice in Panama. But of course the lawyer selling⁣ you the setup will present it in the best way.
 
No, this is⁣ not correct. You can run a company from within Panama, and as long as all⁢ its income comes from outside the country, it is classed as foreign source income. (Completely︀ logically and this kind of business is strongly encouraged by government, banks etc as opposed︁ to pure offshore business)).

Banking and merchant accounts should not be a problem provided you︂ are genuinely establishing residence in Panama and planning to spend time there (renting/buying a home︃ etc). For the merchant account you will require an Aviso de Operaciones (local business license)︄ and the bank will probably want to visit your premises to check that the company︅ really has a physical presence - this is because they had a lot of problems︆ from Visa and Mastercard due to opening accounts for shell companies a few years ago.︇
 
Status
Not open for further replies.

JohnnyDoe.is is an uncensored discussion forum
focused on free speech,
independent thinking, and controversial ideas.
Everyone is responsible for their own words.

Quick Navigation

Forums

User Menu

Login
Community platform by JohnnyDoe © 2025 JohnnyDoe
Top Bottom