Plan B Expat

3 things founders ask about Panama for a second residency: USD economy with established international banking? Yes. Tax on foreign-sourced income? No (territorial system). Direct flights to Tel Aviv? Connections through Madrid, Frankfurt, or Miami. Tocumen airport links 90+ cities. For Israeli founders weighing logistics, the answer is cleaner than most assume.

@VanIstendaelD @Ale_PPathways My pleasure

@planbexpat @Ale_PPathways Thanks for the clear and informative response 👍🏻

Panama is introducing a 15% corporate tax to all companies who can't show proof of substance and operations in the country. So much for "Panama never changes rules" 🤷‍♂️

Good challenge but there is a distinction worth making. The substance proposal targets passive income specifically. Dividends, interest, royalties, capital gains. Not active business revenue from foreign clients. A company with real substance in Panama managing foreign client work is a different animal than a shell collecting passive distributions. The 15% is aimed at the shell collecting passive income with no real presence, not at the operator who actually runs a business from Panama serving foreign markets. Those are two completely different structures with two completely different tax outcomes.

@planbexpat @Ale_PPathways ''Foreign client, work physically done inside Panama, that is the grey area.'' this is what you are creating when getting substance in PA. so you are trading in the 15% proposed/when approved for whatever % they have for local business.

Correct. 100% Nominee directors alone do not create real substance. They act on instruction, hold no real decision-making power, and regulators know it. Real substance means actual management decisions made by real people physically present in Panama. Board meetings held locally, documented properly, with people who genuinely oversee operations. Nominees get you incorporated. They do not get you substance. Two completely different things.

@planbexpat @Ale_PPathways Yeah but if you have a real office and decisions are made in PA, you could argue that by then its is not foreign sourced income anymore. if the company works on PA soil it will be taxed in PA. BTW any idea how much i would cost to have real management and office setup?

Some foreign residents prefer to have an US LLC simply pay themselves as individuals to their Panama bank accounts thereby benefiting from the local tax territorial policy and will not use a Panama company as an operational vehicle to bypass any and all risk of taxation. Some of our clients have opted for this by keeping the company “non-operational”. Others wanted to conduct business in Panama and therefore opted for corporate tax burdens . To ensure clarity : The only scenario where it gets complicated is if you are physically performing services for Panamanian clients on Panamanian soil. That is local income. Everything else coming from abroad, whether to a personal account or a company account, stays untouched under territorial rules.

The source rule is where the work is performed, not where the client is. Foreign client, work done outside Panama, zero tax. Foreign client, work physically done inside Panama, that is the grey area. Historically Panama has not enforced this aggressively but the legal ambiguity exists. But I believe those days are over. Anyone structuring seriously needs to understand that distinction.

Fair point. And it cuts both ways. Substance strong enough to pass the test could flip how some income gets classified. The trick is qualifying without accidentally making your revenue Panama-sourced. Doable but needs to be designed from the start, not patched in later. Real substance costs: registered office with actual activity, $2,000 to $5,000 a year. Nominee directors on top of that. Annual registered agent fees $300 to $500. Annual compliance filings another $500 to $1,500. Full substance setup first year lands somewhere between $10,000 to $15,000 all in if office included in this range. Estimated figures. Side note for anyone following. Panama has no formal IBC statute like Belize or Nevis. What people call an IBC here is actually a Sociedad Anonima, the SA. Same concept, different name. Governed by Panama Corporation Law of 1927, one of the oldest corporate statutes still in active use anywhere. When someone opens a Panama company for residency or offshore structuring, an SA is almost always what they are getting. DM me if you want to run through your specific setup. Answer changes a lot based on what the SA is actually doing.

@adrianscottcom @Ale_PPathways Hilarious

@planbexpat @Ale_PPathways Not forced. Just bending over and simping.

Fair reading. Under the proposal, yes. A Panama IBC collecting passive distributions from a US LLC with no real substance in Panama could get caught. Current law? That flow is untouched. The proposal specifically targets non-qualified entities receiving foreign passive income. The fix is not complicated. Real management decisions made in Panama. Registered office with actual activity. You pass the substance test, you stay qualified. Frankly, this is how serious structures should have been built anyway. The shell era is over. Substance is the new moat.

@planbexpat @Ale_PPathways It depends on how you look at it. If you read ''Scope'' and ''Territoriality Principle'', it says that if a IBC in PA owns a USA LLC which generates income and distributes this to the IBC, this will be taxed. Agree?

@TheJerzWay Uncomfortably so

@planbexpat Time flies

Bank: "What's the purpose of this transfer?" Me: Sending my own money to my own account Bank: "But why" Me: Because I want to Bank: "Sounds suspicious, frozen" Me: 🧍

@NatteCavia @Ale_PPathways My pleasure I’m glad you called it out for fact checking as it keeps even myself on an even keel. And when I’m mistaken I’ll be first to take accountability

@planbexpat @Ale_PPathways Thanks man, much appreciated!

Here it is, clean copy: Everyone’s talking about millionaires and billionaires contemplating exit tax. Nobody’s talking about Marcus. Marcus is 34. Canadian. Graphic designer. Makes $3,200/month remote. Rents in Ottawa. No property. No stocks. No pension worth mentioning. RRSP with $8,000 in it. CRA’s departure tax had nothing to grab. Here’s what he actually did: January: Signed a US client retainer for $3,200/month. All foreign income. March: Flew to Panama City for two weeks. Liked it. Decided. May: Hired a lawyer. Formed a Panama company. Started the FNV application. July: Did not renew his Ottawa lease. Sold his furniture on Facebook Marketplace. Shipped two bags to Panama. Gave the rest to his brother. August: Cancelled Hydro Ottawa. Bell internet. Netflix Canada. Gym membership. Closed his Canadian bank accounts except one kept open briefly for transition. September: Landed in Panama. Furnished apartment in El Cangrejo. $950/month. He kept his RRSP open but stopped contributing. Knew withdrawals would face 25% withholding if he ever touched it. Left it alone for now. The following April: Filed his departure tax return. Declared his exit date. Converted remaining Canadian account to non-resident status. Filed T1161 showing total assets under $25,000. Departure tax assessed: $0. Nothing to deem disposed. Nothing to crystallize. Surrendered his OHIP card but it expires 212 days outside canada anyways - in theory at least. Converted his Ontario license to a Panamanian one after his first year of residency. That was the moment CRA officially let go. He now pays 0% on his foreign client income. Lives well on $2,800/month. Banks the rest. The exit tax debate is not about Marcus. But Panama is absolutely about Marcus. And there are a lot more Marcuses than there are millionaires and billionaires.

@NatteCavia @Ale_PPathways Sure. Two sources: KPMG Panama legal brief (March 2026): assets.kpmg.com/content/dam/kp… Casa Solution summary of the proposal: casasolution.com/panama-propose… The KPMG brief is the cleanest. Straight from their Panama office analyzing the MEF draft reform.

@planbexpat @Ale_PPathways Love to believe you, but do you have a source, like the proposal where that is stated ?

You’re not wrong on the sovereignty angle. That tension is real. Panama is essentially being forced to legislate by Brussels to get off their blacklist. The irony is the reform is narrow enough that the core territorial tax system stays intact. But yes, the direction of travel is uncomfortable for anyone who values jurisdictional independence.

@planbexpat @Ale_PPathways No, Panama is going to get screwed by the EU again, just like every time before. Regalando soberanía.

@Tablesalt13 the beaver's home is right there, he's protecting his place. No wonder he attacked - beaver's are usually much shyer than that so those people may have antagonized it prior to this video cut

@lawrencekingyo The 1% didn’t get lucky. They just made different decisions earlier, usually about where they live, how they earn, and whose rules they play by.

@lawrencekingyo Keeps chugging gems out

The secret to self-discipline is conditioning your mind to fear the lack of results more than the pain of trying to get them.

Panama Private Interest Foundations are a separate legal vehicle from corporations. They hold assets rather than conduct business, so the substance proposal targets them differently. As long as they don’t carry out commercial activities in Panama they pay no income tax. Foreign income remains untouched. The proposal is really aimed at multinational corporate structures gaming the territorial system, not private wealth vehicles. Worth watching as it develops though since substance rules do apply in some form.

@Ale_PPathways Is that also for the Panamanian trust/foundations?

@Island_girl_hk @teycirben @TheJerzWay History is pretty consistent on this pattern. Worth noting before you dismiss it.

@teycirben @TheJerzWay USSR wasn’t so bad 😂I lived there.zero taxes on inheritance. If you work you receive apt for free. If you don’t work, you don’t receive anything - no social money, no social apt. If you work you have many things for free - like hotel for free for your vacation

The European Commission just released a report on Exit Taxes. They're studying how to tax you for LEAVING. A passport won't save you. Residency won't save you. Only structure will. Here's what you need to know: 🧵