FREE eBook (225 pages):”Panama Your Best Value for Offshore Living” by Richard Burkart Click to download: Ebook1018
Your Best Value for Vacationing and Offshore Living/Retirement
In January 2013, Kathleen Peddicord, Editor and Publisher of “Live and Invest Overseas” chose Coronado Panama as her #1 choice for living/retiring offshore in the world. Kathleen has been in the “offshore living” business longer than anyone and now approaching 30 years. International Living picked Panama as their #2 choice for 2013 without identifying a specific location within Panama.
The New York Times chose Panama as their #1 “best place to visit in 2012″. With the new International Rio Hato Airport expected to open in late 2013, the pace of development for Coronado should increase dramatically. For the last decade, Panama has received a barrage of praise from the international press as the “tropical paradise” in terms of weather, a low cost of living, sensible (or no) taxes, friendly people, a laid back “manana” life style, plus a very entrepreneurial business environment if this is your thing.
Panama was one of the fastest growing economies in the world for 2012 at 11.6%; it has grown much faster than China for the past 5 years. At current growth rates, Panama is expected to have the highest per capita income in all of Central and South America within 3 years. Only Chile, Argentina and Uruguay are currently slightly ahead of Panama in per capita income terms.
In Panama you can retire and enjoy life without the typical cash flow problems. As of 2012, the cost of living here is about 40% of a similar lifestyle back in North America or in Europe. Imagine what that fact alone might do in terms of your long-term retirement saving targets! Forget the great weather, the low taxes and the excellent banking system. They are just the gravy.
Or you can easily obtain residency as a young professional and start up your new enterprise in this dynamic and highly pro-business country.
Plan to visit us “Las Bougainvilleas” in spectacular Coronado Panama at Playa Serena. Book early because our high season (December to March) availability is virtually booked by April/May.
Why stay at “Las Bougainvilleas”
- Wonderful weather year around. No snow. No hurricanes.
- A cost of living about 40% of the same lifestyle in Canada or the USA.
- Excellent medical care (at about 33% of the cost) at first class hospitals (including a John’s Hopkins Hospital and San Fernando Hospital) with English speaking doctors. Both of these hospitals are “5 star Joint Commission Certified” which is the highest international rating available.
- ANYONE can obtain low cost, adequate, health insurance with NO AGE RESTRICTIONS.
- Our policy (with San Fernando) has an initial two year pre-existing condition clause, a 30% co-pay clause and a $25,000 annual limit which is more than adequate for 99% of conditions.
- Permanent residency in Panama is available under at least 5 quite different programs and new ones are being added on a frequent basis. Check out the new Executive Decree 343 from May 2012. Panama needs skilled labor and is begging talented professionals to relocate.
- The Panamanian economy grew by 10.6% in 2012. Unemployment is virtually zero at about 4%. There are 60,000 unemployed people in Panama with about 120,000 job openings.
- Restaurants cost about 50% less than similar restaurants in North America.
- There are friendly people everywhere with many expats from North America and Europe.
- In the crime and personal safety category, “victimization rates” per 100,000 in Panama are considerably lower than in North America although homicide rates are higher. For example, Canada has victimization rates 12 times higher than Panama.
- Excellent entrepreneurial and small business opportunities exist if you are so inclined. Many young entrepreneurs are giving Panama a very careful look. The welcome mat is out.
- Panama has low personal and corporate rates compared to North America and Europe on money/profits earned inside Panama. Generally taxes on money earned offshore are zero.
- Panama does NOT tax you on your worldwide income.
- Panama has one of the largest international banking centers in the world and is no longer on the “tax haven” list.
- Panama uses the American dollar. There are no restrictions of cash transfers.
- With the new “third lock” of the Panama Canal the future of Panama remains very bright.
- Although property and housing prices have risen substantially over the past 5 years, this is still a good time to purchase a house or condominium on the Panamanian Pacific Coast.
- A “high end” house will cost you about $120 per square foot inside Coronado. A 10,000 square foot lot can be purchased as of mid 2013 for about $60,000 to $120,000. Your municipal taxes could be as low as zero for 15 years depending on overall property value.
- Coronado offers a great variety of shopping in 5 shopping centers.
Panama Enjoys High Ratings
During the past decade Panama has been consistently selected as “the best offshore country in which to live/retire” by International Living. In 2011, “Coronado” (Panama) was selected as the third top choice after Ecuador and Mexico and just ahead of Punta del Este Uruguay (which is a “ghost town” for about 9 months of the year). Ecuador ranked very high primarily because of a very low cost of living. Italy and France were also very high on the list but very difficult residency conditions, exorbitant taxes on global income, tricky medical care insurance, and a high cost of living should give pause except for short visits and multimillionaires. Europe remains in an economic swoon as of December 2012 with perhaps a 5-6 year recovery period still ahead according to various experts.
The Panama Tax Advantage
Panama has a “territorial tax policy” meaning that it does NOT tax your global income. Income derived from sources outside of Panama is typically “tax free”.
As an American citizen living in Panama, your first almost $90,000 of active regular salary or business income is also tax free for IRS purposes but you must live outside the USA for at least 330 days in a single calendar year. All of your other investment income and other “passive income” is still subject to American taxes. As an American citizen, global income must be reported to the IRS on an annual basis unless you choose to renunciate your American citizenship which could have other tax consequences.
As a Canadian citizen and for most Europeans, your non-Panamanian income is typically tax free without limit if you have permanent residency here and/or live outside your own country for more than 183 days in a calendar year.
The Cost of Living in Panama
One can live at the same standard in Panama on about 40% of what you would spend in North America. If one is rather careful it is possible to enjoy the same standard of living on about one-third of “up-north” costs. As of early 2013 my wife and I are able to live comfortably on about $2,000 per month without debts and with frequent restaurant outings and some vacation travel annually.
The Panama Canal
The $5.25 billion “Third Lock” canal project approved in October 2006 is still on schedule for a late 2014 or early 2015 completion. This new lock will accommodate cargo ships carrying 8000+ shipping containers. The World Bank funded a significant portion of the construction costs. Panama has the second largest container transport hub in the world with major new expansion recently approved for Colon.
Four of the five major global transoceanic fiber optic companies run their lines through the Panama Canal making Panama an excellent choice for a major eCommerce internet business. Standard home ADSL internet service is available at 7 meg for about $35/month (2013) when combined with cable TV and telephone service.
Banking in Panama
Opening a simple bank account in Panama is not simple like in North America. Banks are very methodical and check out every detail of your application. The Panamanian banking system is highly sophisticated and scrupulously applies the “know your customer” guidelines to the hilt. Panama has been removed from the OECD “black list” and complies with international standards for transparency. Tax evaders beware!
Crime and Personal Safety in Panama
Homicide rates per 100,000 are much higher in Panama (19) than in the USA (6) or Canada (2) however, they remain highly concentrated in several highly defined “red zones” in Panama City and Colon. Panama is unfortunately located between cocaine producing Colombia (and now Peru and Bolivia) and cocaine consuming North America.
The vast majority of homicides are committed males in the 16 to 27 age group between the hours of 9 PM and 3 AM. Typically these people are engaged in some illegal activity such as drugs, money lending or prostitution in a “red zone”.
More importantly, “victimization rates” per 100,000 (e.g. rape, burglary, kidnappings, home invasions, assault etc) in Panama are dramatically LOWER than in either Canada (which is 12 times higher) or the USA (about 7 times higher).
As an expat/tourist you could become a “target of opportunity” and you should take the same precautions, particularly at night, as you would in any major North American city. No flashy jewelry, no large wads of cash, no bragging about how rich you are, and keep a low profile when you are not in your comfort zone.
New Johns’ Hopkins Hospital
A state-of-the-art “Johns’ Hopkins” Hospital (called the Hospital Punto Pacifico) opened in downtown Panama City in 2006. This medical facility was their first “off-shore” franchise. This hospital chain, as you probably know, ranks #1 in the USA.
There are two, 5 star Joint Commission certified hospitals in Panama including the Hospital Punto Pacifico and Hospital San Fernando. This is the highest international certification available for hospitals and relatively few American hospitals have this certification.
My wife and I have an excellent health insurance policy with the San Fernando Hospital. They even have a first class clinic about 2 miles from our home in Coronado. The total annual cost for the two of us is about $1800. We have a 30% co-pay, no pre-conditions after 2 years and no age limit for application. The annual expense threshold is $25,000 but has yet to be exceeded by any member according the Administrator.
There are also at least 4 other high quality hospitals in Panama City affiliated generally with a large American hospital chain. A triple heart bypass costs $15,000 to $20,000 in Panama City compared to about $125,000 to $150,000 in the USA or Canada (without insurance).
The Panama City Skyline
The Panama City skyline looks like New York “downtown” but architecturally more attractive. Panama City boasts at least six times the number of high rises of either Montreal or Miami with more than 300 significant commercial or residential “skyscrapers” (and rising rapidly) in a concentrated downtown area. There are several towers with more than 100 floors.
Construction, incidentally, remains the number one employment sector although tourism will probably overtake it shortly. The new upscale Trump Tower, for example, employed 2500 workers on site for several years. It is now completed and open for business. It offers the largest casino in Latin America not to mention very very high end shopping!
Easy Panama Residency Conditions
Panama has some of the best residency conditions in the world for people wishing to retire or start a new business. Under a new Executive decree, you only have to maintain a bank deposit USD$5000 plus $2000 per dependent. If you own property and/or a Panamanian business that requires your presence in panama you will meet the financial conditions. There will still need a medical check and a clean police record but unless you are a convicted felon these are relatively easy conditions.
If you purchase a house for $300,000 you can gain residency as a “financially solvent” person. There are other several residency options including setting up a business, investing in a teak reforestation project ($80K), and investing sufficient money in a bank to provide the required pension income of $1000 per month.
The pensionado visa is the easiest. The total legal costs for a couple to become “pensionados” are generally in the range of $2500 to $3000. You have to show a $1000/month pension income. This is a one-time expense and residency is forever with no restrictions on time spent in Panama. There may be a new rule which cancels your pensionado residency following an absence of two years from Panama.