Thread: Tax Implications of Renting Your Property in Panama

By Gonzalo de la Guardia Jr. for Panama-Guide.com - So, you have a property in Panama you have decided to rent it out and start earning some income from your investment. After some searching you find a good tenant, sign the contract and start receiving a nice monthly check, life is good! But what about Panamanian taxes? To answer the previous question, even if you are not a resident, any income you realize is subject to income taxes in Panama because it is earned inside of the country. Most likely the tenant is using his rent payment as a deductable expense. When they present their income statement eventually the tax authorities (DGI) will come knocking on your door because they have detected the income. (more)


Even If you are not presenting your tenant with receipts and that person or corporation is not using the payment as a deductible expense, it is your legal obligation to declare the income (aside from a few taxpayers excluded by law).


There are ways to legally limit or eliminate your tax burden and maximize your return. For example, if your property is under a corporation, you will be allowed to deduct expenses as the law stipulates, also, depending on the income amount the corporation may qualify for certain incentives. A Private Interest Foundation is also a structure that can be used limit your tax liabilities.


Remember, whether you declare your income and pay your taxes or not, you have the legal obligation to do so. For the tax authorities it could be difficult to detect your income if it is not being declared as a deductable expense by your tenant, never the less, if you are caught you will be subject to the sanctions detailed in the Laws.


The author is a lawyer. For more information contact Panama Relocation Attorneys at info@prapanama.com.

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Great, Very Nice information indeed, Please keep on sharing such Information with us

How much is the tax for rent, does anyone know? Trying to avoid taxes legally is a great idea, but if you don't declare it might mean a lot of trouble if you get caught. Last thing one needs is to end up in jail in a foreign country. It's bad enough at home, but in a foreign country it must be excruciating. Lots of movies come into my mind lol
Of course, at least this is not Mexico