Thread: Financial income sourced abroad? is it taxed?

Should I come live there, would my financial income be taxed?
I mean income coming from dividends, stock and foreign exchange trading which I often do on a weekly basis. While living there I wanted to know if I would need to declare such income or is it considered sourced abroad?
In case taxes on it are due, how much is it?
My broker is in USA.

The problem comes out as soon as I have to bring money on-shore from my USA account (buying stuff, cars, apartments etc...), then the country where I reside may claim taxes in such income, I wonder if Panama would claim them.

Thanks.

I can help you with your questions as others, but in order to do so, I need to know were are you a citizen of, and were are you a legal resident right now, and were you are a legal resident right now for income tax purposes........

I ask this coz they are all diffrent, and it depends on what countries you answer the above questions with.

Thank

Panama does not tax interest on local deposits. Neither does it tax any foreign source income in the form of capital gains, dividends or other proceeds from abroad.

Panama banks pay a handsome ~3.75 % interest on savings accounts and ~5% for 1 year CDs. All tax free income regardless if resident or foreigner.

The USA does not tax it either as long as you have filed a W8-BEN with the broker.

Originally Posted by Marzullo

Should I come live there, would my financial income be taxed?
I mean income coming from dividends, stock and foreign exchange trading which I often do on a weekly basis. While living there I wanted to know if I would need to declare such income or is it considered sourced abroad?
In case taxes on it are due, how much is it?
My broker is in USA.

1. Buying stuff - here is the fun part. I use a Miami PO BOX so sometimes I have to pay FL sales tax. If you contact the US seller and show them proof that your address in FL is really an export address they will usually refund the tax. This is very unpredictable. Better to buy from sellers in the other 47 continental states.

Everything under $50 is tax-free to import into Panama. The tax above that range from 5-15 %.

2. Cars generally have 15 % import duty and a 5 % sales tax when you import them. The process is "a near death experience" unless you pay a lot of money for the paperwork. The % values depend A LOT on how connected your import agent is.

3. Apartments are always taxes locally as far as I know, i.e. in the country where you have it.

Best wishes, Ed
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Originally Posted by Marzullo

The problem comes out as soon as I have to bring money on-shore from my USA account (buying stuff, cars, apartments etc...), then the country where I reside may claim taxes in such income, I wonder if Panama would claim them.

I am an Italian citizen and Swiss resident for tax purposes.
What do you mean for 1 year CDs ? (saving accounts without withdraw duty for 1 year?)
Thanks for advices.

CD means certificate of deposit. Starts from 30 days to as long as 5 years.The longer time you invest ,the more interest they give. 1 year may give you 5% and for 5 years they might give you 6%. You can't withdraw your money before the 1 year or 5 years is expired.

Panama will not tax your offshore income, or if you bring money into the country, but with new anti money laudering laws, they will be asking more questions in the future, but you will be fine in the end.....

However, you must make sure you are not a legal resident for tax purposes in other countries, and if those countries tax your offshore income....

You should try yo be a perment legal resident in Panama, and not any were else.... I not sure but do the Swiss tax offshore ioncome? Lets say from your brokerage income from the USA? Or do the swiss just tax onshore income? I don't think they do, but you should double check.

if the swiss do not tax offshore income you are safe there, just make sure Italy cannot tax you, and you do not stay there much if at all, and on top of that you owe nothing in italy like bank accounts, property, or have a spouse or kids living there. Another words severe all ties in Italy.

Also, you must be carefull with the USA as well, since they might tax your income in the USA, if you meet there residency requirenments... Namely being in the USA, more than 6 months in any one year, or being in the USA, on average of 4 months a year over a three year period....

You must also to remember to file a W8-BEN with your broker in the USA, so they know you are not a resident there for tax puropses, or they might use a 30% with holding tax on you, you must also renew your W8-BEN every three years by law, or they might still charge you a 30% with holding tax after the 3 year grace period ends, so be carefull there.

Lots to think about really....

But Panama will not tax your offshore income from cd's, stock trading, or forex trading... They also don't tax bank intrest either from Panama banks, but they do tax gains you invest in Panama stock companies through the Panama stock exchange, but that would not apply in your case....

So in your case you are safe, and Panama would not tax money you bring into the country...

In the future you should try to be a resident in Panama, that way you would be really safe, in case the Swiss or italians ever change there tax laws some how, you could tell them you are now a Panama resident for tax purposes, and set that up...

To read more about similar topics, on trading etc read this post I made as well as the links in this post, you might find some of it helpfull as well...

http://www.panamaforum.com/business-...ck-market.html (Investing in the stock market)

Hope this answers all your questions, PM me if you need more info....

Darryl