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I just want to throw out there that this is nice, but it's zero in Panama on foreign source income. The country uses the US dollar and is quite stable and moder

by eloff 5y ago

I just want to throw out there that this is nice, but it's zero in Panama on foreign source income. The country uses the US dollar and is quite stable and modern. I used to live there, and I want to go back to that tax system as soon as I can.

dimonomid 5y ago
Thanks for that info! Yeah taxes in Bulgaria are lower than the average, but not lowest for sure. Good to know about Panama. What about social security though?
- eloff 5y ago
  No social security to speak of. Health care is excellent and reasonably priced, so not too big a deal. Set aside some savings and get some basic insurance / critical illness insurance. No pension either, so plan for your own retirement. With what you save on taxes you can do that and take three months of awesome vacation a year anywhere you want and still save money over most countries.
  - dimonomid 5y ago
    So they literally don't take any tax for foreign income and don't require any social security payments? That's seriously awesome. Actually I specifically like it because, while I'm paying here those social security contributions for pension etc, I've no idea if I'm gonna be able to use them for the retirement, since I'm not a citizen, and not sure if I'm ever going to be one. By paying those I'm helping other people though, which is not a bad thing I guess. But I'd definitely prefer this to be more of a donation and less of a tax. Anyway, thanks again. You got me researching about Panama this evening.
    - eloff 5y ago
      Yeah, it's pretty awesome. Panama has its problems too mind you, and one really should learn Spanish if you're going to live there. But all of that seems small in comparison to the tax break that you get. You could spend the whole summer in Europe or North America if you wanted and it would be free, including food and entertainment, and you'd still have plenty left for a medical and retirement savings account for yourself.
JacobAldridge 5y ago
My understanding of “foreign sourced” is that it usually applies to things like pensions, dividends, rental income. If you’re working, the source of the income is where you do the work - not saying you can’t fly under the radar and not pay tax, and each country has its own specific nuances and laws so Panama may allow it, but if you’re living and working remotely in a territorial tax country then that’s “locally sourced income” unless you can find laws or rulings to the contrary. “The general rule for sourcing wages and personal services income is controlled by *where the service is performed*. The residence of the recipient of the service, the place of contracting, and the time and place of payment are irrelevant.” - https://www.irs.gov/pub/int_practice_units/ftc_c_10_02_05.pdf https://www.irs.gov/pub/int_practice_units/ftc_c_10_02_05.pd... (my emphasis)
- eloff 5y ago
  I'm pretty sure you're correct as far as the US is concerned. Panama is different though. Panama imposes no income, corporate, capital gains, or estate taxes on individuals or companies that only engage in business outside of the jurisdiction. No distinction is made between active business or passive income.

by eloff 5y ago

dimonomid 5y ago

Thanks for that info! Yeah taxes in Bulgaria are lower than the average, but not lowest for sure. Good to know about Panama. What about social security though?

eloff 5y ago
No social security to speak of. Health care is excellent and reasonably priced, so not too big a deal. Set aside some savings and get some basic insurance / critical illness insurance. No pension either, so plan for your own retirement. With what you save on taxes you can do that and take three months of awesome vacation a year anywhere you want and still save money over most countries.
- dimonomid 5y ago
  So they literally don't take any tax for foreign income and don't require any social security payments? That's seriously awesome. Actually I specifically like it because, while I'm paying here those social security contributions for pension etc, I've no idea if I'm gonna be able to use them for the retirement, since I'm not a citizen, and not sure if I'm ever going to be one. By paying those I'm helping other people though, which is not a bad thing I guess. But I'd definitely prefer this to be more of a donation and less of a tax. Anyway, thanks again. You got me researching about Panama this evening.
  - eloff 5y ago
    Yeah, it's pretty awesome. Panama has its problems too mind you, and one really should learn Spanish if you're going to live there. But all of that seems small in comparison to the tax break that you get. You could spend the whole summer in Europe or North America if you wanted and it would be free, including food and entertainment, and you'd still have plenty left for a medical and retirement savings account for yourself.

JacobAldridge 5y ago

My understanding of “foreign sourced” is that it usually applies to things like pensions, dividends, rental income. If you’re working, the source of the income is where you do the work - not saying you can’t fly under the radar and not pay tax, and each country has its own specific nuances and laws so Panama may allow it, but if you’re living and working remotely in a territorial tax country then that’s “locally sourced income” unless you can find laws or rulings to the contrary. “The general rule for sourcing wages and personal services income is controlled by *where the service is performed*. The residence of the recipient of the service, the place of contracting, and the time and place of payment are irrelevant.” - https://www.irs.gov/pub/int_practice_units/ftc_c_10_02_05.pdf https://www.irs.gov/pub/int_practice_units/ftc_c_10_02_05.pd... (my emphasis)

eloff 5y ago
I'm pretty sure you're correct as far as the US is concerned. Panama is different though. Panama imposes no income, corporate, capital gains, or estate taxes on individuals or companies that only engage in business outside of the jurisdiction. No distinction is made between active business or passive income.