Tax Benefits of Gold Investments in Panama

Tax Benefits of Having Your Precious Metal Investments in Panama

Portfolio and asset diversification is always a prudent investment decision, but relying solely on securities or “mom & pop” financial instruments aren’t always a great idea. There are plenty of other valuable commodities you can invest in, especially considering the inverse economic relationships between securities and commodities. Gold, Silver and Teak are some of the most stable commodities you can invest in, even if your local stock markets aren’t plummeting. Let’s discuss the tax benefits of having your gold investments in Panama.

Diversifying your financial portfolios is one thing, but a wise financial strategy also reduces your overall tax burden. This is why moving your precious metals to Panama could be the right move. Why would anyone want to go through cumbersome and immoral tax extortion payments, when it’s simpler to move your investments abroad legally and to make profits without worrying about state intervention? 

A lot of my clients have asked me what their investment options are, and a few others have come asking me for tax advice on their commodity investments, of course, the first words out of my mouth are always to speak to a top-quality CPA, the second, after they get the all-clear, is to look into moving some of their investments to Panama because it’s one of the most commodity friendly jurisdictions in the world.

I suppose it is also worth putting a caveat here, Americans are required to file their taxes based on their worldwide income, a lot of things in this article are speaking to Panamian regulations, not US law.

This article will attempt to identify why you should move your investments to Panama, and the possible ways you can avoid paying duties and taxes to reduce your overall tax burden, but once again, please speak to a qualified CPA who understands the international markets before taking action.

 

Why Invest In Precious Metals?

It’s really a no-brainer why anyone should invest in precious metals as part of their investment portfolios. Gold, silver, platinum and palladium are historically considered to be some of the most valuable commodities to possess. EY recently published an article assessing the state of global commodity markets pointed out that the total deal values in the markets rose by 55% in 2018. These trends are expected to hold steady over the next few years, pointing out an increase in the demand for precious metals and the robustness of the market itself.

Considering these trends, it’s safe to say that precious metal investments are some of the safest available across the spectrum of investment options. The question then becomes, how you can maximize your returns on precious metals transactions and where is the best place to invest them. 

 

Panama: The Perks Of A Free Trade Zone

Panama is one of the few countries in the world that can testify to the success of financial and economic mobility as a way towards economic growth. I, for one, would love to see more economic liberty and less state intervention that’s become the status quo over the past decade or so. Since 1948, when the Colón Free Trade Zone was established, Panama has become the center of much of the trade between the Americas and the rest of the world. This wouldn’t be possible if the state hadn’t repealed many of the near-extortion taxes and duties imposed prior to 1948. 

When the Panamanians later established the Panama-Pacifico Free Trade Zone, there was no better opportunity for businesses and entrepreneurs to enjoy tax benefits. The Panamanians have made globalization and mobility as their vehicle to economic prosperity, bringing in nearly $2.09 billion of FDI into the country every year. The reason for this is that Panama, and especially it’s free trade zones, have some of the lowest tax rates in the world. But what does this mean for the perpetual traveller? It gives you a great place to park your investments without having to worry about any additional taxes, and if you set things up right, potentially get a second passport from Panama. 

 

The Panamanian Tax System

Whether it’s individual taxation or corporate taxes, the Panamanian tax system is one of the friendliest in the world. They follow a “territorial tax system” which basically means if the income is sourced outside of Panama the government has no claim to it. The state doesn’t charge any capital duties, companies aren’t taxed for any foreign-derived revenue, they have a VAT of 7% (much lower than other countries) and there’s the huge list of tax treaties the country’s signed to make import/export easier. The tax rates relevant to your precious metal savings is often a capital gains taxes, where the Panamanian government doesn’t charge any capital gains tax. This means that any profits you make on your precious metal sales will be your own with the state having no claim to what is yours.

 

What Does This Mean For Your Precious Metals Holdings?

Central America has become one of the major centers of precious metal trading in the world. Back in 2018, the volumes of exported goods increased by 353% from Central America, with most of it ending up in North America—including the United States and Canada. Panama, as one of the leading economic players in Central American, stands at the very center of all commodities trading in the region.

If you were to buy gold in Panama, because of the negligible capital duties and relatively lower value-added taxes (Scandinavia has an average VAT of 26%), you can make a fair bit of money. Anyone looking to raise the valuations of their portfolios should definitely invest in the Panamanian precious metals markets, making greater profits and avoiding taxes. Assuming you were investing in the US, you’d have to pay up to 28% on your capital gainsin Panama, there is no capital gains tax. 

 

Where Should You Buy And Hold Your Gold? 

There are gold depositories in Panama where you can hold your precious metals. The Fort Kobbe Depository, for example, is one of the safest precious metals holding services in Panama. They run a state-of-the-art holding service, where they store your precious metals including jewelry and gold coins keeping them safe from exorbitant tax rates. I have had the privilege to visit their facilities myself and was extremely impressed with the entire operation.  

I hope you enjoyed this article on Tax Benefits of Having Your Precious Metal Investments in Panama. There is certainly lots to think about when deciding where to store your gold or precious metals.  Here are a few articles that might help you in your decision making:

Shifting Precious Metal Investments To Panama – The Tax Benefits

Storing Your Precious Metals and What you Should Consider Before Picking a Storage Vault

Documentation Requirements Crossing Borders With Gold & Cash

 

Conclusion

There are very few investments that are as safe as investing in precious metals. With the continuing growth in transaction values of precious metals, and with the advantageous location of Panama in Central America, you can’t go wrong storing your gold there. At the end of the day, as a perpetual traveller or someone looking to preserve your wealth better, you must expend all your power to make sure that you sustain your financial well being. Moving your gold investments and/or converting your assets into precious metal holdings in Panama is one of the best ways to make that happen. 

 

About The Author

Mikkel Thorup - Headshot - CircleMikkel Thorup is the host of The Expat Money Show podcast and Director of Content at Escape Artist. He is also the author of #1 Best-Selling book Expat Secrets on Amazon. He has spent nearly 20 years in continual travel around the world, visiting more than 100 countries including Colombia, North Korea, Zimbabwe, and Iran. His goal is to help people just like you to generate additional streams of income, eliminate your tax bill, and take advantage of offshore structures so you can travel the world freely and never have to worry about money again. For more information on his legal (but creative) tax strategies for Expats watch this free video.

 

 

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