The single biggest financial decision-driver for retirees and remote workers choosing between the two countries. The systems are structurally different, not slightly different.
| Panama | Colombia | |
|---|---|---|
| Tax system | Territorial. Only Panama-source income is taxed. Foreign pensions, foreign investment income, and foreign rental income are not taxed. | Worldwide income for residents (>183 days/yr triggers tax residency). |
| Residency trigger | Tax residency is largely a status decision tied to your immigration status; presence alone is not the trigger. | >183 days physical presence in a calendar year OR center-of-vital-interests test. |
| Income tax rate (residents) | 0% on the first $11,000 USD/yr, 15% to $50,000, 25% above. Foreign-source income excluded entirely. | Progressive 0% to 39% (2026). 19% kicks in around 90M COP/yr (~$22K USD); top bracket starts around 4B COP/yr. |
| Capital gains | 10% on Panama-source capital gains. Foreign-source capital gains not taxed. | 10% on most capital gains. Some preferential rates for shares of Colombian-listed companies. |
| Dividends from foreign companies | Not taxed. | Taxed as ordinary income (subject to credit for foreign tax paid in many cases). |
| Property tax | Recently reformed. New construction often qualifies for 20-year exemption; older inventory has limited exemptions. | Predial (annual property tax) assessed by municipality, varies 0.5%-1.6% of cadastral value, often lower than market value. |
| VAT (sales tax) | ITBMS 7% standard rate. | IVA 19% standard rate, lower rates on some essentials. |
| Wealth/net worth tax | None. | Yes, on net worth above ~3B COP (~$740K USD) for residents. |
| US-tax-treaty status | No US-Panama tax treaty. FATCA reporting applies. | No US-Colombia tax treaty. FATCA reporting applies. |