Comparing Panama And Colombia: Finding Your Expat Haven

How does up-and-comer Medellín, Colombia, rate versus long-standing number-one retire-overseas choice Panama City?

Here’s how I’d lay this out…

Panama

Panama Pros

World’s top offshore haven
Bona fide tax haven, taxing income on a jurisdictional basis
Uses U.S. dollar, meaning no currency exchange risk
Specific countries visa program (which can mean a work permit)
Best infrastructure in Central America
Strong economy
Quality, affordable health care
Diverse lifestyle options, including Pacific and Caribbean coasts, islands, mountains, and Panama City
Top choice for entrepreneurs
Super accessible, with many direct flights daily to and from North America and Europe

Panama Cons

Hot and humid in Panama City and on coasts
Traffic congestion in Panama City
Poor service standards
Panama City not suitable for walking
Strong mañana attitude

Colombia

Colombia Pros

Top investment haven with enormous upside
Best health care in Latin America at a cost that can be 90% less than U.S. costs for comparable care
Strong economy
Welcoming locals
First-world, even luxury lifestyle options
Working hard to compete for foreign attention
Easiest and cheapest residency option in the world today; pensioner option requires income of only US$800 per month at today’s exchange rate… and you can process the application yourself
Many lifestyle options on offer, including sophisticated, Euro-chic city living, Caribbean beach, world-class colonial towns, rural landscapes, and the finca lifestyle
South America rather than Central America… and there is a difference

Colombia Cons

Necessary to learn some Spanish
Less existing expat infrastructure
Not a low-tax jurisdiction
Air pollution in Medellín and Bogotá

In the context of the issues most important to the would-be investor or retiree, here’s how these two countries stack up against each other…

1. Cost Of Living

Remember the exchange rate. Right now, thanks to the U.S. dollar’s continued strength versus the Colombian peso, Colombia can be the greater bargain by far.

2. Cost Of Real Estate

Again, thanks to the exchange rate, real estate in Colombia can be 60%+ cheaper, apples to apples.

Also note that, while it’s possible to own luxury in both Medellín and Panama City, Panama City luxury now comes at a much higher cost.

3. Climate

Way more comfortable in Medellín than Panama City, for example, but both countries offer many different climates.

4. Quality Of Life

What are you looking for? Both countries offer city, coastal, mountain, and rural choices.

5. Ease Of Residency

Colombia is perhaps the world’s easiest place to establish residency right now. No lawyer is required, you don’t need to produce a background check, and we’ve known people to go through the process in one hour.

On the other hand, Panama’s residency process requires using an attorney and at least two trips to the country unless you’re actually living there after you submit your initial application (you get a temporary stamp in your passport upon submittal of your application).

6. Banking And Doing Business

Panama is the clear winner, thanks to:

Banking infrastructure
Lack of exchange controls
No currency risk
Much more English spoken
Available labor pool and possibility to acquire work permits for non-local labor

7. Infrastructure

A tie.

8. Taxes

Panama is the screaming champion on this score, a true tax haven, while Colombia qualifies as a high-tax jurisdiction, with, for example, a corporate tax rate as high as 35%.

However, if you’re a retiree making a move with retirement income, you probably don’t have to worry about this. For the retiree, a move to a new country should be a tax-neutral event (except for Roth IRA distributions which may be taxed in some countries).

9. Health Care

Top-quality, international-standard care is available in Panama City. Outside the capital, the standard of care in this country falls.

Eight of the top 35 hospitals in all Latin America are in Medellín. Other cities in Colombia have similarly top-standard facilities.

10. Ease Of Settling In

Panama City is a kind of halfway house for expats, a very easy and comfortable first step overseas. Medellín is an emerging expat destination, though more discovered and therefore easier to navigate as an expat or foreign retiree all the time.

Bottom line, though, Colombia is more challenging in this regard unless you speak Spanish.