Panama vs. Portugal: Which one is better for Italians?

Both Panama and Portugal have established themselves in recent years as top destinations for Italian citizens looking for an alternative tax residence. It's not just about paying less taxes, but about accessing a stable legal structure, quality of life and immigration benefits that make it easier to start over without major legal or economic complications.

Panama: Legal Flexibility and Tax Advantages

Panama offers what many Europeans are looking for: ease of establishing the tax residence without forcing you to spend 183 days in the country, and a territorial tax system, that is, it only taxes income generated within the country. This means that if you have income from abroad as a freelancer, investment or property in Italy, Panama doesn't tax them.

In addition, the country has a very attractive program for citizens of friendly countries (such as Italy), called Friendly Nations Visa, which simplifies the procedures for establishing yourself legally and accessing permanent residence in a short time.

Therefore, if you are looking for How to obtain tax residence in Panama for Italians, the process is designed to be executed directly, with accessible requirements and with minimum tax obligations if your income is outside the country.

Portugal: European attractiveness with temporary tax incentives

Portugal is another famous destination among Italians, especially for its program of Non-Habitual Resident (RNH), which offers certain tax benefits for 10 years. This option has been attractive to many entrepreneurs, retirees and even remote workers, although it has been subject to several legislative adjustments in recent years.

Unlike Panama, in Portugal you do consider your tax residence if you spend more than 183 days a year in the country, and the global taxation It does apply to personal income, although with certain exemptions under the RNH.

• Advantages in Panama: land taxes, quick residencies, no compulsory stay
• Benefits in Portugal: access to the Schengen area, RNH incentives, European legal protection

So, Panama or Portugal as the best country for low taxes? It depends on your source of income, your physical residence plans and your personal tax strategy. Panama may be more useful if your income comes from abroad, while Portugal works better if you're looking to maintain your European environment with temporary tax benefits.

If you are considering establishing your tax residence outside of Italy, it is essential to know the migratory requirements and the different types of visas that Panama and Portugal offer to European citizens, especially in the face of legal changes planned for 2025.

Residence in Panama for Italians

Panama has simplified the process for Italians thanks to the bilateral treaty and the inclusion of Italy in its list of friendly countries. Thanks to this, Italian citizens can easily apply to the Friendly Nations Visa, which makes it possible to obtain a temporary residence with the possibility of becoming permanent.

Basic requirements for the Friendly Nations Panama Visa:

• Valid Italian passport
• Proof of financial solvency (usually through a local bank account with minimum funds)
• Work letter or constitution of a personal company (optional since 2021)
• Certificate of legal criminal record in Italy

After two years as a temporary resident, you can apply for permanent residence. Unlike other countries, strict stay in Panama is not required to maintain status, which facilitates the strategy of tax residence territorial for those who generate income from outside.

Visa and tax residence in Portugal for Italians

As citizens of the European Union, Italians do not need a visa to move to Portugal. However, if you plan to stay longer than 90 days, you will need to register your official residence within the country. This entails tax liabilities, as Portugal will consider you tax resident if you stay there more than 183 days a year or if you have a regular home in the country.

The most attractive option has been the program of Non-Habitual Resident (RNH), which allows reduced or exempt taxation for certain foreign sources of income for 10 years. However, this regime has recently been modified and may be restricted to certain professional profiles or new investors by 2025.

Some residency and visa options in Portugal:

• EU citizen registration (required for stays longer than 3 months)
• Golden Visa Portugal (increasingly limited option for large investments)
• D7 Visa (for retirees or people with demonstrable passive income)

Practical comparison between the two countries

While Panama makes it easier to live with simple requirements and with no real obligation to reside, Portugal requires formal registration and physical residence in the country. Therefore, if your priority is a flexible legal residence with no direct taxation on your income from Italy or abroad, Panama has clear advantages.

However, if you prefer to stay in the European Union and have income that can benefit from the RNH regime, Portugal is also an interesting option, although less convenient if your main objective is low taxes with minimal red tape.

One of the main reasons why many Italians consider moving to Panama or Portugal is the strong fiscal contrast that these countries offer compared to Italy. But which country offers the most attractive tax conditions in 2025? Here we explain the key differences.

Panama's Tax Regime: Territorial Simplicity

Panama stands out for its territorial income system. This means that only income generated within the country is subject to taxation. If as an Italian you earn money for activities in Europe or anywhere else in the world, that income would be exempt if you get the tax residency in Panama.

In addition, the following tax benefits make Panama especially attractive to Italians:

• There are no taxes on foreign dividends, interest or capital gains.
• There is no tax on inheritance or wealth (wealth).
• New residents can get additional benefits under the status of Friendly Nations Visa.

This approach makes many international consultants, freelancers or retirees choose Living in Panama as a legal strategy for tax optimization.

Portugal's tax regime: benefits under certain programs

Portugal, on the other hand, offers an attractive, although more complex, shipping regime. Until recently, the country offered the call Non-Habitual Resident (RNH) Regime, very popular among Europeans. However, since 2024 it has been restricted and most tax benefits are being phased out in 2025.

Currently, Portugal offers some temporary exemptions and benefits if you meet certain criteria as a researcher, entrepreneur, or highly qualified worker. But for many Italian citizens, this implies limited legal stability.

Another important point is that Portugal taxes global income, that is, as a tax resident you are obliged to declare all your worldwide income, even if there are agreements to avoid double taxation.

Panama or Portugal for low taxes: comparative conclusion

If your main objective is to reduce your tax burden legally and safely, in 2025 Panama offers greater tax advantages than Portugal. Territoriality and the absence of taxes on foreign income mean that obtaining tax residence in Panama for Italians be a simple and predictable strategy.

Portugal remains a valid option in certain scenarios, but it requires more complex tax planning and is subject to ongoing legislative changes. For Italians who want fiscal predictability and a minimum tax burden, Panama tops the list.

When evaluating destinations to relocate the tax residence, it's not just the tax regime that matters. El cost of living and quality of life are key factors for Italians considering residing abroad, especially when comparing Panama vs Portugal.

How much does it cost to live in Panama?

Living in Panama is, in general, more affordable than in Western Europe. The cost of living in Panama City depends on your lifestyle, but it's usually lower than in cities like Milan or Lisbon:

• Renting a 1-bedroom apartment in a central area: between 800 and 1,200 USD.
• Basic expenses (water, electricity, gas, internet): about 150 USD.
• Food and monthly market for one person: starting at 300 USD.

Another important point is that Panama uses the U.S. dollar as its currency, which facilitates international finance and reduces volatility.

In addition, getting a Friendly Nations Visa for Italians allows you to work, undertake or even invest with lower requirements than in much of Europe.

Is it expensive to move to Portugal?

Moving to Portugal it may be more expensive in cities like Lisbon or Porto, where prices have increased in the last decade:

El Visa cost in Portugal for citizens of Italy is usually affordable (between 75 and 150 EUR), but other expenses — such as renting housing or the cost of maintaining a residence — can be significant.

Portugal offers a good quality of life: public health system, security and cultural options; however, many newcomers face problems such as inflation in the housing market or prolonged bureaucratic delays.

Additional benefits for each country

Panama offers certain unique advantages for Europeans:

• Warm weather all year round.
• Business-friendly time zone with Europe and America.
• It is not necessary to be fluent in English or Spanish to initiate migratory processes.

Portugal, on the other hand, can be attractive for those who prefer a culturally closer environment, with a direct connection to the EU, and more familiar legal frameworks.

Which country provides the most value on a daily basis?

In terms of cost-benefit ratio for living, Panama usually offers more for less: affordable costs, less tax burden, and comfortable urban living. Portugal is ideal for those who prioritize living within the European Union while paying more taxes and facing greater bureaucracy.

Both countries have their strengths. But if you are looking for a practical, economic route with less fiscal intervention, Panama could be the ideal option. In the next section, we help you decide What is the best option for Italians in 2025.

Choosing between Panama and Portugal in 2025 will depend primarily on your personal, fiscal and lifestyle priorities. Both countries offer solid advantages to Italian citizens, but each one responds better to different types of profiles. Below, let's break down which option may be most appropriate for your goals.

If your main focus is tax optimization

For Italians who want to establish a tax residence outside of Italy and significantly reducing its tax burden, Panama remains a difficult option to overcome. Its territorial tax system implies that it is only taxed on income generated within Panama, which offers very attractive advantages for those who generate income abroad.

In addition, get the residence permit in Panama is a relatively quick process for citizens of the European Union thanks to the Friendly Nations Visa program. This option is ideal for:

• Digital entrepreneurs or remote workers.
• Pensioners with verifiable income from abroad.
• People with international investments or income that are not derived from local activities in Panama.

If you are looking for stability in the European Union with structured benefits

Residing in Portugal may be more convenient for Italians who wish to remain within the European community, either because of cultural closeness, language or ease of travel.

Although the NHR (Non-Habitual Resident) regime was reformed, it still offers tax benefits for a decade under certain conditions. Ideal for:

• High-income professionals in specific categories (for example, IT, engineering, healthcare).
• People who want to live in a stable European economy, with access to quality health services and public education.
• Italians who plan to eventually return to the EU or maintain close ties with Italy.

Final comparison: Panama vs Portugal for Italians in 2025

Both countries continue to attract those seeking tax advantages outside Italy, but their approaches are clearly different. Panama offers more attractive conditions for international profiles, while Portugal is more suitable for those who do not want to stray from the European framework.

Consider the key factors before deciding:

1. Taxes: Panama wins in territorial taxation. Portugal is still viable but requires more planning.
2. Migration process: Faster and easier in Panama with the Friendly Nations Visa.
3. Costs: Living in Panama may be more affordable depending on the city. Portugal offers better European infrastructure.
4. Lifestyle: Choose Panama if you prefer a dynamic, tropical environment. Portugal if you value European history and temperate climates.

In short, if your priority in 2025 is Tax reduction and legal flexibility as an Italian citizen, Panama can offer you a more powerful option at the fiscal and migratory levels. But if you value more a European environment with institutional stability and access to a community market, Portugal remains a safe option.