South and Central America offer a diverse array of countries where you can enjoy tax-free or low-tax living. From tropical paradises to culturally rich cities, these nations provide second residence options to suit various lifestyles and investment goals. Here are five of the best options in this vibrant region.
1. Costa Rica – The Biodiversity Hub with Territorial Taxation
Overview: Costa Rica is famous for its lush jungles, sandy beaches, and eco-friendly lifestyle. It operates on a territorial tax system, taxing only local income.
Requirements: To obtain residency, show proof of a monthly income of USD 2,500 or invest USD 60,000 in a Costa Rican bank. Despite its bureaucracy, the country is ideal for those who enjoy outdoor adventures and tropical living.
Why Costa Rica: A peaceful country with a well-established expatriate community, perfect for retirees and nature enthusiasts.
2. Guatemala – Affordable Residence in the Heart of Central America
Overview: Guatemala is one of the few Central American countries that operate under a territorial tax system, providing tax-free status for foreign-earned income.
Requirements: Obtain permanent residence by showing proof of a USD 1,000 monthly income. Alternatively, invest USD 100,000 to gain temporary residence with a pathway to citizenship after five years of full-time residence.
Benefits: A vibrant culture and affordable living costs make Guatemala an appealing destination for those seeking an adventure-packed lifestyle.
3. Panama – A Friendly Hub for Global Entrepreneurs
Overview: Panama is known for its robust banking sector and Friendly Nations Visa program, offering one of the fastest pathways to permanent residency.
Requirements: Show professional or economic ties, such as employment, real estate ownership valued at USD 200,000, or a fixed-term deposit in a national bank.
Ideal For: Entrepreneurs and retirees looking for an international hub with favorable tax policies and a growing economy.
4. Nicaragua – Affordable Second Residence in the Heart of Central America
Overview: Nicaragua offers a territorial tax system and is often seen as the "next Costa Rica" due to its affordability and similar natural beauty.
Requirements: Obtain residence by investing USD 30,000 in a local company or showing proof of monthly income of USD 600. Retirees and pensioners can also apply for residency, but they need to live in Nicaragua for at least six months a year to maintain the permit.
Why Nicaragua: It provides a mix of affordable living, vibrant culture, and stunning landscapes, making it an excellent choice for those looking for a tropical second residence with low taxes.
5. Paraguay – A Hidden Gem for Tax-Free Living
Overview: Paraguay is well-known for its simple and affordable second-passport program, offering one of the quickest paths to citizenship in South America.
Requirements: Secure permanent residence with a mere USD 4,500 bank deposit or invest at least USD 70,000 in a local business. Paraguay’s territorial tax system means only local income is taxed, with foreign income left untouched.
Advantages: With a low cost of living and a stable economy, Paraguay is a hidden gem for those who want to establish a tax-free lifestyle in South America.
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