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Working and living as a Freelancer in Panama

Simon Köhler
Freelance PHP Backend-Developer and Expert for TYPO3 Open Source CMS
・4 min read

Since I'm new here, I'm using this post to share a bit about my 8-year career as a TYPO3 freelancer. And about how I came from Germany to Panama about 5 years ago.

Freelancing in Germany sucks!

As many surely know, Germany is one of the countries with high economic performance and quality. But there are also downsides. The worst is the tax burden, which I personally estimate at around 50% of total profits.

As a self-employed person, you are also subject to numerous compulsory memberships in associations or even broadcasting companies. Yes, you have to pay a monthly amount for that, because theoretically you can receive public television with your internet connection. And you have to pay twice: once for your private household and once for your company.

I'm not even going to start talking about all the laws that make things even more difficult for entrepreneurs in Germany. Let's move on to Panama!

Why Panama?

The most asked question I always hear is: Why did you go to Panama?

Well, the main reasons why I was looking for alternatives in the first place are described above. Panama made me especially curious because of the completely tax-free foreign income.

I have always been very fond of traveling and after visiting a few other countries, I also flew to Panama for a few weeks. Here, I immediately liked it very much, because I also love the contrast with nature.

So I decided to sell EVERYTHING in Germany and to rent and work in Panama for 1 year with the money. This 1 year became 5 years so far, and I am now completely emigrated, with ID, language and company.

Whaaat, you pay no taxes at all?

Of course, there are taxes in Panama. But in fact, a company from Panama that sells a programming service or similar service to a company in the USA or Europe does not have to pay any taxes in Panama.

This means as a freelancer with clients in Europe, minus bank transfer costs, I can keep almost 100% of my income. That is a big difference to my home country Germany. As an added advantage, the dollar is currently quite below the euro, and I always get more out in USD.

The average tax rate for products and services in Panama is 10%.

What else besides the tax benefits, does Panama have to offer?

Life in Panama is less complicated when you have adjusted to it. Many things that are familiar from the "first world" do not exist here at all, such as population registration systems or vehicle taxes. Gradually, many things are being introduced here, but everything goes very slowly and comfortably.

The nature is stunning, there is much more space for few people, and family and neighborhood are still very important things here. I kind of like that. Anyway, from my point of view, you have a much better quality of life here as a freelancer. Healthy food, nice weather year-round, and less bureaucracy.

Are there also disadvantages?

The biggest problems when living here long-term as an online freelancer: power outages, internet problems or just noise.

There is no infrastructure in Panama like in the USA or Europe. Of course you can get electricity and internet everywhere, but the supply is not stable. That also has to do with the weather conditions, but also the material and the way things are done here are reasons for that.

The locals are also much louder than most foreigners. It's just in their culture to party, and enjoy life. You can't blame them, you just have to live with the fact that your neighbor is playing music at 3am. Or even sometimes in the afternoon when you just have a Skype meeting.

BUT: I am of course well prepared after 5 years here. For the power outage here you have a generator or batteries, for the water a separate tank, and for the Internet always a replacement smartphone with satellite reception.

The time difference can also be disadvantageous. Depending on where your customers come from.

What has changed in the business after the move to Panama?

The time difference of about 6 hours to most of my clients, makes it sometimes difficult to show up for meetings. But often I can do jobs "overnight" and get an advantage.

At first, I naively thought: I can simply earn twice as much money doing the same amount of work as before in my country.

Unfortunately, that wasn't the case, but it was okay. Here in Panama, I had to learn all kinds of things first. I had to completely learn how to live here. This has cost money and time, and honestly, I'm at a point now where I've partially adopted the laid-back lifestyle as well.

It is not about making money primarily, but about a nice life without much stress and best health. I can have less clients and projects because I don't have a big infrastructure around my small business. It just fits perfectly to my needs here. No stress, but 100% commitment for clients and projects.

Laid back! Tranquilo!

Look at this

Here are some photos of my life here in Panama:

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