Do Expats Pay Taxes in Panama, Costa Rica and Nicaragua?

Last reviewed October 27, 2026

All three countries are generally described as territorial tax systems: they tax income earned inside the country and generally do not tax foreign-source income of residents. That does not remove your obligations at home. For example, US citizens remain subject to US tax on worldwide income.

How the three compare

Panama: territorial; reported progressive income-tax rates up to 25% on local income above US$50,000; sales tax (ITBMS) of 7%. Property tax varies and lower-value properties may be exempt for a period.
Costa Rica: primarily territorial; progressive rates of 10% to 25% on local income; VAT of 13%; municipal property tax of about 0.25% of registered value, with closing costs and a capital gains tax on resale.
Nicaragua: reported to tax Nicaraguan-source income only, with a 15% capital gains tax and 15% dividend withholding for residents.

What territorial tax does not do

It does not stop your country of citizenship from taxing you. US citizens must still file, and many credits and exclusions have limits.
It does not apply if you earn money inside the country, for example from local rentals or a local business.
Rules change, so confirm current rates with an accountant who understands both countries.

Why this matters for Veritas Villages residents

Many residents choose Veritas Villages to be able to live with lower costs and more independence. Taxes are one of several factors, along with property rights, healthcare and community. Our freedom guide looks at all of them. We are not tax advisors; please talk to a qualified professional.

Frequently asked questions

Does Panama tax foreign income?

Panama is generally described as a territorial system that taxes income earned in Panama. Foreign-source income of residents is generally not taxed there.

Does Costa Rica tax foreign income?

Costa Rica is described as primarily territorial, so foreign income is generally not taxed, but rules can change and some exceptions exist.

Do US citizens pay US taxes if they live in Panama, Costa Rica or Nicaragua?

Yes. US citizens remain subject to US federal tax on worldwide income regardless of where they live, subject to credits and exclusions. Talk to a US expat tax professional.

Related guides

Thinking about living in a Veritas Village? Our team can answer your questions about communities, homes and the buying process.

Sources

This guide is general information compiled from the public sources above. Immigration, tax and property rules change often and vary with your situation. It is not legal or tax advice; consult a qualified attorney or accountant before you act.