Moving from France to Panama swaps a top combined burden of roughly 49% on income, 30% on portfolio gains and dividends (PFU plus CEHR), 1.5% IFI on real estate above €1.3M, and up to 60% on inheritance for a clean 0% on every cross-border line under Panama’s territorial regime. The catch is that France treats Panama unlike almost any other relocation destination: as of the most recent arrêté updating the list of États et territoires non coopératifs (ETNC, article 238-0 A CGI), Panama remains a designated non-cooperative jurisdiction for French tax purposes, which materially changes how the article 167 bis CGI exit tax behaves and triggers a special 75% withholding regime under article 244 bis B on certain French-source gains realised by Panamanian residents. The 2011 France–Panama double tax convention is technically in force, but the ETNC overlay neutralises much of its practical usefulness. This guide walks through the article 4 B residency tests, the 167 bis mechanics in their harshest non-EEA / blacklist form, the Panamanian Friendly Nations Visa side, and the 9–14 month sequence that survives DGFiP audit.
The Tax Delta at a Glance
| France (current) | Panama (after move) | |
|---|---|---|
| Personal income tax | 0% to 45% progressive (barème IR) | 0% on foreign-source income; 0–25% on Panama-source only |
| Contribution exceptionnelle sur les hauts revenus (CEHR) | 3% to 4% above €250K / €500K of revenu fiscal de référence | 0% |
| Capital gains / dividends | 30% Prélèvement Forfaitaire Unique (12.8% IR + 17.2% CSG/CRDS) | 0% on foreign capital gains; 10% on Panama-source securities/real estate |
| Wealth tax (real estate only — IFI) | 0.5% to 1.5% above €1.3M of worldwide property | 0% (IFI continues on retained French real estate after departure) |
| Inheritance / gift tax | 5%–60% (45% top direct line, 60% non-relatives) | 0% |
| Worldwide vs territorial | Worldwide for residents under article 4 A CGI | Strictly territorial — only Panama-source income taxed |
| Effective rate (typical entrepreneur) | ~49% top marginal IR + CEHR; 30% on dividends/CGT | 0% on foreign income; no day-count requirement |
The Panama column applies in full only after both legs are in place: cessation of French residence under article 4 B CGI and establishment of Panamanian residency under the Friendly Nations or Qualified Investor regime. Until the cessation is documented, the Direction Générale des Finances Publiques (DGFiP) continues to tax you on worldwide income — and any French-source flows you retain may be hit with the punitive ETNC withholdings described below.
Step-by-Step Move
Step 1: Confirm you can legally cease French tax residency under article 4 B CGI
French tax residency is decided by article 4 B of the Code général des impôts. Meeting any one of four alternative tests makes you French resident on worldwide income:
- Foyer — your habitual place of dwelling and that of your family (spouse and minor children). The Conseil d’État has consistently held the foyer to follow the family: a spouse and children continuing in Paris keep France your foyer even with zero personal days.
- Lieu de séjour principal — the country where you spend the most days, applied when foyer is inconclusive. There is no statutory 183-day threshold; 4 to 6 months is enough if no other country has more.
- Activité professionnelle principale — where your principal professional activity is carried out, judged by time and revenue.
- Centre des intérêts économiques — where your principal investments, business management, and source of income sit.
There is no quantified day-count formula equivalent to the UK SRT. The DGFiP applies a faisceau d’indices. The biggest practical break point for France-to-Panama movers is the foyer rule: Panama imposes no minimum stay to keep residency, so it is tempting to leave the family in France while the principal moves to Panama City for tax purposes. That arrangement fails article 4 B on day one.
Mechanical sequence to establish a clean break: terminate the French principal lease (or sell the residence, or convert to an arm’s-length 12+ month tenancy to a non-family party), enrol the children in a Panamanian or international school in Clayton or Punta Pacífica, file the avis de départ with the Centre des Finances Publiques on form 2042 marked “départ à l’étranger” with a Panama address, close the Plan d’Épargne en Actions (closed de jure on departure), move French bank accounts to a non-resident profile, and physically relocate. Without a clean foyer break, every article 167 bis manoeuvre below is moot — France never lost taxing rights to begin with.
Step 2: Plan around article 167 bis CGI — and the ETNC overlay
France’s exit tax under article 167 bis CGI is the dominant single cost for founders and investors leaving France. The trigger conditions are unchanged regardless of destination:
- French tax resident for at least 6 of the 10 years preceding departure, and
- On the date of departure, holdings of either shareholdings worth more than €800,000 in aggregate, or a 50%+ stake in the droits aux bénéfices sociaux of any single company.
If either threshold is met, the day French residency ceases the unrealised gains on those qualifying shareholdings are deemed realised. The deemed gain is taxed at the PFU rate of 30% (12.8% IR + 17.2% social charges — CSG, CRDS, prélèvement de solidarité), uplifted by CEHR 3–4% if total revenu fiscal de référence exceeds €250,000 (single) / €500,000 (couple). Top-bracket exiters typically face ~32–34% on the deemed gain.
The deferral architecture, however, is where Panama materially differs from a UAE or Cypriot move:
- EU/EEA moves get automatic interest-free deferral with no security required.
- Non-EU/EEA moves to a state with which France has both an information-exchange agreement and an administrative-recovery assistance treaty can defer subject to posting a sûreté (typically a bank guarantee or a pledge of the shares).
- Moves to an ETNC-listed jurisdiction — and Panama remains on the French ETNC list under the most recent arrêté fixing the article 238-0 A CGI list — face the harshest treatment. The French tax administration’s published doctrine (BOI-RPPM-PVBMI-50) excludes ETNC destinations from the ordinary deferral mechanism; the exit tax is in principle payable up-front in cash, with deferral conditioned on demonstrating that the move is for genuine non-tax reasons and on posting a heavier sûreté.
Practical mitigation strategies that work specifically on the France-to-Panama corridor:
- Stay under the €800,000 / 50% thresholds. A founder under both can leave France with no exit-tax exposure on portfolio shareholdings at all. Pre-departure dilution, gifts to family ahead of departure (subject to the 6-year donation lookback), or partial sales can drop you under the radar.
- Sequence through an EU/EEA waystation. Many France-to-Panama movers physically relocate first to Cyprus, Portugal or Malta — securing automatic 167 bis deferral with no sûreté — and only later move on to Panama once the deferral is in place. This requires careful structuring under the abuse-of-law doctrine (article L64 LPF).
- Consider an asset reorganisation before departure. Founders frequently roll qualifying shareholdings into a French holding and then arrange post-departure governance such that the holding company itself remains French-tax-resident (avoiding the deemed disposal at the personal level while accepting French corporate tax on the holding’s income).
- The 15-year extinguishment under article 167 bis VII bis still applies in principle — if you do not actually dispose of the deferred shares within 15 years of departure, the deferred exit tax extinguishes — but the cash-up-front rule for ETNC moves means many Panama-bound founders never get the deferral in the first place.
Step 3: Establish Panamanian tax residency
Panama is one of the cleanest residency regimes in the Americas to establish, with the major caveat that an immigration card is not automatically a tax-residency certificate. The two main routes for French nationals:
- Friendly Nations Visa. France is on Panama’s friendly-nations list. Qualifying requires (a) USD 200,000 in Panamanian real estate in your own name, (b) a 3-year USD 200,000 fixed-term deposit, or (c) a Panamanian employment contract approved by the Ministry of Labour. Provisional residency is granted for 2 years and converts automatically to permanent status on renewal.
- Qualified Investor Visa. USD 300,000 in real estate, USD 500,000 in shares listed on the Panama Stock Exchange, or USD 750,000 fixed-term deposit. Issued as immediate permanent residency, often within ~30 days.
The full Panama-side mechanics, document apostille requirements, and comparison with the Pensionado route are in Tax-Free Residency in Panama.
The Panamanian Tax Residency Certificate is the document the DGFiP will demand to recognise your residency under article 4 of the France-Panama treaty. It is issued by the Dirección General de Ingresos (DGI) on case-by-case substance review — typically requiring a registered Panamanian lease or owned property, utility bills in your name, days of presence, and a Panamanian bank account. Apply for it for the same Gregorian tax year you wish to be recognised as Panama-resident.
Step 4: Document the break and use the France-Panama treaty tie-breaker
The double tax convention between France and Panama, signed 30 June 2011 and in force since 2012, is the legal instrument through which dual-residency disputes are resolved. Article 4 of the convention contains the standard OECD cascade:
- Permanent home — if available in only one state, that state wins.
- Centre of vital interests — closest personal and economic ties.
- Habitual abode — where you actually spend time.
- Nationality.
- Mutual agreement procedure.
For most genuine moves, the permanent home test is decisive at step 1: terminate the French lease or convert to arm’s-length rental, register a Panamanian property or long-term lease in your name, and the home is exclusively in Panama. Where a French résidence secondaire is retained, the analysis falls to centre of vital interests, where the test depends on family location, business activity, banking, and social ties.
Build a contemporaneous evidence file: avis de départ with the new address, lease termination or sale contract for the French residence, EDF / Engie / Orange contract closures, résiliation of carte Vitale (Sécurité sociale) with attestation, school deregistrations, French bank accounts moved to non-resident profile, brokerage account closed off the PEA. On the Panama side: cédula, registered tenancy or Public Registry property title, DGI tax-residency certificate, Panamanian bank statements, utility bills, school enrolments. The DGFiP routinely opens audits 2–3 years after departure of HNW exiters, especially on ETNC-corridor moves; the strength of this file decides the outcome.
Step 5: First-year compliance — and the article 244 bis B trap
In the year of departure you file a final déclaration des revenus (formulaire 2042 with annex 2042-NR) marked départ à l’étranger: worldwide income for the period of French residency (1 January to departure date), French-source income only thereafter. Article 167 bis is filed on formulaire 2074-ETD (and 2074-ETSL for any annual deferral monitoring), with the deferral election explicitly requested and the sûreté arrangement evidenced.
After departure, four trailing nexus issues continue:
- IFI on French real estate. If you retain French real property and your French real-estate net worth exceeds €1.3M, the IFI continues annually post-departure on French-situated real estate. A Paris pied-à-terre or a Provence house remains within scope.
- Article 244 bis B — the 75% rate. Capital gains realised by a non-resident on a substantial holding (25%+) in a French company are subject to French income tax. Where the seller is resident in an ETNC, that rate is uplifted from the standard 12.8% to 75% under article 244 bis B CGI. Panama-resident former French nationals selling French SAS / SARL stakes face this rate unless the arrêté is amended, the holding is restructured before departure, or the disposal can be timed to a window when Panama is off the list.
- Withholding on French-source dividends, interest and royalties. Standard French domestic withholding is 12.8% on dividends and up to 25% on interest. Where the recipient is in an ETNC, a punitive 75% withholding applies under article 187 CGI on most French-source passive flows. The 2011 France-Panama treaty is meant to reduce this, but its operation is constrained while Panama remains ETNC-listed.
- CSG/CRDS / prélèvement de solidarité. Unlike EEA-resident former French nationals, who can claim the reduced 7.5% prélèvement de solidarité on French rental income, Panama-resident former French nationals pay the full 17.2% social charges on residual French-source flows.
Panamanian compliance is light by comparison. There is no requirement to file a Panamanian return for foreign-source income. Local Panama-source income (a salary, rental income on Panamanian property, profits of a local business) is taxed progressively at 0–25%. Permanent residency itself only requires you to visit Panama at least once every two years.
Cost & Timeline
| Phase | Cost (USD) | Time |
|---|---|---|
| French tax planning + article 167 bis modelling | $8,000–$25,000 | 2–6 months |
| Article 167 bis exit-tax assessment (founders only) | Up to ~32–34% × deemed gain | Filed with departure return |
| Sûreté / bank guarantee (heightened on ETNC moves) | 1–2% / yr of deferred amount | Held until disposal or 15 yrs |
| Final déclaration des revenus + 2074-ETD | $1,500–$5,000 | Filed by mid-May of following year |
| Panama Friendly Nations Visa (real estate or deposit route) | USD 200,000 + $7,000–$12,000 fees | 4–8 months |
| Panama Qualified Investor Visa (immediate permanent) | USD 300,000+ + $10,000 fees | 30–60 days |
| Move + setup (Panama lease, banking, cédula) | $3,000–$10,000 | 1–2 months |
| Panama tax residency certificate (DGI) | $1,500–$3,000 | First-year substance build |
| IFI monitoring (if French real estate retained) | $2,000–$6,000 / year | Ongoing |
| Total year-1 effective cost (Friendly Nations, no 167 bis) | USD 215,000–250,000 | 9–14 months |
The dominant cost line for taxpayers in scope is almost always the article 167 bis charge plus the heavier-than-usual sûreté on the ETNC corridor. For a founder with €5M of accrued gain on shareholdings worth €8M at departure, the deemed-disposal bill is roughly €5M × ~32% ≈ €1.6M, with a sûreté typically equal to the full liability.
Treaty Considerations
The France-Panama double tax convention of 30 June 2011 is in force in 2026 and provides the article 4 tie-breaker, the residual OECD allocation rules, and a framework for exchange of information. Two structural caveats limit its practical reach:
First, France’s ETNC designation overrides several treaty benefits at the domestic level. Article 244 bis B’s 75% rate on French-source capital gains, article 187 CGI’s 75% withholding on most passive flows, and the loss of CSG reduction all apply by reference to ETNC residency, not treaty residency. Treaty negotiation has not produced a clause explicitly disapplying the ETNC overlay.
Second, administrative-recovery cooperation is patchy in practice. The treaty contains an exchange-of-information article, but the practical record is weaker than France’s relationships with EU/EEA partners or the UAE (where a fuller assistance-in-recovery framework supports article 167 bis deferral). The DGFiP’s published doctrine treats Panama as a destination of heightened scrutiny, which is what produces the cash-up-front exit-tax posture in the first place.
If Panama is removed from the ETNC list during the deferral period, the punitive provisions cease to apply prospectively for taxpayers who relocate after the delisting arrêté. Founders who can wait for a delisting cycle sometimes do.
Common Mistakes
- Leaving the family at the lycée international while you “live” in Panama City. Article 4 B foyer treats the family’s principal home as yours — minor children at school in Paris keep you French resident even with zero personal presence in France.
- Assuming the exit tax can be deferred on standard non-EEA terms. Panama’s ETNC status moves you out of the ordinary 167 bis deferral track. Cash-up-front is the default rather than the exception.
- Selling French SAS / SARL shares from Panama without restructuring. Article 244 bis B’s 75% rate applies to gains on substantial holdings (25%+) realised by ETNC residents. Restructure ownership pre-departure or relocate to a non-ETNC jurisdiction first.
- Keeping French-source dividend flows after departure. Article 187 CGI imposes a 75% withholding on most French-source passive income paid to ETNC residents — meaning even a residual French dividend stream becomes punitively taxed.
- Skipping the DGI tax-residency certificate. A Panamanian cédula is an immigration document, not a tax-residency one. Without a DGI certificate built on real substance — lease, utilities, days, banking — the DGFiP can argue you never validly became Panamanian resident under article 4 of the treaty.
- Failing to close the PEA / PEA-PME affirmatively. Both close de jure on the day French residency ceases, with the 5-year tax preference lost retroactively if held under five years. The taxpayer must close them affirmatively to avoid retrospective assessment.
FAQ
Will I still have to file a French tax return after moving to Panama?
For the year of departure — yes, a final déclaration des revenus (formulaire 2042 plus 2042-NR) covering worldwide income up to the departure date and French-source income thereafter, plus the 2074-ETD for any article 167 bis exit-tax election. After that, only if you retain French-source income (French real estate, French-source dividends, French director’s fees), filed on form 2042-NR. The annual 2074-ETSL deferral monitoring continues until the 15-year extinguishment or actual disposal.
How much is the article 167 bis exit tax in practice on a France-to-Panama move?
For taxpayers in scope (French resident 6 of last 10 years and either €800K+ portfolio holdings or 50%+ stake), the deemed gain is taxed at PFU 30% plus CEHR 3–4% — ~32–34% of unrealised gain at departure. On the Panama corridor, the practical hurdle is that ordinary deferral may not be available because of Panama’s ETNC status, and the cash payment may be required on departure unless a heavier sûreté is accepted by the DGFiP.
Why is Panama treated more harshly than the UAE or Cyprus on the French exit?
France maintains a domestic États et territoires non coopératifs list (article 238-0 A CGI) that triggers a series of punitive provisions — 75% rate under article 244 bis B on substantial-holding gains, 75% withholding under article 187 CGI on passive flows, and tighter 167 bis deferral conditions. Panama appears on the list under the most recent arrêté; the UAE, Cyprus, Portugal and most other low-tax destinations do not.
Can I keep my French SAS shares, bank accounts, and Paris apartment?
French bank accounts can be retained under non-resident profile. PEA / PEA-PME wrappers must be closed. SAS / SARL shares above the article 167 bis thresholds trigger the exit tax and the heightened sûreté regime. A retained Paris apartment that remains “available” can re-establish foyer if the family uses it — convert to an arm’s-length 12+ month tenancy (not to family) before departure. IFI continues annually on French real estate above €1.3M.
How long does the full move take?
Realistic timeline 9–14 months from first planning meeting to issued DGI tax-residency certificate. The critical path is article 167 bis structuring (sûreté, valuation report) plus the Friendly Nations Visa property purchase or fixed-term deposit. The Qualified Investor Visa compresses the Panama side to ~30–60 days.
Does France still have a treaty with Panama?
Yes — the 2011 convention remains in force in 2026. It provides the article 4 tie-breaker and the residual OECD allocation rules, but France’s domestic ETNC overlay disapplies several treaty benefits in practice. Treaty access is necessary but not sufficient for a clean France-to-Panama exit.
Next Step
For the full destination-side breakdown, see Tax-Free Residency in Panama. For the broader exit framework across all major origin countries, see How to Legally Exit a High-Tax Country. For the EU/EEA waystation alternative that avoids the ETNC overlay on day one, compare France to Portugal (IFICI regime, automatic 167 bis deferral); for the GCC route with active treaty cooperation, compare France to UAE.
Book a free consultation — we specialize in France-to-Panama relocations and ETNC-corridor 167 bis structuring specifically.
Last updated: 2026-04-27
Sources:
– Bulletin Officiel des Finances Publiques — BOI-RPPM-PVBMI-50 (article 167 bis CGI) (https://bofip.impots.gouv.fr)
– Code général des impôts, articles 4 A, 4 B, 167 bis, 187, 238-0 A, 244 bis B (https://www.legifrance.gouv.fr)
– DGFiP — Convention fiscale France-Panama du 30 juin 2011 (https://www.impots.gouv.fr/international-particulier/conventions-internationales)
– Arrêté fixant la liste des États et territoires non coopératifs (article 238-0 A CGI) — most recent update (https://www.legifrance.gouv.fr)
– Panama Servicio Nacional de Migración — Friendly Nations Visa rules (https://www.migracion.gob.pa)
– Panama Dirección General de Ingresos (DGI) — territorial tax regime and TRC (https://dgi.mef.gob.pa)