Legal tax optimization levers: Panama, Andorra, Georgia, Portugal and Bahamas compared.
- Jul 31
- 7 min read
Summary
Introduction
Reducing your tax burden doesn't mean tax evasion, but rather organizing your residence and business activities within a perfectly legal and documented framework. This is the crucial difference between tax optimization and tax fraud, a line that the French tax authorities closely monitor. The subject therefore deserves a methodical approach rather than the simplistic explanations often found online.
We recently compared the expatriation of entrepreneurs to five jurisdictions . This article extends this analysis from a more operational perspective: what specific optimization strategies are available in Panama, Andorra, Georgia, Portugal, and the Bahamas? Each of these jurisdictions operates on a different logic, and the right choice depends primarily on your individual profile.
Here we review the legal mechanisms specific to each country, then the French obligations to anticipate. The aim is to provide you with a clear framework , without any magical promises. The rates mentioned are those stipulated by each state's public legislation; they are subject to change and should always be verified at the time of your project.
Legal tax optimization: what are we talking about?
Tax optimization involves using existing rules to legitimately reduce one's tax liability, without concealment or artificial arrangements. It is the opposite of tax evasion and fraud, which rely on lies or misrepresentation. In practice, a strategy is sound when it corresponds to a verifiable economic reality .
Three families of levers
There are three main levers to consider. The first concerns the tax residence of individuals , by actually transferring their home to a country with a lower tax rate. The second affects the location of business activity, through a company with real substance. The third optimizes the nature of income, for example by favoring dividends that are taxed at a lower rate.
These levers can be combined, but they only work if the whole structure is coherent. A company abroad whose management remains based in France will be reclassified without difficulty. Consistency between the place of residence, the place of decision-making, and the place of taxation forms the true foundation of a sustainable arrangement.
The role of structured support
A successful project begins with an honest assessment: the nature of your income, assets, family situation, and long-term goals. This initial framework determines the most suitable jurisdiction , rather than the other way around. At Coreway, personalized assessments are conducted upon request, with no standardized solutions.
Panama: Territorial taxation as a lever
Panama applies a strict territoriality principle: only income from Panamanian sources is taxed, while income from foreign sources is generally exempt from local taxation. For an entrepreneur whose clients are located outside the country, this mechanism provides a significant advantage, provided that the income-generating activity is actually located outside Panama.
The country also offers relatively accessible residency programs, including the popular scheme for citizens of "friendly" countries. However, obtaining residency is not enough: a credible physical presence must also be established for the transfer to be recognized by the French tax authorities. We detail these conditions on our page dedicated to tax optimization strategies in Panama .
Portugal: After the NHR, what levers for 2026?
The renowned Non-Habitual Resident (NHR) scheme has been closed to new arrivals : it has not accepted new registrations since 2024, with a transition period running until March 2025. Those already benefiting retain their rights until the end of their ten-year period, but the scheme is no longer an option for a project launched today.
The new IFICI (NHR 2.0) regime
Portugal replaced it with the IFICI, a tax incentive targeted at research, innovation, and highly skilled professions . It offers a flat rate of 20% on certain Portuguese business income for ten years, but it now excludes retirees and passive investors. Its scope is therefore much narrower than the former NHR.
For eligible individuals, Portugal remains attractive thanks to its quality of life and extensive network of tax treaties. For others, the standard tax rates, which are progressive up to 48%, must be considered. Eligibility analysis thus becomes the crucial turning point, a topic we address on our page about tax optimization strategies in Portugal .
Andorra: low income tax and regulated residency
The principality has a personal income tax capped at 10% , with the first tax bracket exempt, and a corporate tax also limited to 10%. The absence of a general wealth tax and inheritance tax further enhances the territory's appeal for long-term wealth management.
The trade-off lies in the strict residency requirements : a deposit, actual residence, and, for active residency, genuine involvement in an Andorran company. It's a demanding but transparent environment where substance is taken seriously. Our tax optimization strategies in Andorra detail the various available statuses.
Georgia: Territorial regime and small business status
Georgia combines two rarely found advantages. On the one hand, it applies a territorial principle for individuals: a resident's foreign-sourced income is generally exempt from local tax , with only Georgian income being taxed at 20%. On the other hand, it offers a favorable status for the self-employed.
The 1% Small Business status
This scheme allows eligible sole traders to be taxed at 1% on their revenue , up to a limit of 500,000 GEL per year, with the excess taxed at 3%. Simple to administer, it appeals to many freelancers and consultants, but it requires that the business actually be conducted from Georgia to withstand rigorous scrutiny.
The country's accessibility and the speed of establishment make it a frequent entry point, although this does not negate the need for a genuine on-the-ground presence . We elaborate on this point on our page dedicated to tax optimization strategies in Georgia .
Bahamas: Zero direct tax and residency by investment
The Bahamas does not levy income tax, capital gains tax , or inheritance tax for individuals. Its model relies on indirect taxation and property-related taxes, making it a preferred jurisdiction for established wealth seeking legal stability.
Permanent residency is primarily obtained through significant real estate investment , which requires substantial capital. The archipelago clearly targets high-net-worth individuals, for whom the focus is not on interest rates but on security and inheritance planning. Our page on tax optimization strategies in the Bahamas details the conditions.
Substance, CRS and securing the setups
No attractive rate can withstand a meaningless structure. The concept of economic substance is now central to audits: offices, staff, locally made decisions, and actual resources. A legal facade without tangible activity exposes the entity to reclassification, with potential penalties and adjustments.
Transparency in information exchange
Most of these jurisdictions participate in the automatic exchange of financial information (CRS standard). In practice, accounts held abroad are reported to the tax authorities of the country of tax residence. Opacity is therefore no longer a viable strategy: the only sustainable path is full and documented compliance.
Document each step
Leases, invoices, attendance records, proof of decisions: compiling a solid file is what makes all the difference when the authorities question you. It's better to prepare this documentation from the outset rather than having to reconstruct it under the pressure of an audit.
Exit tax and French bonds before departure
Leaving France isn't just a matter of boarding a plane. Holders of significant shareholdings may be subject to the exit tax , which aims to tax certain unrealized capital gains upon relocation. A deferral of payment often exists, but it is subject to specific conditions that must be understood beforehand.
In addition, there's the management of the year of departure, the question of residence as defined by agreements, and compliance with reporting obligations . The rule regarding days of presence, particularly the current threshold of 183 days, serves as a reference for assessing residency, but it's not the sole criterion. A poorly planned departure can cost far more than the intended savings.
Comparative table of the five jurisdictions
The table below summarizes the main principles of each jurisdiction. This is a general overview, to be refined according to your personal situation.
Jurisdiction | Tax logic | Main lever | Target profile |
Panama | Territorial | Foreign income exempt from tax | International Entrepreneur |
Portugal | Tax scale + IFICI | 20% targeted (qualified profiles) | Highly skilled talent |
Andorra | low IRPF | IRPF and IS capped at 10% | Heritage and leadership |
Georgia | Territorial | Small business status at 1% | Freelance and consultant |
Bahamas | Without direct tax | Zero income tax | Great heritage |
Testimonial: an independent consultant
“I was billing clients in several countries for my services and was looking for a simple and defensible framework. After a thorough assessment, we ruled out two options that seemed attractive on paper, due to a lack of sufficient substance in my case. I finally structured a real and documented setup , with a proper living and working space. Two years later, everything is in order and I sleep soundly.” — Anonymized testimonial from a consultant receiving support.
Frequently Asked Questions
Is tax optimization legal?
Yes, as long as it is based on existing rules and verifiable economic reality. It becomes illegal as soon as there is concealment, artificial arrangement or simulation intended to deceive the administration.
Is it enough to create a company abroad to stop paying taxes in France?
No. If you continue to manage the business from France or if your home remains there, the tax authorities may reclassify the situation. Actual residence and the substance of the business are decisive factors.
Is Portugal's NHR scheme still accessible?
Not for newcomers: it has been closed to registration since 2024. The IFICI scheme has replaced it, but it only targets certain highly qualified profiles.
Do these countries exchange information with France?
Most participate in the automatic exchange of financial data. Compliance and transparency are therefore essential; opacity is no longer a viable strategy.
Do I have to pay an exit tax when leaving France?
It depends on your assets and investments. Some taxpayers are subject to the exit tax on unrealized capital gains, with a possible deferral of payment under certain conditions.
How do I know which jurisdiction is right for me?
It depends on your income, assets, and lifestyle. A personalized study, conducted upon request, will help identify the most suitable and robust option.
Before making any decisions, it's wise to compare your project with residency, substance, and exit tax regulations. You can evaluate your optimization project with Coreway Consulting .
