Provided by Dow Jones May 22, 2021 3:06 PM UTC As an American, for instance, if you can prove tax residence in another country, you're eligible for several meaningful tax breaks. Proof generally means meeting the "physical presence test," or living outside the U.S. for at least 330 days in a 12-month period. If you meet the test, this is what you gain: Those are meaningful tax breaks that can improve your standard of living or allow you to ramp up your retirement savings by reducing what the IRS demands from your global income. Locally, Panama operates a territorial tax system. That means you must report all income to Panama, but income you earn outside the country is not taxed. Again, that can be advantageous to those who want to amplify their lifestyle or ramp up contributions to their nest egg.