A Comprehensive Guide to Long-term Residency in Panama
Capital: Panama City
Population: 4,337,768 (2022, 127th)
Ethic Group: 65.0% Mestizo (mixed White and Indigenous), 12.3% Indigenous, 9.2% Black, 6.8% Mulatto (mixed White and Black), 6.7% White
Area: 75,417 km2 (116th)
Offical Language: Spanish
Currency: Balboa(equal to USD) & USD
GDP per Captial: $42,738 (2023)
Human Development Index: 0.827 (57th)
(This map is sourced from Nations Online Project)
Country Profile:
Panama is located at the southernmost tip of Central America, serving as a bridge connecting North and South America.
Economically, the Panama Canal is a crucial waterway linking the Pacific and Atlantic Oceans, and the Colón Free Trade Zone is the second-largest free trade zone in the world. Canal revenue is a significant financial source for the Panamanian government.
Panama is an important international banking and financial center. Its banking system attracts a substantial amount of international capital due to its confidentiality and stability.
Overall, Panama is known for its strategic location, thriving service industry, and multiculturalism. The main challenges the country faces include social inequality, infrastructure development, environmental protection, and coping with global economic fluctuations.
Visa And Immigration System:
Residency By Investment:
As one of the most open economies and wealthiest countries in Central America, Panama’s immigration system offers a wide variety of investment visa options.
In fact, currently, you only need to deposit $5,000 in a Panamanian bank and register a local company to obtain a short-term residence permit for your entire family in Panama.
Then, if you operate the company in Panama with the short-term residence permit, you will be eligible to apply for citizenship after five years.
However, this is an idealized immigration path that is not yet fully systematize. In practice, you need to consider the operating costs of the company and the cumbersome procedures and waiting time for applying for citizenship.
In Panama, there are six well-established and stable investment immigration programs:
1. Qualified Investor Visa: This is the main investment immigration program in Panama, including three economic options: real estate purchase, deposit, and stock purchase, with a minimum investment requirement of $300,000 (which will increase to $500,000 after October 2024).
This visa allows you to obtain permanent residence directly through investment, and you only need to visit Panama once every two years to maintain the permanent residence card.
2. Business Investor Visa: This is a two-year residence visa issued to foreigners who operate a company in Panama.
To apply for the Panama Business Investor Visa, you need to invest a minimum of $160,000 locally to operate the company, and your company must create at least five long-term jobs.
3. Self-Solvency Visa: This visa is issued to foreigners who invest more than $300,000 in real estate or deposits in Panama.
The Panama Self-Solvency Visa is a two-year residence visa. After two years, if you maintain your investment, you can apply to convert the visa to permanent residence in Panama.
4. Reforestation Visa: This visa is specifically issued to investors engaged in reforestation and forest maintenance activities in Panama. It has two application routes:
Regular Route: You need to invest more than $100,000 and maintain the investment for more than eight years. This route grants a two-year residence visa, and if you maintain the investment, you can apply for permanent residence in Panama.
Fast Route: You need to invest $360,000 and maintain the investment for more than five years. This route allows you to directly obtain a permanent residence card in Panama after completing the investment.
5. Income Retiree Visa: This is a program run by the Panamanian government since 1987. If you deposit (usually between $260,000 and $300,000) in two local banks and ensure a monthly interest income of no less than $850, you can obtain a five-year long-term residence visa.
A notable attraction of the Panama Income Retiree Visa is that you can quickly obtain a second passport: the Panama Travel Passport, within two weeks from the application date without obtaining Panamanian citizenship.
This special passport allows the holder to travel freely (visa-free or visa-on-arrival) to 118 countries and regions, making it one of the few legal opportunities for a single nationality holder to obtain a second passport.
6. Friendly Nations Visa: This is a special investment visa issued only to citizens of 50 specific countries and regions.
The Friendly Nations Visa requires the applicant to be employed in Panama, purchase real estate worth $200,000, or make a fixed deposit of $200,000 in a local bank in exchange for a two-year residence permit, which can be renewed under the same conditions or converted to permanent residence upon expiration.
Income Visas:
In addition to investment visas, Panama also offers two income visa options:
1. Retirees & Pensioner Visa: This is a permanent residence program that requires a monthly pension of $1,000.
If you purchase a property worth more than $100,000 locally, the pension requirement can be reduced to $750 per month.
Although primarily aimed at retirees, the Panama Retirees & Pensioner Visa is also available to those who can demonstrate sufficient passive income, even if they have not reached retirement age.
2. Short Stay Visa for Remote Workers: Launched in 2021, the Panama digital nomad visa requires applicants to be remote workers with an annual income of no less than $36,000.
The Panama digital nomad visa is essentially a tourist visa valid for nine months and can only be renewed once.
Other Visas:
In addition to the common visas mentioned above, Panama offers various long-term residence permits for foreigners wishing to settle in the country. These include the Family Regrouping Visa and visas for relatives, such as the Married with Panamanian Visa and the Parents of Panamanian Children Visa.
Dependents:
For most long-term residence visas in Panama, the spouse and children under 25 of the principal applicant can also settle in Panama as dependents.
For those applying for the Panama Qualified Investor Visa, the parents of the principal applicant are also eligible to obtain permanent residence cards as dependents.
Taxation:
Foreigners who live in Panama for at least 6 months each year can apply to become tax residents in the country.
The annual income tax threshold in Panama starts at $11,000. For residents, there’s a 15% tax rate on the first $50,000 of income, and any income beyond that is taxed at 25%.
Both employers and employees are also required to contribute to social security taxes at rates of 12.25% and 9.75%, respectively. Additionally, they need to pay education protection taxes at rates of 1.5% and 1.125%, respectively.
Companies in Panama pay a flat 25% tax rate on taxable corporate profits.
For property taxes in Panama, if the property is valued under $120,000, it does not qualify. However, anything over that amount will be taxed between 0.5% to 0.7%.
Capital gains taxes are paid at 10% of the calculated gain. A 3% withholding is made at the closing as an advance payment against the 10% capital gains tax for real estate transactions. There are no wealth, gift, or inheritance taxes.
Panama’s VAT is known as the movable goods and services transfer tax. The standard tax rate is a flat 7%.
Furthermore, Panama does not imposewealth tax, inheritance tax, or gift tax.
Citizenship:
Permanent residents of Panama who are proficient in Spanish can apply for local citizenship after legally residing in the country for a certain period. The required time frame for naturalization ranges from 1 to 5 years, depending on the applicant’s nationality (generally, it is less than 3 years for Spanish-speaking countries).
Typically, non-Spanish speakers can apply for Panamanian citizenship after living in Panama for five yearswith permanent residency (or three years if they have a Panamanian spouse or children). Applicants must pass an interview that tests their knowledge of Spanish, Panamanian history, geography, and civic rights to qualify for citizenship.
Passport Utility:
Panama’s laws do not formally recognize dual citizenship, but there isn’t strict enforcement in practice. The Panamanian passport is ranked 30th globally, and its holders can enjoy visa-free access to 149 countries and regions(Apr 18, 2024）.
