Panama Residency by Investment

Tax-Friendly Policies 

The country has a tax-friendly regime, with income generated outside Panama tax-free. Panama's tax-free policy on foreign-sourced income also applies to any Panamanian company you own or control, making it a popular destination for the world's wealthy and international entrepreneurs. 

Global Banking Hub

Panama attracts significant banks worldwide due to its tax-free policy on international non-Panamanian sourced income. Holding funds in Panama is considered safer than in other countries, including Europe, thanks to its strict secrecy and privacy laws. Freezing personal and business accounts is infrequent and only imposed in severe offences, making Panama a secure location to manage your finances.

Dubbed "The Monaco" of Central America, Panama offers the same tax benefits without the high cost of obtaining residency and real estate, making it an attractive investment opportunity. There is a strong sense of stability as a country with a robust dollar-based economy and large amounts of government revenue generated through the Panama Canal. 

Logistically Pleasing Location

Compared to Paraguay, Panama has additional advantages, such as being a highly credible place for individuals and businesses to permanently domicile. Panama City has excellent flight connections and is a top hub for the Americas, regardless of going north or south. 

The canal allows the city to maximise its potential as a freight hub for trade operations and is a melting pot of many nationalities. These factors have made it easy to live in Panama and further beds its key centre point in offshore banking, a desirable place for international business.

Routes to Residency in Panama

What are the visa requirements for Panama? You can apply for temporary or permanent residency depending on the type of visa you obtain. There are options available to potential residence holders, including investors, retirees, entrepreneurs and digital nomads. The residence does not grant you citizenship in Panama, but there is a potential for citizenship in the future.

Before getting into each residency visa in Panama, there are a few benefits to temporary residency and permanent residency process that make it relatively attractive compared to other countries:

• No language requirement, including Spanish (unlike in Canada, the U.S., New Zealand, and Australia); 

• No onerous medical testing or procedures, exemptions/waivers available for illnesses;

• Fast processing with an initial residency permit in three weeks and a final permit after three months;

• No age restriction; and 

• There is a lower cost for Panama residency with government and professional fees compared to other countries.

I. The Qualified Investor Program (VIP) for Permanent Residency

The Qualified Investor Program is the crème de la crème of the available visa programs in Panama. The VIP allows you to obtain permanent residence immediately upon meeting the investment criteria. 

Additionally, you will be able to complete all submissions remotely and only need to travel to Panama after receiving approval for permanent residence. You will receive your PR ID (cédula) and personal Tax Identification Number (TIN) within a month and can live in Panama and provide a pathway to apply for citizenship in the future. 

As an investor, you may receive permanent residence in Panama if you:

• Purchase real estate for at least US$ 300,000. The real estate property can be a title deed or sectional title in a development;

• An investment in the stock market for US$ 500,000;

• An investment in banking for an amount of US$ 750,000;

• There is a minimum of a one-year holding period; and 

• Please note that as of 15 October 2024, the minimum real estate investment requirement will increase to US$ 500,000.

Although there is no requirement to visit Panama before purchasing real estate and obtaining permanent residency, it is advisable to do a site visit beforehand. You can submit a promise to purchase and sale agreement as proof for getting permanent residence under the VIP. However, this is only after making a legally binding initial payment to the developer or owner.

The permanent residence program for a qualified investor is a popular option for a back-pocket residence and as a solid offshore investment. Diversifying a global real estate portfolio can give an investor a significant yield.

II. Friendly Nations Temporary Residence Program

The Friendly Nations Temporary Residence Visa Program is a world-renowned program. Panama allows certain nationalities to invest in real estate, thus increasing foreign investment in the country.

The Provisional Residency can be achieved in one of the following ways:

• By employment contract in Panama: a work agreement must be established between the principal applicant and a Panamanian company. The latter must be duly registered in Panama and have a determined economic activity; 

• By investment in Real Estate: the applicant must own a property on Panamanian soil with a registered value of at least US$ 200,000. The transaction is completed via the local banking institutions with funds coming from abroad; and

• By Fixed Bank Deposit: a fixed deposit of at least US$ 200,000 placed in a national bank in Panama, free of encumbrances with a minimum validity of three years.

There is a low tax rate for Panama-sourced income under the Friendly Nations Residence Visa of 7%. This rate is only enforced once you surpass the revenue threshold of US$ 36,000 in a single financial year. 

III. Retirement and Pensioners Residence Visa

A retiree residence visa is a prevalent option for U.S. citizens to obtain as they look to spend their golden years enjoying many benefits of a quieter life. After already discussing the beautiful beaches and vibrant cities, a few of the benefits of using the retiree residency visa to live in Panama include:

• Low cost of living: Panama has a relatively low cost of living compared to other countries;

• Tax incentives: Retirees can receive tax incentives, including exemptions on foreign income and property taxes;

• Good healthcare: Panama has a sound healthcare system, including modern hospitals and affordable health insurance options;

• Safe and stable country: Panama is considered a safe and stable country, with a growing economy and modern infrastructure; and

• Friendly towards foreigners: The Panamanian government is friendly towards foreigners and offers several programs to help retirees settle in the country.

The retiree residence visa required is straightforward to apply for in terms of its financial requirements by showing a pension. The pension needs to be through an official government or known and renowned life insurance provider. If you’d like to live in Panama on the reitree residence, then the wording of the pension is crucial for approval purposes. The pension needs to have the wording "lifelong" when referring to the monthly figure. 

The minimum lifelong pension requirements include the following:

• Demonstrate a lifelong pension of at least US$ 1,000 per month and US$ 250 for each dependent; and

• Demonstrate a lifelong pension of at least US$ 750 per month and US$ 250 for each dependent. In addition, a place of residence purchase of at least US$ 100,000 cannot be purchased with a mortgage loan. 

The Panama retiree or pensionado, officially known in Panama as "Jubilado", allows you a one-time exemption of duties on the importation of personal assets up to the total amount of US$ 10,000.

The benefits do not stop there, as you can also enjoy  discounts on day-to-day activities:

• 50% off entertainment anywhere in the country (movies, theaters, concerts, sporting events);

• 30% off public transport for bus, boat, and train fares;

• 25% off airline tickets;

• 25% off monthly energy bills;

• 30% to 50% off hotel stays;

• 20% off prescription medication; and

• 15% off hospital bills.

IV. Reforestation Residency Visa Program

The Panama Reforestation Visa grants temporary or permanent residency to foreigners, not from a Friendly Nation. You can invest US$ 100,000 or US$ 350,000 in a reforestation project. The project needs to be approved and managed by a forestry company regulated by the Ministry of Environment of the Republic of Panama.

An eligible applicant must satisfy the following conditions to obtain their Panama residency. Two options can impact the type of reforestation residency visa that you can apply for:

• Investing US$ 100,000. The applicant and dependents will receive a two-year temporary residency visa and the right to opt for permanent residency, just as other residency programs;

• An investment of US$ 350,000. The applicant and dependents will be granted permanent resident status immediately and receive their Cédula (Panamanian ID); and

• You must maintain the investment for five years. Otherwise, the permanent resident status will be suspended and possibly permanently canceled. 

The final point is essential for reforestation and other investment programs that allow immediate permanent residency. Authorities can cancel the permanent residence if the investment is liquidated. 

The reforestation residency project comes with a good possibility for an annual return on investment. You can expect a 9 - 20% return after the sixth year by taking on a ten-year lease with a crop management company. There is the possibility of canceling the lease after five years. 

The qualified investor can further enjoy several tax benefits through an agriculture incentive. There are no income taxes on revenues derived from harvesting the crops. There are property taxes that are paid for on the land value. 

There is a 0.6% annual property tax on registered land with a value of between US$ 30,000 to US$ 250,000. The crop management company can mitigate this by deducting each piece of land from the official purchase price. 

Applicants need to be made aware of a few disadvantages of the program. The asset is not liquid for at least five years, and six if considering the initial lease agreement to receive a return on the investment. 

The investment does not come with a physical address. The qualified investor must have a physical address to apply for permanent residence. Something that NTL Trust can arrange. 

V. Digital Nomad Residence Visa

As of 7 May 2021, Panama created a new visa opportunity, which allows an initial stay of nine months, that can be extended for an additional nine months. The program aims to boost tourism, restaurants, purchases and consumption of local goods and general use of Panamanian services. 

The visa targets remote workers outside of a Panama corporate organisation and not employed locally. The government allows the residence visa to be completed online. They are allowing approvals to be made entirely remotely.

Every applicant (remote work employee or self-employed or freelancer) must provide proof of their income by bank statements, adequately authenticated. The main requirements for this program are: 

• The digital nomad must show annual earnings of at least US$ 36,000. The foreign business that will have to issue a letter or a copy of the contract duly apostilled;

• That they will have medical insurance covering Panama; and

• There is a requirement to have a sworn declaration that the applicant will not accept any job offers in Panama.

If the applicant is not employed permanently by an international company, then a self-employed or freelance worker can show the following to apply for the Digital Nomad residence:

• Certification or proof of ownership of a company (Panama corporate documents duly apostilled); and

• Sworn declaration describing the company’s services and purpose.

As Panama is a tax-friendly location, this visa is very appealing for digital nomads in search of excellent quality but also affordable lifestyle in a tropical paradise.

Other benefits as such: 

• Applicants can expect that their processing will be completed within thirty days. The Immigration Bureau authorities are currently working to enable the online platform to process applications efficiently and promptly;

• The total cost of the visa application is US$250. This amount is paid to the Immigration Bureau; and

• Panama is tax-friendly with a territorial taxation system and will not consider any income outside of Panama.

Using the VIP for permanent residence is efficient and allows the investor to submit their application remotely. There are thus three critical timelines to consider:

• Initial visit and document collection: The investor can visit Panama to select their property, but there is no requirement. They then need to put together documentation (three to four weeks) to submit;

• Reserving real estate and submission: After securing the property and paying the deposit, and ensuring all documents are correct for submission (four weeks); and

• Visit for biometrics and PR: after approval is granted, all applicants need to visit Panama to activate their permanent residency (four weeks)

A few additional benefits that a qualified investor can enjoy through the VIP permanent residence program include:

• A physical address with utility bills in your name, enabling banking in Panama and your home country if you choose to leave your current residence;

• You don't have to reside on the property right away. There is the ability to rent out the real estate that can provide an annual net return of 5.5% to 6.5%; and

• There is no strict requirement for physical presence (just a theoretical condition of five days every two years, which is not enforced).

The process for temporary residence is different to permanent residence. There are more visits to Panama and the immigration offices to work towards obtaining permanent residency. To get temporary residency, the applicant needs to follow the below process: 

• Initial visit and document collection: The investor can visit Panama to select their property, but there is no requirement. They then need to put together documentation (three to four weeks) to submit;

• Initial visit for migration and application submission: After securing the property, paying the deposit, and ensuring all documents are correct for submission (six weeks). The submission needs to take place in Panama in person. The initial temporary residence is active for two years. Applicants need to spend five working days in Panama to activate their residence; 

Second visit for migration: Several months after your initial visit, you'll need to revisit Panama to formalise your migration. The final decision for the two-year temporary residency lies with the Ministry via resolution.

The provisional residency is the first visa application fee that you must pay.

After holding temporary residence for two years, you can apply for permanent residency. You must have professional or economic ties with Panama to apply for permanent residency, and only then can they receive a Panamanian ID (Cedula). These ties are also important for obtaining citizenship in Panama. This will either be through owning real estate or being a self-employed person within a business that you have registered. 

• Initial PR visit: Arrive in Panama a few days before your permanent residence can be applied for and to fulfill the necessary physical presence requirement. Apply at the Ministry for permanent residence;

• Second migration visit: After three to four months later, return to Panama for approval of permanent residence. The Ministry formalises the decision via a resolution; and

• Third and final visit: Four to five weeks after approval, you can obtain your permanent residence I.D. (cédula), which contains the Panama tax I.D. (TIN). This step may be processed remotely, but there are costs associated with this expedited option. 

The holder of Panamanian permanent residency must visit the country at least every two years. Otherwise, their permanent residency may be suspended. The suspension is not automatic as the immigration officer has the authority to suspend a permanent residency at his discretion. Other possible reasons for suspension include being a threat to national security.

After two years of residence in Panama, you can apply for permanent residence. There are fees attributed to converting temporary residence to a permanent residency visa:

Document Requirements and Next Steps 

Panama has several residency programs that can suit the needs of any qualified investor, remote worker, or retiree looking to become a Panama citizen after five years of residence. The process is relatively simple compared to the document collection for residency in other countries.

The standard documents are shown below. Each qualified investor must ensure they cover each point on the checklist: 

• A valid passport and secondary I.D. of the applicants;

• Original criminal history record (of the principal applicant, spouse, and dependents over eighteen  if applicable) notarized, apostilled, or authenticated by the Consulate of Panama (valid for six months);

• If presenting a record from a country of residence different from nationality, provide proof of residency (notarized, apostilled, or authenticated by the Consulate of Panama)

• Dependent Spouse: Original notarized, apostilled, or certified marriage certificate (valid for three months);

• Dependent Child: Original notarized, apostille birth certificate;

• Certificate of Good Health (can be arranged in Panama);

• Five passport-sized photos of the applicant and dependents;

• Registration form (affiliation) migration office (provided); and

• There will be document and certification checks during the collection process in Panama.

Proof of origin of foreign funds to buy property (3 options):

• Letter from foreign/local bank certifying the transfer;

• Foreign bank statement showing transfer and destination; and

• Letter from the recipient of funds or local bank certification of deposit/transfer.

Required property documentation:

• Certification from the Public Registry of Panama and apostilled certificate; and

• For Qualified Investors only: authenticated contract of promise of sale registered in the Public Registry of Panama and original/authenticated Trust Contract.

Required bank documentation:

• Authenticated copy of Fixed Term Deposit Certificate from issuing bank; and 

• Bank certificate of deposit existence.

Certificate of lifelong pension: Status certification from a foreign government, international organisation, or private company (pension of at least US$ 1,000/month). 

If pension from your government or private company: 

• Letter from pension/trust/insurance/banking company; 

• Certification of company validity; and 

• Proof of payment/bank statement.

Proof of origin of foreign funds to make an investment into an approved reforestation project. Additional documents. 

• Certification from Panamanian CPA of invested capital paid by the applicant;

• Authenticated certificate of shares in Reforestation of Panama; 

• Copies of business tax return with invested capital; 

• Resolution from the National Environmental Authority (ANAM) of Forest Registry Certification; and 

• Original certification of business registration and property title.

The list of bank requirements varies by account purpose, type, and bank. The process can differ depending on opening a bank account for your Panama corporate organisation for your personal use. However, there are a few standardised documents that you can prepare:

• Proof of identity: passport, I.D. card, or other government-issued identification;

• Proof of residency: local utility bill, rental agreement, or other proof of address;

• Evidence of source of income: recent pay stubs, bank statements, or tax returns;

• Introduction letter from your current bank; and

• Bank reference letter from your current bank.

Citizenship in Panama by Naturalization

Permanent residence does not entitle the qualified investor to become a Panamanian citizen. You cannot apply for citizenship without physically living in the country. The permanent residence provides you with an I.D. but not a passport to travel outside Panama. 

While permanent residence does not need a qualified investor to be in Panama, the route to naturalisation and citizenship is very different. Dual citizenship is only permitted under certain circumstances. 

The pathway for a qualified investor with permanent residence, obtaining citizenship in Panama can be more complicated than in other investor programs. For a foreigner to acquire Panamanian nationality, they must first have received a permanent residency from the National Immigration Service, based on reasons such as employment or investment, family reunification, or a special policy.

• Retirees with permanent residence and qualified investors who have lived in Panama for five consecutive years can apply for citizenship. An applicant needs to show that they declare their intention to naturalise and renounce their previous nationality. Additional requirements include requiring to demonstrate proficiency in Spanish and knowledge of Panama's geography, history, and political system; 

• An applicant who has lived in Panama for three consecutive years and has children born in the country to a Panamanian parent or spouse can also apply under the same conditions; and

• Nationals of Spain or a Latin American country can also apply for naturalisation if they meet the same requirements as Panamanians in their home country and if a Reciprocity Agreement exists between the two nations. These nationals are eligible for dual citizenship. 

The countries with Reciprocity Agreements and their respective years of permanent residency required for naturalisation in Panama are:

• Colombia and El Salvador: after one-year of residency;

• Argentina, Ecuador, Spain, Honduras, Mexico, Nicaragua, and Peru: after two years of residence; and

• Uruguay: after three years of residency.

The Panama passport holders can travel visa-free or obtain a visa upon arrival to 142 countries, ranking their passport 34th globally for travel freedom. Major visa-free destinations include 95% of South American countries, Mexico, the United Kingdom, Russia, Hong Kong, Singapore, India, Europe's Schengen Area and Eastern Europe. 

The passport is worthwhile if you formally renounce your previous citizenship. That may deter many potential applicants from becoming Panama citizens. The country is worthwhile to obtain residence and a great tool to diversify investments while having a permanent residence.