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Panama Residency: How to Obtain it and Pay Zero Taxes

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panama residency
  • Published 19/11/2024
  • Last Updated 19/11/2024

Panama offers a unique opportunity for individuals and businesses seeking to optimize their tax obligations.

With its territorial tax system, foreign income is completely exempt from taxation. By combining residency with the incorporation of a local entity, you can enjoy both personal and corporate benefits.

In this article, we’ll guide you through the steps to obtain residency, establish your business, and take full advantage of Panama’s favorable financial landscape.

Make your move seamless and start enjoying tax freedom in one of the world’s most business-friendly countries!

Panama Tax Benefits

By spending at least 183 days in a tax year in Panama you can benefit from its territorial tax system which applies taxation exclusively to income generated within its borders. This approach makes Panama a prime choice for expatriates, entrepreneurs, and businesses aiming to optimize their taxes, as all foreign-sourced income remains completely untaxed.

Key Taxes in Panama

  • No Tax on Foreign Income: Income sourced abroad is fully tax-exempt.
  • No Capital Gains Tax on Foreign Investments: Including stocks, property, and cryptocurrencies held overseas.
  • No Estate or Inheritance Taxes: Facilitates wealth and succession planning.
  • No Exit Tax or Controlled Foreign Company (CFC) Rules: Ideal for global tax planning.
  • Corporate Income Tax: 25% only applicable to income earned within Panama.
  • Personal Income Tax: Progressive rates up to 25% only applicable to income earned within Panama.

In addition to its tax advantages, Panama offers minimal bureaucracy. Foreign income does not need to be declared, simplifying reporting for individuals and businesses.

Furthermore, companies earning foreign income are not required to maintain bookkeeping or undergo audits, reducing administrative overhead and making it easier to operate in Panama.

Best Residency Programs in Panama

There are numerous pathways to residency in Panama, but the two most appealing for individuals seeking to relocate and reduce their taxes are incorporating a company in Panama or investing under Panama’s Friendly Nations Visa.

Citizens from Panama’s Friendly Nations list, which includes over 50 countries, enjoy significant advantages in obtaining residency permits, including the opportunity to secure permanent residency by establishing a business in Panama or through an investment significantly lower than other permits, such as the Golden Visa.

Below is the list of Panama’s Friendly Nations:

Andorra Cyprus Hungary Monaco Singapore
Argentina
Czechia
Montenegro
Ireland
Slovakia
Denmark
Australia
Israel
South Africa
New Zealand
South Korea
Norway
Japan
Austria
Estonia
Latvia
Finland
Paraguay
Belgium
Spain
Peru
Liechtenstein
Sweden
Brazil
France
Poland
Lithuania
Canada
Germany
Switzerland
United Kingdom
Portugal
Chile
Greece
Luxembourg
Malta
Costa Rica
Netherlands
United States
San Marino
Uruguay
Hong Kong
Croatia
Serbia
Mexico

Residency in Panama Through Company Incorporation

The incorporation of a company in Panama is undoubtedly the most popular option for obtaining tax residency and a permanent residence permit if one belongs to one of Panama’s Friendly Nations.

However, this process must be carefully handled by experts, as the permit is only granted through the signing of a work contract with the company, which must be linked to an activity conducted in Panama through a Business License.

While your company won’t need to operate in Panama, it is essential to follow the proper steps and structure everything correctly to comply with regulations and secure the permit.

Our residency service in Panama is designed to achieve this quickly and affordably, offering the most cost-effective path to tax residency in the country.

Residency in Panama Through Investment

For citizens from the Friendly Nations list, we find other alternative options, although somewhat more expensive, for obtaining tax residency.

The fundamental requirement will be one of the following:

  1. A fixed-term deposit of a minimum of $200,000 in a Panamanian national bank.
  2. An investment of $200,000 or more in Panamanian real estate.

Whatever option you choose, we can help you carry it out.

Panama Golden Visa

If you’re not from a country listed as a Friendly Nation by Panama or prefer a straightforward route to permanent residency through a higher investment, this option is tailored for you.

Here’s how you can qualify:

  • Invest $500,000 in real estate (for a limited time, this is possible with just $300,000).
  • Invest $500,000 in Panamanian bonds or stocks.
  • Deposit $750,000 in a Panamanian bank.

Contact us to begin your Panama residency process

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