The revolutionary changes in the management of the government and economy of Panama has made this Latin American country the choice destination for foreign investors to get the Panama residency.

The country is located in the world’s most biodiverse region, where the Caribbean Sea, the Gulf of Chiriqui and the Gulf of Panama meet and offer different coastlines and waters that are all beautiful and clean. Aside from its variety of landscapes wherein forest, mountains, beaches and pastures are protected to preserve its beauty and richness, the capital of the tropical country is famous for its cosmopolitan life; bringing together the best of both worlds.

Panama residency permits and investment options:   

Panama City is known to be one of the financial centres in the world, welcoming international direct investment and ranking the highest in Central America. International investors that want to live and/or work in Panama permanently may apply for Panama residency permits that are easy and cheap to acquire, as there is no minimum number of days required for applicants to stay in the country, for as low as a $5,000 deposit. The two more popular residency programs permit in Panama are:

  • Panama Friendly Nations Visa – this visa allows citizens from one of the 50 friendly nations (which includes countries in Europe such as the Netherlands and Spain, as well as from the United States and parts of Latin America) to immigrate to Panama along with their family. With a deposit of $5,000 and an additional amount of $2,000 for each dependent, you will be eligible for economic ties to Panama. After 5 years, you can apply for Panamanian Citizenship.
  • Pensionado Programme – pensioners that receive a pension of at least $1,000 a month and an additional of $250 for each dependent, in case of a married couple, can apply for this visa without the need of buying real estate in the country. For this residency permit, they will be protected from changes in the law, but will not be entitled to apply for Panamanian Citizenship.

One of the main reasons international investors choose Panama as their destination to relocate is for its territorial tax system that applies to residents and companies domiciled in the country. Due to the high number of persons that possess Panamanian Citizenship but are not required to live in the country, the Tax Code does not use the terms “resident” and “non-resident”.

Under the Panama tax law, individuals are subject to income tax at progressive rates on their taxable income wherein taxable net between PAB 11,001 and PAB 50,000 is subject to a tax rate of 15%, while a 25% of tax rate is for taxable net income of over PAB 50,000, approximately USD 49,900.

The taxable income includes all sources directly from Panama, which includes salaries, income from investments, compensations for personal services, income from commercial, industrial and agricultural activities, and expenses paid by an employer on behalf of an employee. Nevertheless, the following categories of income are exempted from tax:

  • Taxable net income not exceeding PAB 11,000 per year
  • Employment income not exceeding PAB 10,400 per year
  • Other profit distributions paid by small or medium sized enterprises to their shareholders
  • Payments of up to PAB 5,000 made to employees upon termination
  • Gains from public lotteries, games or bets
  • Inheritances, legacies and gifts
  • Income of individuals engaged in farming, provided that the annual gross incomes does not exceed PAB 250,000
  • Dividends on nominative preferred shares when certain conditions are met

The main reason Panama has opted for this long-term solution for its slow growing economy is to let overseas investors boost the job market, which is dominated by the supply and demand game. Fast and affordable permanent residence permits, as well as the Panama favorable tax and lifestyle, attracts foreign business people that will help grow the country’s economy.

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