Blog and news
News
Establish your tax residency in Panama, the best jurisdiction in Latin America
The dilemma, then,
is how to find the best option. To save you the trouble of researching, here is
the answer: Panama, without a doubt, is the leading country in terms of economy
in Latin America and the right place for your new business.
It is an ideal tax
residency for American and European businesspeople seeking for a transparent,
beneficial, and secure jurisdiction to set their tax residency.
Panama is one of
the financial small giants of the planet. This tiny country located in Central
America is one of the business hubs of the world thanks to the Canal and its
attached free zone and its top financial and banking system.
Of all the
countries in South and Central America, Panama stands out for its stability and
excellent economic and financial offer. It is on a par with great powers such
as the United States and Switzerland.
This is why it has
become an ideal destination for investors and executives; you will not only
benefit from the country's enormous economic growth (the fastest the continent
has experienced in the last ten years). You will also be able to do so while
enjoying a tropical climate, indigenous culture and customs, avant-garde
buildings, and very warm people willing to receive foreigners.
Thanks to its deep
interest in economic development, the Government of Panama consistently offers
programs that seek to attract foreign investment that will enhance the state's
projects.
Among the
advantages of having a tax residence in Panama, you'll find:
- Taxes
are limited to local income. If you receive an amount of money in the country,
you will have to pay taxes for it. However, if you receive money from abroad
(regardless of the amount, nature of the income, or place), no payment of any
kind of taxes is required.
- It is
relatively easy to obtain a Panamanian residency (little bureaucracy involved).
There is even a list of 47 countries that are guaranteed permission without any
investment involved.
- The
reporting of your overall income will remain in Panama only. This is due to the
country's banking and privacy laws, which provide legal protection for both the
resident and the depositor.
- You
will be exempt from paying income taxes in other countries, with the sole
exception of the United States. However, the first $160,000 will not require
any type of tax, which is one of the best benefits Americans can receive
tax-wise abroad.
- You
will be able to protect your income by sending it to a foundation within
Panama. In this way, your assets will be safe from creditors and foreign
governments.
- International
banks in Europe and the United States will accept UBO (Ultimate Beneficial
Owner) accounts without any inconvenience, since Panama is not considered an
offshore jurisdiction.
Tax residency in Panama
After seeing all
these benefits, you're probably wondering what's the criteria for tax residency
in Panama.
As the name
suggests, you must have some form of residence in the country. The general rule
in Panama and other nations is that a person will be considered a tax resident
if he or she has stayed in the country for more than 183 consecutive or
alternate days in the fiscal period in which the request is made.
Companies are
considered Panamanian tax residents if they've been incorporated in Panama and
if Panama is its main management center.
Panama has a
territorial tax system for both companies and individuals. That means you only
pay taxes for your Panama-sourced income, so if you're a Panamanian tax
resident, your income deriving from foreign sources can be completely tax-free
as long as you have a Certificate of Tax Residency.
To receive one as
an individual, you'll need to showyou have spent the necessary time in Panama.
Documents such as utility bills, food receipts, and rental agreements will help
prove that you have family and economic ties to the country. To receive one as
a company, documents of the meetings of the board of directors, bills, and
similar may help you show Panama is your main business center.
This means you'd
need to have some kind of temporary or permanent residency in Panama.
Panama has one of the best immigration policies for investors and skilled workers in the planet. It has a wide array of possible residency options. Here we'll sum up the most important and the one we consider the best (however, if you wish to know them in detail, please check our country focus )
Friendly nations
visa
It is one of the
most sought visas as it is incredibly affordable and very easy to obtain. The
main requirement is to be a citizen of one of the almost 50 territories that
are considered as "friends" of Panama, such as Argentina, Brazil,
Canada, Denmark, France, Greece, Hungary, Israel, Japan, Luxembourg, Malta,
Netherlands, and others.
To receive the
residency, you must have a bank account in Panama in which you will deposit a
minimum of 5,000 USD for the applicant and at least 2,000 USD for each
dependent. With this, you will demonstrate that you are in the capacity of
being economically solvent.
We can help you
open a Panamanian bank account remotely. Check out our banking article right here and discover how.
Of course, it is essential
to demonstrate that you expect to establish an economic and labor link with
Panama, either through the establishment of a new company (it cannot be a retail
company) or through a work permit.
Thanks to the
friendly nations visa, you and your dependents will obtain permanent residence
upon approval of the application.
Retiree's visa
This visa is
perfect for those who receive any kind of pension or monthly payment of at
least 1,000 USD. Although it may seem that it is only available for pensioners
(senior citizens), the reality is that there is no maximum or minimum limit to
apply, just having reached the age of majority (18 years).
You can even apply
together with a spouse. In this case, the pension amount is required to
increase to $1,250. However, if you both receive the benefit, you can pool your
monthly amount to meet the basic requirement of $1,000.
Panama is the ideal
country for retirement: the quality of life can be very similar to that of the
United States, but with much more affordable prices. Besides, by obtaining the
pensioner visa, you will also get discounts such as 20% less in medical
consultations and 50% in entertainment (which includes movies and events).
Economic solvency
visa
Through this visa,
you will demonstrate to the government entities of Panama that you have
sufficient resources to support yourself (without the need for a pension or a
labor certificate) and that, on the contrary, you are willing to participate
and improve the Panamanian economy.
The minimum
investment, in this case, will be 300,000 USD. However, there are three
options:
- Buy a
property for that amount with a holding period of three years
- Invest
in a certificate of deposit in a Panamanian account for three years
- Combine
both options
In any case, it is crucial
to consider that for each dependent, an amount of 2,000 USD must be added to
the total, in addition to proving that you can support your family group.
Business Investor
Visa
Ideal for those who
wish to establish their own business in Panama, although you will need to apply
for a commercial business license. The requirement is that the basic investment
is 160,000 USD and can provide employment for five Panamanians (with their
respective social security benefit and payment of at least the minimum wage).
It is also possible to invest in the establishment of a new company with the
same requirements.
As in the previous
visa, you must increase 2,000 USD for each dependent you wish to include in
your application.
Specialist worker
visa
A very common
option around the world that allows you to obtain a job in Panama with a
temporary residency of at least a year.
In the case of
Panama, foreigners working for a Panamanian company as professionals can become
residents of Panama after two years of employment. A university degree is also required
to support your expertise.
Panama's tax system
The main reason why
Panama has become so popular in terms of alternatives for tax residencies is
that it has a territorial tax system; that is, international transactions are
tax-free.
This makes it
easier for a person to set up a business under the Panamanian tax residency and
manage it from abroad, so he would be generating his income outside the
territory and, therefore, this capital would be tax-exempt. Also, companies
based on the many FTZs in Panama don't pay income tax on the import of products
and services destined for exportation. This means you can assemble products
with imported parts and export them completely tax-free.
Do you want to know
how to establish an FTZ company in Panama? Check out our article about our corporate
services in Panama .
We could group the
tax exemptions in Panama in the following way:
- Income
from operations that are managed in Panama, but are performed abroad.
- Income
from re-invoicing of foreign goods or services.
- Distribution
of dividends derived from foreign income (including the above mentioned).
In addition, being
a tax resident of Panama grants other valuable advantages:
- High
level of protection for beneficiaries thanks to Panama's strict banking
legislation and high levels of privacy. It is considered one of the most
effective banking systems in the world.
- Possibility
to protect your capital even more thanks to the creation of a Panamanian
foundation. Thus, you can protect your assets from creditors and even foreign
governments.
A territorial tax
system
Due to pressures
from the CRS and FATCA (Common Reporting Standards and Foreign Account Tax
Compliance Act, respectively), it is essential to have a genuine and legally
validated tax residency, which applies to businesspeople and entrepreneurs who
obtain their income from international sources.
Panama is one of
the best tax residency options because only territorial taxes apply.
Individuals and companies with fiscal residence in Panama will have zero taxes
on transactions from abroad (anywhere in the world). This is where it stands
out from so many other countries. You will have the opportunity to establish
your business in Panama (at least a fiscal residence) and work with
international clients. You will be able to receive payments and profits legally,
and at no time will you have to lose money in taxesas long as the income comes
from outside Panama.
You just have to
present your Panamanian documentation and will be exempted from virtually any
personal income tax. The biggest exception is the United States, which always
taxes the worldwide income of its citizens, whether they reside in the US or
not. Nevertheless, the first 160,000 USD will not be taxed, which is a
significant advantage. Moreover, even in this case, you can run a Panamanian
company and keep the profits within the company and not pay taxes until you pay
the dividends to yourself. This is known as tax deferral, which is perfectly
legal and is implemented by the largest corporations in the US.
The territorial
system means, for example, that you can legally have an income of $5,000 per
month generated in Panama (salaries, dividends, rental income, etc.) and pay
taxes on it while receiving hundreds of thousands of dollars from abroad
without having to pay any taxes. This is the reason why many investors and high
net worth worldwide choose Panama as their tax residency destination.
Although Panama is
not considered an offshore banking destination, it enjoys all these advantages
(and more) in an onshore jurisdiction.
Corporate tax
Among the numerous
benefits of investing money in Panama, you will find that, in general, the tax
rates are much more affordable than in other territories, allowing the
development of small and medium enterprises that will eventually benefit the
same nation.
All income of
Panamanian origin is taxable. In the case of a company, an income tax of 25% is
required on net taxable income. If the state owns part of the capital of the
company (40% or more), the rate is 30%. It should be noted that these amounts
have been decreasing in recent years to allow business formation to be
maintained; for example, companies engaged in agriculture have an even lower
percentage.
25 % may not sound
too different from what you find in some OECD countries, but remember that you'd
only pay taxes on your Panama-sourced income. Also, if you establish your
company in an FTZ, all products and services imported for exportation services
are wholly tax-free.
For smaller
companies, it is recommended that they make a combination of individual and
business tax rates (however, if the gross income is less than $1,500,000, this
will not be possible).
Personal income
taxes
As usual, Panama
applies a progressive income tax. The brackets go as follows:
- Income
under $11,000 a year is tax-free.
- Income
between $11,000 and $50,000 is taxed at a 15% rate.
- Income
over $50,000 is taxed at a 25% rate.
In the case of
married couples, a deduction of 800 USD is charged along with a joint tax
return. This declaration is made once a year (before every March 15th). Those
who receive income through a single salary are not obliged to submit a joint
return (the one that's employed would be responsible).
Who are we, and what can we do
for you?
In Mundo,with our
partner firm NTL, we have more than two decades helping high net worth
individuals and investors around the world, keeping their money safe and
finding new investment opportunities.
We work with an
unparalleled network of experts to offer the best of the best in asset
protection, investment, corporate solutions, banking, and immigration.
We have our main
headquarters in Panama because we believe it's one of the best jurisdictions on
the planet from a banking, corporate, financial, asset protection, and tax
perspective. We have our own legal and financial team in Panama, ready to offer
the best services for you. We can help you move your tax residency in Panama
and use it as your main tax optimization vehicle.
Our experts can offer the best tax advice for you in Panama. All you need to do is get in touch with us, and we'll find a tailor-made solution for you. Enquire now!
- How to get residency and guaranteed income in Panama In October of this year, Panama issued Decree 722, opening the door to obtaining permanent residency...
- Can a US Citizen Have an Offshore Bank Account? One of the downsides of the Internet is the dissemination of misinformation. That has led some to be...
- Unique opportunity for permanent residency with an investment For certain, COVID19 is the iceberg's tip; there is a new norm forming, and we need to prepare ourse...
- What are the cheapest second passport programs? A second passport can cost you a few hundred or thousand dollars in legal fees. That is, of course, ...
- How to get Maltese citizenship by investment All good things come to an end. And this happened to the Maltese citizenship by investment program; ...
- Money machine Part II - Your brokerage account with Mundo Welcome to the Money Machine, Mundo’s latest section on the way the top family offices in the world ...
- Multiple citizenship: Is it worth it to acquire triple nationality? 50 years ago, most countries revoked the citizenship of someone who became a citizen of another coun...
- Redomiciliation of an offshore company, everything you need to know Individuals seek to register their businesses offshore for many reasons. Privacy is one of the most ...

Nevis-US LLC + bank account $3400
.jpg)
Foundation + account $5800
.jpg)
IBC + account from $2000
.jpg)
LLC + account from $1800
.jpg)
IBC + account $2140
.jpg)
LLC + account from $2270
.jpg)
.jpg)
Company + account from $2700
.jpg)
Foundation + account from $3800
.jpg)
Storage + company + account $9500
.jpg)

Company + account from €2000

Foreign company + account $10,000
.jpg)
UK-US $5000

Company + account from $6920

Company + account from $3050

Company + account from $4600

LP + account from $2350
.jpg)
Company + account from $2740
.jpg)
.jpg)
LTD + account from 2350 USD
.jpg)
Branch office + account $9500

LP+ account from 2800 USD