Digital Nomads vs. Traditional Residents: Which Panama Status Suits Your Lifestyle?

Overview of the Panama Digital Nomad Visa

We have seen much content discussing the ways to obtain permanent residency, but the digital nomad option often gets overlooked. In Panama, this constitutes an excellent choice, especially if the remote worker lifestyle is what suits you best. Today, we analyze the Panama digital nomad visa vs permanent residency and their peculiarities in the country of the canal.

Eligibility Requirements

Who is Eligible for the Digital Nomad Visa?

What is informally known as the Digital Nomad Program is called the Remote Worker visa, and it's aimed at foreigners who obtain their income remotely, whether through services, employment, or their own company. Anyone can apply as long as they meet the requirements and are of good character. 

Proof of Financial Self-Sufficiency

Applicants must provide proof of receiving an income of at least $3000 a month working as independent service providers, employees, or having dividends from their own business. This activity must be conducted abroad; hence, the resident will not be allowed to work in the territory of Panama. 

Proof of Employment or Professional Activity

The said program is backed by Executive Decree Number 198 of 2021, and stipulates that the applicant presents proof of their professional activities. If they are employed, they must present a letter from the company, duly signed by the legal representative. It must state the applicant's information, their position, and responsibilities. If, on the contrary, the applicant owns a company, they should present a certificate proving the existence of the said company and where it's registered.

Private Health Insurance Requirements

It's mandatory to present a copy of the applicant's medical insurance policy, which must remain in force for as long as the residency permit lasts. 

Application Process

Step-by-Step Instructions for Application

• Assessment of your case together with your Mundo expert
• Collecting the documents hand in hand with your expert
• Make a copy of your passport
• Take passport-sized photos (consult with your Mundo expert about the requirements for such photos)
• Fill out all the necessary forms
• If you don't have one, hire a health insurance valid in the Republic of Panama
• Obtain a letter from your employer or a certificate stating the existence of your company
• Together with your Mundo lawyer, go to the immigration office and present your application
• Pay all necessary fees (government and legal fees)
• Wait for approval
• Obtain your residency permit and enjoy the country for 9 months

Visa Duration and Renewal Options

The residency permit lasts nine months and can be renewed once for 9 more months.

Mundo expert's opinion: "If the most important thing for you is the city's amenities, then there's no doubt that the capital is your choice. Whenever you want to go to the beach, you can easily drive for one hour and get to Coronado or Veracruz. If you must live by the beach but don't want to compromise on urban experiences, then Coronado is right on that sweet spot in which you can have the best of both worlds". 

Living in Panama as a Digital Nomad

Best Cities to Live: Panama City, Boquete, Bocas del Toro

A cosmopolitan environment and big-city vibe: Panama City

The Central American capital is the ideal location for digital nomads who want to be immersed in an urban, active environment. It's ideal for freelancers because it has great internet speed and services, an active nightlife, and a wide expat community. Some of them are here for the midterm (a few months or years), while others have settled here permanently.

This creates an exciting ambiance for remote workers, who want to know what it feels like to live in an international hub. It’s also attractive for those who want to explore the Central American culture without missing out on urban living.

Cooler weather and coffee tasting in Boquete, Chiriquí

Chiriqui is the westernmost province in Panama, bordering Costa Rica. Of its approximately 471,071 inhabitants, 144,000 live in David, the capital and most developed city. Approximately 30 miles from David, there's this charming little town called Boquete. Its size is considerably smaller (with a population of 25,000 people), and it's mainly surrounded by green hills and bucolic landscapes. 

There are hiking trails along its sloping hills, national parks, and coffee tours and tasting, since this is a key coffee producer. One of its advantages is the weather, which is much cooler than on the coast: Boquete is situated at an elevation of approximately 4,000 feet. 

Transparent waters and eco-friendly adventures in Bocas del Toro

100 miles north of Chiriqui lies the country's most breathtaking scenery in Bocas del Toro. This is an archipelago nestled in the crystal-clear waters of the Caribbean and, hence, one of the most touristic destinations in Panama. Most freelancers choose to stay at least for a season here to explore coastal living in one of the most charming locations in the region.

More information about Panama residency

Mundo's tips for digital nomads

Find reliable Internet connection

The digital nomad lifestyle is based on a travel-while-working philosophy. They usually don't take days off, but combine work with enjoyment and the exploration of new sites.

In Panama, like in most places, the Internet connection works better in populated areas. In downtown Panama, and in the cities of Boquete, David, and Bocas Town, you will find good internet speed. However, it may be weakened as you move to the suburbs or more secluded places.

The same principle applies in the capital. Internet connection is probably less stable in Cerro Azul (on the outskirts of the capital) than in downtown David. So, if you want to explore a secluded island in the Caribbean or go hiking in the Chiriqui highlands, find out about the internet connection in advance. If the picture doesn’t look that promising, make sure to make all necessary arrangements, get your own mobile connection, or take a few days off if needed. 

One place, one lifestyle

It's important to understand the kind of lifestyle you can have in each of the cities. Panama City, for example, is a great urban center but not the best for coastal living as it doesn't have access to the beach. On the other hand, in coastal towns, you won't have the active nightlife, concerts, theater, and activities that you do find in the capital. For deeper insight, read Mundo’s lifetime guide next.

Mundo’s Panama lifestyle guide 

Best places for coastal life

Coronado

This is a beach town located 54 miles from the Central American capital. It has everything a person needs for modern living, from large supermarkets and stores to schools, parks, and recreational places. Being a beachfront town, it also has a wide array of vacation houses and weekend estates. 

Bocas del Toro

As mentioned above, this is a true Caribbean paradise. You can live a tranquil small-town life in Bocas Town or venture into the more secluded islands for a more rustic approach. This is for those who want to be away from the hectic pace of the metropolis. 

Best places for bucolic life

Boquete

Boquete is definitely your choice if you want tranquil living without the high temperatures of the tropics. If the beach is something you enjoy for only a couple of weeks a year, and that’s it, choose Boquete. It will bewilder you with its cool climate, dry environment, and dreamy hilly scenery.

Best places for urban living

Although there are other large cities, none of them compares to the capital. In Chitré, David, or Santiago de Veraguas, you will find more of a small-town feel. In Panama City, you'll find all the activities, novelties, and events of a metropolis. Besides, you’ll have easy access to government offices for legal or migration procedures. To find out about other locations, check out the map below: 

Mundo’s conclusion on the best city for digital nomads

Digital nomads have an enormous advantage: they can experience life in every one of these places as they carry their office with them. However, when thinking about a longer stay, it's important to consider one’s preferences.

If the most important thing for you is the city's amenities, then there's no doubt that the capital is your choice. Whenever you want to go to the beach, you can easily drive for one hour and get to Coronado or Veracruz.

If you must live by the beach but don't want to compromise on urban experiences, then Coronado is right on that sweet spot in which you can have the best of both worlds. Finally, places like Boca del Toro or Chiriqui offer very distinctive lifestyles. In that case, you'll need to accept the fact that, for any big event, international conference, or important legal procedure, you’ll have to drive for 8 hours or jump on a plane.

Digital nomad visa vs traditional residency 

Now let's compare the programs that will get you to either a temporary or a permanent residency, and the options in between.

Cost of Living Overview

Panama is convenient for Americans and Canadians in terms of cost of living. Here, they can find products and services to be much less expensive, from rent to utilities, theater tickets, transportation fares, and healthcare. This makes the isthmus an outstanding alternative, especially for retirees. Actually, many Americans in their retirement years find Panama to be an even better alternative than Miami. 

In the Central American hub, they find low costs and also interesting perks like discounts on healthcare, entertainment, and tourism, and the possibility to import personal goods duty-free.

Tax Implications for Digital Nomads in the isthmus

Understanding VAT 

The regular value-added tax in the country of the canal is 7%, and it's applied to most goods and services. While some products are exempted, like basic food products, medicine, and agricultural and education products, others have a higher VAT. Alcohol and tobacco, for example, have a higher value-added tax of 10% and 15% respectively.

U.S. Tax Obligations for Americans

By living more than six months a year in the country, you automatically become a tax resident and will have to pay tax on your income derived domestically. Income tax is one of the lowest in the region, increasing from 0% to 25% according to stipulated layers. 

As a remote worker, all your foreign income will be free of tax in Panama; however, you may be taxed on the money you wire and receive for your personal expenses. Mundo strongly recommends consulting with a certified tax specialist.

Apply for Panama residency

Foreign Earned Income Exclusion (FEIE)

Americans can apply for the foreign earned income exclusion, which exempts a portion of the income they earn abroad. Those living in the territory under the remote worker visa should consult with a certified expert because their income will not be derived in Panama. 

Foreign Tax Credit (FTC)

In line with the exemption above, there's this foreign tax credit that helps expats avoid or reduce double taxation. Foreign tax credit is usually recommended for those who live in high-tax nations, because they usually generate excess credits to carry back or forward. This strategy can help reduce burdens on other types of taxation; however, it should be discussed with a specialist.

Digital Nomad Application: Requirements Needed

• Power of attorney
• Three photographs
• Notarized copy of the passport
• Certificate of criminal records
• Health certificate
• Copy of the insurance policy, which must have coverage in the territory of Panama for as long as the resident remains in the country
• Certificate stating the existence of the foreign company (if applies)
• Letter from the company that employs the applicant, including the applicant's information, their position, responsibilities, and monthly remuneration
• Sworn affidavit that the applicant won't accept a job offer in the country
• Payment of the stipulated fees ($250 for the national immigration service and $50 for the resident card; legal fees are not included)

Disclaimer: all information about the Digital Nomad Visa and other visas shared in this article may be outdated at the time of reading. This article doesn't constitute legal or migration advice. Up-to-date and case-by-case information will be provided only through formal consultations. 

Benefits of the Panama Digital Nomad Visa

This is a unique approach for foreigners to get to know the isthmus without a long-term commitment and without huge investments. For those who embrace the perpetual traveler and digital nomad lifestyle, the “Land of Birds and Butterflies” offers a legal path to a perfectly legal stay. 

Moreover, considering the country's variety when it comes to nature, landscapes, opportunities, geography, and lifestyle, Panama is one of those sites that digital nomads should experience, even if it is for a short period. And this is exactly what this visa allows them to do with its nine-month permit.

Frequently Asked Questions

If I have a digital nomad visa, can I work for a Panamanian company?

No. This is strictly forbidden, and applicants have to sign a sworn affidavit that they won't accept any work within the Panamanian territory.

What is the minimum income requirement?

The minimum income requirement is $3000 a month.

Can I extend my stay beyond 18 months?

No. This visa was designed for a limited stay in the country of the canal, hence it can only be renewed once. The initial permit is granted for nine months, after which it can be renewed for nine more months. After this, the visa can't be renewed again.

Conclusion: Why Choose Panama for Your Digital Nomad Journey?

Panama, the bridge of the world, the land of birds and butterflies, and the fantastic isthmus that connects two continents can't be easily dismissed. If you are a perpetual traveler or a digital nomad, don't hesitate to spend a season in Panama. The requirements are quite accessible, the costs are low, whereas the lifestyle benefits are enormous.

Choose Coronado if you love the beach, Boquete if you love mountain weather, or the city for a thrilling world-class capital experience. 

Why choose Mundo

Mundo is a team of experts located in different countries. In Panama, we have our own physical office. Many of our experts have lived here for years and have a clear insight into its residency paths and business advantages. 

We specialize in services for the global citizen and international investor, encompassing a wide array of services from economic migration to banking, corporate, and trusts. Contact us and learn more about our services. 

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