How to get a Residency visa, set up a company and open a bank account in Panama
Frequently called the Hong Kong of Latin America, Panama has a reputation for being a tax haven, as well as a beautiful, safe and warm place to live in. For decades, the wealth of the Americas has been accumulated in this country, a place where freedom and privacy still prevail, and where free-market capitalism reigns supreme. If your concerns are to optimize for things like liberty and bottom-line profits, this country is a great place for that and immigration to Panama an option to consider.
Though not considered an “official” offshore jurisdiction, Panama has excellent tax laws that benefit both residents and corporations. With a territorial tax regime in place, the country does not tax the foreign-earned income of its residents. So if you immigrate to Panama, your income earned outside the country may be free of taxes. On income that is made within the country, it imposes a very reasonable tax on both residents and corporations. Sales tax currently stands at 7 to 15 percent, while corporate tax is at 25 percent.
This Central American country is one of the few lefts in the world that still values privacy, and is a place you might want to base yourself in if you plan to build a successful company without annoying government intervention, piles of paperwork, or a huge back-office staff.
The quality of life here varies depending on where in the country you choose to set up a base. Most expat immigration to Panama, end up living in the major coastal cities, mainly Panama City and Colón. The cost of living is much higher in these places, especially Panama City, although it is still much lower than in similar cities in wealthier nations. The country is generally safe, but there are, of course, areas to avoid. Communications and infrastructure are probably the best in the region.
All this makes Panama a great jurisdiction for setting up an offshore company. The country is also among the few in the world that allow offshore companies to be run from within their territorial borders. But while the country imposes almost zero tax and fairly simple regulations on such firms, technopreneurs who choose to operate from within Panama may have to hire talent from overseas; the local universities do not offer a computer science degree courses, so developers and programmers may be scarce in the country.
Immigration to Panama Investment Schemes
There are six main investment schemes in Panama. The cost of each scheme is:
- Macro Investor: US$160,000
- Real Estate Investor: US$300,000
- Time Deposit Investor: US$300,000
- Film Industry: US$150,000
- Free Zones (including call centers and Panamá Pacífico): US$250,000
- Friendly Nations Visa: US$5,000 deposit in a bank account and incorporation of a new company
Panama definitely offers a great investment opportunity if your main concerns are tax residency and setting up an offshore company.
Friendly Nations Visa
Launched in 2012 to attract foreign capital and immigration to Panama, the Friendly Nations Visa grants individuals who have strong ties with the country, five years of residency in Panama leading to full citizenship.
To qualify, you will first need to show that you conduct some economic activity in the country. This is done by incorporating a company. While there is no requirement for this company to have any employees, it cannot be a dormant entity and must show some degree of activity. It is up to the authorities to determine if a company’s activities are adequate, though reportedly, officials tend to be quite lenient on this.
Next, you will have to prove that you are economically solvent by depositing US$5,000 in a Panamanian bank account. If you have dependents who are also applying for the visa, you will have to deposit US$2,000 per dependent in the account. Dependents include the applicant’s spouse, and children under 18 years of age, or 25 if they are full-time university students.
You will be required to submit the following documents when applying for the residency in Panama with the “Friendly Nations Visa”: [footnote] Some documents must be apostilled and then authenticated by a Panamanian consulate. [/footnote]
- Notarized color copy of all pages of your passport
- Notarized color copy of your driver’s license or government-issued ID card
- Notarized color copy of your recent utility bill. This should not be older than 30 days from the date of your application
- A professional reference letter from someone from your home country who have known you professionally for a considerable amount of time and can attest that you are a good person
- A bank reference letter stating that your banker has known you for at least two years and that your account is in good standing
- A letter detailing the type of profession or economic activity you wish to conduct in Panama
- Eight current, passport-sized photos of yourself and each of your dependents
- A criminal background report, duly apostilled
- Marriage and/or birth certificates, if applicable
- If you have dependents, you will have to submit a letter of responsibility for them, as well as a copy of their birth certificates to prove that they are related to you. If the dependent is your spouse, you will need to submit your marriage certificate.
- Dependent children over the age of 18 must provide documents showing that they are unmarried
Applicants will receive a temporary residency card, which is valid for one year, while their application is under review. Once it is approved, they will get a permanent residency card and will be allowed to apply for a work permit.
The Friendly Nations Visa application process can be fairly smooth and hassle-free if due preparations are made in advance and if you are in good hands. At Flag Theory, we can lead you to your Panama Residency Visa, as we will explain below. Before, a visit to Panama is required, and it is best to set aside at least a week for this.
All in all, we have helped single applicants complete this visa process for a lower cost compared to similar visa programs offered by some other countries. However, if you are American, it is also important that you consider things like CFC laws and PFIC rules, and that you get help from a qualified professional.
Residency under the Friendly Nations Visa can also lead to citizenship, which sources say can take about five years. If a shorter timeline for a new passport is a priority for you, it would be best to check out our free passport comparison tools at Passports.IO.
Get your Friendly Nations Visa
At Flag Theory, we can lead you to your Friendly Nations Visa. Your dedicated account manager will guide you through each step of the process to ensure the incorporation and Visa process is as fast, efficient and pain-free as possible. Get started now buying the Friendly Nations Visa Complete Package.
Q: How long does the residency in Panama application process take?
A: Just a couple weeks.
Q: Who is eligible to apply for the Friendly Nations Visa?
A: Citizens of the following countries may apply: Andorra, Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile, Costa Rica, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hong Kong, Hungary, Ireland, Israel, Japan, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Monaco, Marino, Montenegro, Netherlands, New Zealand, Norway, Paraguay, Poland, Portugal, Serbia, Singapore, Slovakia, Spain, South Africa, South Korea, Sweden, Switzerland, Taiwan, United States of America, Uruguay and United Kingdom.
A lower-cost alternative to the Friendly Nations Visa would be the Pensionado Visa, which grants legal residency in Panama to foreigners who are willing to immigrate to Panama have a lifetime income of at least US$1,000 per month. Though often referred to as a retirement program, this visa is actually available to anyone over the age of 18. One advantage of the Pensionado Visa is that Panama has pledged to grandfather in its holders, so they can be sure that they will never lose their residency, provided that they continue to meet the requirements for this status. Such residents, however, are not entitled to apply for Panamanian citizenship.
To qualify for this visa, you must have:
- A monthly income of at least US$1,000 for the rest of your life. This payment must come from a guaranteed source, such as a pension or annuity. Spouses applying for this visa are allowed to combine their income to meet the US$1,000 requirement
- A monthly income of US$750 and above AND a minimum investment of US$100,000 in Panamanian real estate
If you have dependent children, you are required to have an additional monthly income of US$250 for each child. This amount may also be obtained from interest earned on deposits placed in a local bank. Children up to 18 years old, or 25 if they are full-time university students, are considered dependents. They will lose their Pensionado status once they reach the ages of 18 or 25.
Applicants must submit the following documents:
- A letter from the organization that issues your monthly payments, certifying that the funds exist and guaranteeing that the payments are for your lifetime
- Proof of the existence of the organization that issues your payments
- Proof of prior payments to you, such as bank statements showing the deposits made
- Government certification that the organization administering your income is in good standing if it is a private company
- A criminal background report from the national police or investigatory agency of the country you lived in during the past five years
- Certificate of public registration of Panamanian real estate in your name, if applicable
- Marriage and/or birth certificates, if applicable
The application process for the Pensionado Visa typically takes about four to six months.
Legal Entities in Panama
Since you’ll need to incorporate a company in Panama for the immigration to Panama and qualify for the Friendly Nations Visa, it’s worth looking at the types of entities you can set up here. The two most common types of companies are Sociedad Anónima (SA) and Sociedad de Responsabilidad Limitada (SRL).
Sociedad Anónima (SA)
The more popular of the two types of legal entities, an SA is akin to a company limited by shares (a limited company).
The requirements of an SA are:
- Three directors
- One shareholder
- US$1 paid-up share capital
- One secretary
- A registered address in Panama
Corporate shareholders and directors are permitted. However, for corporate directors, companies must submit full details on the directors of the entity, and extensive due diligence will be conducted on them.
Sociedad de Responsabilidad Limitada (SRL)
An SRL closely resembles a typically limited liability company (LLC). However, if an LLC is what you need, incorporating in jurisdictions such as Nevis may be a better option. This is because the yearly accounting requirements, as well as the minimum number of members required, are higher in Panama than in some other offshore jurisdictions.
The requirements of an SRL are:
- Two members
- A registered address in Panama
Corporate members are permitted, and there is no minimum capital requirement for SRLs.
Taxation for SRLs
Like LLCs, SRLs are tax neutral and, like LLCs in most jurisdictions, they will be tax transparent, meaning that their members are taxed on personal income instead. Non-resident members of SRLs are not subjected to taxation in Panama. You can check Panama’s corporate tax scheme here.
Incorporate in Panama today
If you are ready to set up a company in Panama, leave it in our hands buying now our Panama Company Formation Professional Package.
There is no central bank in Panama, and its national currency, the Balboa, is rarely used. Yet, everything seems to operate just fine without extensive government intervention. In this country, cash is king and American dollars are the currency du jour.
When banking here, expect to be asked for invoices and proof of payment from time to time, though this is not beyond what is normal in international banking nowadays.
For non-US persons, Panama still maintains a relatively strong banking secrecy. However, the country does comply with requests for information under tax treaties (TIEA/DTA).
There are 90+ licensed banks in Panama.
General Licenses Banks
There are 50 banks licensed under this scheme, which may or may not engage with non-resident companies, provide wealth management, and take on international clients.
These banks include:
- Balboa Bank
- MMB Bank
- Tower Bank
International License Banks
These are foreign-owned banks that provide international banking services. Currently, there are a total of 28 license holders. Essentially, they are either wealth management banks or banks that engage with offshore companies and Panama Private Interest Foundations (PPIFs).
These banks include:
- Crèdit Andorrà
- Popular Bank
Open an offshore bank account in Panama today
We have a strong relationship with our Panama Bank partners and our introduction may allow you to open remotely an offshore bank account in the jurisdiction. You can check options and apply for your offshore bank account in Panama through bankaccounts.io or filling this form.
Ultimately, Panama presents a good opportunity for you to plant a citizenship, residency, company or banking flag. It is a great place to establish tax residency, as taxation on both personal and corporate levels is exceptionally reasonable. If you choose to live here, you can look forward to a good lifestyle in a country with a good economy and lots of investment opportunities. The quality of life here is high, and the country is safe and warm.
If you can qualify for the Panama Residency ‘s Friendly Nations Visa, you will get to enjoy tax residency status and a home in the Central American region, with a fast track to a full-fledged passport – all at a lower cost compared to similar visa programs offered by some other countries. The Pensionado Visa is an even cheaper option, as there is no need to incorporate a company.
All in all, immigrate to Panama is a very good option for anyone who wishes to optimize for personal freedom and privacy.
How we can help you
If you are willing to start your immigration to Panama, you can get the Flag Theory’s Friendly Nations Visa Complete Package now or apply for the “Pensionado Visa” at passports.io/panama. You can also incorporate your company in Panama, acquiring our Panama Company Formation Professional Package, which is required for applying for the Friendly Nations Visa. If by now, you only want to open an offshore bank account you can do it at bankaccounts.io or filling this form.
If you want to compare other international incorporation and residency options, you may check our free comparison tools: Incorporations.IO and Passports.IO. You can also consider joining our PT Society, a Do-It-Yourself information center that can empower you to take an action. If you need personalized advice to find an optimal internationalization solution according to your specific circumstances, you can e-mail us at any time or check how we can help you.