Topics Covered Hide
- Defining ties with Panama
- Employment contracts
- Requirements for the initial provisional residency
- Requirements for a dependent spouse
- Requirements for dependent children
- Applying for permanent residency in Panama
- How about a work permit?
- How the Panama Friendly Nations Visa has changed
- Showing your ties with Panama
- Getting automatic permanent residency
- Updating the eligible country list
- Quick second residency
- Citizenship and taxes
- Understanding taxes in Panama
There are some requirements in the process, and most of them are economic and professional. Those who are eligible can get a work permit and keep it for as long as they manage to maintain their eligibility for the visa.
Before digging deeper, it is important to know that eligible individuals cannot apply for this permanent residency straight away through the program. Instead, they must get a provisional residency first. This type of residency is only valid for a couple of years.
During these two years, applicants must maintain the requirements. They need evidence that they are still eligible for residency. Only then – and only if they are interested to spend more time in Panama – they can request a permanent residency.
The benefits of a friendly nation include the right to work in Panama and reside there. Moreover, the application can include more than just one applicant. For example, you can also add dependents on it – spouse, parents, and children younger than 25.
Defining ties with PanamaBenefits for a friendly nation include many perks, but before even thinking about Panama, you need to ensure you come from an eligible country. There are plenty of jurisdictions out there, so you might actually be lucky.
Most countries in Europe are eligible for it, with some exceptions around the eastern part of Europe. Then, jurisdictions out of Europe are also eligible – Argentina, Australia, Brazil, Canada, Chile, Israel, Japan, and a bunch of other countries from South America.
It does not mean that citizens of other countries cannot get to Panama. In fact, there are lots of other opportunities and different residency programs – each program has its own requirements and regulations, though.
Now, talking about ties, every applicant to the Panama Friendly Nations Visa must bring evidence regarding their ties with Panama. There are a few different ways to express your connections with the country.
Employment contractsThis is probably the easiest option out there. If you are interested in Panama as a job market, you can find jobs online and apply there – you can also visit the country and try to find a job before applying. This way, you have the contract straight away.
A simple employment contract is not enough, though. You will also require a letter from the potential employer, which basically claims that someone is interested in your skills and work. You need to have at least an offer of employment or perhaps a pending contract.
Real estate ownership
Having a property in Panama is practically a tie with this country. Whether you use it for business purpose (to rent it out) or you keep it as a holiday home or perhaps a future permanent residence, this is a solid connection that will help with the application.
Now, this property must meet some conditions, of course. You cannot just buy an old abandoned barn or some land for $1,000 and call it property. It does not work that way. Instead, the registered value must be at least $200,000.
Now, here comes an interesting fact. You do not need to own the property straight away. Sure, if you have the funds, you can get it. But then, you can also get a loan. In fact, you can get a mortgage from a local bank as well.
Certificate of deposit
Finally, a certificate of deposit can also be considered an economic with Panama and will push your application forward. It is one of the approved methods to prove your ties. Now, what does this certificate actually mean?
To keep it simple, you need a fixed-term deposit. There is a minimum requirement, though – $200,000. Anything over that limit qualifies. The deposit must be made in a local bank in Panama and not some random institution.
To prove your eligibility, the deposit should include the title, the term, and the value. Furthermore, there must be no encumbrances for at least three years. This deposit can be made in your name, but it can also be made in a business name – as long as you are the beneficiary of its shares, of course.
Requirements for the initial provisional residencyThe benefits for a friendly nation include lots of perks, but you need to go through the provisional residency first. This residency requires two years – meanwhile, you need to maintain the eligibility. The more people you have on the application, the more requirements you must check.
Single applicant? No problem. You will need a power of attorney or some licensed agency to deal with the process for you – too complicated, and authorities would rather deal with an expert than with someone with no experience.
You will need to bring your original passport, too, and the validity should exceed six months. The government requires two forms of identification. You can bring an identity card or a driver's license. Other than that, this residency will also need your pictures, so bring five passport style photographs.
Then, how about the fees? Indeed, the application will cost. You will need a check from a local bank in Panama – $250. The payment must be made to the National Treasury, so you are basically supporting the government.
The National Immigration Service will also require your support – after all, this is the service dealing with your application. Again, you must provide a check for $800 from a local bank in Panama – make sure it is paid to the National Immigration Service.
Despite being a welcoming environment for foreigners, Panama does not want to accept criminals within its borders. Therefore, you must get in touch with the local police and obtain a criminal background check. This document must be fresh – not older than half a year.
It has to be an official document. Get in touch with the Panamanian embassy or consulate in your country and make sure they authenticate the document. It can also be apostilled in your country – whichever option is easier for you.
You need to be in good physical condition – basically, no one cares if you are a bit overweight, but coming over with seven chronic and potentially deadly affections is not a good idea. You will be checked by a local doctor, who will also give you a medical certificate.
Finally, you need all the documents to prove your economic or professional ties with Panama. There are three options out there. It makes no difference which one you choose – simply attach the evidence to your application.
Requirements for a dependent spouseInterested in bringing your partner over? No problem. Apart from some of the above-mentioned documents – such as passport-style photos, payment checks, or identification, there are a few extra papers you must bring in.
One of them is the marriage certificate. It must be authenticated or just apostilled. The authentication should be valid for at least a year. Then, you will need a notarized proof of address in Panama. For example, a rental contract or a home purchase contract will do.
If, for example, your partner is in a hotel until the process is over, you can get a letter from the hotel.
Finally, financial solvency is a must – just like in your case. Your partner needs to prove. A personal bank account should have around $5,000 or more like evidence. If you and your partner have a joint account, go higher – $8,000 or, even better, $10,000.
Requirements for dependent childrenIf you have children too, you should know that main applicants can include children on their applications, but with one condition. Dependent children must be younger than 25. Other than that, there are no conditions.
In terms of requirements, apart from the classic documentation and the same payments, you need to bring birth certificates. They must be apostilled or authenticated, and the certification should be less than a year old.
If you are the only parent – unless your partner has passed away, you will need a letter from them. The letter should basically authorize the application for your children. If the other parent has passed away, you need to prove it.
Now, there are a few extras you must be aware of. The $800 check to the National Immigration Service is payable only if the child is 12 years old or older. If the child is older than 18, you must prove that they are single. Plus, your child must enroll as a full time student in Panama.
Applying for permanent residency in PanamaThe applicant must spend two years on a temporary visa before applying for the permanent one. At this point, eligibility criteria will not change at all. There is one difference – you will no longer be asked for the $250 payment to the National Treasury.
The whole program – reaching permanent residency – can be divided into four major steps. Overall, you are granted the provisional residency, and you need to keep it for two years. Overall, the whole process of becoming a permanent resident should not take more than three years.
The first step begins with doing the application. Overall, it will take up to a week to complete everything. You will be given a temporary residency ID at first. Half a year later, the provisional residency permit will arrive.
The ID implies having a photo taken at the local immigration office, so you must be physically present.
If the application is approved, you will get your provisional permit. Keep the requirements for two years. You can then apply for permanent residency. You will need to get back to Panama – in case you are abroad.
Follow the same procedures, and the result will be available within six months. If you are not in Panama at the time of approval, the date of return will most likely depend on the approval date. Once you get there, you need to complete the visa process.
The benefits for a friendly nation include more perks, and waiting for you is one of them. Completing the visa process takes a couple of days only. As a result, you will be able to receive your permanent residency card. To take it, you must visit the Immigration Office one more time.
While not mandatory, you can opt to get a national ID too. You will have to apply for it – known as e-cedula locally. You can do it anytime you want. While not a top notch priority, it is highly recommended to have it too. You will most likely use it locally for all kinds of procedures.
Although the authorities will wait for you to complete the permanent residency process, the truth is you do not have too much time. You have six months once the provisional residency expires to complete the permanent one.
How about a work permit?The benefits of a friendly nation also include the possibility to work in the country, but, of course, there are some laws and regulations you must be aware of. Getting residency with this Friendly Nations Visa does not mean that you can start working straight away.
However, the government does offer some procedures for new applicants to also be able to apply for a work permit. You need to apply at the Ministry of Labor, and you need to wait for the provisional residency to be eligible.
The process is different from the one needed to obtain the residency. Just like any other application, it comes with some costs. It is worth noting that it may take up to a couple of months to get your work permit.
How the Panama Friendly Nations Visa has changedEver since it was created, the Panama Friendly Nations Visa has changed dramatically. 2021 has seen some serious changes and the bad news is the program is now less accessible than before. Here is what made the process more difficult.
Showing your ties with PanamaBack in the day, there were more ways to show your ties with Panama. These days, there are only three solutions. One of them has been scrapped, and unfortunately, that was one of the most efficient ones for an entrepreneur.
Practically, you had the opportunity to be a business owner or investor. You could start a business in Panama, and that tie would have been enough for the residency to be approved. You could also invest in a local company.
Such economic ties are no longer accepted.
Getting automatic permanent residencyThe way it works now is fairly simple to understand. You apply for the residency, and you wait about half a year. Meanwhile, you get some sort of temporary residency. Once approved, you will get the provisional residency, which will last for two years.
Before 2021, you used to get permanent residency automatically. It was given, assuming you are still eligible. Today, it is no longer given like that. As the provisional residency expires, you will need to apply for the permanent one yourself.
This is not really a big issue, but it implies more work, more hassle, more documentation, and money.
Updating the eligible country listTaiwan has been removed from the eligible list in 2021. Taiwanese citizens can no longer apply for this visa. This move has seriously closed the door to numerous opportunities, especially since both Taiwan and Panama are highly appreciated for their tax optimization opportunities.
Benefits of the Panama Friendly Nations Visa
Benefits for a friendly nation include a bunch of aspects that still make this jurisdiction an appreciation option, despite the scandals that have shaken the offshore industry over the past decade. So, why would you choose this program?
Quick second residencyObtaining a second residency has never been easier. The process asks for basic paperwork and is quite straightforward. There is no way you can go wrong with it if you meet the requirements. Overall, these requirements imply proving that you are able to support yourself, but you also have ties with the country.
The process to complete the application will take about a week. Then, you can go back to your country and wait there – or you can just wait in Panama, assuming that there are no actual reasons to get rejected.
A second residency will provide more benefits and a bit of freedom.
Great lifestyle and living costs
Residing in Panama will bring in a completely different lifestyle. The country is safe and stable – no major issues in terms of security. Furthermore, you will be impressed by the modern infrastructure – you have good roads, great Internet speeds and a well-organized environment.
Despite being seen like a playground for the rich, the cost of living in Panama is actually affordable. The healthcare system is just as effective – high-quality services at good prices. Compared to the USA or countries in the EU, Panama is quite cheap – plus, everyone is chilled and laid back.
citizenship-and-taxes" data-toc="1" >Citizenship and taxesIf you have ever wondered why so many western companies are based in Panama, you should know that Panama has a territorial taxation system. What does that mean? No one will tax you from the income generated from abroad.
Basically, you can have a company in Panama, operate internationally, avoid Panama and pay no taxes at all. The same rule applies if you are a self-employed professional or a freelancer – deal with foreigners only, and no one will ask you for tax.
Interested in making money locally? No problem. Compared to most civilized countries out there, Panama has extremely low taxes, so it is still a better option. As for citizenship, you can apply for it after keeping the permanent residency for five years.
Understanding taxes in PanamaNo matter what type of residency program you choose, taxable income in this jurisdiction targets money generated from inside the country only. Local activities will get you charged – dealing internationally will not expose you to any problems at all. This is different from the EU and USA.
So, how does Panama make money then? The VAT is the most important source of money.
Now, when it comes to tax rates, people making less than $11,000 a year will not need to pay income tax. Then, the income tax is 15% for those who make less than $50,000 a year. Income higher than $50,000 a year will be taxed at 25%.
By comparison, you are likely to leave half of your income to the government if you have big amounts of money in the EU or the USA. Moreover, small amounts of money are charged at what Panama charges for big amounts of money.
Those who get permanent residency may also be interested in the tax residency. Tax residency has one purpose – proving to other countries that you pay tax in Panama. You will need a certificate that you can use with countries that have a partnership with Panama:
To get tax residence, you must spend 183 days or more in Panama over a year – you have to actually prove it. Then, this certificate also comes with some requirements. Most of these requirements are related to the documents needed in the application.
For instance, you will need the so-called e-cedula, a notarized copy of your passport, proof of address in Panama, proof of your residency and economic activities, not to mention the details of the tax treaty that will be included or the tax year of your request.
ConclusionAs a short final conclusion, benefits for a friendly nation include financial considerations, as well as access to a low taxation system and an incredibly chilled lifestyle. Quality of life in Panama is high, and the cost of living is low. What else can you ask for?
The program is suitable for those with business abroad, as well as those who are looking to relocate to a stable and safe country – after all, just because Panama is associated with rich and wealthy entrepreneurs, it does not mean that you cannot go there to work.