Benefits of Becoming a Resident in Panama
By Ivette Chan, Panama Immigration Lawyer
You are researching countries to relocate to, and while Panama’s beautiful weather might be your initial attraction, there are other beneficial key factors to sway one to chose Panama.
The tax regime
Panama’s tax regime is territorial, this means that Panama will tax all income that is sourced locally, regardless of residency status. This presents a great advantage for foreign investors and digital nomads, as their income most likely is sourced outside of Panamanian territory, thus their income tax will be 0%.
No requirement to have a work permit if your job is done remotely for a foreign company, this applies if you own your business too.
The local currency is the US Dollar, so your assets held in local banks will be protected from drastic currency fluctuations.
In Panama, to be consider a tax resident, the interested person can opt to comply with one of the following requirements:
- spend 183 days in Panama, or;
- Proof to the tax office that they have strong links with the country that they do not have with any other country.
You can make a case for the latter by becoming a resident of Panama, having a physical address (that could be a long-time rental), and certifying that you hold businesses in Panama. This requirement might seem elaborate but is very simple with the assistance of a qualified attorney.
Ease of business
In Panama, when compared to other jurisdictions, you can be in business in an expedite time. For reference, opening a legal entity takes approximately 2 weeks, a business license for services takes 3 days to be issued and municipality registration takes about 2 weeks. There is no requirement to liquidate the investment, and for most businesses the declared initial investment is USD $10,000, for nominative purposes.
If you are looking to operate your business from Panama but offer your services in offshore jurisdictions, you can declare your activities as such, and your business will pay 0% of income taxes. Note that there are other applicable taxes, that will apply to your business if it falls under this category, such as the dividend tax (5% for foreign sourced income), and complimentary tax (10% if the company chooses to hold dividends for the fiscal year).
Easily Maintain your Residency
And finally, one of my favorite benefits is that when you become a resident of Panama, you do not have to stay in the country for certain number of days to maintain your residency. You can make Panama your hub to travel the world and come back a few days every 2 years and still be in good standing to maintain your residency status.
There are a lot of benefits in becoming a resident in Panama, here I list the most relevant from an expats point of view. If you want to learn more about moving to Panama permanently or even occasionally to take advantage of what this beautiful country has to offer, do not hesitate to contact me to discuss this matters further.
Learn More About Obtaining Residency in Panama
Ivette is a freelance business and immigration lawyer in Panama. She has over 9 years of experience in various legal areas concerning relocation.
Connect with Ivette to be your guide in investing in Panama Real Estate, as well as immigration matters.
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