Destination · Panama
Panama: a territorial tax system in a dollar economy
Income earned outside Panama is generally not taxed, the US dollar is legal tender, and residency routes exist for citizens of many countries and for retirees.
Overview
Why Panama works for international earners
Panama taxes income from Panamanian sources. Income from business done outside Panama is generally not subject to Panamanian income tax, which is why the country is a long-standing base for entrepreneurs with clients around the world.
Panama City is a regional business and banking hub with direct flights across the Americas and to Europe. The US dollar circulates as legal tender, which removes currency risk for many North Americans.
Panama offers some of the best-known residency routes in the region, including the Friendly Nations Visa for citizens of listed countries and the Pensionado Visa for retirees. A permit on its own does not end your tax residency at home, so we plan both together.
At a glance
Panama in six lines
| Tax system | Territorial: tax applies to Panamanian-source income. |
|---|---|
| Foreign income | Income from business carried out outside Panama is generally not taxed in Panama. |
| Residency routes | Friendly Nations Visa, Pensionado Visa, the Qualified Investor programme and others. Friendly Nations · Pensionado. |
| Path to citizenship | Naturalization is possible after a period of permanent residence set by law, with further requirements. |
| Good fit for | Entrepreneurs with foreign clients, investors, retirees and anyone who wants a city base with strong banking and air connections. |
| Watch out for | Visa rules that have been revised in recent years, and structures that must genuinely operate outside Panama to stay outside local tax. |
General information, not legal or tax advice. Immigration and tax rules, amounts and processing times change; we confirm the current requirements for your specific case during your Global Strategy.
Residency routes
The Panama programmes we handle most
- Friendly Nations Visa Residency for citizens of countries with friendly relations with Panama, tied to an economic link with the country.
- Pensionado Visa Residency for people with a lifetime pension, with local benefits for retirees.
- Qualified Investor residency Under the ministry notice of 21 September 2026: B/.300,000 in new first-sale property, or B/.500,000 in resale property or in fixed-term deposits at Banco Nacional de Panamá or Caja de Ahorros (the balboa is at par with the US dollar). As checked September 2026.
- Second citizenship How residency today can become a passport later.
Does Panama tax foreign income?
Panama taxes Panamanian-source income. Income from business carried out outside Panama is generally not taxed there. How your own income is classified depends on where the work is done and how the business is structured.
Can Americans and Canadians use the Friendly Nations Visa?
The United States and Canada are among the countries whose citizens have been eligible. The list and the requirements are set by Panama and have changed over time, so we confirm eligibility for your nationality first.
Will moving to Panama end my taxes at home?
For Canadians, becoming a Canadian tax non-resident can end Canadian taxation of worldwide income, while certain Canadian-source income remains taxable. US citizens remain taxable in the US wherever they live. See leaving the United States and leaving Canada.
Is Panama good for retirees?
Many retirees choose Panama for the Pensionado Visa and its local benefits. See how it works.
Journal
Reading on relocation and tax residency
Sep 23, 2024 · 3 min read
Paraguay: The Hidden Gem for Conservative Entrepreneurs
Paraguay is a top choice for conservative entrepreneurs, offering low taxes, personal freedom, Christian values, and pro-business policies.
Read article
Sep 23, 2024 · 2 min read
Millionaires Are Moving to Costa Rica–Here’s What They Know That You Don’t
As taxes rise in Canada, USA, and Europe, wealthy entrepreneurs are seeking better options. Costa Rica is a popular choice—here’s why.
Read articleYour next step
Considering Panama?
The Global Strategy checks your eligibility, compares Panama with the alternatives and plans your tax residency.