Requirements to Become a Panama Tax Resident Through the “Friendly Nations”

Wikipedia explains the definition of tax resident in the following way:

“The criteria for residence for tax purposes vary considerably from jurisdiction to jurisdiction, and “residence” can be different for other, non-tax purposes”.

The truth is nowadays many immigration firms are promoting their CBIs and RBIs as tax avoiding vehicles, however, this is nothing but a marketing strategy. The tax residency definition is completely independent from the immigration status. A person can have a Cyprus passport, for example, without being a Cypriot tax resident. Likewise, a person can have legal residency in Portugal but be tax resident in Russia if he lives or works there. This definition depends entirely on the country and each nation defines its own standards to achieve a tax resident status.

It is important to understand that having a legal resident status in a country doesn’t automatically make you a tax resident. But, in order to acquire a tax resident legal certificate, it is necessary to have a legal resident status. In this regard, Panama is positioned as one of the best places to relocate because it has what every international investor needs: many immigration options and a territorial tax system.

Tax residency in Panama through the friendly nations visa

There are two main factors that will determine the fiscal residency of a person in Panama: legal residency and ties to the country.

The first step a person needs is to understand the definition of tax resident in Panama.

Firstly, it is necessary to acquire permanent residency status. There are three ways to achieve this:

1- Apply and obtain any visa in Panama in order to be a legal resident. After a minimum of two years (depending on the case and the visa) of living in the country, it will be possible to apply for permanent residency.

2-One direct path to permanent residency is through the Qualified Investor Visa, thanks to which a person can acquire permanent residency in only 30 days by making an investment. The minimum investments are 1) 300,000USD in real estate, 2) 500,000USD in financial vehicles in the Panama stock market, 3)700,000 USD in a bank deposit in Panama. For the detailed requirements and procedures of this visa please visit this article.

3-Another direct path to permanent residency in Panama is the Friendly Nations Visa which we discuss in this article. This visa does not require an investment, but the applicant will need to prove having business or professional ties to the country. You can find more details on the requirements and procedures further down in this article.


Tax residency definition in Panama

Like we stated before, tax residency definition depends on each country. In general, a person becomes a tax resident when he or she has business or commercial activities in a country, or when he or she spends more than 6 months a year in a country.

For the United States, for example, which has a worldwide tax regime, everyone is a tax resident no matter where they live. If a person holds a US passport or a green card, he will be subject to tax on worldwide income, even if he never set foot in the country.

Let´s suppose a child is born in Italy to an American married couple. The child will be an American citizen even if he never visits the US and will have to pay tax on all his assets from around the world forever. In the case of Panama, it is all the way around. Thanks to its territorial fiscal system, tax residents in Panama are not subject to tax on worldwide income.

The tax residency definition in Panama starts with obtaining legal permanent residency status, which can be acquired through 3 different options like explained in the previous section. The person or entities that will be considered tax residents are:

-The ones who remain in the territory of Panama for more than 183 calendar days or alternate days in a fiscal year or the previous fiscal year.

-The ones who establish permanent residency in Panama.

-The entities incorporated under the Panama legislation that are managed or directed inside the territory.

-The legal entities established abroad that are registered in the Public Registry of Panama and that have the material means to manage the company in the Panamanian territory.

There is a list of requirements stipulated that are intended to prove the tax resident status of a person. The key is to demonstrate that the individual lives in the country or has significant ties within it on a personal or professional level. In general, these requirements include:

-Utility bills

-Grocery bills

-Rental agreement

-School bills

-Property title

-Business registered and operating in Panama

If you gather sufficient proof that you spend most of your time in the country, then you can have a Panama tax resident certificate. This means that all income, dividends, or royalties generated outside of Panama won’t be subject to tax in Panama. This also means that your banks abroad will report to Panama under the CRS, not to any other country.

It is worth noting that the tax resident status can´t be faked. In most jurisdictions it is important you find yourself in the country for more than 6 months a year, which means you practically need to live there. Faking presence will not work as the authorities will revise utility and grocery bills, passport stamps, where your family lives, where your children go to school, etc.

However, Panama is one of the few countries that recognizes tax residency without the formal requirements of spending 183 days a year in the country. Tax residency can be acquired in Panama by proving having ties to the country through different options. For example, if you have an apartment that brings you rental income, receive a permanent salary or director’s fees, have other economic ties and file your taxes in Panama. However, you should not spend more than 183 days a year in another country.

This article does not constitute an official tax consultation. For formal tax advice we recommend asking for an interview with our experts.


Friendly nations visa

From all the available visas in Panama, the friendly nations visa is one of a kind. This is one of the few programs in the world that allows for permanent residency without any investment. The only trick is that you have to be a citizen of a list of countries that are considered to have friendly relationships with Panama.

The main concept of this visa was originated in the desire to attract talented people and professionals to Panama in order to develop the economy and industries. The decree allowing for the friendly nations visa is decree 343, released on May 16th, 2012.

In a practical way, this means that if you are a citizen from any of the 50 countries considered “friendly”, you can acquire permanent residency with a straightforward process and no investment.

The original decree only named 22 countries on the “friendly countries” list. However, now the number of “friendly nations with professional and economic ties with the Republic of Panama” has increased to 50.

You can apply to this program if you are a citizen or hold a passport from any of these nations:

Great Britain Germany Argentina Australia Republic of Korea Austria Brazil Belgium Canada Spain USA Slovakia France Finland Netherlands Ireland Japan Norway Czech Republic Switzerland Singapore Uruguay Chile Sweden Poland Hungary Greece Portugal Croatia Estonia Lithuania Latvia Cyprus Malta Serbia Montenegro Israel Denmark South Africa New Zealand Hong Kong Luxembourg Liechtenstein Monaco Andorra San Marino Taiwan Costa Rica Mexico Paraguay.

Requirements for a friendly nations visa

Since the official name of the visa is visa for “citizens of friendly nations with professional and economic ties with the Republic of Panama”, it becomes necessary to prove these economic or professional ties. But how do you prove this? There are two options:

1-Establish or purchase a corporation in Panama. This option proves that the applicant has economic ties by owning a company that operates in the country. The company cannot engage in retail businesses activities as this is reserved for Panamanian citizens only.

2-Having a job contract with a Panamanian corporation. Thanks to this option it is possible to prove having professional ties with the republic of Panama. In order to apply, the individual needs to have a job contract with a Panamanian company that is duly registered in the Ministry of Labor and Workforce Development. This means that the employee must be registered in the Panama social security system.

When applying through this option, it is important that the employer provides proof of income and other documents showing the involvement of the foreign employee with the company. It is vital to remember that certain professions are exclusively reserved for Panamanian citizens. Thus, foreigners can´t work as medical doctors, veterinarians, attorneys, engineers, or architects. Some professions that are available are teaching, sales, customer support, waitressing, cooking, and others.

After meeting the first two requirements (nationality and proof of economic or professional ties), the prospective applicant needs to prove economic solvency. This can be achieved by depositing a minimum of 5,000 USD for the main applicant, and 2,000 USD for each additional dependent, in a Panamanian bank account. Based on this evidence, the Immigration Department decides whether the applicant is economically solvent.

The funds need to be kept in the bank account for as long as the process is in review and they can be released upon approval. The tricky part of this requirement is to be able to open a bank account in Panama as a foreigner. Usually, the most important banks offer their services to those that already have legal residency. However, thanks to our long-term banking relationships, at Privatus Maximus we can help you open a bank account as a foreigner. You can read more on this further in this article.

The author, for example, was able to open a bank account before acquiring residency and was required to submit the following documents:

-Letter of reference from a Panamanian citizen stating all his or her information (at least name, ID, social security number, and address).


-Minimum deposit.

Please keep in mind that these requirements are selected from a specific case, but they can vary at any time depending on the bank and the regulations in general. If you want updated information and a private consultation, please contact our experts.


After acquiring permanent residency, you will be issued a Panamanian ID, with which your life in the country will become much easier. You will be able to open bank accounts in practically every bank of the country.

Coming back to the topic that concerns us, professionals are allowed to apply to the Friendly Nations program with dependents, i.e., spouse and children. The children need to be younger than 18 or else study a career at the university and be single, in which case they can apply up to 25 years of age. Every dependent over 18 needs to present a certificate proving their status as “single” (not married).

Once the application and documents are submitted, the Immigration Department will grant a temporary residency card. This card can be used by the applicant to show that his or her residency application is in process. Once approved and the residency resolution is issued, the applicant will receive a permanent resident card. After this, it is possible to acquire a Panamanian ID or cedula which will start with the letter “E” followed by a number, e.g., E-8-xxx-xxxx.

In Panama, not all visas allow for a work permit. Luckily, the friendly nations visa does. Once the resident acquires his/her permanent resident card, he/she can apply for a work permit that is also valid for an indefinite period of time.

How to apply – documents and procedures

Step 1- Schedule a consultation

Contact our experts at Privatus Maximus and schedule a consultation. Through this consultation we can establish the documents that will be required in your particular case. The immigration process takes between 7 and 9 business days, which needs to be considered when you plan your trip to Panama.

Step 2- Documents

The required documents must be issued during the 3 months prior to application and authorized by a Panamanian consulate or apostilled.

-If you are not in Panama, we require you prepare the documents and send a scanned version to our offices so we can evaluate them. This needs to be done at least 1 month before the application date.

-When the applicant arrives in Panama, these documents need to be authenticated at the Ministry of Foreign Relations.

Dual nationality

In this regard, a very important point arises. If the applicant has two passports, he or she must enter the country using the passport that will be used for application (which should be the one included in the “friendly countries” list) and the documents presented must be also issued in this country.

For example, if a person applies with a Polish passport, he or she will have to present a police record issued in Poland. If he/she presents a certificate issued in, for example, Grenada, then the applicant will have to prove that he/she is a legal resident in Grenada.

The Panamanian government institutions have a very strict dress code. The access to the facilities is forbidden for people wearing shorts, sandals, mini-skirts, or any clothes disclosing shoulders.


The following documents are required for the Panama Friendly Nations program:

-Eight passport-sized pictures per applicant (for applicant and dependents).

-Police record from the country of origin showing the applicant does not have a criminal history. If the document is issued abroad, it must be authenticated by a Panamanian consulate or have a Hague apostille. It may also be also possible to ask for this document at your country´s embassy in Panama.

Like we stated before, if the applicant shall present a document that is issued in a different country then he or she must present an ID from this country or prove to have residency there. This document must be presented for each applicant that is older than 18, this includes the spouse and children.

If the applicant has been living in Panama for two years prior to application, without leaving the country, then he or she should present a police record from the Panama National Police. The police record in general has a validity from 3 to 6 months, depending on the nationality. It is important to consider this when gathering all the documents. From the date when your police record is issued till your residency application, there can be only 1 entry stamp to the Republic of Panama on your passport.

This means that, unless you live in the country, you must acquire the police record after your first trip to Panama and before the trip during which you will present your application. This is an important point to consider when planning the travel dates and the gathering of documents.

-Written statements describing the applicant´s activities in the country.

The friendly nations visa grants permanent residency only to those individuals who have economical or professional ties with the Republic of Panama. Therefore, applicants will have to prove these ties.


Proof of economic activity (owning a business in Panama):

Provide documents where it is stated that the applicant is member of the board of directors or that he owns at least 50% of shares from a Panama company. If the company has been recently established, it is necessary to provide proof of payment of its franchise tax. If the company is older than a year, then it is required to provide proof of its tax return and a certificate of good standing.

To sum up, if a person is member of the board of directors of a Panama company, he or she can apply for permanent residency. The company needs to be registered in the Public Registry and exist at least until the application is approved. The corporation does not have to be active in business and cannot be registered to provide activities that are only for Panamanians such as retail services.

Proof of professional activity (work contract in Panama):

An individual can apply for this visa if he or she has a job contract with a Panamanian company. The company needs to be registered in the social security and the applicant must have a contract registered in the Ministry of Labor and Workforce Development, a social security card and a work permit.

Before applying for the friendly nations visa it is possible to acquire a job permit under the Marrakech treaty. All companies in Panama are allowed to hire a maximum of 10% of foreigners among their staff. It is important to note that once you acquire the friendly nations visa status, you no longer belong to the 10% of foreigners but are counted as a national resident. This means that the company will be able to hire a new foreigner employee once you acquire residency.

Some professional activities in Panama are restricted for foreigners such as medical and veterinarian doctors, engineers, architects, and lawyers.

-Copy of a second ID. Besides the passport, the applicant must submit a copy of a different ID issued by the country of origin. This is in general either a national ID or driver’s license. If you do not have a second ID, it is possible to present a birth certificate duly authenticated.

-Proof of economic solvency. In order to prove having economic solvency, an applicant should submit:

-Bank statement from a Panamanian bank proving that the applicant has 5,000 USD deposited in his bank account (plus 2,000 extra for each dependent).

-The applicant can present a proof of income from the company he works for stating the salary and social security number.

-Letter of responsibility for dependents

-The applicant must provide a letter of responsibility for each of the dependents.

-Proof that the dependents are related to the applicant by a birth certificate (in case of children) and a marriage certificate (for the spouse). These documents must be not older than 6 months by the time of application.

Sons and daughters of the main applicant older than 18 years can apply if they are single and study a full-time career at the university, or if they are disabled. They should provide an authenticated certificate that proves they are single, i.e., not married.

-Personal affidavit

Through this document the applicant needs to explain his purpose for establishing residency in Panama and state that he can support his dependents.


Summarized list of documents required for a friendly nations visa:

All documents issued abroad have to be legalized by a Panamanian consulate or have a Hague apostille. If the documents are in a language other than Spanish, then it is necessary to provide translations certified by an official public translator.

Friendly Nations required documents:

-POA (allowing your lawyer to apply on your behalf). It must be authenticated by a public notary.

-Copy of the complete passport authorized by a public notary.

-8 passport pictures.

-Police record.

-Copy of a second ID (other than the passport).

-Birth certificate for children and marriage certificate for the spouse (if applies).

-Medical certificate stating that the applicant and dependents are in good health. It needs to be signed by a Panamanian doctor.

-Letter of reference from a Panamanian bank that certifies that the applicant has a balance of at least 5,000USD (plus 2,000 extra for each applicant). The letter needs to be addressed to the “National Migration Service”

-Certificate proving that the applicant is part of the board of directors of a business or owner of at least 50% of the shares/job contract duly registered at the Ministry of Labor, document stating the employee´s salary, the social security number, work permit.

-*Certified check for 250USD to the National Treasury for immigration fees.

-*Certified check for 800USD to the “National Immigration Service” for repatriation funds.

*Once the application is approved or rejected, these funds won´t be reimbursable.

*The checks need to be issued by the Panama National Bank, and the foreigner will need a reference letter from a Panamanian citizen to be able to issue this check on his/her behalf.

Panama friendly nations visa: application procedure

Step 1 – Open a bank account

The foreign resident will have to travel to Panama for at least one business day. As we stated before, opening a bank account can be difficult for a foreigner. However, Privatus Maximus´ have been working with Panamanian banks for several years and they can help you to open an account. The time frame for the account opening will depend on the bank and the documents you provide, and it can vary from 1 to 30 days approximately.

Once your account is open, you need to deposit 5,000 USD if you are a sole applicant, and 2,000 additional dollars for each dependent that´s applying with you.

By opening your bank account with us, you have the certainty of working with a team that has excellent banking relationships in Panama. Thanks to our experience, we can advise you on how to prepare for your account opening application and interview at the bank. Thus, no time is wasted.

The requirements may vary depending on the bank, the applicant´s activities, place of residency, nationality, etc. Here we present the usual requirements to open a bank account in Panama:

-Copy of the passport

-Copy of a second ID (country´s ID or driver’s license).

-Bank reference letter from your bank abroad. The letter must not be older than 3 months by the time of application and must contain email and phone number from the banking representative that signed it. This is required so the Panamanian bank can confirm the information with your local bank.

-Proof of source of income. The bank needs to confirm what is the source of your income and for this you can present a tax return, employment letter, or retirement document.

-CV with details of your career including education and work experience.

-Letter to the bank describing the uses intended by the client for the account: debit and credit cards, monthly estimated deposits or transfers, estimated withdrawal and average balance, online banking, etc.

The bank may require additional documents if the banking officer considers it necessary. The applicant will also have to be available for a personal interview at the bank.

Our working procedure usually consists of sending at least two applications at a time, so that we don´t waste time in case one of the institutions rejects the applicant.

Step 2 – Register your passport and apply for residency

At this point you will need from 7 to 9 business days in Panama, because, although Privatus Maximus’ lawyers will take care of most of the process, your presence will be required in some particular moments. We recommend planning a trip of at least 10 business days.

The applicant needs to be present at the immigration office with the passport and 2 passport-sized photographs. Next, we will proceed to register the passport, which generally is done in the same day, depending on the amount of people ahead in the line.

The immigration department will stamp the passport and this stamp will be used throughout the entire process. For this reason, we recommend that the passport is not about to expire soon.

Then, we will make a copy of the complete passport which will be authenticated by a Panama notary. At this stage Privatus Maximus´ lawyers will have your passport to prepare the copies.

While we prepare the copies, the client can go to a doctor’s appointment with his or her family for the health certificate.

We proceed to authenticate all the documents and translate them to Spanish (if needed). This process can be much faster if you send us good quality scanned copies in advance.

With all the documents authenticated, our lawyer will approach the immigration office to submit the application and documents. Our lawyer will have to use your original passport for this. We strongly recommend that the applicant and dependents have copies of their passports with them at all times during their stay in Panama.

Time frame: 4 business days approximately

Step 3 – Temporary resident card

On the fifth day, the immigration office will issue a temporary residency card to the applicant. The applicant must attend in person for this procedure. They will take a picture of the applicant and issue the card on the same day. The said card will be valid for 1 year. Before the year is over, the application must be approved (or denied) in which case the applicant will be granted a permanent resident card. Please note that this is not a Panamanian ID. Privatus Maximus´ lawyer will then keep the passport, the residency card and the passport copies for the next step which is the Multiple Exit/Entry visa

Step 4 – Multiple Entry/Exit Visa

This process will take place approximately on the 6, 7 and 8 days of the application process. This visa is a very important point during a Panama residency application and next we will explain why. While the process is still going, the applicant will have to pay a fine of 2,000USD for leaving and coming back to the country. In order to avoid this, and so that the applicant is still able to fly back and forward, he can apply to a multiple Exit/Entry Visa. This visa has an extra cost of 50USD, but it will save you 2,000 if you need to travel.

Once this visa has been issued (which takes approximately 3 business days), the lawyer will return the passport to the applicant.

Time frame: 3 business days

After application

With these four steps the first part of the process will be completed. Then all we have to do is wait until the application is approved. Our Privatus Maximus lawyers will do the corresponding follow up on a weekly basis and will inform you when the application is approved. It usually takes 3 months (the maximum waiting time is 6 months). At this point the applicant´s presence is required again. After approval, the applicant has a period of three months to come to the immigration office and complete the process.

Step 5 – Receive your permanent resident card and Panamanian ID

The applicant needs to come to the immigration office where they will take a picture an issue a permanent resident card. This process usually takes 1 day. Approximately three months after this, you can acquire your Panamanian ID card at the Civil Registry, but this is not mandatory.

Time frame: 1 business day for the permanent resident card, 1 business day (after 3 months) for the Panamanian ID (optional).


The tax residency definition varies with every country, but in Panama, the first step towards it requires a permanent resident status. If you do not want to make an investment, the Friendly Nations Visa is an excellent choice to start your path towards a new home in Panama.

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