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Panama is an increasingly popular country for expats, as well as for perpetual travelers looking to take advantage of the tax system. Known for its canal, the country has developed significantly in recent years and has rightly become so popular.
But how do you move to Panama, what costs will you incur, and what do I need to consider? All these questions are answered in this comprehensive article.
Advantages
First, regarding the advantages of emigrating to Panama. These are diverse, but must nevertheless be weighed individually. Below is an overview of the most important advantages of Panama.
Taxes
One of the biggest advantages of Panama is definitely the tax system of Panama. It is not only attractive for expats, but also for people without a fixed residence (so-called Perpetual Traveler). Because this is a territorial tax system. This means that foreign-sourced income is not taxed. This includes, among other things, capital gains from stocks, dividends, rental income (e.g., from Dubai), or similar. Companies that are headquartered in Panama but conduct their business abroad also do not pay taxes.
Additionally, there are no taxes on wealth, inheritance, and gifts.
Currency
Another advantage of Panama is its currency. The official currency is the US dollar. This is not only easy in terms of theoretical conversion for anyone coming from the eurozone, but also practical in reality, because the US dollar is a global reserve currency and accepted almost everywhere.
Language
Linguistically speaking, Panama is also a country that presents comparatively few hurdles. The official language is Spanish, a relatively easy language to learn. Otherwise, you can also get by with English at certain banks or government offices. In everyday life, however, Spanish is the primary language used. Accordingly, it is recommended to learn some Spanish.
Location
An advantage, but also a disadvantage, of Panama is its location, depending on which perspective you look at it from. Because Panama is far away from any military conflicts in Europe or the Middle East. Furthermore, from a military standpoint, Panama is protected by the USA and is therefore a relatively safe country.
In general, the proximity to the USA, especially Miami, is an advantage when it comes to flight connections.
Disadvantages
No country is perfect, not even Panama. Accordingly, one should also know the potential negative aspects of the country when it comes to emigration.
Lack of digitalization
Panama is a country that has developed rapidly in recent years, yet still feels somewhat old-fashioned. Compared to other expat destinations like Dubai, Singapore, or other major Asian cities, life here is still far from digitized. For some, that may actually be an advantage.
Climate
Anyone who is used to a Mediterranean climate—or is looking for one—won’t be happy in Panama. That’s because the tropical climate is quite different. While it’s pleasantly warm year-round, with daytime temperatures ranging from about 25 to 32 degrees, it gets very humid from April through November. During this rainy season, the humidity in certain regions rises to around 80 %.
Prerequisites
Below are the most important requirements for moving to Panama.
Residence visa
The first step is to choose the visa you want to apply for. Depending on your initial situation, you have several options here. Below is an overview of the most popular ways to get a visa.
- Signature The most popular way to obtain a visa is Company formation in Panama. As described previously, this has several tax advantages and is especially popular among entrepreneurs.
- Real estate Anyone who purchases a property in Panama City for $300,000 or more will also receive a residency visa for the country. This is particularly attractive to investors who wish to capitalize on the potential of the real estate market. Currently, net rental yields of up to 10 % are possible.
- Investment Investing or depositing USD 500,000 in a broker or USD 750,000 in a local bank account and holding it for 5 years grants permanent residency in Panama.
- Pension Panama also offers an interesting program for retirees. Anyone who receives a pension of 1,000 USD or more also gets a residency permit and can emigrate to Panama.
criminal record certificate
Another point just like the Emigration to Paraguay is a clean criminal record from the country in which one has lived continuously for the past few years.
Financial resources
In addition to the aforementioned costs and requirements for the visa, ongoing income or assets are of course necessary for living in Paraguay. Since the social system cannot be compared to that of Germany or Austria, one should bring sufficient resources for private doctors, kindergartens, schools, insurance, etc.
Procedure
The procedure for emigration naturally depends on the type of visa one chooses. However, the basic approach involves the following steps.
- Select Visa type
- Meet the requirements
- Submit an application
- Submit documents
- Entry & local bureaucratic procedures
Costs
The costs for emigrating to Panama are individual and depend on the type and number of visas, as well as personal expenses such as moving containers, etc. However, generally speaking, in the most common case of emigration involving the establishment of a company, you can expect to pay around €7,500.
Experiences
In our experience, moving to Panama makes sense for all those people who have an affinity for the Spanish language or the Latin American way of life. That means a warm climate, a slower lifestyle, and lots of sun.
Apart from emigration, Panama also makes sense as a compliance residence for frequent travelers or digital nomads for themselves and their own company.
The most important points to emigrate successfully and free yourself from the system.
Optimize taxes, gain freedom and increase quality of life.
Summary
Panama is an exciting country for expats and impresses with an attractive territorial tax system, simple immigration regulations, and a good banking system with the US dollar as its leading currency. Anyone who prefers a relaxed lifestyle or needs a compliance residency will find what they are looking for in Panama.
