Panama’s Friendly Nations Visa program offers an appealing route to residency for citizens of over 50 countries, providing access to the country’s favorable tax system and thriving business environment. This visa makes Panama one of the most sought-after destinations for expats looking to establish a legal and tax-friendly base.

In this article, we’ll break down the process of obtaining the Friendly Nations Visa in Panama, including the qualifying criteria, company formation, banking requirements, and why Panama’s territorial tax system is particularly beneficial for expats.

What is the Friendly Nations Visa?

Introduced to foster diplomatic and business ties, the Friendly Nations Visa provides a fast-track option for citizens from countries that have positive relations with Panama. The program is especially popular among expats, entrepreneurs, and nomads due to its relatively straightforward process and numerous benefits.

Countries Eligible for the Friendly Nations Visa

Citizens from the following countries qualify for the Friendly Nations Visa:

United Kingdom and North Ireland, Germany, Argentina, Australia, Austria, South Korea, Brazil, Belgium, Canada, Spain, United States, France, Finland, Holland, Ireland, Japan, Norway, Switzerland, Czech Republic, Singapore, Uruguay, Chile, Sweden, Slovak Republic, Poland, Hungary, Greece, Portugal, Croatia, Estonia, Lithuania, Latvia, Cyprus, Malta, Serbia, Montenegro, Israel, Denmark, South Africa, New Zealand, Hong Kong, Luxemburg, Liechtenstein, Monaco, Andorra, San Marino, Costa Rica, Paraguay, Mexico and Peru.

This visa program grants a two-year provisional residency followed by an option to apply for permanent residency after two years. Once residency is obtained, individuals can live and work in Panama indefinitely, with the option to pursue citizenship in the future.

How to Qualify for the Friendly Nations Visa

There are three main routes to qualify for the Friendly Nations Visa:

1. Employment in Panama: You can qualify if you secure a job with a registered company in Panama. The company must provide proof of your employment and commitment to repatriation expenses if required.
2. Starting a Company in Panama: Establishing a business is a common way to qualify for residency. You can set up a Sociedad Anónima (S.A.), which is similar to a limited liability company (LLC) in other jurisdictions. This company must have a registered address in Panama, and it must meet the operational requirements set by the government.
3. Fixed-Term Deposit: Another route is to open a fixed-term deposit account in a Panamanian bank. This option requires you to deposit funds in a local account as proof of financial solvency.

Applicants must also provide a clean criminal record, a valid passport, and proof of income or financial standing. Documents should be apostilled or authenticated through the Panamanian consulate in the applicant’s home country.

The Residency Process

The process for obtaining residency through the Friendly Nations Visa involves several steps, but with the right preparation, it can be completed smoothly.

Step 1: Gather Required Documentation

Applicants need to gather the following documents:

• A valid passport with at least six months of validity remaining
• A criminal background check from the applicant’s country of origin or residence
• Proof of income or financial solvency (this could include job letters, business formation documents, or fixed-term deposit statements)
• Bank reference letters and other financial statements

These documents must be translated into Spanish, where necessary, and authenticated through apostille or the Panamanian consulate. At Work, Wealth and Travel, we guide you through this process step by step, and ensure any questions you have are answered along the way.

Step 2: Company Formation

If you choose to qualify through company formation, you’ll need to incorporate a Sociedad Anónima (S.A.). The process typically takes around 7 to 10 business days and involves appointing three directors and dignitaries (who can be the same individuals) and registering a fiscal address in Panama.

Once the company is established, we will obtain a Tax ID (RUC) from the National Tax Authority on your behalf.

Step 3: Open a Bank Account

Opening a Panamanian bank account is another key part of the process. You can open either a personal or corporate account depending on your qualifying method. The bank account setup can take anywhere from 5 to 60 days, depending on whether you choose a standard or VIP service.

You will need to provide:

• A valid passport and a secondary form of ID
• Bank reference letters from your home country
• Proof of income or financial solvency

Step 4: Submit the Visa Application

Once you have all the necessary documents and bank or company formation steps completed, your visa application can be submitted. You must be present in Panama for at least five business days to complete this process. During this period, your application is filed with Panama’s Immigration Office, and you will receive a Multiple Entry-Exit Visa, allowing you to enter and leave the country while your application is under review.

The approval process typically takes between two to five weeks, at which point you’ll receive your two-year provisional residency.

Permanent Residency

After two years of temporary residency, applicants are eligible to apply for permanent residency. This process involves updating your documentation and providing continued proof of financial ties to Panama, such as ongoing employment or active company operations.

Panama’s Territorial Tax System

One of the key reasons expats are drawn to Panama is its territorial tax system, which provides substantial tax advantages. Under this system, only income generated within Panama is subject to local taxes. Foreign income—whether from investments, pensions, or employment outside of Panama—is not taxed.

This tax structure is particularly beneficial for expats and retirees with foreign income sources. Unlike global tax systems that tax residents on their worldwide income, Panama’s system allows expats to keep their foreign earnings tax-free, making it an ideal base for international business owners, remote workers, and retirees looking to maximize their financial freedom.

Key Benefits of Panama’s Tax System for Expats:

• Foreign Income Exemption: Expats are not taxed on income earned outside of Panama, including passive income streams like dividends, rental income, or pensions.
• No Capital Gains Tax on Foreign Assets: Panama does not tax capital gains on international investments, which is particularly appealing to investors.
• No Inheritance or Estate Taxes: Panama does not impose inheritance or estate taxes, making it easier for expats to protect their assets and transfer wealth to future generations.

Why Choose Panama?

Panama’s combination of a favorable tax system, a straightforward residency process, and an attractive business environment makes it one of the top destinations for expats worldwide. Whether you’re an entrepreneur, retiree, or simply looking for a change of pace, Panama offers an excellent balance of financial benefits and a high quality of life.

Work Wealth and Travel can help make your transition to Panama as seamless as possible, guiding you through the company formation, residency, and banking processes so you can focus on enjoying everything Panama has to offer.

By leveraging the Friendly Nations Visa Panama program and the country’s territorial tax system, you can optimize your global tax situation while enjoying life in one of the world’s most dynamic and beautiful countries.