The Panama Friendly Nations Visa (FNV) is a popular immigration program that offers a streamlined route to permanent residency for citizens of a specific list of countries. It is designed for individuals who wish to establish professional or economic ties with Panama.

🔑 Key Benefits of the Panama Friendly Nations Visa

📝 The Residency Timeline (2-Step Process)

The process is divided into two main stages:

1. Provisional Residency (Year 1 & 2):
   • Once your initial application is approved, you receive a Provisional Residency ID, valid for two years.
   • This initial phase takes about 5–6 months for the application review.
2. Permanent Residency (Year 3 onwards):
   • After the two-year provisional period, you must re-apply (before the provisional card expires) to prove you have maintained your economic/professional ties.
   • If approved, you are granted Permanent Residency.

💰 How to Establish Economic or Professional Ties

A core requirement for the FNV is proving your link to Panama. You must choose one of the following three options:

👨‍👩‍👧‍👦 Applicants and Dependents

• Main Applicant: Must meet all requirements, including proving economic ties.
• Eligible Dependents:
  • Spouse (must be legally married—common-law partners are not eligible).
  • Children up to age 25 (if they are full-time students over 18).
  • Parents of the main applicant.
  • Note: Dependents are processed under the Family Regrouping Visa and receive permanent residency after three years.

💸 Estimated Costs (Provisional Residency)

The fees for the initial Provisional Residency application (not including travel or document preparation) are:

• Government Fees Breakdown: These fees include a certified check of $800 (repatriation fee) and $250 (application fee) to the government.

Taxes for expats in Panama

One of the most powerful features of living in Panama as a Friendly Nations Visa holder is the pure territorial taxation system – probably the cleanest and most straightforward in the world for expats.

What does “zero tax on foreign-source income” really mean in practice?

• ✅ 0% tax on income earned outside Panama (salary from a foreign employer, remote work, dividends, interest, capital gains, crypto trading profits, rental income from abroad, pensions, etc.).
• ✅ 0% tax on worldwide income if you never become a full “tax resident” (many expats simply spend less than 183 days per year in Panama and avoid triggering full tax residency).
• ✅ Even if you do become a tax resident (183+ days or obtain the tax residency certificate), foreign-source income remains 100% tax-free – Panama simply does not tax it, period.
• ✅ No wealth tax, no inheritance tax, no gift tax, no capital gains tax on foreign assets (stocks, crypto, foreign real estate, etc.).
• ✅ No mandatory worldwide income reporting like in the U.S. or most European countries.

Real-life examples of what stays 100% tax-free in Panama:

• A U.S. or Canadian remote worker earning $150,000/year from a foreign company → 0% Panamanian tax.
• A European day-trader making €300,000 in crypto/stock gains → 0% Panamanian tax.
• A retiree receiving a $60,000 foreign pension → 0% Panamanian tax.
• Dividends or interest from investments held abroad → 0% Panamanian tax.

The only income Panama taxes:

• Income generated from activities physically performed inside Panama (local salary, local business profits, rental income from Panamanian properties, etc.).
• Even then, the first ~$11,000 is tax-free, 15% from $11k–$50k, and 25% above $50k – rates that are very low by global standards.

Pro tip – Stay “non-tax resident” and keep everything zero: Many digital nomads and high earners choose to spend 150–180 days per year in Panama (perfectly allowed) and the rest traveling in Latin America or elsewhere. This way:

• You enjoy permanent residency and the Panamanian ID.
• You never hit the 183-day threshold.
• You remain 100% outside Panama’s tax system while still using Panama as your legal base.

Bottom line: For anyone earning money outside Panama, the Friendly Nations Visa + territorial taxation = one of the most legitimate and sustainable 0% (or near-0%) tax lifestyles available today – completely legal, stable since decades, and backed by one of the strongest banking and legal systems in Latin America.

Always consult a Panamanian tax advisor to structure your specific situation, but for most remote workers, investors, and retirees from “friendly nations,” Panama remains the gold standard of tax-efficient residency. 🚀

What income is taxable?

No matter the residency program, taxable income in Panama includes any income generated from business activities in Panamanian territory. Different from the US and European tax system, you will only be taxed for what you generate within Panamanian borders. In case you’re wondering how Panama gets tax revenue it is important to keep in mind that most of it comes from VAT.

Tax rates in Panama In locally souce income

Individuals who earn less than US$11,000 per year don’t pay income tax. In case of earning between US$11,000 and US$50,000, the rate for income tax is 15%. Income higher than US$50,000 will need to pay 25% income tax.

Panama tax residency

Now, if you obtain permanent residency through the Friendly Nations visa you might also be interested in obtaining your tax residency. The purpose of a tax residence certificate is to prove to other countries your tax status as resident of Panama. One main benefit of this certificate is that it can be used by citizens of countries which have conventions such as Mexico, Spain, France, UK, Germany, among others, for the avoidance of double taxation with Panama.

One way to qualify for a tax residence certificate is by showing proof of having spent a total of 183 days or more in one year in Panama. The requirements to request the certificate are:

• E-Cedula
• Notarized full copy of passport
• Proof of address in Panama
• Proof of economic activity that generates income in Panama
• Proof of residency status
• Details of tax treaty to be applied
• Tax year of the request of the certificate

🚫 Work Permit is Separate

Important: Obtaining the Friendly Nations Visa for residency does not automatically grant you the right to work.

• A separate application for a Work Permit must be filed with the Ministry of Labor (MITRADEL).
• The work permit process takes an additional 6–10 months after you receive your Provisional Residency ID.

🛑 Maintaining Permanent Residency

• Once you have Permanent Residency, it can be suspended if you are absent from Panama for two years or more.