The Panama Friendly Nations Visa after the 2021 reform

Most of what is written about the Friendly Nations Visa online describes a programme that no longer exists. Until 2021 it was, in substance, an inexpensive route to immediate permanent residence for nationals of a long list of countries, supported by little more than a modest bank balance and a gesture towards economic activity. That version is gone.

Executive Decree 197 of 7 May 2021, applied to applications filed from 18 August that year, rebuilt the requirements and, more importantly, restructured the grant itself. Anyone reading older guidance is reading about a closed door.

What changed

Three changes matter.

Economic solvency became a defined test. The old formulation asked for professional or economic activity in Panama and was satisfied loosely. The decree substituted specific qualifying grounds, principally employment in Panama under a formal contract with a corresponding work permit, or the purchase of real property held in the applicant’s own name above a stated value. Property acquired under bank financing has been accepted. A fixed-term bank deposit of comparable magnitude has also been treated as qualifying, though the practical acceptance of that route has varied and should be confirmed directly before funds are committed.

The property threshold is USD 200,000, and the deposit route where accepted is of the same order, held for a fixed term of three years.

Permanent residence became a second step. The permit is now granted provisionally for two years. Permanent residence is a separate application made at the end of that period, on evidence that the qualifying condition has been maintained throughout. The applicant who buys property and sells it in month fourteen has not simply reduced their exposure; they have removed the basis of the permit.

The nationality list remains, and remains subject to change. Eligibility still depends on holding a passport from a country Panama has designated as friendly. The list has been amended before and can be again.

Territorial taxation, and what it actually exempts

Panama taxes income from Panamanian sources. Income sourced outside Panama is not subject to Panamanian income tax in the hands of an individual. This is the structural attraction and it is genuine.

It is also narrower than it sounds, because everything depends on how source is characterised. A dividend from a foreign company is straightforwardly foreign source. Consultancy work physically performed at a desk in Panama City, invoiced to a client in Frankfurt, is not so obviously foreign source, and Panamanian practice on the point is more nuanced than the marketing suggests. Rental income from Panamanian property, local employment, and services rendered to Panamanian businesses are all plainly within the net.

The practical consequence is that where you physically are when you work becomes a tax question and not merely an immigration one. That is unusual, and it makes the day record load-bearing in a way it is not in a pure worldwide-income system.

Immigration residency and tax residency are different statuses

This distinction defeats more people than the solvency requirement does.

Immigration residency is granted by the Servicio Nacional de Migración. It gives you the right to live in Panama and, eventually, a permanent permit and a national identity document. It says nothing about tax.

Tax residency is determined under the Fiscal Code. An individual is tax resident where they remain in Panamanian territory for more than half the year, counted consecutively or alternately, in a fiscal year or in the immediately preceding one; or where they have established a permanent home in Panama. The certificate that evidences it is issued by the Dirección General de Ingresos, a different body applying a different test.

You can hold the visa and not be tax resident. Many holders are in exactly that position, and it is often deliberate — but it means that when a former home country asks where you are resident, the visa is not the answer. The certificate is, and the certificate needs the days.

Keeping the permit alive

The presence obligation attached to Panamanian residence is light by international standards, which is much of its appeal, but it is not absent.

A permanent resident who remains outside Panama for more than two years without authorisation from the Director of the immigration service exposes the permit to cancellation. A rehabilitation procedure exists for longer absences, subject to a short window to apply following re-entry, and beyond a further period the permit is treated as cancelled outright. During the provisional two-year stage the position is tighter still, because the qualifying condition must be shown to have subsisted.

The obligation is therefore modest and absolute at the same time: little is asked, but the record of having done it is either there or it is not. Panamanian entry and exit records exist, and are the document the authorities will look at.

The corridor problem

Panama’s treaty network is narrow. That matters more than it appears, because it means dual residence often cannot be resolved by a tie-breaker at all — you are left arguing under the domestic law of the country you left, with a Panamanian certificate as evidence rather than as a trump card.

If you are leaving the United Kingdom, the Statutory Residence Test applies its own counting conventions to the year of departure and does not care about your Panamanian permit. If you are a United States citizen, Panama’s territorial system does nothing for your federal filing obligation, though the foreign earned income exclusion may. If you are leaving a European jurisdiction with a centre-of-interests test, expect the enquiry to focus on family and property rather than on days — but to use the days as the opening question.

Planning notes

• Confirm the currently accepted solvency routes with the immigration service or Panamanian counsel before transferring funds. Published summaries, including recent ones, disagree with each other.
• Treat the qualifying investment as a two-year commitment at minimum. It underpins the permanent residence application, not just the provisional grant.
• Decide deliberately whether you want Panamanian tax residence as well as Panamanian immigration residence. If you do, plan the presence to support the certificate, not merely the permit.
• Do not assume territoriality covers work performed in Panama. Take advice on source before you invoice.

What Residay tracks

Residay holds a dated record of which country each day belongs to, with the underlying evidence kept on your device, so that both Panamanian thresholds — the absence limit that protects the permit and the presence count that supports a tax residence certificate — rest on a contemporaneous account rather than a reconstruction.

Panama is covered as an advisory presence counter rather than a researched rule set, because the tests that matter here turn on conditions outside a day count: the permit class, the qualifying investment, the source of the income. What the counter does is make sure the arithmetic is already done, and the evidence already assembled, on the day the Dirección General de Ingresos or a former home country asks for it.