Panama has long been an attractive destination for expats of all ages, with its favorable residency requirements and unmatched retiree benefits. But if you were thinking you had a few more years to slave away in a cubicle and a few more dollars to save before you could make your move to this Central American haven…
Think again.
In a recent executive decree, Panama’s President Ricardo Martinelli signed into effect a new visa option for those who want to escape the ever-tightening choke hold of the American government, but aren’t quite yet able to get by on their current retirement savings… Retiring to Panama Just Got Easier!
What’s different about Panama’s new visa?
The new visa, called the Immediate Permanent Residency visa, gives instant residency status to those who wish to engage in professional and economic activities, start a business, or get a job in Panama. This is in contrast to options such as the pensioner’s visa that explicitly prevents retirees from taking jobs away from Panamanians.Also different are the solvency requirements. Instead of an investment of anywhere from $60,000-$300,000, the new visa requires a mere $5,000 in a Panamanian bank account. Another benefit is the option of obtaining citizenship after five years in the country, something that isn’t offered at all by many of the other visas.These are all perks that can benefit retirees as well. It gives them the opportunity to work if they want (or if they can’t afford not to), and it basically serves as a fast pass that sends them directly to the head of what was once a long line of steps toward immigration.
What prompted the President’s decree?
Over the years Panama’s government has implemented a number of incentives that have made the country an extremely attractive place to do business. As a result, its economy has been growing at a tremendous rate, experiencing a whopping 10.6% increase in 2011 alone. This, coupled with an unemployment rate of only 4.5%, has led to a shortage of educated, trained, English-speaking workers.
The government recognizes that the long-term solution is, of course, education. They have already begun to pour millions into the country’s education system. But for the meantime the best way to find qualified labor is to import it. They’re looking specifically for “workers in growth sectors such as logistics, tourism, banking, and those making Panama a regional hub for multinational companies,” explained Minister of the Presidency Demetrio Papadimitriu.
What would it be like to work or own a business in Panama?
Panama’s business community is heavily English-speaking, recognizes the U.S. dollar as its official currency (alongside the balboa), and bears an awful lot of other similarities to the States. Well, on the surface at least. Panama’s laws are much more favorable to investors and businesses. There are fewer restrictions on banks and corporations and much greater financial privacy. The country is home to several large duty-free zones, and personal taxes are reasonable as well, with none levied on income earned outside of the country.
Who qualifies for the new visa?
The new visa is available to those who hold a passport from one of 47 specific countries (currently, as the number has increased several times since the initial decree) “that maintain friendly, professional, economic, and investment relationships with the Republic of Panama,” including the U.S. and Canada. A full list is included below. Also eligible are applicants’ dependent spouses, children under 18 (or between 18 and 25 if they’re students), dependent parents, and family members with disabilities.
In order to qualify, applicants need $5,000 in a Panamanian bank (plus $2,000 for each dependent) and one of the following: evidence of investment in Panamanian real estate, proof of ownership in a Panamanian business or corporation, or a letter and contract of employment from Panamanian company. Throw in a clean police record and a passport, and you’re well on your way to personal and financial freedom.
What are the first steps towards obtaining immediate residency?
Because the employment requirements must be met before the application can be completed, you should probably start there. You’ll need a work permit, which is issued by the Ministry of Labor. The next step is finding a job or setting up a corporation, which is not a very difficult or expensive process in Panama. However, since several government entities are involved and the paperwork is all in Spanish, it wouldn’t be a bad idea to hire a competent attorney to assist you with the whole process.
What are the “specific countries” that are recognized by the decree?
Alphabetically, the 47 countries are Andorra, Argentina, Australia, Austria, Brazil, Belgium, Canada, Chile, Croatia, Cyprus, Czech Republic, Denmark, Estonia, France, Finland, Germany, Greece, Hong Kong, Hungary, Ireland, Israel, Japan, Latvia, Liechtenstein, Lithuania, Luxembourg, Norway, Malta, Monaco, Montenegro, Netherlands, New Zealand, Poland, Portugal, San Marino, Serbia, Singapore, Slovakia, South Africa, South Korea, Spain, Switzerland, Sweden, Taiwan, United Kingdom, United States, and Uruguay.
What could be better than taking a trip to the gorgeous tropics of Central America? How about making the trip affordable?
Due to the booming tourism industry, this may seem easier said than done, and unfortunately, many once budget-friendly destinations, are no longer so. But that doesn’t mean it’s not possible.
Each year tourists from around the world come to experience the tropical climate, Latin culture and exotic beauty of Central America, but many don’t realize that it can be done on a budget.
Costa Rica, Panama, Nicaragua, and El Salvador are four popular Central American countries that can be truly experienced without breaking the bank in the process.
First Stop, Costa Rica
The most popular tourist destination on the list, and arguably the most tourist friendly, Costa Rica can tend to be a bit pricey But don’t worry, there are ways to keep your costs down.
In big cities like San Jose, prices will typically be higher, so hop on a bus and head for one of the smaller beach towns. A five hour direct bus to a town like Santa Theresa will cost you around ten dollars.
Remember to exchange your money into the local currency colones, as usually only expensive items/places accept American money. Seek out cheap accommodations at a hostel (around ten dollars) and start exploring the beauty of Costa Rica.
On to Panama
Photo: Martha de Jong
Although the tourism industry here is not quite as developed as their northern neighbor Costa Rica, Panama is just as beautiful and the prices are often lower. Again, buses will be the cheapest mode of transportation and hostels your best bet for reasonably priced accommodations (around twelve dollars for a bed). As a perk, many hostels will have communal kitchens, so take advantage of the local market and cut another cost by cooking your own meals. If cooking on vacation isn’t for you, try to avoid restaurants aimed at tourists and instead look for street stalls and small cafes.
Next It’s Nicaragua
Photo: McMallan
Just north of Costa Rica, Nicaragua, known as the land of lakes and volcanoes, is cheaper and attracts a lot less tourists. In fact, you can catch a bus from Costa Rica to Nicaragua for just a few dollars, but remember, you will have to pay a fee of seven or eight dollars to get into the country. Once you are in Nicaragua, exchange your money into córdoba’s and head for small towns like El Trasito, Popoyo and Playa Maderas to soak up the sun and experience the amazing surf. If you visit Isla de Ometepe, be sure to hike up the double-volcano nestled in a lake filled with fresh water sharks, or you can try remote Little Corn Island for cheap kayaking and snorkeling.
Last Stop – El Salvador
Photo: Amber and Bryan via flickr
While El Salvador may not be as popular a tourist destination as the others, most who visit are pleasantly surprised. The people are friendly and welcoming and there are many wonderful, and cost efficient things to enjoy, like taking a trip to the beach town of El Tunco just an hour from the capital San Salvador. Yes the food is a little pricey, but the hostels are cheap and the surfing and swimming is unbeatable. Explore San Salvador on a five dollar bike tour that takes place every Thursday night, or take a leisurely stroll around the city to check out the politically-charged street art.
Ready to go? Remember these tips:
- Take advantage of local transit. While bus rides may be longer, the cost is substantially less.
- Eat like a local. Avoid tourist-targeted restaurants and look for low-key local spots.
- Make the most of happy hour.
- Visit “free” national parks for hiking and observing nature and wildlife.
- Stay in a hostel. Typically group and private rooms are offered.
- Surf and swim – it’s free!
It’s a common misconception to think that a good holiday means an expensive holiday. Cliché but true, the best things in life are free, especially when you are somewhere as beautiful as Central America. The sun, the mountains, the beaches, the surfing, it’s all free and all unforgettable. If you are not overly concerned with five star transport and accommodation, Costa Rica, Panama, Nicaragua, and El Salvador can all be yours at a reasonable cost. So do your research, book your plane ticket and get ready to discover the wonders of Central America without putting a dent in your wallet.
Does the thought of becoming an Expat scare you? Here are nine tips on helping you make a smooth transition into life abroad.
1. Be Certain About Your Move
Moving is stressful. Go for the right reasons. If possible, visit the country before you make up your mind and most importantly, make your OWN opinions.
2. Will Your Benefits Follow You?
If this is a corporate move you might luck out and be eligible for relocation benefits. Ask, it’s worth knowing. If you are on Social Security, check with the embassy, the more information before the move, the more comfortable you will feel.
3. Make a Budget
Taking the time to make a budget is sometimes the difference between a successful relocation and a disaster. Before you go, find out what you can expect as your new cost of living…budget for the unexpected!
4. Insurance – What Type and Where?
Take the time and prearrange for the appropriate insurance (such as health, life, and travel) for yourself and your family. Find out what type of health care options, even insurance, and infrastructure are available to support you, especially if you suffer from a medical condition that requires treatment or medication.
5. Banking – Here or There?
More than likely you will need to open a bank account in your new country – look for information on the one that suits you best. Bring reference letters from your bank at home. Is it wise to keep your current account open? Most likely yes; do your homework and find out what foreign transaction fees you might incur. At the very least, you’ll need to tell your current bank that you’re moving.
6. Can I Take My Credit Cards?
Your credit card companies will need to be informed you’re moving; it is wise to also see if the cards you hold are widely accepted.
7. Will You Need to Exchange Currency?
When moving abroad you might not be using the same currency as your homeland. Therefore, even a 5 per cent shift in the exchange rate can make a huge difference in how far your money stretches. There are websites which can help, checkout www.x-rates.com and select the currencies. It provides historic information and you will know whether your exchange rate is good – and whether to wait a few more days before you run to the bank.
8. Yes, There Is Paperwork
Use this rule: if you might need it, take it. No matter how insignificant a document seems, it’s better to have it on hand, than be without. Chances are, at some point, you’ll have to show it to someone. Important documents you will want to think about include: birth certificates, police reports (often needed for immigration processing) wedding certificates, educational certificates, and medical certificates (including those for your pets).
9. Go Ahead, Make Friends!
Friends are like a security blanket, whether locals or fellow expats, nothing will help you feel more at ease than being able to rely on the assistance of your friends when you need it. Socializing is not time wasted, it’s what makes a new country feel like home. Picking up and moving to a new country can be both a bureaucratic and emotional nightmare at the best of times, but if you are prepared, you stand a good chance of a stress-free relocation.
Cuenca, Ecuador photo by Jonathan Hood
When considering relocating to Latin America, many would-be expats quickly narrow their search down to the countries of Ecuador and Panama. And why wouldn’t they?
Ecuador has topped out International Living’s list of best places to retire for five years running, with Panama always following closely in the second or third spot. This list is based on an index of different factors such as climate, cost of living, culture, and many more. However, much of this criteria is highly subjective. The hot, humid climate you enjoy could be someone else’s idea of misery. Likewise the Burger King on the corner might be a welcome sight to some, but for you it might evoke the very feelings that prompted you to leave behind the cookie-cutter culture of the States.We’ve outlined some of the major differences between the two countries below, but don’t take our word for it. The best decision-making tool is your own observation. Plan a trip, and check things out for yourself.
Cost of Living
In this category, the advantage goes to Ecuador. In most parts of the country, you can easily get by on about $1,200 per month, including rent. This number gets even lower the further you venture into the rural areas where monthly rent can run as low as $150 per month. Combine that with an average cost of $1.90 for a four course meal, $1.50 for a gallon of gas, and the help of a domestic servant for a mere $10 a day. While it is possible to get by on the same $1,200 in Panama, it would be with a standard of living that more closely resembled that of the locals.
Real Estate
While Ecuador wins this one for its low cost homes, Panama may have a slight edge when it comes to the ease of the entire process. New homes in Ecuador are well below the $100/square foot price. That’s half the price of comparable homes in Panama, although the construction is different. Homes in Ecuador are built of cement and red clay.
The home buying process is easier in Panama, where international banks are quick to offer financing to foreign residents. Closing costs are twice as high in Panama (around 6%). However, property owners in Panama may be exempt from property taxes for a number of years if the home is their only residence.
Transportation
The infrastructure of Panama closely resembles that of the U.S., and its roads are much more well-maintained. Other than that, there’s little difference between the two countries. Ecuador offers several options for public transit, including buses and taxis, that average around $1 per hour. However, they may not be the safest options (See Safety below.) Panama offers similar modes of transportation for a slightly higher premium. Both countries offer convenient direct flights to several U.S. hubs from a few key cities.
Health Care
While health care in both countries is better than you’d expect, the quality may be slightly higher in Panama, particularly in David and Panama City. Panama boasts many private hospitals with English-trained and English-speaking doctors. In both countries the cost is lower than U.S. health care, up to 90% lower in Ecuador where doctors will even make house calls for less than $25. Both countries also offer a variety of health insurance options for foreigners.
Familiarity
Now here’s where personal preference really plays a big factor. While we can’t say which countries earns the most points in this category, we can tell you which one most closely resembles the culture of the U.S. It’s Panama. With a much larger and more established expat community, Panama will initially feel the most like home. It’s up to you to decide whether that’s the atmosphere you’re seeking.
Both countries use the U.S. dollar, so there’s little risks associated with currency exchange. English is widely spoken in both, although in Ecuador it’s largely confined to touristy locations and international business areas. Both are also home to many U.S.-based restaurant chains and other franchises. Modern conveniences are found in both, although internet service is reportedly much better in Panama. It’s true in both countries that communication is more accessible the closer you are to the larger cities.
Boquete, Panama photo by Ken Mayer
Climate
While this factor also depends greatly on your own personal taste, most will probably prefer Ecuador for its more temperate and varied climate. Panama is mostly hot and humid everywhere with large amounts of rainfall, particularly in May through December, although it’s slightly lower on the Pacific coast than the Caribbean side. The only real difference in the country’s climate is in the higher elevations where the temperatures and rainfall both decrease. Some areas may see temps in the 50’s versus the 84 degree average near the coast.
Ecuador experiences a more diverse climate across its four main regions. The mountainous Andean Sierra boasts average temperatures of 75 degrees by day and around 60 at night. With a lot of sunshine, 12-hour days, and relatively low humidity, its climate is considered by most to be nearly perfect. Ecuador’s coastal region and the Amazon rain forest more closely resemble the climate of Panama: hot and humid all year with temps ranging from 80 to 95 degrees and year-round rain. The Galapagos Islands have much milder temperatures and less rainfall.
Culture
While Ecuador and Panama both have plenty of cultural attractions, the edge here goes to Ecuador. While both countries boast many activities and forms of entertainment, those in Ecuador are often more authentic and less Americanized. With over 28 indigenous groups speaking more than 10 languages, evidence of the country’s heritage fills the marketplaces and festivals that abound in the South American nation. Panama is also a culturally rich country, but often in the form of museums and shopping districts.
Residency and Retirement Benefits
Panama wins this one, hands down. Requirements for a pensioner’s visa are similar between the two ($1000 per month income in Panama versus $800 in Ecuador). However Ecuador offers very few incentives for retirees. Panama, on the other hand, boasts a long list of discounts for those who qualify for its pensioners program. This includes savings of between 10 to 50 percent on virtually every category of goods and services including utilities, closing costs, entertainment, travel, and even health care. In addition, retirees can import up to $10,000 in household goods duty-free, as well as a personal vehicle every two years. And retirement in Panama has never been easier. Recent legislation has expanded its residency program to include individuals who may seek employment upon relocation, at least for citizens of the 47 “Specific Countries” on its list. This change was implemented to counteract the current labor shortage in the country.
Investment Potential
Buying property in both Panama and Ecuador can be a good investment. Since Ecuador generally offers more affordable options, its homes often have more potential for appreciation. However, even more advantageous than buying a home is the opportunity to invest in land in some of the more remote areas where expats are only just beginning to develop an interest. For those savvy enough to get in during the early stages, there’s much money to be made once development begins.
Investing in land won’t get you quite as far in Panama. Since expat communities there are more established, the lots are more expensive. You’d best build if you want to turn a profit. Panama does, however, have a much better rental market than Ecuador and more property management companies to provide assistance. Properties in Panama consistently experience higher occupancy and rent for a high premium.
Safety
While both countries have areas that are safer than others, Panama is definitely the safest overall. In fact it’s one of the safest in Central America, experiencing less violent crimes in a year than New York City does in a day. The country also saw the addition of the Tourism Police Force in 1992, which was specifically established to assist tourists in Panama City. Conversely, Ecuador is plagued with a murder rate of 19 people per every 100,000, four times that of the U.S. Even more alarming is the fact that much of the country’s violent crime occurs in areas heavily populated by tourists. Public transportation, especially taxis, are prime targets for criminals. It’s recommended that all taxis be radio-dispatched. Don’t just hail one on the street.
Schools
Panama wins again, with free public education that is a requirement for children ages 6 through 15. Investments are currently being made into the education system, to increase the number of educated adults in the workforce due to the labor shortage mentioned previously. Several good private schools also exist, many of which are bilingual. By stark contrast, Ecuador’s education system is in the bottom 50 world-wide. While it does have some private school options, most aren’t truly bilingual, only teaching English as a second language.
Things to Do
There is no shortage of activities in either Panama or Ecuador, and we would be hard-pressed to award this category to one country over the other. Both have options for exploring nature, such as whale or bird watching. There are also plenty of opportunities for adventure, like hiking or rafting. No matter what you’re into, you’re sure to find a place to enjoy your favorite hobby or perhaps develop a new one.
When it comes to real estate, there are always two choices: should you be renting or should you buy? Wherever you are in the world, whether New York City, Panama, or Ecuador: those two options never change. If you’re planning to start a new life overseas, you’re going to have to think carefully about which of them is going to be best suited to your upcoming overseas adventure.
The general wisdom is that buying is a better investment. When you buy a home, the money that goes towards paying the mortgage is money that you’ll be able to recoup if and when you decide to sell. However, if you’re thinking about emigrating or retiring to a tropics location like Panama or Nicaragua, you may find that renting is the best option, at least in the short term.
Why Should You Rent?
The first six months of any overseas move is a very crucial time. This is the time when you will either settle in to your new home and begin to thrive, or when you decide that it’s just not for you. Because of this, many sources recommend that for the first six months of your overseas move you rent. This gives you a bumper zone to decide:
- Whether the life in your new country is for you, and,
- Whether you have picked the right location within that country.
If you rent initially, you have the freedom to decide whether or not you’ve made the right decision with no long-lasting financial implications or responsibilities. If you decide that you want to go back home, or that you want to be in a different type of neighborhood, no problem! You don’t have to worry about selling up, and going through the extra costs of a move: you can just give notice on your lease and make your next move.
In addition to giving you greater flexibility during the first part of your big move, renting can have many other benefits for expats.
- You don’t need to worry about home maintenance. If you own your own home and something goes wrong: you’ll need to start the daunting process of looking for a contractor. If you’re renting, you’ll have a landlord at the end of the phone who will manage everything for you.
- You don’t need to manage the expense of importing furniture or buying new. You can rent a home already furnished, which takes away the trouble and the expense of deciding what to do about furniture.
- You don’t need to consider as many legal aspects. There are far fewer legal considerations to think about when you rent instead of buy. This can be a huge draw if you’re feeling daunted by the amount of paperwork involved in a move overseas.
- You don’t need to find local finance options to get a mortgage. Some of the most popular tropical locations such as Nicaragua, Ecuador, and Uruguay just don’t have local options available for financing. If you don’t have the means to buy a home outright, in some locations renting will be all that’s available.
The Bottom Line
When you’ve owned your own home for most of your life, it can be difficult to come to terms with the idea of renting. But the truth is that it’s often the best option for your move to the tropics: at least at first. Renting a place to live will allow you the flexibility to get used to your new surroundings and decide if the first place you’ve settled is where you want to remain long term.
The reasons to relocate to a haven overseas like Santa Fe, Panama, or Monte Verde, Costa Rica are wide and varied: but most people don’t do it primarily because they want to be a Latin American real estate owner! Remember that starting a new life in the tropics is more about the adventure than the investment opportunity! Why not stop buying, and start living?
If you decide to move forward with the renting process, you won’t need to do it all on your own. Think about using the services of a rental agent who is based in your destination country, and make sure you’ve considered these 14 pointers for renting abroad.
The Panama 3 Count, where we bring you 3 Panama stories that you shouldn’t miss.
Photo: Bob Therina
1: Is Panama the Best Option in Central America?
Investment blogs and financial papers crow in unquestioning unison about the current and projected economic growth of Panama. As always, it’s tough to get a read on a place until you visit. And even then it can become harder to see the real picture.
2: What Donald Trump Can Teach You About Investing in Panama (Machine Translation)
U.S. billionaire Donald Trump has his sights set on expansion in Latin America and announced an additional investment of $100 million in Trump Tower Punta del Este in Panama, cementing his opinion that it’s a great time to invest in Latin America.
3: Is Privatization the Best for Panama’s Interior Airports? (Machine Translation)
The three interior airports of Panama will become privatized in a reversal of the decision to have them administered by Tocumen SA. The airports of David, Colon, and Rio Hato will be granted in concession to private companies instead. Meanwhile, budget Canadian airline Air Transat is in talks to offer flights to these same interior airports.
The Travel 3 Count, where we bring you 3 travel stories that you shouldn’t miss.
Ecuador’s Galapagos is a must see destination in 2013.
1. Destinations to Watch in 2013
First Up: Conde Nast Traveller’s destinations to watch in 2013 list includes some of Latin America’s gems. Here are the top Latin America destinations to watch in 2013.
- Panama. No longer just a place where ships pass in the night, Panama is the cool Caribbean destination of the moment.
- Mexico’s Mayan Riviera. The Mayan Riviera is set for a bounteous year in 2013.The vibe is deliberately hippy-chic, lo-fi by day and up-tempo at night and is a great place to stay for discerning travelers seeking barefoot luxury.
- Ecuador’s Galápagos Islands Galápagos is one of the most fascinating places on earth, an evolutionary melting pot. It’s already at the top of many wishlists, for the intrepid and for animal-lovers.
2. 21 Cheap Places to Visit… Where Does Latin America Come In?
Up Next. Want to travel, but don’t want to spend lots of money? These 21 cheap travel destinations let you get the most bang for your buck. Want to try it? Tim Leffel’s can help. His mission is to show cheapos how to find travel destinations they can afford.
Where is his favorite cheap spot in Central America’s? Ometepe, Nicaragua.
In Nicaragua, it’s a wide-open blank slate, because there isn’t much tourism outside of Granada and San Juan Del Sur. That means there are but a few nice hotels and restaurants and your main mode of transportation is mostly on chicken buses. But if you want cheap and exciting, Nicaragua is your choice.
3. 6 Must See Latin American Destinations
Finally: With over 7 million square miles to cover and 430 million people to meet between Central and South America, deciding where to start your Latin American adventure can be a little tricky, but with Bootsnall Travel Guide’s six must-see Latin American destinations, the planning just got easier.
- 1. Quito, the Amazon, and Cuenca – Ecuador
- 2. Rio de Janeiro and Iguazu Falls – Brazil
- 3. Lima, Cuzco, Lake Titicaca and Machu Picchu – Peru
- 4. Buenos Aires to Santiago via Bariloche – Argentina & Chile
- 5. La Paz, Sucre and more – Bolivia
- 6. San Jose to Panama City – Costa Rica & Panama
Adventure-lovers rejoice! These top sports are certain to deliver pure beach bliss, idyllic islands, curious creatures, and small towns packed with charm.
Panama City ranks as the cheapest place to live in Latin America.
A global study of the cost of living published by the EIU ranks the most expensive and cheapest cities in the world. While Tokyo continues to hold the top spot for the priciest places to live in; Panama City, Panama placed 8th among the world’s cheapest places to live.
The Global Survey Cost of Living, published twice a year by the EIU, compares hundreds of prices on 160 common products and services, such as food, drink, rent, utilities, education costs, and household items.
The 10 cheapest cities in the world
1. Karachi, Pakistan 2. Mumbai, India 3. New Delhi, India 4. Kathmandu, Nepal 5. Algiers, Algeria 6. Bucharest, Romania 7. Colombo, Sri Lanka 8. Panama City, Panama 9. Jeddah, Saudi Arabia 10. Tehran, Iran
Top 10 most expensive cities
1. Tokyo, Japan (up one place) 2. Osaka, Japan (up one place) 3. Sydney, Australia (up four places) 4. Oslo, Norway (up one place) 5. Melbourne, Australia (up four places) 6. Singapore (up three places) 7. Zurich, Switzerland (down six places) 8. Paris, France (down two places) 9. Caracas, Venezuela (up 25 places) 10. Geneva, Switzerland (down seven places)
The Economist Intelligence Unit’s Worldwide Cost of Living survey is a full service that enables human resources line managers and expatriate executives to compare the cost of living in 140 cities in 93 countries and calculate fair compensation policies for relocating employees.
The Panama 3 Count, where we bring you 3 Panama stories that you shouldn’t miss.
1: The PBS Guide to the History of the Panama Canal
For nearly a hundred years, the Panama Canal has stood for the triumph of technology over nature. But when it was built, at the dawn of the 20th century, it was simply an audacious gamble — a colossal engineering project, the likes of which the world had never seen.
2: The One Card You Need to Open a Bank Account in Panama
If all goes according to plan, Panama will soon roll out a simplified procedure for opening bank accounts in the country. The program will allow residents and legal foreign nationals with valid immigration cards to open bank accounts with a value of up to $1000.
3: Do You Recognize These Ways Panama Is Out Performing Costa Rica?
Tourism driven spending in Panama rose by 15% between 2010 and 2012 totaling $322 million in the last five years. The preferences of tourists include staying in the capital city, Panama Canal tours, Casco Viejo, and Panama’s interior, but spending was also increased in the conference and convention sector.
With the fastest growing economy in the Americas, Panama has often been compared to 1970’s Brazil or present day Singapore. And with ongoing projects such as a $5.3 billion expansion of the Panama Canal and a $13.6 billion government investment in infrastructure, this Central American country is not slowing down. Its sophisticated banks and stable economy attract investors worldwide.
In addition, the Panamanian government has a long history of establishing incentives and atmospheres that make investing in this beautiful landscape even more attractive. The list below highlights some of the more significant benefits:
Panama Incentives for Retirees & Expats
Retiree Tourist Visa
The Turista pensionado affords retirees (who must be a minimum of 18 years of age), who can show proof of income, the following benefits:
- Import of household goods (up to $10,000) free of taxes
- Import of a car for personal use every two years
- Property tax exemption on a home that is your only residence
- Discounts between 15-50 percent on restaurants, hotels, entertainment, and professional services
Panama Real Estate Laws
Law 54 – Foreign Investor Protection
This law grants foreign investors and their businesses the same rights and freedoms as Panama natives. They are also granted the right to dispose of their investment profits and repatriate their interest, dividends, and profits.
Article 44 – Private Property
This section of Panama’s constitution guarantees that the rights of property owners are protected for both Panamanians and foreigners alike.
Law 24 – Reforestation Investment
This law provides benefits, including a 25-year income tax exemption, to those who purchase property for the purpose of reforestation.
Law 2, 2006 – Island Property and Concessions
This law allows foreigners to purchase island property, for the first time ever, provided that it is used for the purpose of tourism and that certain other conditions are met. Concessions, or lease agreements, for government-owned land can also be granted for use in tourism.
Law 9 – Casco Viejo Development
These tax deductions and exemptions were created to encourage the restoration of this section of Panama City. Renovation costs are 100% tax deductible. Income from the sale or rental of the property is exempt for 10 years, and the property itself is exempt for 30.
Panama Investment Incentives & Protections
Banking & Currency
Panama uses the U.S. dollar as its currency and, as a result, has no exchange controls in place to limit the amount of currency that can be traded.
Law 8, 1944 – Tourism Investment
With as little as a $50,000 investment ($300,000 in metropolitan areas), those who wish to start a tourist-related business can enjoy a multitude of tax exemptions. These include import and property taxes, taxes relating to the use of airports or docks, and in some cases even income tax.
Bill 481 – Hotel Investments
This incentive is aimed mainly at hotel investments over $250,000 and include no tax on the import of building materials and tax exemptions on land and improvements for five years.
Law 58 – Outside Developments
This bill incentivizes the building or renovation of lodging facilities that are outside of the country’s Special Tourism Zones. Investment in areas such as the mountain regions or islands can result in tax-free importation of materials, equipment, and vehicles. A 20-year exemption on property taxes also applies.
Law 18 – Colon Free Zone
The Colon Free Zone is located at the Atlantic entrance to the Panama Canal. This free port is home to over 2,500 companies, employs over 28,000 people, and ships more than $16 billion each year. Companies operating within the zone, both foreign and domestic, are mostly free of taxes, provided that they meet a certain set of requirements. These include employing a minimum of 5 local workers, exporting a minimum of 60 percent of their merchandise, and maintaining certain reporting criteria.
Law 41, 2004 – Panama Pacifico
This area, formerly Howard Air Force Base, is another tax free zone established to attract certain categories of business. These include call centers, corporate headquarters, distribution and logistics centers, naval and aircraft goods and services, technology manufacturing, and the film industry. The site is also equipped with a One-Stop Shop that houses 12 governmental agencies under one roof for ease of conducting business, obtaining permits, etc.
Law 32, 1927 – Comprehensives and Simplified Regime of Free Zones
Passed in 2011, this act allows for the establishment of tax free zones anywhere in the country, provided that they do not interfere with the local ecosystem. To date, there are 14 free zones registered, nine of which are already operating.
Law 3 – Manufacturing Companies
Under this law, companies involved in the manufacturing and processing industry that export all of their products are exempt from direct taxes including import taxes on machinery and equipment.
Taxes
Panama is famous for its low taxes across the board. Income tax is only 7 percent after the first $9,000 and maxes out at only 27 percent. However, taxes only even apply to income from Panamanian sources. New home purchases are tax exempt for the first 20 years. Capital gains taxes are a low 10% and no inheritance tax exists.
If you don’t spend your nights jaunting around casinos, ordering martinis shaken, not stirred, and casually assassinating a whale or two on the way out then you’re probably not James Bond.
So if you’re not James Bond, and if you’re not a crook (we’re just going to cross our fingers and hope you aren’t…but if you are, thanks for reading!) then why would you need an offshore account? And what are the chances of you getting one without spending all the money that you want to put in it?
We’ve done some research for you and figured out the how’s, the where’s, the why’s and the who’s, because we’re here to help you out!
Why Bank Offshore?
Everyone has their own reasons: some do it because they are always travelling (and it just makes sense to put their money where they get the best benefits), some do it to avoid tax, some do it because they don’t trust their country’s economy (look at Zimbabwe, for instance) and some do it because what they’re doing is illegal.
Whatever the reason (let’s hope the latter isn’t it!), you’ve been thinking about putting some money overseas, and now you want to know the logistics.
How to open an offshore account?
Firstly, you have to realize that this is going to cost. So make sure you aren’t putting aside that $10 that your five year old son has been saving for the last two years. As to how much, that varies from country to country.
If you’re a U.S. citizen here’s a quick heads up: it is legal for you to invest your money overseas, but if it’s over $10,000 then you’ll have to declare it. Also, U.S. citizens are required to do a lot of paperwork or you could get into deep water. Be safe, and get someone who knows what they’re doing to help you out with dotting your i’s and crossing your t’s.
Logistically, you can do it all from your office desk. You don’t need to go to the country to open an offshore account. Through email and telephone you can complete the whole process these days. This, however is not ultimate. Rather make the trip, and build a rapport. And remember, if you haven’t been to the place, you should be thinking about the ‘who’.
Who to open an offshore account with?
Who are you investing your money with? In terms of a country as a whole, double check on their stability: a coup, an accounting scandal, or even something as innocent as a natural disaster could wipe out your entire investment. At least if you visit the place before you invest you’ll have a look at the functioning of that country: and if you get off the plane and into a civil war…well then maybe plan B wasn’t such a bad plan after all!
The country might be fine, but do remember this is a shady area of law. With shady areas come shady characters. It’s very important not to get mixed up in here too…how embarrassing to lose your investment because you deposited your money into the account of an arms dealer? Protect your reputation, and use a company that has a good one too.
Another nifty review of good legitimate banks is through Fitch Ratings. This website allows you to make a free profile with which you can check the ratings of banks from all over.
Where?
Photo by Steve Velo
It depends. I know you didn’t want me to say that, and that you wanted a ‘winner-takes-all’ answer, but here’s where you need to decide what you want.
You need to decide how secretive you want to be and how easy it is to track your account to you personally (by registering as a business entity, for instance) or whether you want an account that rather protects the account’s details itself.
If you choose a country which won’t disclose your information to the IRS, for instance, then the responsibility lies with you to declare it, or not. The Matador Network has made a list of the 10 Best Countries in which to open an offshore account, naming Panama as their number one.
If you follow this list, at least you know your money’s going to a beautiful place. And also, if you’ve been storing it for illegal reasons, you might end up here too! (I take that back. There’s no place for crooks in Panama, rather go invest in Cayman Islands. Or anywhere else. We only have good solid investment banks for good solid people folks.)
Most of all, be smart.
Good luck!
It wasn’t easy moving to Central America. It’s not easy to uproot your family just like that. You keep wondering – is this really worth it? Will it work out?
Not so long ago I went back to the U.S. to visit everyone and it was through this visit that I saw just how much it has worked out.
Being back in the U.S. I immediately got sucked back into the fast-paced lifestyle
I mean, routine-wise, we did the same things as I do in Central America, but the ways in which I approach these things has entirely changed.
And so I came up with the ratio of effective living: to see the amount of time spent doing that which you love, versus all the other admin-stuff.
My pattern wherever I’ve lived is similar to most people’s: I get up. Eat. Drop kids at school. Work. Pick up kids. Cart to after school activities. Do some chores. Buy admin-stuff, like food. Cook that food. Clean up. Sleep. Repeat five times a week, forever.
In the U.S. it involved at least two hours a day in the car, just going to-and-fro, as well as shopping a heap of different places for different niche things. It involved different schools for different children, with their different schedules and different needs all over town.
It was time-consuming to put it lightly.
In Central America, however, life’s different
Choices are limited. When I go into the supermarket (where I do the weekly shop) I am limited with choice: instead of fifty different types of cheese there’ll be three. This limitation saves me time – it means I nab the cheddar and off I go, not worrying about the fact that it comes from the local dairy and not from France. Instead of being too exhausted after running around town for cheese all day I can actually use it for supper and sit down to eat the mac-and-cheese I just made for my family.
Having supper and breakfast is something I do with my family nearly every day. Things like these, things that are important to me, I can make time for. Why? Because I’m not sitting in traffic; because soccer practice and music lessons? They’re both offered at the same place: at school; because I actually have time.
Moving to Central America has improved my effective living ratio. Living here has shown me how to spend my time. It’s shown me how much of it that I have, and how I should use it. With the beach being five minutes away, it helps me focus on doing a quick shop and getting out there for a surf; time for a run. Time to myself.
It’s changed my approach to life. It means that I have time to do the things that I love.
I whipped out my calculator to put a value on my time. Say I am awake 16 hours a day. In the U.S., chores (fetching-and-carrying kids, shopping, traffic, those sort of mundane things) would take me around 3-4 hours a day.
So what, if it’s four hours that’s 75% of my day doing that which I want.
In Cental America, I’m living 95% effectively.
Not bad.
But wait…that’s 120 hours in a month wasted on the mundane.
And that’s only if you don’t count your job as mundane…otherwise add another 8 hours a day.
In Panama I spend 15 hours of a day doing the things that I want to: I use my time. I use it to surf, to spend time with my family, my friends. I spend time living. And effectively at that (93.7%).
It wasn’t an easy decision to move to Central America, to leave the comfort of the U.S. But the comfort living here has brought us all is worth it.
I’m living effectively. And I love it.