The Ultimate Guide to Expat Living in Panama City, Panama

Panama’s motto, ‘pro mundi beneficio’ (for the benefit of the world) is a fitting description of a country that manages to remain both diverse and intriguing while offering many opportunities to the intelligent investor.  

In truth, the motto for the country’s capital, Panama City, might as well be: ‘Why settle for just one world when you can have them all?’

The city, Latin America’s answer to Miami, is a place where towering skyscrapers meet the ocean, and palm trees sway to the rhythm of a unique cultural blend – Spanish vibes with various splashes of indigenous, African, North American and Caribbean influences.

Panama City offers the savvy investor a playground of opportunities wrapped in modern infrastructure and low-cost living.

After all, the capital’s low-cost medical care, modern infrastructure and consistently high temperatures have already proven their appeal with an estimated 30,000 Americans who live there. 

So, yes, life in Panama City is full of contrasts, with areas ranging from the bustling to the serene.

But is it the right place for you? Should you uproot your life and move to Panama? 

These are the kinds of questions this in-depth guide is designed to help you with.

The Best Places for Expat Living in Panama City, Panama

Panama City is full of contrasts and, like most cities around the world, has some areas that are safer than others.

For overall security, prestigious schools, good shopping and proximity to the city centre, the following residential areas offer residents a high quality of life:

Costa del Este

East of Panama City, between the vibrant city centre and just 15 minutes away from the Tocumen International Airport, you’ll find the exclusive Costa del Este.

One of the main benefits of living in Costa del Este is its proximity to the Pacific coast: this upscale neighbourhood gives you easy access to some of the best beaches in the area. 

Though buying here can be more expensive than elsewhere in Panama City, it’s still affordable. If you’re willing to forego a sea view, two-bedroom apartments in Costa del Este start from as little as US$285,000. 

Depending on how much luxury you need, the price increases the closer you go to the sea. 

With options at around US$400,000 available, if you want a top-of-the-range condo in a building with gyms, pools and social areas, you can pay up to US$1 million, though high-spec apartments can be rented for about US$3,500 a month.

Costa del Este is well maintained, with wide streets, beautifully designed buildings, palm trees and a mix of green and urban spaces. 

It really is Panama City’s premier district, with a layout and amenities you won’t find in many other cities in Latin America, giving it the feel of a South American Miami.

In Costa del Este, you’ll find high-quality services, shopping and entertainment areas and places to enjoy the outdoors. 

The town centre shopping mall has a pharmacy, gyms, restaurants and stores that sell top international brands. 

Located nearby, in the city centre, the Pacifica Salud Hospital is among the top three medical facilities in the region. 

Expats that relocate to Costa del Este can expect a high standard of education in its private and international schools. Many of these follow a Western-style curriculum. 

Casco Viejo

In contrast to the sleek high-rises and beautiful sea views of Costa del Este, the old town of Casco Viejo is very much the cultural heart of Panama City. 

A popular expat community destination, Casco Viejo offers an array of restaurants, shops and great nightlife. 

As a UNESCO Cultural World Heritage Site, this historic old town is famous for its colonial-era buildings and landmarks.

The Casco Viejo neighbourhood is one of the more expensive areas of the city to stay in, but that doesn’t diminish its popularity with expats. 

It’s possible to rent a furnished three-bedroom apartment there for a little over US$2,000 a month, while buying an apartment is possible for less than US$400,000, depending on the size and specs.

With cobbled streets and chic rooftop bars, Casco Viejo is an upmarket but laid-back district for expats who enjoy the finer things in life. 

The restaurants there offer an array of local delicacies, like Panamanian tortillas, jerk beef, the national dish, sancocho or corn dough tamales. 

Other popular neighbourhoods for expats include the rapidly growing suburb of San Francisco, the upscale luxury and convergence of central Marbella and the stunning ocean views and high-end apartments of Avenida Balboa.

Avenida Balboa

Living on Avenida Balboa gives you direct access to Panama’s most famous recreational area, La Cinta Costera, a 26km section of reclaimed land. 

This large strip of land on the Pacific coast is popular with both locals and the expat community for basketball, tennis, cycling and outdoor exercise. 

The length of the park borders the sea and is well maintained by the government of Panama. 

Aside from having the Cinta Costera as your playground, many of the residential buildings on Avenida Balboa have first-class social areas, infinity pools, movie theatres, tennis courts, gyms and spas, some even have shopping malls. 

On Avenida Balboa you can rent moderate and small apartments for US$1250 a month, but doubling that figure gets you a large apartment in a managed complex with plenty of luxuries and a sea view.

Buying the same property could cost anything from US$400,000 to over US$1 million. 

Panama City – Cost of Living

There are many reasons why Panama keeps popping up on the list of the best destinations for retirees.

Despite the gleaming skyscrapers that define the Panama City skyline and the glitz and glamour that give it a Miami feel, it is still one of the world’s top destinations for affordability.

Compared with other similar destinations, where you get good weather and great beaches, Panama’s low cost of living is a major draw. 

This is true whether you choose the modern international oceanfront hub that is Panama City, the spectacular mountains, cool breezes and sweeping mountain vistas of its interior, or a coastal town with pristine beaches and sparkling turquoise waters. 

Accommodation

The level price for a large 1,700-square-foot (158 square-metre) apartment in a nice neighbourhood in Panama City is around US$200,000, which includes a communal gym and pool. 

Many apartment complexes are served by a security guard and a concierge, so this is affordable, luxury living of the kind you won’t find in major North American and European capital cities. 

Apartments often come fully furnished, saving you considerable sums in appliances and furniture costs. 

If you’re new to Panama City and want to rent to test the waters before committing to a purchase, apartments in Panama’s upscale central area start in the US$900 to US$1,500 per month range for a 1,000-plus-square-foot property.

Food and Dining

Food is another major cost, and it’s also way more affordable in Panama. Local produce is abundant and cheap. 

From fruits like mangoes, papaya and pineapple to fresh meat and fish, the local food selection is incredibly affordable (and delicious). 

Some produce is imported and more expensive, but you can save on your monthly grocery bill by choosing mostly local products: a large bag of vegetables from a farmer’s market costs as little as US$5.

If you enjoy eating out, choosing smaller family-owned restaurants or ‘Fondas’ over those in high-end tourist areas offers significant savings. 

For example, a lunch of fish, rice, plantains, and a pasta salad at a local eatery can be enjoyed for under US$10 per person. 

Pushing the boat out isn’t exactly expensive here either, with a meal at one of the better restaurants costing US$30 per person. 

For those looking to live well in Panama City, a couple should budget US$500 a month for groceries and US$300 for dining out and other activities. 

Utilities, Healthcare and More

Other major expenses like gas, electricity and transport will cost you around US$400 per month.

Internet expenses are going to range from US$30 to US$40 a month, depending on whether you’re adding a cable television package. 

In terms of healthcare expenses, the cost of prescriptions, doctor visits and minor procedures can be substantial, depending on the frequency of use. 

These are out-of-pocket expenses that can be partially covered under Panama’s state health insurance system for those who pay into the program and have the right visa.

Many expats find it difficult to resist hiring the services of a maid: they’re easy to find and you’re likely to pay just US$15 to US$30 per visit for general cleaning and laundry. 

A weekly visit is usually enough for many expats, but wealthy Panamanian families tend to have a live-in maid. If this appeals, expect to pay a maid around US$350 a month.

In Panama, retirees are entitled to special pensionado (retiree) discounts on utility bills (25%), sports, movie and theatre tickets (50%), medical consultations (20%), prescriptions (10%), meals at restaurants (20%), public transport (30%) and others. 

In summary, expats can live well but frugally in Panama City for around US$2,500 per month or more extravagantly for US$4,000 and upwards. 

Pay Low Taxes In Panama City

Panama is one of the best-known tax havens in the world.

This is partly due to the Panama Papers scandal of April 2016, when 11.5 million financial and legal records from the database of Panama law firm, Mossack Fonseca, were leaked. 

The scandal exposed thousands of people, including politicians and celebrities, to allegations of using secretive offshore companies to hide money, and, worse, to enable crime and corruption.

Panama has since changed the rules to make it possible to identify the ultimate beneficiary of all legal entities incorporated there. 

However, Panama is still a territorial tax system, which in practice means that only income generated in Panama within the territory is taxable in Panama. 

So, if you live there or have a company there and you’re not actively managing it from Panama and your income is coming from abroad, it’s not going to be taxable in Panama: it may be reportable, but it’s definitely not taxable. 

A similar principle applies to personal taxes.

If you’re living in Panama without working there and without actively managing your foreign company there, that’s not considered a Panamanian-sourced income: it’s considered offshore income and not taxable in Panama.

For example, rental income coming from abroad, dividends from offshore companies or interest from offshore investments is not taxed in Panama. 

It’s more complex if you own a business that you are single-handedly managing while living in Panama. This could trigger permanent establishment rules that deem you are working for the company from Panama. 

This is where proper tax planning is vital, so you can understand and avoid permanent establishment rules.

However, to be eligible to pay lower taxes in Panama, you must first be a tax resident. 

Becoming a Tax Resident of Panama

There are two ways for you to become a tax resident of Panama. These include:

• Living for 183 days in Panama: this works for those who enjoy living in Panama and are willing to commit their time to benefit from that tax system. 
• The other option, for those who don’t want to commit to living in Panama for six months a year, is demonstrating significant economic substance. 

To demonstrate ‘significant’ economic substance, you simply have to show that you have more economic ties with Panama than any other country and you can do that in one of two ways:

• Through showing personal ties to the country, like ownership or use of a property in Panama, membership of gyms and local societies, a bank account, children in local schools or having a doctor or dentist there.
• Having ownership of an operational business in Panama.

This is where it gets interesting because, as previously said, to avoide being taxed in Panama your business must not be managed from there.

The solution could be to create a company in Panama to show some limited activity and pay personal taxes on your salary from that company.

Taxes in Panama are relatively moderate, with a top rate of 25%, and this only applies to incomes over US$50,000. 

So, if you earn less than that, you could end up paying as little as 15% to guarantee you get a tax certificate.

If you choose not to live in Panama for 183 days a year, but are receiving a salary from a Panamanian company and, as mentioned above, can demonstrate significant economic substance you are considered a tax resident with the benefit that your foreign-sourced income won’t be taxed.

Panama has no capital gains, inheritance or wealth taxes but there is a small withholding tax of 5% on foreign revenue from a Panamanian company and 10% on dividends distributed out of domestic profits. 

If interest and royalties are paid to a non-resident the withholding tax rate increases to 12.5%.

How To Get Panama Residence

When it comes to getting residence in Panama, there are several programs to choose from:

• Qualified Investor Visa
• Friendly Nations Visa
• Self-Economic Solvency Visa
• Panama Pensionado Visa
• Reforestation Visa
• Digital Nomad Visa
• Business Investor Program Visa.

Depending on how much you are willing to invest, the physical presence requirements and path to citizenship options vary markedly. The four visas are detailed below:

Qualified Investor Visa

The Qualified Investor Visa, known as the red carpet visa, is attractive because it offers immediate permanent residence. 

You do not need to visit Panama to submit your application, which can be done entirely remotely via power of attorney.

Then, to keep your residence active, you only need to visit Panama for two days every two years. So, with the red-carpet visa, you don’t even have to relocate to Panama.

Once you have been a permanent resident for a period of five years, you can apply for citizenship. 

To qualify for citizenship, you can make three different types of investments:

• You can invest at least US$500,000 in real estate in Panama.The investment in real estate can be either in property that’s already been built or that is currently under construction. However, until October 22, 2024, you have the option to invest only US$300,000 in qualifying real estate. 
• You can invest US$500,000 in securities listed on the Panamanian stock market
• Make a fixed deposit of US$750,000 in a licensed Panama bank for a duration of five years.

Friendly Nations Visa

Another program, the Friendly Nations Visa, requires you to be a national of one of the 55 countries included in the terms of this scheme.

They include the majority of Europe, the US and major Latin American countries like Chile and Argentina. 

This route starts with temporary residence for two years, after which you can apply for permanent residence. 

The investment amount is lower at US$200,000 in property, company formation, or a three-year term deposit in a local bank. 

Self-Economic Solvency Visa

Moving on to the Self-Economic Solvency Visa, you are granted temporary residence with minimal physical presence via the following route:

• An investment of US$300,000 in property or a bank deposit
• An investment of US$500,000 in securities in the Panamanian stock market
• A fixed-term deposit of at least US$750,000 in any local licensed bank for a minimum five-year term.

This is initially valid for two years before becoming permanent, with the option of applying for citizenship after five years. 

Panama Pensionado Visa

Finally, the Panama Pensionado Visa (retirement visa) or pensioners visa doesn’t require you to make any investment but to show that you have a lifelong income of at least US$1,000 per month. 

This income needs to come either from a pension or retirement fund, a government agency, any other regulated retirement agency or a private company, and it needs to come with a verified certification that this entity manages a pension fund. 

One thing to keep in mind, though, is that this visa will give you permanent residence, but,but in order to keep it, you should not be away from the country for periods over 24 months. 

So, you would still need to commit to visiting the country at least once every two years. 

Overall, while citizenship in Panama is possible, there are no guarantees. It will certainly not be fast, and the requirements include a historical, geographical and civil rights test in Spanish. 

Other Visa Options

There are other visa options including a Reforestation Visa, Digital Nomad Visa, Business Investor Program.

Expat Living in Panama City: FAQs

Prepare for Life’s Eventualities

For high-net-worth entrepreneurs and investors, having a Plan B is an essential way to ensure you’re ready if events in your home country take a turn for the worse. 

Being prepared by having a second residence is more than a tax consideration; it’s about going where you are treated best in terms of investment, lifestyle and travel possibilities. 

The Nomad Capitalist lifestyle is all about ‘going where you’re treated best’ and planting flags in different countries that serve you better than any other. 

However, you’ll need to plan this carefully, and that’s where Nomad Capitalist comes in. 

We help seven- and eight-figure entrepreneurs and investors create a bespoke strategy using our uniquely successful methods. 

This allows you to keep more of your own money, create new wealth faster and be protected from whatever happens in just three steps. 

At Nomad Capitalist, we have a network of lawyers, estate agents, accountants and tax and company formation specialists all around the world. 

All that expertise and real-world experience come together when we advise your holistic, bespoke action plan. Discover how we do things here.