Concept
For many years, Panama's Friendly Nations Visa was considered the easiest way to quickly obtain permanent residency: citizens of about fifty "friendly" countries received status almost immediately. The 2021 reform changed this, but the program remains attractive—primarily due to territorial taxation, under which foreign-source income is not taxed in Panama at all.
Before and After
Before 2021, the visa granted virtually instant permanent residency with minimal requirements. Since 18 August 2021 (Executive Decree 197 of 7 May 2021, supplemented by Decree 226 of 20 July 2021), the logic has changed: first, temporary residence is issued for 2 years, and only after maintaining it for at least two years and preserving the qualifying grounds can one apply for permanent residency. The main innovation is the mandatory real economic connection with the country.
List of Friendly Nations
Eligibility for the visa is determined by citizenship: the list contains 49 countries—the USA, Canada, the United Kingdom, Australia, Japan, most EU member states, and several others. The EU qualifier matters: Italy, Bulgaria, Romania and Slovenia are absent from the list, and Italian citizens instead use a separate route under the Panama–Italy friendship treaty (Convenio Panamá — Italia). Russia is not on this list, so Russian citizens can usually access the program only if they hold a second citizenship from the list. The list itself should be verified before application—it is periodically updated.
Taxes: Territorial Principle
Panama taxes only income from sources within the country. Foreign-source income—dividends, interest, capital gains, rental income, pensions—is completely exempt for both residents and non-residents. In other words, the combination of "Panamanian residency plus foreign income" results in zero Panamanian tax on that income. However, this does not eliminate two things: Panama participates in CRS, and your previous tax residency does not disappear by itself.
How Relocation Works: Two Steps
After the reform, residency is processed in two stages. First, the applicant receives temporary residence for two years; when the term expires and the qualifying grounds remain valid, they apply for permanent residency. The application is filed with the National Migration Service by a Panamanian attorney under power of attorney: the process cannot be initiated without a local lawyer. One application can include dependent family members—spouse and children; a child over 18 and under 25 is included only on proof of full-time regular study together with a sworn declaration of being unmarried. Parents are absent from the dependants listed for this category. The service publishes no decision deadline for the permanent-status application, so ask your attorney for realistic timing. After approval a Panamanian cédula is issued; the right to work is granted by a separate MITRADEL permit. The path to naturalization opens later—usually after several years of permanent residency, and these conditions should be verified separately.
Regulation and Requirements
The program was opened by Decreto Ejecutivo 343 of 16 May 2012, but within a month it was repealed by Decreto Ejecutivo 416 of 13 June 2012 — decree 416 remains the base instrument for this category, and every later change is an amendment to it. Decreto Ejecutivo 197 of 7 May 2021 (published in Gaceta Oficial No. 29290-A of 20 May 2021; under its article 5 it takes effect ninety days after promulgation, i.e. on 18 August 2021) rewrote articles 2 and 3 of decree 416: the symbolic deposit was replaced with a requirement for a real economic basis and a two-year probationary period. In addition to the qualifying grounds themselves, the applicant must demonstrate financial solvency, absence of criminal record, and the presence of professional or business ties with Panama. Citizenship remains decisive: only citizens of countries from the approved list can use the visa.
There are three economic grounds, and the applicant chooses one. One caveat matters: decree 197 as published offered only two grounds — employment and real estate, and the real estate had to be held strictly “a título personal”, in the applicant's own name. The third ground, and the option of holding the asset through a legal entity, were added by Decreto Ejecutivo 226 of 20 July 2021, which is the instrument the National Migration Service now cites as the legal basis for this category. The first ground is real estate in Panama with a registered value of at least 200,000 dollars; the property must have clear title, can be purchased with a mortgage, and can be registered to an individual or to a company or private-interest foundation where the applicant is the ultimate beneficiary. The second is a fixed-term bank deposit of at least 200,000 dollars in a general-licence Panamanian bank, for a three-year term and free of encumbrances; this too may be held through a company or private-interest foundation with the applicant as ultimate beneficiary. The third is an employment contract with a local employer and a work permit, with the company required to justify hiring a foreigner. The chosen grounds must not only be demonstrated at the time of application but also maintained until permanent status is granted.
Evolution of the Program
The logic of the reform is visible against the backdrop of general tightening toward "residency and citizenship by investment" schemes. In the 2010s, Panama competed for mobile capital with maximally simple entry; by the early 2020s, international pressure for transparency—from the EU, OECD, and FATF—made symbolic schemes reputationally expensive. The 200,000-dollar threshold transformed the visa from a formality into an instrument with real economic ties. The trend is regional: neighboring Paraguay, Uruguay, and Costa Rica have also shifted residency toward verifiable investments and presence.
On the foreseeable horizon, the program appears stable: Panama maintains territorial taxation and remains a convenient point for relocation, but requires more documentation and real grounds. For those planning relocation, it is prudent to anticipate further increases in requirements, verify in advance the current status of your country on the list, and maintain the chosen grounds throughout the transition period.
Who It Suits
The program is good for those who need a base in Latin America with territorial taxation and a path to permanent residency, and eventually to naturalization (usually after several years of residency; conditions should be verified). It is no longer suitable for those seeking instant status without presence and investment: now a genuine connection with the country is required—real estate, a fixed-term deposit, or employment.
The list of countries and program requirements change periodically—current conditions are worth verifying before applying.
Q/A
How should eligibility for the Friendly Nations route be checked before filing?
Eligibility depends on citizenship of a country on the current list, not on a former residence permit or place of business. Before spending, check the live list and requirements sheet published by Panama’s National Migration Service and identify the passport under which a dual national will apply.
Which economic grounds are recognised after the reform?
Decree 226 and the current SNM sheet provide three routes: local employment with the MITRADEL process, real estate worth at least B/.200,000, or an unencumbered fixed deposit of at least B/.200,000 in a general-licence Panamanian bank for three years. The selected ground must be evidenced.
Does the first application grant permanent residence immediately?
No. SNM describes the initial status as provisional residence for two years. A permanent-residence file is submitted after that period and the qualifying ground is evidenced again. The property, deposit or employment connection must therefore be maintained; conversion is not automatic.
Who can be included as a dependant, and does the family receive work rights?
The SNM sheet covers a spouse and children; an adult child under 25 needs proof of regular full-time study and a sworn declaration of being unmarried. Inclusion as a dependant does not replace work authorisation: employment-based applicants must complete the separate MITRADEL process.
Does Panamanian immigration residence create tax residence or end the former one?
No. Immigration status alone answers neither question. The tax result must be analysed separately under current Panamanian rules, actual days, the centre of personal and economic ties and any applicable treaty; ending the former residence is determined under the former country’s law.