Benefits of Panama's residency-by-investment program

By Emilio Cornejo Vernaza 

Since 2008, due to an update in Panama’s immigration laws and regulations, the country experienced a significant increase in international investment in real estate. The growth in the construction and property sector was motivated not only by its tax system, its security and its proven dollarized economy, but also by the incorporation of a migratory residence program based on the purchase of real estate and the opening of bank accounts on fixed-term deposits. 

The change was also triggered by the start of formal diplomatic relations with China in 2017 and the expectations of economic growth at 5.9 percent, according to the financial forecast of the International Monetary Fund for Panama for 2019.1   

In this sense, Panama adopted the program of permanent residency-by-investment as part of a state strategy to attract international investment in search of stable markets for the placement of its funds, with the added value of migratory benefits not only for the investor, but also for his family. 

BENEFITS OF INVESTING IN PANAMA  

Relocating funds to Panama could be a convenient and profitable decision for investors’ international investment portfolios. Panama has maintained a democratic and stable government since 1989, with guarantees of money circulating in the local market, as a result of the placement of more than $6 billion American dollars in projects of the "turn-key" type for construction in airports, subways and similar public infrastructures. This takes into account the next change of government in May of 2019. These funds are in addition to the new surplus of $2.5 billion American dollars as a result of revenues from the government’s increase in tolls with the recent expansion of the Panama Canal.2 

Panama also has regulations that protect their investors’ investments. In addition to having an international banking center, there is the possibility of forming trusts and private foundations for the protection and privacy of assets. These grant foreign investors the same guarantees and rights as Panamanian citizens with respect to properties, investments and bank accounts. 

REAL ESTATE INVESTMENT OPTION 

If you are considering investing in real estate in Panama for residency purposes, you should take into account that this must be done with the minimum amount of $300,000 U.S. dollars, in addition to adding another $2,000 for each dependent that applies next to the principal in the residency application. The $300,000 investment can be placed either in one or more properties, as well as in a bank account, or even in a combination of both options, provided that it adds up to the minimum required investment.3 

Before starting the preparation of documents, translations and apostilles required by the National Immigration Service, the first step to achieve a resident permit through real estate investment in Panama is by setting up a personal bank account in a local bank that will accept the funds used to purchase property in Panama. The reason for this banking requirement is for the investor to prove to the Panamanian authorities that the invested funds actually are “coming from abroad” by means of a reference letter from the bank. 

Once the personal banking account is completed, the next step is to purchase the selected property. Panama has a large residential and commercial property market with real estate offered in cities, mountains and beachfront areas. In addition, there are associations of professional and qualified real estate brokers who can assist buyers in finding a suitable property. 

As a rule, in order to apply to the investment program, the property must be registered in the Public Registry of Panama completely under the name of the investor, in addition to being totally paid for. However, bank financing or mortgages for acquisition are allowed, as long as the investor can prove that he or she made the minimum requested investment from his own funds. 

Once the account has been opened and the property has been properly registered, the investor, together with his family, can move to Panama and begin their residency process. 

RESIDENCE BY MEANS OF A FIXED TERM DEPOSIT BANK ACCOUNT 

As an alternative to investing in real estate, the applicant may also choose to open a bank account on fixed-term deposits for the same amount, $300,000, for a minimum period of three years. In addition, it must be proved that the fixed term is free of bank liens and solely under the name of the investor or applicant. 

If applying with dependents, the investor also must open a personal account with a minimum amount of $5,000 in any local bank. 

Setting up the fixed-term deposit account and the submitting the residency permit application may be done on the same trip, compared to the real estate option that required two trips to Panama to complete. 

It is imperative to clarify that the investment residency process, once granted by the National Immigration Service in Panama, is granted for an initial period of 2 years, and upon completion, the investor must reiterate to the Panamanian State its investments in order to finally be granted the lifetime residence, with the right to a Panamanian ID. 

Five years after obtaining the permanent residency permit by means of an investment, the investor may opt to become a Panamanian citizen, receiving all the benefits as a local property owner, with better property tax rates, as well as the possibility to obtain a Panamanian passport, and the possibility to practice any sort of profession or commercial activity in Panama.  

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