Move to Panama: 0% Tax on All Foreign Income
Panama's territorial tax system means zero tax on all foreign-sourced income, capital gains, and dividends. No minimum stay requirement, no worldwide reporting, and the country uses the US dollar. For remote workers and international entrepreneurs, Panama offers one of the cleanest tax-free setups in the Americas.
Tax Environment
Panama operates a strict territorial tax system. Only income sourced from within Panama is subject to tax. All foreign-sourced income—whether salary from a foreign employer, international business revenue, investment gains, dividends, or rental income from overseas property—is completely tax-free.
For Panama-sourced income, progressive tax rates apply: 0% on the first $11,000 USD, 15% on $11,001–$50,000, and 25% above $50,000. Corporate tax on Panama-sourced income is a flat 25%. However, these rates are irrelevant for anyone earning exclusively from foreign sources.
There is no worldwide income reporting requirement, no wealth tax, no inheritance tax for foreign assets, and no dividend tax on foreign dividends. Capital gains on foreign assets are completely exempt. Domestic property sales carry a 10% capital gains tax. Panama also uses the US dollar as its official currency, eliminating exchange rate risk for USD earners.
Cost of Living
A mid-tier lifestyle in Panama City. Costs are lower in smaller cities like Boquete, David, or Pedasi.
| Category | Monthly Cost (USD) |
|---|---|
| Rent (1-bed apartment, city) | $900 |
| Food & groceries | $400 |
| Utilities (electricity, water, internet) | $100 |
| Transport (metro, taxi, Uber) | $100 |
| Total | $1,500 |
Visa Options
Requires $5,000 bank deposit + income proof
Available to ~50 nationalities (US, UK, CA, AU, EU)
Most popular residency route
Requires $1,000/mo pension income
Extensive discounts on services and goods
One of the world's best retirement visa programs
Income requirement: $3,000/mo
For remote workers employed outside Panama
No Panama income tax on foreign earnings
Requires $300,000 investment (property or business)
Also available with $300k bank deposit
Includes dependant sponsorship
Estimated Annual Tax Savings
Approximate savings from relocating to Panama with foreign-sourced income, based on standard tax rates in each origin country.
| Moving From | Gross Income | Tax at Home | Tax in Panama | Annual Savings |
|---|---|---|---|---|
| Australia | $200k AUD | ~$78k | $0 | ~$78k/yr |
| United Kingdom | £150k GBP | ~£48k | £0 | ~£48k/yr |
| Canada | $200k CAD | ~$75k | $0 | ~$75k/yr |
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Open the calculator →Frequently Asked Questions
Does Panama tax foreign income?
No. Panama operates a strict territorial tax system. Only income earned from Panama-sourced activities is taxed. All foreign-sourced income, including salary from foreign employers, investment gains, dividends, and rental income from properties outside Panama, is completely tax-free. There is no worldwide income reporting requirement.
Does Panama have capital gains tax?
Capital gains on foreign assets are not taxed under Panama's territorial system. For domestic property sales, a 10% capital gains tax applies. Securities traded on the Panama stock exchange are taxed at 10% of the gain or 5% of the gross sale value, whichever is lower.
What is the Friendly Nations Visa?
The Friendly Nations Visa is Panama's most popular residency option for citizens of about 50 countries including the US, UK, Canada, Australia, and most EU nations. It requires a $5,000 bank deposit in a Panamanian bank plus proof of economic ties. It grants a 2-year temporary residency, renewable, with a path to permanent residency.
How much does it cost to live in Panama?
A mid-tier lifestyle in Panama City costs approximately $1,500 per month, covering rent ($900), food ($400), utilities ($100), and transport ($100). Total costs range from $1,600 to $4,200 depending on neighborhood and lifestyle. Panama uses the US dollar as its official currency.