After writing up Uruguay, where the tax case rests on a 10-year holiday for foreign passive income, I looked at the other Latin American name that always comes up. Panama gets pitched as zero tax on foreign income and easy residency for nomads. I checked both claims against the law as it stands in October 2026.
On passive income, Panama beats Uruguay: foreign income is outside the tax net with no time limit and no holiday to elect. Residency is harder than the pitch suggests, since the nomad visa is a short non-resident permit and real residency costs USD 200k-500k, a job offer or a lifetime pension.
Panama is also still on Portugal’s tax-haven list. That keeps Portuguese nationals tax resident in Portugal for up to five years after they leave.
How Panama Taxes You
Panama is territorial. Residents and non-residents are taxed only on Panamanian-source income, at 0% up to USD 11k, 15% from 11k to 50k and 25% above, per PwC’s summary.
Foreign dividends, interest and capital gains aren’t taxed. Only gains on Panamanian securities (10%) and Panamanian real estate are. There’s no wealth, inheritance or gift tax.
Property tax on a primary residence is 0% up to USD 120k, 0.5% up to 700k and 0.7% above. Other property pays 0% up to USD 30k, rising to 1% above 500k.
Tax residency starts at more than 183 days in the current or previous year, or a permanent home in Panama. The DGI, the tax authority, issues tax residency certificates and requires your migration entry-exit record. Whether it issues one to someone with no local income is at its discretion.
Panama has exchanged bank data under CRS since 2018, so your home country sees your accounts there.
If you hold assets through a company, two rules apply. Law 526 (May 2026) makes Panamanian entities in multinational groups without economic substance pay 15% on foreign passive income from fiscal 2027; it doesn’t apply to individuals. A Panamanian company with an operations license withholds 5% on dividends paid from foreign-source profits.
Remote Work Is a Grey Area
The Fiscal Code taxes income “produced within the territory,” but it exempts directing, from an office in Panama, transactions whose effects are abroad. A tax lawyer argues that offshore services with effects abroad aren’t local-source even when you perform them in Panama. The nomad visa uses the same “effects abroad” wording.
No DGI ruling on freelancers exists. Treating that income as foreign-source is common practice and a defensible reading of the code, but it isn’t a guarantee. If the DGI disagreed, the income would be taxed at Panama’s rates of up to 25%. Uruguay went the other way, with a 2024 ruling saying remote work done there is taxable.
For a freelancer or a founder who works from a laptop, this question decides most of the tax picture. An investor living off foreign dividends, interest and capital gains can mostly ignore it.
Residency Routes
Every immigration checklist starts with a notarized power of attorney, so in practice you need a Panamanian lawyer. The routes that lead to residency:
- Friendly Nations: a Panamanian job, USD 200,000 in real estate, or a USD 200,000 fixed deposit for 3 years. You get a 2-year provisional permit, then permanent residency. It doesn’t include the right to work, which needs a separate Labor Ministry permit. Malta, Spain and Portugal are on the list. You have to visit at least once every 2 years, and processing takes about 4-6 months.
- Qualified Investor, tightened in September 2026: USD 300,000 in new-build real estate, USD 500,000 in resale property, or a USD 500,000 deposit for 5 years at a state bank (USD 750,000 at a private bank). Gifted funds no longer count, and you must prove the investment every year. It gives permanent residency directly, in about 30 days.
- Pensionado: a lifetime pension of at least USD 1,000 a month, or USD 750 if you own property worth over USD 100k. The status is indefinite.
- Own economic solvency through real estate: a USD 300,000 property bought with funds from abroad, followed by a 2-year permit and then permanent residency.
A nomad with a laptop and USD 3,000 a month of income, and no capital, qualifies for none of these.
The Nomad Visa
The remote worker visa requires USD 36,000 a year (USD 3,000 a month) of foreign-source income, from a foreign employer or your own foreign company. It lasts 9 months and can be extended once, for 18 months maximum. Fees run about USD 300, health insurance is required, and you swear not to work for anyone in Panama.
It’s a non-resident category, and time on it doesn’t count toward residency. When it ends, the Friendly Nations and investor routes are separate applications with their own money or job requirements.
Citizenship
Panama requires 5 consecutive years of residence (3 with a Panamanian spouse or child), and you must expressly renounce your current nationality. That alone rules it out for most EU passport holders.
Panama and the Portugal Blacklist
Portugal still lists Panama as a tax haven under Portaria 150/2004. The latest update, in force from January 2026, removed Uruguay, Hong Kong and Liechtenstein and left Panama on. Portugal blacklists Panama even though the two countries have a tax treaty in force.
Article 16(6) of the IRS code keeps Portuguese nationals tax resident in Portugal for the year they move and the next four, unless they prove valid reasons. It stops if they move on to a country that isn’t listed. It applies only to Portuguese nationals, so a Maltese or German national leaving Portugal isn’t caught. My NHR article covers the same rule for Dubai.
Portugal also taxes capital income from entities in listed jurisdictions at 35% instead of 28%. Anyone resident in Portugal who holds a Panamanian company takes that hit, whatever their passport.
Spain and the EU Lists
Panama isn’t on Spain’s list and hasn’t been since the Spain-Panama treaty took effect in 2011, so Spain’s 5-year rule for nationals moving to tax havens doesn’t apply.
At EU level, Panama moved off the tax blacklist onto the grey list on October 9, 2026, per the EU’s announcement. It left the FATF grey list in 2023. Neither change moves Portugal’s list.
Banking and Cost of Living
Panamanian banks are strict. Expect to provide bank references, proof of the source of your funds and 6 months of statements, and usually to turn up in person.
Panama City is roughly 7% cheaper than Lisbon before rent, and rent is about 18% lower, according to Numbeo in October 2026. Expats use private healthcare and insurance.
Panama vs Uruguay
Set against Uruguay, Panama compares like this:
- Passive income: Panama exempts foreign income with no time limit. Uruguay gives 10 years to those who qualify, then 12% or a paid regime.
- Work done locally: Panama is a grey area at up to 25%. Uruguay clearly taxes it at up to 36%.
- Residency cost: Uruguay needs no investment for legal residency, only proof of income. Panama’s practical routes cost USD 200k or more, or need a pension or a job.
- Blacklists: Uruguay is now off Portugal’s list and Panama isn’t. Neither is on Spain’s.
- Citizenship: Uruguay takes 3-5 years without renouncing your nationality. Panama takes 5 years plus renouncing it.
Uruguay is the cheaper way in for someone with little capital who wants legal residency on proof of income, and for Portuguese nationals it’s also off the blacklist.
Who It Works For
Panama suits investors with foreign passive income who can put USD 200k-500k into property or a deposit. Retirees with a pension of USD 1,000 or more a month get indefinite status through Pensionado. Spanish and other non-Portuguese EU nationals aren’t caught by Portugal’s 5-year rule.
It doesn’t work for Portuguese nationals leaving Portugal, or for anyone holding a Panamanian company while resident in Portugal. Nomads expecting the remote worker visa to turn into residency will be disappointed, and so will anyone who wants a second passport without giving up their own.
Rules as of October 2026. This isn’t tax advice; get a Panamanian lawyer and an adviser in your home country before you move.
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