Panama: tax residency, rates & nomad visa

Tax residency rules in Panama

As of 2026, Panama’s tax-residency test centres on a presence threshold of 183 days^ⓘPwC Worldwide Tax Summaries“A resident is a person who is physically located and has been generating income in Panama for more than 183 days during the year.”View source · accessed 2026-09-18. An individual becomes a Panamanian tax resident by spending more than 183 days in the country within a fiscal year or the year before it, and the days do not need to be consecutive. Panama also treats a person as resident if they have established a genuine permanent home in the country, which the tax authority assesses through evidence such as utility bills or children attending local schools.

Territorial taxation principle

Panama taxes individuals on a territorial basis, so only income earned from Panamanian sources is subject to tax, and this applies equally to citizens, residents, and non-residents. Foreign-source income is not taxed in Panama even for people who are full Panamanian tax residents. [source]PwC Worldwide Tax Summaries“Citizens and residents are taxed on income earned from Panamanian sources. Non-residents are taxed only on income from Panamanian sources”View source · accessed 2026-09-18

Income tax rates in Panama

As of 2026, the headline personal income tax rate in Panama is 25%^ⓘPwC Worldwide Tax Summaries“Over 50,000 | Tax on column 1 (USD): 5,850 | Tax on excess (%): 25”View source · accessed 2026-09-18. The top marginal personal income tax rate in Panama is 25 percent, applied to taxable income exceeding USD 50,000. This top rate only bites on Panama-source income, since foreign-source income is exempt under the territorial system regardless of the taxpayer's residency.

Capital gains tax

For individuals selling real estate in Panama, a 2 percent transfer tax plus a 3 percent advance income tax payment applies on the higher of the sale price or cadastral value, and the seller can instead choose to be taxed at a flat 10 percent on the actual gain and credit the 3 percent already paid. Gains on the sale of securities carry a 5 percent withholding tax with the underlying capital gain taxed at 10 percent, and sellers can accept the withholding as final or claim a refund of any excess after calculating the real gain. [source]PwC Worldwide Tax Summaries“A 2% real estate transfer tax plus a 3% income tax advance payment must be submitted (done over the gross transaction amount or the cadastral value, whichever is greater).”View source · accessed 2026-09-18

Vat standard rate

7% (as of 2026)^ⓘPwC Worldwide Tax Summaries“The general tax rate is currently 7%.”View source · accessed 2026-09-18 — Panama's value added tax equivalent is called ITBMS, the movable goods and services transfer tax, and its general rate is 7 percent. This is a low rate by regional standards and applies to most goods and services transactions in Panama.

Social security contribution rate

Panamanian employees contribute 9.75 percent of their salary to social security, a rate that took effect on 1 April 2025. This is a payroll contribution separate from personal income tax. [source]PwC Worldwide Tax Summaries“Effective 1 April 2025, social security tax is assessed at a rate of 9.75% for employees.”View source · accessed 2026-09-18

Immovable property tax

Owners of real estate in Panama pay an annual immovable property tax at a progressive rate between 0 percent and 2.10 percent depending on the property's value. PwC's page also flags a further reduction of the top rate to 0.9 percent from January 2019, so the exact current ceiling should be checked against the latest DGI property tax table. [source]PwC Worldwide Tax Summaries“all owners of real estate should pay Immovable Property Tax annually at a rate between 0% and 2.10%, depending on the value of the property. From January 2019, the maximum rate will decrease to 0.9%.”View source · accessed 2026-09-18

Pit income brackets

0–25% (as of 2026)^ⓘPwC Worldwide Tax Summaries“Taxable income (USD*) | Tax on column 1 (USD) | Tax on excess (%) | Over (column 1) | Not over ... 0 | 11,000 | 0 | 0 ... 11,000 | 50,000 | 0 | 15 ... 50,000 | — | 5,850 | 25”View source · accessed 2026-09-18 — Panama's progressive personal income tax scale has three bands, stated by PwC directly in USD, starting at 0 percent up to USD 11,000, rising to 15 percent on the excess between USD 11,000 and USD 50,000, and 25 percent on any excess above USD 50,000 on top of a base tax of USD 5,850. Panama's currency, the balboa (PAB), is pegged 1 to 1 with the US dollar and USD is used interchangeably in practice.

Special tax regimes in Panama

None (as of 2026)^ⓘPwC Worldwide Tax Summaries“There are no inheritance, estate, or gift taxes in Panama.”View source · accessed 2026-09-18 — Panama does not levy any inheritance, estate, or gift tax on individuals. This is a further consequence of Panama's light-touch, territorial approach to personal taxation.

Foreign source income exemption

Panama's carve-out for foreign income is not a special election but the default rule of its territorial tax system, meaning salary, business, or investment income earned outside Panama is simply outside the scope of Panamanian income tax for anyone, resident or not. This is the central reason Panama functions as a low-tax base for people whose income is generated abroad. [source]PwC Worldwide Tax Summaries“Citizens and residents are taxed on income earned from Panamanian sources. Non-residents are taxed only on income from Panamanian sources”View source · accessed 2026-09-18

Friendly nations visa

The Friendly Nations Visa is an immigration residency route open to nationals of around 50 listed countries who can show an economic or professional tie to Panama, either through a job with a Panamanian company, a real estate purchase of at least USD 200,000, or a three-year fixed bank deposit of at least USD 200,000. Getting this residency permit does not by itself make someone a Panamanian tax resident, that still depends separately on the ordinary day-count or permanent-home tests. [source]Kraemer & Kraemer“By Executive Decree 343 of May 16, 2012, the migratory subcategory of Permanent Residency for Friendly Nations was created”View source · accessed 2026-09-18

Digital nomad visa in Panama

Visa de Corta Estancia como Trabajador Remoto (Short Stay Visa for Remote Workers) (as of 2021)^ⓘServicio Nacional de Migración de Panamá“Decreto Ejecutivo No. 198 / Que crea la Visa de Corta Estancia como Trabajador Remoto, y se dictan otras disposiciones.”View source · accessed 2026-09-18 — Panama does have a dedicated remote-worker permit, created by Executive Decree No. 198 of May 7, 2021, officially called the Short Stay Visa for Remote Workers. It targets people who work remotely for a foreign employer or as self-employed freelancers whose clients and income are abroad, rather than people working for Panamanian companies.

Nomad visa duration

The remote worker permit is granted for an initial nine months and can be renewed once for another nine months, giving a maximum stay of eighteen months under this specific permit. After that, holders would need to pursue a different residency route to remain in Panama. [source]Galindo, Arias & López“una vigencia de 9 meses y podrá prorrogarse una sola vez por igual periodo”View source · accessed 2026-09-18

Nomad visa tax treatment

None of the official or law firm sources reviewed state that holding the remote worker visa itself confers Panamanian tax residency, and the visa's foreign-income requirement means the very income that qualifies someone for the permit is exempt from Panamanian tax under the territorial system either way. In practice this makes the remote worker visa tax-neutral for the income it is built around, though holders should still track their day count if they want to avoid any ambiguity about residency status. [source]PwC Worldwide Tax Summaries“Citizens and residents are taxed on income earned from Panamanian sources. Non-residents are taxed only on income from Panamanian sources”View source · accessed 2026-09-18

Nomad visa income requirement

Applicants for Panama's remote worker visa must show foreign-source income of at least USD 36,000 per year, equivalent to USD 3,000 a month, verified through bank certifications and account statements. The income must originate abroad, consistent with the visa being aimed at people whose earnings are not Panama-sourced. [source]Galindo, Arias & López“un monto anual no menor a US$36,000.00 (US$3,000.00 mensuales), o su equivalente en moneda extranjera”View source · accessed 2026-09-18

Frequently asked questions

Sources

• PwC Worldwide Tax Summaries individual / other taxes · big4, accessed 2026-09-18
• PwC Worldwide Tax Summaries individual / taxes on personal income · big4, accessed 2026-09-18
• Kraemer & Kraemer immigration / panama friendly nations visa · other, accessed 2026-09-18
• PwC Worldwide Tax Summaries individual / residence · big4, accessed 2026-09-18
• Fábrega Molino tax residence in the republic of panama 2 · other, accessed 2026-09-18
• Galindo, Arias & López visa de corta estancia como trabajador remoto · other, accessed 2026-09-18
• Servicio Nacional de Migración de Panamá decretos y resoluciones 2021 · tax_authority, accessed 2026-09-18

Explore more

• Not sure you count as resident? Am I a tax resident of Panama?
• Working remotely? Digital nomad taxes in Panama — the visa, when you become tax resident, and your effective rate.
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• Planning your days in Panama? Track them with the free 183 Days residency tracker — it checks your travel log against verified thresholds like the ones on this page.

When to talk to an advisor

This page maps Panama’s general rules — it cannot weigh your treaty position, your family and asset ties, or the timing of a move. If meaningful money depends on the answer, have a qualified advisor in Panama (and in your home country) review your situation before you act.