Panama - residency
Panama Friendly Nations Visa 2026: What Changed After Decree 197
Executive Decree 197 of August 2021 ended the old "open a company plus USD 5,000 in the bank" path to permanent residency. We explain the current 2026 rules: 2-year provisional phase, three qualifying paths, the USD 200,000 real estate or deposit threshold, and the seven-year road to citizenship.
Key takeaway
The Friendly Nations visa still exists and still covers 50+ countries including the USA, Canada, EU, UK and Australia, but you can no longer buy permanent residency in a single step. Expect a 2-year provisional residency first, then permanent, then five more years before citizenship eligibility.
The Panama Friendly Nations Visa was for a decade the easiest direct-to-permanent-residency program in Latin America. Nationals of around 50 countries could incorporate a Panamanian company, deposit USD 5,000 in a local bank, and walk out with a cedula E (permanent resident ID) in about four months. That era ended on August 23, 2021.
What Decree 197 of 2021 changed
Executive Decree 197, published in Gaceta Oficial 29356-B, replaced Decree 343 of 2012. The reform took effect after a 90-day grace period in late 2021. Applications filed under the old rules before the cutoff were grandfathered; every application filed in 2026 follows the new framework.
| Pre-2021 (Decree 343) | Post-2021 (Decree 197) | |
|---|---|---|
| Path to permanent residency | Direct, single application | 2-year provisional first, then permanent |
| Bank deposit required | USD 5,000 (any Panamanian bank) | USD 200,000 in 3-year fixed deposit (investment path) |
| Company incorporation qualifies | Yes, with any Panamanian S.A. | No, removed entirely |
| Real estate threshold | Not required | USD 200,000 minimum (investment path) |
| Employment qualification | Yes, with labor contract | Yes, still permitted |
| Eligible countries | ~50 (original list) | ~50 (list unchanged) |
| Years to citizenship | 5 from PR grant (total ~5-6 years) | 5 from PR grant (total ~7 years) |
The three current qualifying paths
Post-reform, you must establish one of three specific ties to Panama. "Incorporating a local company" is no longer one of them.
Path 1: Employment with a Panamanian company
- Signed labor contract with a Panamanian employer registered with MITRADEL (Ministry of Labor)
- Employer files an application for a matching work permit
- Salary must meet the applicable minimum for the position
- Extends to spouse and minor children as dependents
- Permit revoked if employment ends during the 2-year provisional period
Path 2: Real estate investment of USD 200,000+
- Property titled in the applicant's personal name (not a company)
- USD 200,000 minimum market value; bank financing allowed, but the applicant's unencumbered equity must be at least USD 200,000
- Can be residential, commercial or raw land
- Multiple properties can be combined to reach the threshold
- Must be maintained through the provisional phase and the permanent residency application
Path 3: Fixed-term bank deposit of USD 200,000+
- Deposit in a Panamanian bank licensed by the Superintendencia de Bancos
- Minimum 3-year fixed term
- Held in the applicant's personal name, unencumbered, not pledged
- Must remain intact through provisional + permanent phases
- Interest earned is Panama-source income and taxable locally; principal is not
Full 7-year timeline to citizenship
2026 cost breakdown
Eligible countries (50+)
The list has not shrunk post-reform. Most English-speaking expat passports qualify:
- North America: USA, Canada
- UK and Ireland
- EU member states (all 27)
- European non-EU: Switzerland, Norway, Iceland, Liechtenstein, Monaco, San Marino
- Oceania: Australia, New Zealand
- East Asia: Japan, South Korea, Singapore, Hong Kong, Taiwan
- Middle East: Israel, UAE
- Latin America: Argentina, Brazil, Chile, Mexico, Uruguay, Paraguay, Peru, Costa Rica
- Plus: South Africa, Serbia, Montenegro
Panama tax bonus: territorial system
Once resident, you pay Panamanian income tax only on Panama-source income. Foreign salary, foreign dividends, US Social Security, 401(k) distributions, foreign rental income and foreign capital gains are exempt from Panamanian tax under Articles 694-701 of the Fiscal Code. This is the single biggest reason expats pick Panama over Costa Rica or Colombia.
Sources
- Official source: Servicio Nacional de Migracion - Permisos Migratorios
- Official source: Gaceta Oficial - Executive Decree 197 of 2021
- Official source: Ministry of Foreign Affairs (Friendly Nations relations)
- Official source: IRS - US-Panama tax treaty list (no treaty in force)
- Official source: DGI - Direccion General de Ingresos (Panama tax)
Related visa guides
Frequently asked questions
Can I still get Panama permanent residency in a single step?
No, not under Friendly Nations since August 2021. Post-Decree 197, the Friendly Nations route requires a 2-year provisional residency first. The only direct-to-permanent routes are the Pensionado Visa (USD 1,000/month lifetime pension) and the Qualified Investor Visa (USD 300,000+ real estate, USD 500,000 in securities, or USD 750,000 in fixed deposits).
Does incorporating a Panamanian company still qualify?
No. This was the most common pre-reform path and it was removed in 2021. You now need a genuine employment contract, USD 200,000 in real estate, or a USD 200,000 3-year fixed deposit. Buying an off-the-shelf S.A. with no operations no longer works.
How much does the Friendly Nations Visa cost in 2026?
Excluding the qualifying investment, budget approximately USD 10,000-12,000 total across the full 7-year path (provisional + permanent residency). This covers government fees (~USD 2,350), legal fees (~USD 8,500) and ID card issuance. The USD 800 Treasury repatriation guarantee is refundable if you later leave Panama in good standing.
Do I need a Panamanian lawyer?
Yes, by statute. Article 77 of Decree Law 3 of 2008 requires a licensed Panamanian attorney to file any residency application. You cannot self-file. Most expats budget USD 5,000-8,000 in legal fees for the provisional phase and another USD 1,500-3,000 for the permanent residency conversion.
Which visa is faster than Friendly Nations?
The Qualified Investor Visa (Decree 722/2020) issues permanent residency in 30 business days for investments of USD 300,000+ in real estate. The Pensionado Visa also gives direct permanent residency (3-6 month processing) for retirees with a USD 1,000/month lifetime pension.