Panama has already been attracting retirees and businessmen for many years, due to its advantageous tax system. Notably, the absence of taxes on wealth, succession, gifts, and foreign sourced incomes.
Since the launch of the Panama Qualified Investor Immigration Program ("QIIP") in October 15, 2020, we have seen new investors now looking to take advantage of the perks that Panama offers, by securing permanent residency in Panama via a qualified investment in the country.
What is unique about the QIIP?
Unlike most immigration programs in Panama or permanent residency opportunities worldwide, investors can apply and complete the entire QIIP application remotely, from anywhere in the world and with just one short visit to Panama at the end process to activate the permanent residency.
There is no minimum physical residency requirement to maintain permanent residency – other than having to set foot in Panama at least once every 2 years.
Applications are processed on an expedited basis. In most cases, applicants will receive their permanent residency within 30 days from submission, which makes this one of the fastest pathways to permanent residency worldwide.
Varied investment options
The QIIP requires the investor to make and maintain a qualifying investment in Panama for at least five years. There are several types of investments that the investors may choose from:
- USD 300,000 real estate (which will be increased to USD 500,000 from October 15, 2022); or
- USD 500,000 in Panama securities; or
- USD 750,000 deposit in an approved Panama bank.
At the moment, the real estate option is by far the most popular investment option for QIIP applicants. Investors are free to opt for commercial or residential real estate at their discretion.
The popularity of this option may stem from several reasons, including that as of today it is the option that requires the lowest investment amount, and it permits investors to make a different kind of investment in the local real estate market and bet on for future gains.
However, we expect that increasing the minimum real estate investment amount from USD 300,000 to USD 500,000 may make the wheel turn in favour of the securities options. Our experience in other jurisdictions has indeed shown that if the investment amounts are the same, investors tend to favour securities options over real estate options – usually because real estate requires more time to complete the process (due to the time required to find and purchase the property) and also results in more long term management just because it involved a physical asset.
Benefits of becoming a permanent resident of Panama
Investors can include their legally married spouse and children below 18 years old (or between 18 and 25 years old if they are financially dependent on the investor) to their applications for permanent residency. Each family member that is included will be granted permanent residency, on an individual basis and independently from each other, with no need to multiply the qualifying investment.
The permanent residency will allow them to reside in Panama indefinitely, and to take up employment, studies or carry out a business locally without the need for any visa. In addition, permanent residents can also benefit from Panama's modern and affordable health care system.
It is a true permanent residency as per the literal meaning of these words: it will not be revoked or cancelled even if the investor withdraws the investment (subject to the minimum investment holding period of 5 years).
Path to citizenship
Permanent residents may apply for citizenship after holding permanent resident status for five years, subject to meeting physical residency requirements in Panama. However, this is not a popular request, essentially because Panama does not recognize dual citizenship and one must renounce his existing citizenship to become a Panamanian citizen.
In addition, becoming a Panamanian citizens require commitment and determination. The citizenship application involves a comprehensive test (in Spanish!) on Panamanian geography, history, and political organization.
We expect this program will continue to be popular due to the efficient and fast processing behind it. Also, while we expect the securities investment option may soon become more popular due to the upcoming increase on the investment amount required for the real estate option, the real estate option could still be an interesting choice to take advantage of current lower property prices resulting from a depressed local property market that have been impacted by COVID. This may be of particular interest to those looking at acquiring luxury properties in Panama in view of later retirement.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.