I’m starting to feel like a proud uncle. I flew in to Panama yesterday afternoon and thought, “look at how much you’ve grown!”
Things were so different the first time I came to Panama in 2004.
It was quieter. Underdeveloped. Backward. And cheaper. You could buy an oceanfront condo for $50,000 in the nicest part of town.
Over the years as I’ve traveled back and forth here (and even lived here for a spell), it was obvious how much Panama was growing… and how quickly.
Between the rapid increase of trade, the Panama Canal expansion, and droves of foreigners moving here looking for a better life, Panama’s GDP growth was one of the highest in the world throughout the last decade.
You can see it on the ground. The skyline here in the capital has entirely transformed, and the city itself has become cosmopolitan (yet still entirely affordable).
Expats here live very well. English is widely spoken, the medical services are excellent, a high standard of living is available at a reasonable cost, and the nightlife is fantastic—from top quality restaurants to more exotic adult adventures.
Panama was one of the first countries in the world to establish a program specifically aimed attracting retirees.
They promised special discounts and a number of attractive benefits to anyone who could demonstrate a certain level of retirement income.
The program worked, and foreigners showed up en masse. (Although many retirees are still waiting for some of those promised special discounts…)
Over the next several years, the government established all sorts of immigration programs hoping to attract investors—from forestry to agriculture to finance.
(With a whopping 52 ways to obtain residency, it’s clear the residency visa requirements in Panama are incredibly easy.)
Then in 2012, they created an even easier way to become a resident: simply letting people in.
They called it the Friendly Nations Visa. And it’s just about the easiest way in the world to obtain residency in any country.
The list now includes over 40 countries, including the US, Australia, most European countries, Israel, Japan, Hong Kong, Korea, Singapore, South Africa, and several Latin American countries.
Citizens of any of these countries can obtain residency in Panama extremely easily by merely demonstrating ‘economic activity’ in the country.
This doesn’t mean that you necessarily have to do any business in Panama; you can satisfy this requirement by registering a Panamanian corporation and making a reasonable deposit at a local bank.
Conveniently, you can include children up to the age of 25, disabled relatives, and dependent parents in your application.
And once you submit your residency application, you’re free to leave the country and come a few months later to collect your documents and ID card.
Moreover, you don’t have to actually live in Panama. You don’t need to maintain a home.
In fact, Panama’s immigration code now only requires that the visa be renewed after two years (which should be done in Panama). Aside from that, you don’t really need to spend any time here.
But then again, this is a really great place to spend time. And there are nonstop flights to cities all over the US, Canada, Europe, Latin America, and the Caribbean, so it’s a great place to travel from.
Another pleasant thing about Panama is its territorial tax system.
In other words, Panamanian residents and companies only have to pay local tax on their Panamanian-sourced income.
If you operate a hotel or restaurant here, you’re going to pay tax. But if you’re an independent investor or run a business (especially online) that generates income outside of Panama, you won’t pay a dime.
I know, just imagine—being able to waltz in here, obtain residency easily, and then have to suffer through a very high standard of living in a cosmopolitan city while paying no tax. The horror!
There is a catch, though.
Just like with everything, residency programs are subject to supply and demand dynamics.
Panama’s economy will eventually start to cool off. Real estate prices will get too high. And we’ll hear grumblings about “foreigners driving the prices up.”
It’s inevitable. This program won’t be around forever.
Here’s the bottom line: having a second residency makes sense. It’s a great insurance policy to keep in your back pocket.
After all, if things ever get so bad where you live that you feel like you need to get out of Dodge, you don’t want to start figuring out ‘Where do we go?’ while you’re packing your bags.
Having a plan B makes sense. And a second residency is part of a Plan B—especially when it’s so damn easy to establish.
Panama is a great option to consider. And given that it probably won’t be around forever, I’d definitely encourage you to learn more about it and decide if it’s right for you.
(Again, there are other options—Chile, Philippines, Andorra, Belgium, etc.)