Living in Panama: taxes, pensions, healthcare

The first interesting thing about Panama is that it’s an attractive destination for everyone: retirees, investors, entrepreneurs and digital nomads.

With a population of 3.5 million, Panama is a multilingual and multicultural country with state-of-the-art infrastructure, an outstanding natural landscape, and an advantageous tax system.

Territorial taxation

The basic principle is that of territorial taxation: all income earned outside the geographical borders of Panama is totally tax-free.

This means that entrepreneurs who choose to move their businesses to Panama will not have to pay taxes on what they produce abroad, just as retirees (who weren’t public employees) will not only receive their monthly checks completely tax-free but they also won’t have to pay taxes to the Panamanian government on income from abroad.

The zero tax rate also has no time limit as it responds to a cardinal principle of Panama’s taxation system.

Where to live in Panama

To move to Panama for tax purposes, you will need to have a residential address. That means you must rent a home long-term or purchase property locally.

Where to look for a house for rent is very subjective, but luckily Panama is a country with a lot of variety: you can live by the sea, in the mountains, in a small town, in a big city, or even in the capital: Panama City.

Keep in mind that rental prices vary significantly from one area to another and, as you can easily imagine, certain neighborhoods in the capital or certain features related to the location of a property, such as a waterfront position, can fetch higher prices.

The most interesting mountainous area in Panama is called Boquete (Chiriquí province), located at about 1,000 meters (3280 feet) above sea level: it’s a popular location, especially for North American investors and entrepreneurs.

The advantage of living in the mountains is the climate, which is significantly cooler than in the plains.

The capital: Panama City

With a population of more than 1.5 million, Panama City has a dense metropolitan network that connects key areas of the city. It’s a multi-faceted city that extends inland and covers different types of geography, from plains to hillsides, crossed by 6 rivers and divided into 13 municipalities.

Panama City is a true metropolis, with an incredible skyline consisting of skyscrapers and immense buildings.

Some areas of the city are considered luxury, such as Punta Pacifica, Bella Vista, and Costa del Este: each neighborhood has its own characteristics and personality.

It is essential to understand how to navigate the city and precisely where to look for rental housing, also based on the available budget, well in advance.

Of course, it is also important to put key elements such as safety, the presence of amenities and green spaces, and, in the case of a family relocation, also the presence of world-class schools, first.

Banks in Panama

Panama is home to international banks such as:

Banca Personas (BAC)

Banca Svizzera Italiana (BSI)

Credicorp Bank

HSBC

Panama has one of the largest banking networks in all of Latin America, along with Brazil and Mexico; it also has more than 90 different banking institutions, 42 of which are international in scope.

Healthcare in Panama

Public healthcare

Panama’s public healthcare system is free for both Panamanian citizens and permanent residents. However, while offering all basic health services and being qualitatively state-of-the-art (the Panamanian healthcare system is among the best in all of Latin America), it is rather slow and wait times can be long.

Panama’s public healthcare system has 17 hospitals, some of which are considered truly excellent.

Private healthcare

The private healthcare system in Panama is highly qualified, fast and excellent. There are numerous private clinics in all provinces of the country, some of which also offer “first class” service. Those who do not yet have a permanent residency permit must take out a private health insurance policy.

Panama’s retiree program (jubilados)

The main requirement to be accepted to the program and relocate to Panama as a retiree is to receive at least $1,000 in monthly social security or pension benefits.

The Panamanian retirement program offers:

• A 0% tax rate, forever, if your pension is private;
• Substantial discounts on rent, transportation, medical services and restaurants;
• Tax exemptions on the import of personal property (e.g., automobiles).

In addition to the strictly economic aspects, the opportunity to live by the sea in retirement in a place that has so much to offer in terms of society, culture and nature is unique. We recommend taking an in-depth look at the pros and cons of relocating to Panama in comparison with other attractive retirement destinations.