What is Friendly Nations Visa (Panama)?

How it works

The Friendly Nations Visa (FNV) was created in 2012 as one of the simplest residency programmes in Latin America: nationals from a list of "friendly nations" could obtain Panama residency with minimal investment (~USD 5,000 economic solvency deposit). It became the go-to "low-cost residency" for North American and European founders relocating for tax-territoriality reasons.

In August 2021, Panama overhauled the FNV via Executive Decree 197 of 2021. The simple economic-solvency route was eliminated; applicants must now demonstrate one of three real economic ties to Panama:

1. Employment by a Panamanian-registered company.
2. Professional activity in Panama (work as licensed professional, for non-restricted categories).
3. Real estate investment of at least USD 200,000.
4. Fixed-term bank deposit of at least USD 200,000 for 3+ years (added in some interpretations).

The applicant must also be a national of one of approximately 50 "friendly" countries — full list maintained by Panama's National Migration Service (Servicio Nacional de Migración). Includes most of the EU, UK, US, Canada, Australia, Israel, Argentina, Brazil, Chile, Mexico, Singapore, South Korea, Japan.

Process and timeline

Three stages:

1. Provisional residency permit (initial 2 years) — granted after document submission, criminal background check, health check.
2. Permanent residency — applied for after 2 years of provisional status, granted indefinitely.
3. Cédula Panameña (national ID) — issued after permanent residency, used for all civil purposes.

Total timeline: ~6-9 months for provisional, then 2 years to permanent, then immediate cédula.

Tax positioning

Panama is a territorial tax country (per Decree 170 of 1993 and codified Income Tax Law). Individuals pay tax only on Panama-source income; foreign-source income is exempt regardless of residency. So Panama-resident founders running US LLCs, foreign businesses, or holding international investments owe no Panamanian income tax on those flows.

Panama-source income (employment by a Panamanian company, real-estate rental in Panama, dividends from Panamanian companies) is taxable at progressive rates 0%–25%.

How it compares to Paraguay residency

Paraguay residency typically suits the cost-conscious nomad without significant capital; Panama suits founders with USD 200k+ to deploy and an existing operational footprint.

Examples

• Brazilian founder uses Panama FNV via real estate. Buys USD 220,000 condo in Panama City to qualify. Provisional residency granted in 5 months. Lives in Panama 200 days/year, breaks Brazilian residency. Operates US LLC remotely; Panama territorial → 0% on foreign-source income.
• Spanish executive moves to Panama under employment route. Hired by Panama-registered subsidiary at Panama-source salary. Visa granted. Panama-source salary taxed at progressive rates; remaining international consulting income (foreign-source) exempt under territorial system.

Common mistakes

• Assuming pre-2021 rules. Many guides still describe the USD 5k solvency deposit option — gone since 2021. Real economic tie now required.
• Buying real estate just under the threshold. USD 200,000 is the floor; immigration may scrutinise marginal investments. USD 220k+ is safer in practice.
• Ignoring the day-count residency test. The visa doesn't equal tax residency. Panama requires 183+ days for individual tax residency under most interpretations.
• Forgetting source-country residency rules. France, Spain, Germany, Italy keep you tax-resident on permanent home / foyer / vital interests grounds even with under 100 days. Plan source-country exit separately from Panama entry.