Panama has long been a favourite with North American retirees and people with foreign income. It uses the US dollar, has a modern capital with direct flights across the Americas and Europe, and taxes only income earned in Panama. Panama City offers high-rise living and good private hospitals, Boquete and the highlands offer a cooler climate, and the Pacific and Caribbean coasts offer beach towns.

Visa and residence options

Residence is handled by the Servicio Nacional de Migración, and nearly every application needs a Panamanian lawyer, apostilled documents and police records.

  • Pensionado (retiree) visa: for anyone with a lifetime pension of at least US$1,000 a month, or US$750 a month if they buy property worth at least US$100,000. There is no minimum age. Pensionados receive discounts on medical bills, flights, hotels, restaurants and utilities set by law.
  • Friendly Nations visa: for citizens of around 50 countries, including the US, Canada, the UK and most of Europe. Since 2021, applicants need either a job offer from a Panamanian company or a real estate purchase above a minimum value. It leads to permanent residence after two years.
  • Qualified Investor visa: fast-track permanent residence for a large investment in real estate, Panamanian securities or a fixed-term bank deposit.
  • Short-stay remote worker visa: for remote workers earning at least US$36,000 a year from abroad. It lasts nine months and can be renewed once.

Many nationalities can visit visa-free for up to 180 days, but tourist stays do not count toward residence.

How much does it cost to live in Panama?

Panama is mid-priced for Latin America. Our Panama data puts a one-bedroom at around $900 a month and a three-bedroom at around $1,600. Newer high-rises in Panama City neighbourhoods such as Punta Pacífica, Costa del Este and El Cangrejo cost more, while Boquete, Coronado and David are cheaper.

Groceries cost about $300 a month because many goods are imported. Utilities average about $110, but air-conditioning in the hot, humid capital can push electricity bills much higher. Local produce, domestic flights and taxis are cheap. Panama City has a metro, but most residents drive.

How Panamanian tax works

Panama uses a territorial system: only income earned in Panama is taxed, so pensions, investment income and remote work for foreign clients are generally not taxed there, according to the Dirección General de Ingresos. Panamanian-source income is taxed at 0% up to US$11,000 a year, 15% from US$11,000 to US$50,000, and 25% above.

Employees contribute about 11% of salary to social security (CSS) and educational insurance. Sales tax (ITBMS) is just 7%. US citizens still owe US tax on worldwide income. Use our tax calculator to model Panamanian income.

Healthcare

Panama City has some of Central America's best private hospitals, including Hospital Punta Pacífica and Pacífica Salud, which is affiliated with Johns Hopkins Medicine International. Private insurance is relatively cheap. The public CSS system serves contributors, but quality varies outside the capital.

Working in Panama

Many professions, including medicine, law, engineering and accountancy, are reserved for Panamanian citizens by law, and work permits for foreigners are limited. Most expats live on pensions, investments or remote income rather than local jobs.

Daily life

Panama mixes Spanish, Afro-Caribbean, Indigenous and American influences, and Spanish is the main language, though English is common in business areas. The climate is tropical, with a rainy season from May to December. Carnival, especially in Las Tablas, is the biggest celebration of the year. Paperwork can be slow, so patience and a good lawyer help.

Is Panama a good place to move?

Panama is ideal for retirees with a pension, Americans who want a dollar economy and people with foreign income who benefit from territorial tax. It is less suited to those seeking local work. Considering Central America more broadly? Read our Panama vs Costa Rica comparison.