Panama is located between Costa Rica and Colombia. It is known by the Panama Canal. The most important sea connection between the Pacific Ocean and the Caribbean brings ships, tourists and money into the country. The República de Panamá - a charming destination in Latin America.

Profile: Panama in figures

  • Official language: Spanish –
  • Capital: Panama City 1.673 million inhabitants
  • Area: 75,517 km² (slightly larger than Bavaria)
  • Population: 3,705,246 (2016) and growing rapidly
  • Population density: 44 inhabitants per km² (Germany: 230/km²)
  • GDP per capita: 13,654 USD nominal, #52 worldwide
  • Human Development Index: 0.765 #65 worldwide
  • Net immigration rate: -0.3 immigrants per 1000 inhabitants (2016)

Who emigrates to Panama? 1: Pensioners

If you have a fixed monthly income, you can easily get a residence permit. The good news for pensioners is that the German pension is paid to Panama. But maybe you want to live there permanently as a tourist and keep your main residence in Germany? Because that is also possible. I will discuss this further below.

Cost of living: some price examples

The cost of living in Panama is lower than in Germany. The additional costs (electricity, air conditioning, water, garbage) for an 85m² apartment are 77,24 USD. The Fitness Club costs about 60 USD per month and person. Dinner for two in a 3 star restaurant: 36 USD. McMeal at McDonalds or similar combo-dinners: 6 USD (average prices, April 2017). This has long been known to retirees from the USA. They used to go to Florida, but Florida is too expensive and too crowded for many people today. So they go to Panama or Costa Rica. The Sun Belt originally referred to the sunny southern states of the United States. It has grown beyond the national border, Panama is its extension.

Who emigrates to Panama? 2nd: minimalists

Do you want to go to Panama with little money and a small household? Then the residence permit is more difficult. And the good news is that you don’t necessarily need it. More about this below. The country is also attractive for drop-outs, if only because of the natural way of life. The rural areas or areas near the coast are recommendable.

A village by the sea with landing stage and palm trees

Who emigrates to Panama? 3: Investors

Panama is looking for investors. This is especially true in the tourism sector, in agriculture and for investments in the second largest free trade zone, which is located in the city of Colon.

The success story of Panama

This is the story of Panama in the years 2005 - 2015 in fast motion. Trade increased. The Panama Canal was expanded (more turnover, more income). And droves of foreigners sought the better life here. Thus Panama grew non-stop. GDP growth was one of the highest in the world for over ten years.

You can see the effects in the country. Panama City has a skyline like Boston (only with palm trees) or Auckland. Buenos Aires (in Argentina) may be ten times bigger, but it is not ten times nicer. The capital of Panama has become cosmopolitan and has remained affordable.

The expats live very well in Panama. English is widely spoken (this is rare in Latin America, maybe in Curacao it is similar. The doctors have modern surgeries and medicines 10 years before their EU launch - and the staff is polite and courteous. Have I just prescribed myself? No. Were you misread? Also not! Forget the “service” of AOK & Co. Panama is presented to Germans as a Third World country, so that no one goes there. Paying 50% taxes, for ailing streets and as a supplicant of a rampant bureaucracy - nobody should miss that.

And if that is not enough: Services are excellent, the service providers value their customers - instead of rejecting their wishes as an imposition. The bottom line is that a high standard of living is possible at a reasonable price. Americans also rave about nightlife: From upscale restaurants to exotic adult adventures, everything is there.

Panama was one of the first countries to develop a program and framework to specifically attract retirees. Not only a pioneer in Latin America, but worldwide.

How can you settle down in Panama? Let’s first look at the possibility of living as a permanent tourist. When you read this for the first time, it may sound confusing (uncertain? no, not really). Other countries have created similar opportunities / loopholes for people who bring money into the country and yet you want to get rid of them easily in case of doubt (look at an alternative: emigrate to Thailand). So: first the life without a permanent residence permit, then with.

Living in Panama without permanent residence permit

Unless you already have a second passport in your pocket, it is often not necessary or desirable. You do not need to officially take a second residence abroad (e.g. Panama) just because you want to live in the country. The bureaucratic side (registration, residence permit) can be solved from the practical question of where you are actually staying.

Why should you consider this? A legal resident is fed into the tax system of a country. Obviously, there are nicer ideas than this. It is better (for you) if you could avoid this.

The smarter option is usually: you leave the country after 90 days and renew your tourist visa. Condition: You do not live more than six months per year in a certain country. (Most countries will consider you a taxpayer if you spend more than 180 days per year there). Solution: Find neighboring countries between which you are moving. Panama, Costa Rica and Dominica are good options.

Remember: Rather a valued guest (tourist) than a cash cow (official resident).

Living in Panama with permanent residence permit: Officially. As an investor. With regard to the second citizenship

However, sometimes it makes sense to become a legal resident of Panama, especially since the second passport offers you advantages. Now you will never get the second passport immediately and not without conditions. The good news is that one of the easiest countries in the world to obtain permanent residency status is Panama. Other countries usually make it more difficult.

In 2012 a law was passed to encourage certain foreign citizens to come to Panama. Eligible countries include the USA, Canada and many European countries. Also Germany. Bingo!

Residence regulations

Citizens of the following countries can apply for the immediate permanent residence permit

Andorra, Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany :), Greece, Hong Kong, Hungary, Ireland, Israel, Japan, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Monaco, Montenegro, Netherlands, New Zealand, Norway, Poland, Portugal, San Marino, Serbia, Singapore, Slovakia, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, United Kingdom, Uruguay, United States of America.

Requirements for the immediate permanent residence permit

The applicant must deposit USD 5,000 into a local bank account, plus an additional USD 2,000 for each additional person. So it really does not cost the earth. The applicants must also prove that they have a real investment interest in Panama. How does this work? a) You buy real estate. b) You become the owner of a Panamanian company with a business license. c) You find a Panamanian employer and get hired. (a or b are better than c). Also, please do not have a criminal record and a valid passport. That’s it!

The climate in Panama

Panama lies between two oceans. Therefore the climate is diverse despite the small size of the country. Geographically, Panama is also rich in contrast: highlands, the Caribbean coast and the Atlantic coast can be found on an area that is almost twice as large as Lower Saxony.

In principle, there is something for every taste: The Panamanian summer begins when winter arrives in Central Europe. Extreme heat and high humidity accompany this period. But there is also the eternal spring in the highlands of Boquete: Always mild, always pleasant.

European immigrants are mainly attracted to the capital Panama City, to David and Boquete.

The best places for the European emigrant

It depends on what you are looking for. If you prefer the big city, the capital is the place to be. Here you will find everything concentrated: clinics, universities or malls (the shopping centers). A little tip: If you live a bit outside in one of the suburbs, it will be cheaper. Real estate prices here are much lower than in the city.

Do you prefer nature, living on a finca in moderate temperatures? Then the highlands of Boquete would be the right choice.

If you like Caribbean flair, the Atlantic coast around Bocas del Toro is the place to be. The diversity in this country makes it possible.

Personal freedom

Since one does not live in a dictatorship, personal freedom is guaranteed. In contrast to other countries, the foreigner is accepted as a human being and not as a “financier” as in other countries. This is noticeable when you go shopping as a foreign tourist. When showing the passport with the entry stamp, one does not pay VAT in many Almacenes.

How much starting capital does the emigrant to Panama need?

This is a question that only everyone can answer for himself, since everyone has built up a different quality of life during his life. A simple employee, who had to get along with his family of four in Germany with 2000,00 EUR, cannot now expect to lead a life in luxury with his employee.

One can lead a normal life in Panama City with 2500,00 US$ or live in the country with 800,00 US$. The cost of living is lower everywhere than in Germany and the quality of life is therefore higher. Before you emigrate, you should explore the destination country for a longer period of time to find out what quality of life you will find with the money available each month.

Political Situation in Panama

Panama is a presidential republic. Due to the history of the country as well as the presence of the USA for many years in the Canal Zone (the Panama Canal is US sovereign territory) and also due to the current situation one can say that Panama is politically stable.

Major changes, such as those currently taking place in Bolivia or Venezuela, are not in sight. Because of the importance of the Panama Canal, enough eyes from the Northeastern United States will already be watching over political security.

Panama Canal - most important source of income, largest employer

Taxes and currency

The value added tax for most products is 5 percent. Since the official currency of Panama is the Balboa (PAB) or the Dollar (although most products are written out in Balboa), everything is based on the American Dollar.

The Balboa is only available as coin money. The PAB is at a 1:1 exchange rate to the dollar. The paper money is exclusively the dollar bill.

A pleasant thing about Panama is its territorial tax system. In other words, Panamanian residents and companies only have to pay tax on the income generated in Panama. If you run a hotel here, you pay taxes. But if you are an independent investor, you do not. If you run an online business that generates income outside of Panama, you do not pay a cent.

The job market in Panama

As a foreign employee it is quite difficult to find a good job. It is better to search from Germany or your employer sends you to Panama. More tips for expats here.

What speaks against Panama?

The most common disease that guests suffer from is diarrhea. But it is relatively harmless. There are a number of tropical diseases that are far more serious. Ask about travel warnings and vaccinations. At least, if you find vaccinations helpful. A friend of mine lives with family in Paraguay; they have not been vaccinated for years and are healthy. Apart from that: Service has a different sound than here. “Mañana” does not really mean tomorrow, as the stranger suspects, but only: not today.

Which language - do I have to speak Spanish?

You should definitely speak Spanish, although in Panama a lot can be arranged in English. The better you know the national language, the more independent you are. The relationship to Germans is good overall. As a German emigrant you have no disadvantages because you are a foreigner. Immigrants also have the same rights as the natives.