Panama

{"ftc_utility":"low","fbar_trigger_notes":"US expats in Panama commonly open local bank accounts with Banco Nacional, Banistmo, or other Panamanian banks. If combined foreign account balances exceed $10,000 at any point during the calendar year, FBAR filing (FinCEN 114) is required. Panama banking system uses USD, which eliminates currency conversion complexity. FATCA compliance is in place - Panama signed a Model 1 IGA with the US in 2010.","ftc_utility_reason":"Panama's territorial tax system means most foreign-source income earned by expats living in Panama is not taxed locally at all. US expats earning income from US sources while residing in Panama will owe US tax on that income but will have little or no Panamanian tax to credit against it. The Foreign Tax Credit is therefore of minimal utility for most Panama-based expats. Expats with Panama-source income from local employment will pay Panamanian income tax at rates up to 25%, which could generate creditable taxes, but most retirement and passive income scenarios produce no Panamanian tax.","presence_day_count_notes":"Panama's Pensionado visa has no minimum stay requirement, and the Friendly Nations Visa also imposes no minimum presence requirement after permanent residency is granted. The 330-day physical presence test is achievable for US expats living in Panama full-time. Some visa categories require periodic renewals but do not restrict days outside the country in ways that would interfere with the 330-day count. Tourist-based stays are limited to 180 days and would complicate bona fide residence claims.","typical_qualifying_method":"either","housing_exclusion_available":true,"physical_presence_test_applies":true,"estimated_housing_exclusion_usd":18000,"local_tax_rate_on_earned_income":0,"bona_fide_residence_test_applies":true}

{"pension_income":{"notes":"Foreign pension income of any type is exempt from Panamanian income tax under the territorial system. This is a significant benefit for retirees and a primary driver of Panama's popularity as a retirement destination. Only pensions from Panama-source employment would be taxable.","tax_rate":null,"locally_taxed":false},"social_security":{"notes":"US Social Security benefits are foreign-source income and exempt from Panamanian tax. No US-Panama totalization agreement or income tax treaty exists. Panama has its own social security system (Caja de Seguro Social) to which employed residents contribute.","locally_taxed":false,"treaty_protection":false},"roth_distributions":{"notes":"Roth IRA distributions are foreign-source and exempt from Panamanian tax under the territorial system. No distinction is drawn between Roth and traditional IRA distributions - both are foreign-source and untaxed in Panama.","locally_taxed":false},"us_401k_ira_distributions":{"notes":"Panama taxes only Panama-source income. Distributions from US 401(k) and IRA accounts are foreign-source income and are not subject to Panamanian income tax under the territorial system. There is no US-Panama income tax treaty, so treaty protection is not available. The tax exemption derives from domestic Panamanian territorial law, not treaty provisions.","tax_rate":null,"locally_taxed":false,"treaty_protection":false}}

{"rate":0.1,"notes":"Panama taxes capital gains from securities transactions at a flat 10% rate. Gains from real property sales are subject to a 3% transfer tax on the sale price (or 10% on the gain, whichever is higher), which operates as a final withholding.","details":{"tax_type":"Capital Gains Tax","country_name":"Panama","country_iso_code":"PAN","source_references":["PwC Worldwide Tax Summaries - Panama","Panama Fiscal Code (Codigo Fiscal)"],"last_verified_date":"2026-06-03","general_description":"Panama operates a territorial tax system. Capital gains sourced outside Panama are not taxed. For Panama-source gains, securities are taxed at 10% flat and real property transfers are subject to a 3% withholding on the gross sale price (treated as advance payment against a 10% tax on net gain, with the taxpayer electing whichever method yields higher tax as the final liability).","corporate_capital_gains":{"rate":0.25,"tax_treatment":"Corporate gains on securities taxed at 10% flat; gains on real property subject to same 3%/10% regime as individuals. General corporate income tax rate is 25%. Foreign-source gains are exempt under territorial system."},"individual_capital_gains":{"rate":0.1,"tax_treatment":"Gains from sale of securities listed on Panama Stock Exchange taxed at 10% flat rate as final withholding. Real property: seller withholds 3% of gross sale price as advance tax; final tax is 10% of net gain; taxpayer pays whichever is greater. Foreign-source capital gains are not subject to Panamanian tax."}}}

{"notes":"Panama levies a dividend withholding tax (impuesto de dividendos) at 10% on dividends paid from Panama-source income and 5% on dividends paid from foreign-source income. An additional 10% surtax applies to undistributed earnings when a company fails to distribute at least 40% of net income as dividends within 3 years. Dividends distributed from income that already bore the 10% dividend tax are not taxed again at the shareholder level.","rates":[{"rate":0.1,"type":"withholding","notes":"Standard rate on dividends from Panama-source income"},{"rate":0.05,"type":"withholding","notes":"Reduced rate on dividends paid from foreign-source income"},{"rate":0.1,"type":"withholding","notes":"Complementary tax on undistributed earnings (surtax) if less than 40% of net profits are distributed within applicable period"}]}