In continuing our discussion regarding options for the would-be retiree to Panama, we want to cover some financial bases you should ponder before taking the leap.
The suggested $2,000 a month income minimum still holds in Panama, now more than ever. Panama as an up and coming and growing economy has not escaped the worldwide increasing cost of living, especially in the price of food, housing and utilities. If your monthly income doesn’t meet the $2,000 minimum, however, you can still consider other, more remote areas of the Republic such as Las Tablas (near the beach) where you may still find affordable rentals and home prices. There are also areas in the Panama Oeste (western metro area of the Panama City) like Chorrera which still has districts with affordable accomodations.
Of course, the further away from Panama City you get, the less you can count on quality public services such as garbage pickup, availability of potable water service and reliable security force like police and fire department. Also, an important factor is the spiralling cost of electricity anywhere in the Republic. Panama has probably the highest electric energy cost in all of Latin America and a reduction in the price of keeping your home and business well lighted and cool doesn’t seem to be on the horizon.
Panama offers several Visa programs with special benefits for foreign residents and retirees which you might find attractive. They are as follows:
1. Turista Pensionado– Tourist visa for retired persons on a government agency or private pension plan. Minimum retirement income is $500 a month ($600 per couple). The benefit package includes a singular exemption of duties for the importation of household goods (up to $10,000) and an exemption every two years of duties for the importation of a car. There are other benefits offered under this visa which is granted instantly, but it is based on the agrrement that you, as the retiree, cannot qualify for Panamanian nationality or a Panamanian passport.
2. Rentista Retirado– Private Income Retiree Visa- for those who don’t have a monthly pension, are no longer working but have received a retirement lump sum. The lump sum would have to be invested in a Certificate of Deposit with the Panama National Bank and yield at least $750 a month or more at current rates. Visa is renewable every five years and as long as the CD is renewed. One of the benefits of this visa is a travelling Panama passport which does not grant Panamanian citizenship. It carries similar benefits in the exemption of duty on importation of household goods and automobile as the Turista Pensionado.
3. Solvencia Económica Propia– Visa for the “Person of means” or the person who has no need to work or conduct a small business. The minimum deposit of $200,000 in a local bank is a requirement in a Certificate of Deposit; $80,000 of this amount must go toward purchasing a home. After initial renewal of this CD, there is a possibility of obtaining Panamanian nationality and a passport.
4. Inversionista – This visa is offered for those who wish to establish a business in Panama, although some retail businesses professions are reserved for the exclusive development by Panamanian nationals thereby restricted to foreigners. This visa, unlike the above, is granted provisionally for one year and after renewal is granted permanently with the right to acquire a Panamanian cédula (local ID card). Also, five years after obtaining permanent visa, the holder may be eligible for Panamanian nationality and passport.
5. Inversionista de Pequeña Empresa– This visa is similar to the Inversionista (investor) with the stipulation that the minimum investment be $40,000 and that there be at least three permanent Panamanian employees hired.
6. Tax Free Processing Zone Investor– This visa is for foreign investors in Panama to obtain legal residency by renting a plot of land, an office or an entire building, rented through a 10 to 20 year concession, within one of the new tax free processing zones in Panama, with the intention of operating a business from Panama exporting its products or services.
7. Panama Reforestation Program Visa– this visa is a bit more specialized and complex. We recommend you read it in its entirety here.
We will review some more retiree benefits and tax considerations in our next post.