New Immigration Law Effective 26 August 2008

The following information is an excerpt from Panama Insider and is provided as is and is subject to revision as more information/interpretation becomes available.

New presidential decrees regulating Panama immigration law would come into effect on August 26. Finally, the text of the new decrees has been published for all to see in Panama's National Gazette-this is the final step, as laws, decrees, amendments, etc. cannot go into effect until they have been published in the Gazette.

The variety of residency permit options remains more or less the same, but both the costs and investment amounts involved have changed.

About the Most Popular Residency Permits for Non-Pensioners

By the way, under the new decree, permanent residency options are referred to as permits and not visas. Options for temporary stays are referred to as visas. To avoid confusion we use the term "permit" instead of "visa" below.

Visiting Panama? Easy! The new decree doesn't specify any change to the tourist visa for U.S. and Canada citizens. If you are from the U.S. or Canada you may, as before, enter Panama by purchasing a $5 tourist card from your airline or at Panama's Tocumen International Airport. Citizens of countries with visa waiver programs may continue to enter Panama as tourists free of charge. These countries include: Argentina, Austria, Belgium, Brazil, Bolivia, Chile, Costa Rica, Czech Republic, Cyprus, El Salvador, England, Finland, France, Germany, Greece, Guatemala, Honduras, Hungary, Italy, Israel, Latvia, Lithuania, Luxembourg, Netherlands, Nicaragua, Paraguay, Poland, Portugal, Singapore, Spain, Switzerland, and Uruguay.

Tourists may stay for up to 90 days and, in general, extensions are not available unless you can prove you need more time because you are changing your status from that of tourist...for example, if you entered Panama as a tourist and then decided to apply for residency. If you need an extension to complete your permanent residency permit application process-and you'll need to prove you have documentation ready to file with immigration-you can apply for a maximum extension of 60 additional days. You'll pay $250, but this is credited toward the fees you pay immigration for your residency application. You'll also be asked for a deposit of $500, which will be returned to you if and when you complete your "change of status" paperwork. If you don't file residency permit documentation by the end of the 60 day extension, you will lose both payments and you will have to leave the country immediately.

The Person of Means Permit (POM): The minimum investment for this residency permit has increased from $200,000 to $300,000. If you plan to live in Panama but not start a business here, this may be the best option for you. To qualify, among other things, you must invest $300,000 in one of three ways: by buying property here; by placing $300,000 in a fixed-term deposit; or by applying with a "mixed use" split between a property purchase and fixed-term deposit, provided the total investment adds up to at least $300,000. Previously, the Panama government stipulated that the only acceptable split was 40% / 60% invested in property and a fixed term deposit, respectively. Now, you may determine the split yourself (for example, if your dream property costs you $280,000, you may place the remaining $20,000 in a fixed-term deposit).

If you choose to invest in a fixed-term deposit, it must be in a bank that is physically located in Panama. Under the new rules, the deposit may be in any currency offered by the bank...Euro or Pounds Sterling, for example. There's another advantage that didn't exist before: now you can apply for the POM even if you have a partial mortgage on the property you buy, provided you pay a minimum of $300,000. For example, if you want to buy a $500,000 property and finance $200,000 of the total, you can do so and still apply for this residency.

You must keep the property and/or fixed-term deposit for approximately three years or until you are granted your permanent residency. You can apply for this two years after your initial application is approved. Also, you may now avail of this residency permit option even if you choose to own the property via a private interest foundation. There are some conditions that you should verify with your lawyer. For example, you must be listed as the founder and the only beneficiaries must be you and/or your legal dependents under the POM. These dependents must be declared to the Panama Public Registry. Despite the conditions, this is a noteworthy option, as many expats (and locals) prefer to own property and assets in private interest foundations to avoid probate issues.

The Forestry Investor Residency Permit: Previously, forestry investors had two options, the Small Forestry Investor Visa and the Large Forestry Investor Visa. Among other things, the requirements included investment in approved forestry projects of $40,000 and $80,000 respectively. Now the amounts are $60,000 and $80,000...but there's a catch...or catch-22, it seems. You must use these amounts to buy 10 or 20 hectares of approved land, respectively. A hectare is a land measurement equivalent to 2.47 acres, so you're looking at 24.7 to just under 50 acres...that's a lot of land, and 20 hectares in a duly accredited reforestation company could cost you $800,000 or more.

Special consideration for construction delays: Some of you may have invested $200,000 in property in Panama before August 26, with the understanding that the purchase would qualify you for the Person of Means permit. The Director of Immigration has been granted the power to consider Person of Means residency applications from those who have spent $200,000 or more (up to $300,000) on property in Panama and do not yet have title due to construction delays. In this case, you must have signed your promise to buy-sell contract (contrato de promesa de compra-venta) before August 26, 2008, and you must have made all payments on time. Talk to your lawyer if you meet this criteria and would like to appeal to the Director of Immigration.

The Pensionado Program Put Panama on the Map

The most popular option for people relocating to Panama is the Pensioner's or Pensionado Residency Permit. It has always drawn expats to Panama because, in addition to allowing you to stay in Panama indefinitely, it also entitles pensioners to discounts including 30% off local transportation, 25% off airline tickets, 30% to 50% off hotel stays, 20% off medical consultations, 15% off hospital bills (when insurance is not applied), an exemption every two years from duties for the local purchase of a car, and much more.

Previously, pensioners with a qualified pension of $500 per month were entitled to apply. Now you must draw a pension of at least $1,000 per month to qualify for this option. You can, however, apply with a minimum pension of just $750 if you invest at least $100,000 in property in Panama. Another plus: you may now pool your pension with your spouse's pension to meet the minimum pension requirement ($1000 per month for two people).

If you want to start a business outside of these special investment zones, you may be eligible for the Inversionista or Investor permit, which now stipulates, among other things, a minimum investment of $160,000 and minimum of five permanent Panamanian employees. (Previous requirements stipulated only three Panamanian employees.)

Temporary visas that may, under certain circumstances, allow you to stay in Panama longer than the tourist visa are called visas de corta estancia, or short-term visas, and include, but are not limited to, the Visa de Corta Estancia Por Tratamiento Médico (Short-Term Visa For Medical Treatment) and Visa De Corta Estancia Por Negocios (Short-Term Business Visa). Talk to your attorney to find out which is best for you.