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Found 23 results

  1. How to Keep Your Panama Visa as a Part-Time Resident With the current restrictions implemented on international air traffic, border closures, and controls due to COVID-19 it is difficult for many temporary, part-time or permanent residents in Panama to travel to Panama and thus maintain their current permanent residency status. Most foreign residents in Panama know the golden rule of "having to travel to Panama every two years to maintain your resident status". But are there any exceptions to that rule? Can I lose my residency in Panama? The answer is, "Yes." In fact, the law establishes a list of reasons that may cause the loss or denial of residency in Panama. Some of the most important are the following: Have been convicted of committing a fraudulent crime or tax fraud. Have a criminal or police record in your country of origin or perform criminal acts within Panama. Having been absent for more than two (2) years from the national territory, unless such absence is justified and authorized by the Director of the National Immigration Service. What are the consequences if, due to the current circumstances, I cannot travel to Panama in order to maintain my status as a resident? The Law stipulates that there must be a reason for the absence. It is presumed that a global pandemic is a sufficient reason to justify the absence since the National Immigration Service of Panama has suspended all terms for the time being. Are there any legal procedures to recover my residency if it is canceled? If the National Immigration Service decides to cancel your residency in Panama (remembering that in our country nothing happens automatically), there are legal procedures to request the reactivation of your status as a resident, in case you have been out of Panama for a period of more than two (2) years and up to a maximum of six (6) years. To get your permanent residency back, you must meet the following requirements: Copy of the resolution that granted the permanent residency or in its defect a copy of the migration ID card issued by the National Immigration Service of Panama. Copy of your passport and of the registration stamp. Copy of your Cedula (E-card), duly authenticated by the Tribunal Electoral. Sworn Affidavit before a Notary Public in Panama, stating the reasons for your absence. You will have a term of 30 working days to present the petition for recovery of your residency, starting on the day you re-enter Panama. The request must be filed by a licensed immigration lawyer in Panama. What happens if I can not travel to Panama for more than six years? Foreigners who have remained more than six (6) years outside of Panama and whose residency has been canceled by the National Immigration Service will lose their status permanently and must start a completely new immigration procedure in accordance with current regulations at that time. There is one exception to the golden rule... If you are an Italian citizen and obtained your residency in Panama under the "Panama - Italy Treaty" Visa, you will not lose your status. This is a special cause protected by the Law. Bella Italia!
  2. Today Panama’s National Immigration Service has published in detail the requirements for the NEW Friendly Nations Visa and additionally August 6th has been set as the new deadline to submit visa applications under the "old" Law. As of August 7, the new Friendly Nations Law will be in effect. What are the requirements for a residency application under the new Friendly Nations Visa? There were several pending issues that were not detailed in the executive decree published months ago. In practice we knew that they had to be modified and so it happened. Finally, the National Immigration Service of Panama made its pronouncement. Below, we have made a summary of what the new Law says. In order to apply for the new Friendly Nations Visa, an investment must be made by purchasing one (1) real estate property whose cadastral value is at least two hundred thousand US dollars (US$ 200,000). This was already known but it was not clear if the investment should be in the personal name of the main applicant or if it could also be made in the name of a corporation or private interest foundation. Now the National Immigration Service has established that the investment can be made either as natural person or in the name of a corporate body (corporation or foundation) as long as the main applicant is the final beneficiary of said corporation or foundation. This means, by presenting a true copy of the corporate documents of the corporation or the foundation's by-laws. There is a NEW option beside real estate investment Beside investing in real estate in Panama, the National Immigration Service now offers a second investment option which is the following: Investing in a fixed-term deposit (certificate of deposit – CD) with a bank in Panama. The CD must be a minimum of two hundred thousand U.S. dollars (US$ 200,000) and with a minimum term of three (3) years. It is possible to obtain the CD in one’s personal name or by a Panamanian legal entity (corporation or foundation), as long as it is demonstrated that the main applicant is the final beneficiary of the corporation/foundation that holds the CD. Remember, that in Panama any interests generated by a savings account or a fixed term deposit in a bank according to the current fiscal code of Panama do not pay any taxes in Panama. The third option to obtain residency under the new Friendly Nations Visa remains the same: for labor reasons. This means, it is necessary to file for a work permit granted by the Ministry of Labor of Panama. The requirements according to the new Law include submitting a letter of employment on letterhead and signed by the employer stating the position, salary and commitment to assume the repatriation expenses, certificate of public registry proving the existence of the company (if applicable) commercial license (if applicable). But there are not any further details given (yet) on how to obtain the work permit and other documents needed. The new law will have modifications as it is usual in the legal practice, but we can foresee positive changes. In addition, there is now the possibility of obtaining residency in Panama not only by investing in real estate but also in a CD, which might be a more practical option for many clients.
  3. Good business opportunities are always in the right hands when at the time of closing the deal, you were the one to scout it first. When I go to a different country, not only the language changes, even the culture, the food, and also the websites and classified portals where one is used to look for things and offers. If I want to rent or buy a property in Panama, where should I look? Apart from the websites of various real estate brokers and agents, where do I find local deals? Today I will give you a secret tip on where to find real deals and bargains in Panama. If you want to search for properties where local or foreign owners and most real estate agencies publish their properties you will find them here: www.encuentra24.com. Encuentra24 is the largest and most popular platform in Panama. Besides their large real estate section, you can also find vehicles and even job offers. However, you will have to take some time to search through a lot of information, compare different offers (and sometimes even prices) in order to find your personal bargain. If you search on Encuentra24 you will have everything in one place, owners and real estate brokers, all together. Remember that, if you decide to buy or rent through a real estate broker in Panama, it is the owner of the property who pays the commission of the real estate broker used for the transaction... not the tenant nor the buyer (that would be you). But what other options are there? Where can I find the real secret offers? Many clients do not know that there is a real estate market in Panama managed by the mayor banks. If you look at the banks directly, you will have more options without intermediaries. But if a bank is auctioning for example a property, it will not exactly choose Encuentra24 to publish the auctions. It is for this reason that Banco General (one of the largest and most popular banks in Panama) has just launched its own "property classifieds" advertising portal where new properties (with financing option by the bank), repossessed properties and commercial properties are being published. For bargain hunters, we have compiled a list of sites worth investigating: 1. Banco General “Clasificados de propiedades” https://www.bgeneral.com/clasificados-bg/ 2. Banco Nacional de Panamá: https://www.banconal.com.pa/remates-judiciales.html 3. Global Bank: https://www.globalbank.com.pa/es/bienes-reposeidos 4. Banco Banesco: https://www.banesco.com.pa/bienes-reposeidos 5. Banco Caja de Ahorros: https://www.cajadeahorros.com.pa/bienes-reposeidos/ 6. Banco BAC Credomatic: https://www2.baccredomatic.com/es-pa/people/bienes-reposeidos 7. Banco CanalBank https://www.canalbank.com/banca-empresarial/canal-inmuebles/ 8. Banco Banistmo: https://www.banistmo.com/wps/portal/banistmo/personas/productos-y-servicios/galeria-inmobiliaria 9. Banco Scotiabank https://pa.scotiabank.com/es/banca-personal/prestamos/propiedades-en-venta.html Now what is a Judicial Foreclosure in Panama? It is when someone could not or failed to pay the loan on their property, the bank took back that property by judicial foreclosure and put it up for sale to recover the money borrowed. A bank is not a real estate company, so it is not really interested in the property. Banks live off the interests they generate from lending money. Having a property without generating money is a monthly loss. The expenses caused will be very high if the bank keeps that property, so it is better to let go off it as soon as possible, and that is where you come in to buy "good, nice and cheap" as we say in Panama. Good luck with your hunt!
  4. Several companies (especially in the IT sector) are offering their employees more flexible working models and making teleworking the new normal. Nowadays for many employees it does not matter where they work from, which creates new freedoms, self-determination and opportunities when it comes to choosing a place to live. Why not move your workplace to the tropics in the short or long term? Like many other Caribbean countries, Panama has adapted its legislation to the new working conditions and has created an immigration category especially for remote workers and/or digital nomads. With this measure, the government hopes to encourage the development of the national economy, through investment and consumption of local goods and services. To qualify for the remote worker visa you must meet the following conditions: To have an employment contract from a foreign company of transnational character or to be a self-employed worker, in the modality of remote worker To carry out functions that take effect abroad. Receive income from a foreign source and with an annual amount not less than thirty-six thousand U.S. dollars (US$36,000), or its equivalent in a foreign currency. To apply for the Remote Worker-Visa, the following documents must be submitted: Complete copy of the passport duly authenticated by a Panamanian notary. Five (5) passport size photos. Criminal background check from the country of origin or residence (duly apostilled). Health certificate issued by a licensed Panamanian professional. Affidavit of personal background. Completion of the corresponding application form. Copy of the applicant's medical insurance policy. Affidavit of Non-Acceptance of any job offer or service offer from nationals, residents, tourists or companies of Panama in order to carry out business within the Panamanian territory (signed by the applicant). Payment of two hundred and fifty U.S. dollars (US$250) in favor of the National Immigration Service. Proof that your income comes from a foreign source: Bank account statement from your bank abroad (or from a local bank), duly sealed by the issuing bank that proves the transaction of the remittance of the funds and that accredits that the same is linked to the declared labor condition (if it comes from a foreign bank, the statement must be duly apostilled). Additional requirements for REMOTE EMPLOYEES If your are a foreign employee who wishes to reside in Panama to work remotely for a foreign company, you must additionally provide the following documents: Certification or proof of existence of the foreign company you are working for in the place where it is registered (apostilled). Letter of the company (apostilled), on the company’s letterhead, signed by the legal representative stating the following Your general information. The position and functions performed within the company. Your monthly income (which cannot be less than three thousand US dollars US$3,000), periodicity of payments and that it comes from a foreign source. The modality of your job (remote work / home office) The commitment to assume the costs of return or repatriation to your country of origin or destination, if necessary. Additional requirements if your are SELF-EMPLOYED OR DIGITAL ENTREPRENEUR In order to apply for a visa as a remote worker, a self-employed person must provide the following documents: Certification or proof of your company, duly registered abroad, through which you will conduct your business (apostilled). Notarized affidavit describing the commercial relationship with the clients to whom your are providing your services. Once approved the visa as a remote worker will grant you the right to live and work in Panama as a remote worker or digital nomad without having to request any other type of procedure or additional permission. The visa will have a duration of nine (9) months, extendable one-time (1) for the same period.
  5. Due to the recent legal changes in the immigration category of the Friendly Nations Visa we have received many questions and doubts. For this reason we have compiled for you the most frequently asked questions and their answers. When do the new Friendly Nations Visa conditions come into effect and how much time do I have left to apply under the "old" rules? The new decree becomes effective 90 days after its promulgation. If you still want to apply for your permanent residency in Panama under the "old" Friendly Nations Visa you can still do so in June and July. I want to apply for the Friendly Nations Visa in June. Do I have to travel to Panama? How long do I have to stay in Panama for the application? The residency application can only be submitted if the file is 100% complete and all applicants are present in Panama. During your stay in Panama an appointment is arranged at our office in Boquete to sign the necessary documents, deliver the original documents we have already received via email, make copies, open the bank account, go with a member of our team to the immigration office, register your passport with them, have your migration ID card photo taken and receive your multiply visa to leave the country without penalties. The minimum stay for this trip to Panama is four (4) weeks. I want to start my process to obtain my residency in Panama under the "old" Friendly Nations Visa, what do I have to do? What is the next step? We are currently organizing our agenda for June and July. Clients whose file is already completed (i.e. the company is already incorporated and the bank account is already opened or pre-approved by the bank) will be assigned a presentation date for filing their application in June or July. Due to the current workload the minimum stay in Panama for applications presented in the months of June or July is four (4) weeks. If we have not started to prepare your file yet, please contact us to evaluate your case and analyze if you are still in time to take advantage of the “old” Friendly Nations Visa regulations. I have read on the internet that I can open a bank account in Panama online, without coming personally to Panama. In the practice the personal interview with the client is one of the basic requirements in order to open a bank account in Panama. There are even banks in Panama that insist that you must first comply with the personal interview in Panama in order to subsequently send your file to the corresponding department and evaluate the approval of your bank account. Can you submit my application without me having to come to Panama for it? No. After formally submitting your file to the immigration office, a photo will be taken of you in order to issue your (temporary) migration ID card. This is why all applicants included in the application file must be personally present in Panama. I want to apply for a Friendly Nations Visa according to the "old" requirements. What documents do I need? What do I have to do and what do you do or prepare for me? As a first step please email us a colored scan of the apostilled police record, your passport, (just the photo page with your personal information) and second ID document such as identity card or driver's license, as well as the bank reference letter from your bank and proof of income (payslip of the last three months together with a copy of your employment contract). We prepare the power of attorney, forms and other necessary documents. The translation of the documents (if necessary) must be done in Panama. We will send the documents in advance to the translator. Once you have scheduled your arrival in Panama with us, we will coordinate an appointment in our office where you will deliver all original documents, sign powers of attorney and other documents. Additionally, we will arrange an appointment at the bank to open your bank account and to make the first deposit (in cash), as well as to request the bank reference letter necessary for your application. At all immigration appointments a member of our staff will accompany you and give you the necessary instructions to follow. When filing your application immigration will not ask you any questions or conduct an interview, our firm is in charge of delivering and presenting your file and answering any questions from the officials. Do the documents have to be apostilled? This is correct. The police record must be apostilled. As well as the marriage certificate (if applicable), and if you have minor children that you want to include in your application you must also bring their birth certificates duly apostilled. Do the documents have an expiration date? The police record, as well as the marriage certificate, and the birth certificates of your minor children (if applicable) are valid for six (6) months from the date of issuance (not the date of the apostille). If your marriage certificate was issued before 2021 it is no longer valid for your residency application. You must apply for a new certificate at the competent authority. The document must be certified with an apostille. The same rule applies to birth certificates for (minor) children. If you already have your police record and travel to Panama WITHOUT submitting a visa application, once you leave the country the record automatically loses its validity and you must apply for a new one (with apostille) prior to your next trip to Panama. My police record is expired and I don't have time to apply for a new one, can we submit my application anyway and you will tell immigration that I will provide the document later? No. Immigration does not accept incomplete files. The file must be 100% complete in order to be submitted. At the time of presenting your application an immigration officer will review your file, verifying if all documents are complete and comply with the minimum requirements as well as the expiration dates established by law. It is not possible to ask them to accept the file and submit a missing document at a later date. If the file is incomplete it will not be accepted. Do I need a birth certificate? No. Only if there are minor children that you want to include in your residency application. The birth certificate must be apostilled and must not be older than six months (date of issuance of the document, not of the apostille). My partner and I are NOT legally married, can we apply together? No. In order to apply for any visa in Panama as a couple (same file) you must be legally married. Otherwise you and your partner must file a separate application. Do you take care of translations? That is correct. The law requires that a licensed translator from Panama must do the translations. This is why you must send us all the documents by email in advance (before your trip to Panama) so we can forward everything to the translator in advance. How do I obtain the health certificate? We will give you the address of a laboratory in Boquete to obtain the certificate. The cost of the certificate is between 5 to 10 US dollars. Where is your office located? Do I need to travel to Panama City for the application? Our office is located in Boquete. All appointments for file preparation, bank account opening, presentation at the immigration office will be performed either in Boquete and/or David. Once your residency has been approved and to receive your permanent residency, we can make an appointment at the immigration office in David or Panama City, according to your preferences. I have already booked my flight to Panama for my residency application, can you send me a short timeline? It is best to book a hotel in David or Boquete. Boquete (from a tourist point of view) is more interesting to see. We can send you a list of hotels in Panama if needed. Immediately after your arrival we need an appointment at the office and another one at the bank for the account opening. If you bring the necessary cash to the bank appointment (5,000US$ or 7,000US$ if you are a married couple) we can also apply for the bank reference letter at once. Otherwise, you will have to wait for the international wire transfer. Be sure to activate your online banking while you are still in Panama. Also make a note of your bank officer's contact information. After the appointment at our office, the documents you sign during the appointment (and the copies we make) still have to go to the notary. Then we have to make copies of the whole file (there is one original and then two complete copies of the file). Afterwards we can submit the application at immigration office (for this we need your original passport). In the best case scenario we get an appointment at the immigration office on the same day of the presentation of the file in order to get your photo for the migration ID card taken. However, in most cases it will take up to three (3) days to get an appointment. Immigration will then hold your passport for 48 hours to issue the multiple visa. I already have my residency approved in Panama, what is the next step? When should I return to Panama? Before the COVID-19 pandemic clients had to travel within six (6) months (counted from the date of filing the visa application) to Panama to receive their residency in order to avoid any fines. Now (due to the new health measures) it is possible for us to be notified of your resolution without you being present in Panama. We then pay the new migration ID card and send your resolution with DHL to Europe or USA/Canada. This means that between your first trip to Panama for the visa application and the second trip to Panama to receive your residency, more than six (6) months may pass. On your second trip to Panama you must have your resolution on hand to avoid problems at the passport control at Tocumen airport. Then we will coordinate an appointment at the immigration office in David or Panama City to take the photo for your new migration ID card. The minimum stay for this trip to Panama is seven (7) days, if everything is done in Panama City. Preferably the appointment is set on a Monday morning (7:30 am) and you will be able to travel back to your country on Saturday or Sunday of the same week. I want to form a company for my "old" Friendly Nations Visa application, what do I need, how is the process? We have an online form for you to fill out. Remember that in order to incorporate a company in Panama a minimum of three (3) persons are required. In Panama it is not possible to create a sole proprietorship. The two other persons needed can be friends, family members or relatives. It is not necessary that they travel to Panama or have residency in Panama. It is not necessary that they are Panamanians. I have a company in another country, can I use this company for the visa application in Panama? No. For an application under the "old" Friendly Nations Visa, a Panamanian company must be presented. I want to apply for a residency as a single person, can I form a sole proprietorship? No. Sole proprietorships do not exist in Panama. In order to incorporate a company in Panama a minimum of three (3) persons are required. Apart from you, the other two persons can be friends or relatives. It is not necessary that they travel to Panama or have residency in Panama. It is not necessary that they are Panamanians. Can I use my friend's company for my residency? My friends and I want to use the same company for our residency application, is it possible? In the past Panama's immigration service discovered that lawyers were "recycling" companies for residency applications. This is no longer allowed. You must have your own company in order to qualify for the “old” Friendly Nations Visa. Do I need a business plan? Do I need to proof or deposit the share capital to incorporate my company? No. The capital stock of a Panamanian company is generally 10,000US$, but it is not necessary to consign this capital with the competent authority. How much are the company's annual expenses? The annual maintenance expenses of a company are US$ 567.50 (including taxes) plus accounting expenses. I already have my residency approved in Panama. Can I close the company I submitted for the "old" Friendly Nations Visa application? Yes, if you no longer need the company you can close it. How much is paid in corporate taxes in Panama? In Panama for legal entities it is 25%. The tax office also applies a "notice of operations - commercial license"tax, which is 2% of the net assets or patrimony that may not be less than $100 and must not exceed $60,000.00. Corporations that exceed $1,500,000.00 of taxable income may be required to pay the 4.67% rate. Income generated outside of Panama is really not taxed? Panama is taxed under the territorial system, i.e. everything generated within the coasts of Panama is taxed in Panama. Income generated outside of Panama (offshore) does not pay taxes in Panama. What if I invest in real estate? Is there any benefit for me? Yes, if you wish to apply under the NEW Friendly Nations Law you will NOT need to open a bank account in Panama or create a company. With a real estate investment of minimum 200,000US$ in Panama you qualify for this new visa. Do you have contacts of real estate brokers that you can recommend? Yes, we can gladly send you contacts of real estate brokers in Panama. You can also research rental and sales prices on Panama's most popular classifieds portal called encuentra24.com. I have pets, what do I have to do when bringing them to Panama? There are agencies in Panama City that specialize in "Pet Relocation" services. We will be happy to send you contact information so you can communicate directly with them and verify the necessary documents and the process to follow to relocate your pets to Panama. Do I need any vaccinations to travel to Panama? No. When my wife first traveled to Panama, the Vienna Tropical Institute recommended her all kinds of vaccinations, including yellow fever, hepatitis, typhus, cholera and even rabies. But in the practice, as an adult, at no time have the Panamanian authorities ever asked her for any proof of vaccination.
  6. Before starting any business, apart from the study and analysis of the market, profitability and competition, you should investigate the legal requirements in order to execute your entrepreneurial idea. Certain economic activities require a special commercial license. Although in Panama there are not as many restrictions as in other countries when it comes to starting your own business, there are certain commercial activities that are exclusively reserved for nationals. This limitation is based on Article 20 of the Constitution of the Republic of Panama, which establishes that Panamanians and foreigners are equal before the law, but for reasons of labor, national economy, morality, health, public safety and other conditions, the exercise of certain activities may be denied to foreigners in general. Which activities are reserved for nationals? Retail in general is reserved for Panamanians. That is to say, the direct sale of products to the Consumer (B2C). But it is possible to sell wholesale products (B2B) to distributors, supermarkets or other stores that sell directly to the customer. It is also possible to import and export products or merchandise. And, there are certain exceptions when it comes to agricultural products that you produce yourself on your own your farm and then sell them (example farmer's market). The so-called "liberal professions" in Panama require a special permit and can only be performed by Panamanians by birth or foreigners with a letter of naturalization. These include the following professional branches: Nursing, Barbering and cosmetology (there are exceptions for foreigners married to Panamanian nationals), Dentistry, Engineering (Civil, Chemical and Forestry are not allowed, the rest are), Architecture (there are exceptions for foreigners married to nationals), Agricultural Sciences, Pharmacy, Chiropractors, Nutrition, Medicine, Psychology, Medical Assistants, Accountancy, Journalism, Laboratorians, Public Relations, Speech Therapists, Therapists and the like, Economics, Social Workers, Veterinary Medicine, Physiotherapy, Medical Radiology, Law, Dental Assistants, Sociology, Chemistry, Sociology, Chemistry, Education in the following fields: History, Geography and Civics. (The rest of the fields are allowed). If I studied a career in medicine or nursing, can I practice it directly in Panama as a foreigner? The answer is no. Unless you are naturalized and your degree is recognized in Panama, you cannot. But what you can do is to incorporate a company in Panama (for example, a private clinic or an agency offering nursing services) and be the owner of that company and hiring licensed Panamanian employees to perform the service under your supervision. For the activities of engineering, architecture, insurance, real estate companies, certain tourism companies (such as travel agencies or tour operators) among others, there is a special rule that says that the president and legal representative of the company must be the person who holds the license to exercise that economic activity. In that case, it is possible to hire a person with said license, but it is the company that provides the service. The same company of which you are the owner. You would be the one who manages and administrates the company and provides instructions based on your experience and knowledge in that field. But it will be your company together with your collaborators, that will execute the work and carry out the commercial activity. You may not be able to validate your architectural degree in Panama (or it may be a little difficult to do so), but it is possible for you to have your own construction company. Which activities are allowed for foreigners in Panama? Services and wholesale activities are accessible to foreigners. This means that you can open a hostel or B&B, you can open a restaurant, import and/or export products, work remotely offering (digital) services to customers anywhere in the world, invest in real estate and live on rent and much more. In fact we have clients all over Panama who operate touristic and/or gastronomic companies, who are owners of hostels, hotels and restaurants, who produce strawberries, tofu or grow gourmet coffee, who are involved in construction, real estate projects or real estate investment, who offer maritime services, who provide IT services to clients in Germany, logistics services, who sell digital products or software, real estate agents and property managers, who work remotely as freelancers for clients in Europe and/or the United States, who buy nails in Taiwan and sell them to European companies, and much more. As corporate lawyer I am passionate about entrepreneurship and new business set-ups, and there are endless opportunities and entrepreneurial ideas to discover. Tell me about your experience. What is your business idea?
  7. Due to my business I am a frequent traveler. However, flying in times of a global pandemic brings new challenges and experiences. In the last 20 years I have never seen the airports as empty as they are now. It reminds me a lot of the 90s when I was flying for the first time without my family to England. When planning your trip to Panama there are some important details to consider. Important recommendations for passengers coming from Germany, Austria, Switzerland, Holland, Spain, USA, Canada, etc. If you travel from one of the countries of the European Union, United States, Canada, etc. to Panama, at the time of arrival at Tocumen airport you must present a negative PCR or antigen (rapid) test, which must not be older than 48 hours. With this it is not necessary to take another test at the Tocumen airport or comply with any type of quarantine. If you do not carry such test, if your test is expired or if your test does not meet the minimum requirements established by the health authority, you must take a COVID-19 rapid test at the Tocumen airport (at your cost). Requirements for passengers arriving from South America, United Kingdom, India or South Africa The Panamanian health authorities established the following entry requirements for passengers coming from and having stayed or transited through the United Kingdom, the Republic of South Africa, India or any South American country during the last 15 days. In order to travel to Panama, you must present a negative PCR or antigen test which must not be older than 48 hours. Additionally upon registration with the National Immigration Service in Panama, passengers coming from or who have transited through the United Kingdom, South Africa, India or South America, during the last 15 days, must take a COVID-19 test at Tocumen airport at their own expense (costs 85USD). If this test is negative, the person must comply with a three (3) day isolation period (remember that this only applies to passengers coming from South America, United Kingdom, India or South Africa). If you are Panamanian or a foreigner resident of Panama (and have the corresponding documentation, i.e. migration ID card or E cedula and proof of address such as a lease contract or title deed) you may serve the isolation period at your residence in Panama. Otherwise, the isolation period must be spent in a non-COVID-19 surveillance hotel for non-COVID-19 travelers at state expense. Isolation may also be carried out in hotels authorized by the health authority at your own cost. In this case you must present your reservation to the airline before boarding the plane to Panama. Either if you spend the isolation period at home or in a hotel, in both cases, at the end of the three days period, another PCR or antigen test must be performed. This test must be done by the health authority at its expense in a laboratory that has an operating permit from the Technical Board of Health and is validated by the Gorgas Memorial Institute). If the test is negative the the isolation will be concluded. For passengers who test positive upon arrival in Panama, a COVID-19 RT-PCR test and +ICGES analysis must be performed, complying with mandatory isolation for 14 days. Now, in practice, what is it like when you travel to Panama? First, before planning your trip, find out where to get a PCR or antigen test, which it is legally recognized for travel purposes. Nowadays, major airports already have laboratories for such tests. Depending on the day of the week a PCR test can take about 24 hours (although I know of a lab in Vienna that delivers it in 90 min) and an antigen test result can be available in about 15 to 30 minutes. Please note that when traveling, not all countries will accept an antigen test for entry into the country. Panama accepts antigen or rapid test, Spain for example only accepts PCR tests. You will usually receive your COVID-19 test result to your email so that it is available during your trip on your mobile phone. Choose the lab ahead of time and schedule your appointment early to get your PCR or antigen results prior to your flight. It happened to me that I arrived at the airport once on a Sunday thinking I could get a quick PCR test before my trip, and no.... but that’s another story. When you arrive at Tocumen airport in Panama, you must enter with your mask on, and its use is mandatory at all times and in all airport facilities. Likewise, your temperature will be taken by airport personnel. Immigration and customs lines are properly marked on the floor. Immigration and customs agents will serve you through protective windows to ensure physical distance. To enjoy your flight and reduce your stress level, we recommend the following:: 1. Investigate the travel requirements of the country of origin and destination in a timely manner. 2. Do Web Check-In and download your mobile boarding pass. 3. Remember to bring your mask. 4. Arrive at the airport at least 3 hours before your flight departure time. 5. Take into account that in some airports, only passengers who are going to travel are allowed to enter the facilities. 6. Remember that you can bring food on board for your personal consumption. 7. To expedite the boarding process, have your boarding pass ready, as well as your passport and COVID-19 test. 8. When passing through immigration control in Panama, remember to show your passport and migration ID card or E cedula (if applicable). If you are entering Panama as a tourist, remember to have your hotel reservation or place of lodging at hand. Feliz viaje! Have a safe flight!
  8. The owners of apartments or real estate that are subject to the Horizontal Property Regime in Panama, have the obligation to pay taxes, related to their individual real estate unit, as well as regarding the land on which the building is built. Here we are going to explain why you must pay taxes for your condominium under the Horizontal Property Regime, even if you have a tax exemption for the apartment. In Panama many years ago, most of the owners of an apartment (which we will now call PH) took into account that if the value of their apartment was less than USD$30,000, they did not have to pay real estate taxes for the land on which the building is built. But as a result of a law created in 2010 that modified the tax code in relation to real estate taxes, it is established that "the first $30,000 of this fee will not apply to the land of the properties subject to the horizontal property regime". In other words, the land where the building was constructed is taxable since it becomes common land, that is to say, the co-owner's land. The law does not say how to pay the taxes, and generally people forget to pay them and accumulate a debt with the tax office over the years. The Panamanian tax office distributes this tax among all the co-owners of the building and assigns the payment to each one of them in their individual account (according to the respective property number). In my professional opinion, and I agree with other professionals on this, as the land is a common good, that is to say it belongs to all the owners where the building is built, the tax should be paid in full and each owner should deliver his share with the monthly administration fee. But in practice this is not the case. The tax is not included in the common maintenance fees, which is why it is often forgotten. Nevertheless, each individual owner is responsible for paying his taxes and keeping up with his fiscal obligations. Now why is this happening? When a property is incorporated into the PH regime, two properties (fincas) are automatically created. The first property is the PH (the common property) with a different number and which is registered in the PH section of the Public Registry. This property has an initial value that is set by the developer that built the project. The other properties that are created, are all the apartments, one of them or several can be yours. This is called private property. The exempted improvements only correspond to each of the properties of the PH, i.e. the apartments, but this does not include the common property, i.e. the building constructed on that land. By law you will not be able to exonerate the real estate tax of that land. Therefore, if the value of the land is 1 million dollars, the tax to be paid is calculate based on this value at the rate of 1%. And this 1% is distributed among all the real estate units, i.e. all the apartments in the building. The 1% is paid in three installments per year: at the end of April, August and December. However, it is possible to pay in advance. When the exemption period of your apartment expires, you will pay for the value of the apartment plus the amount of the participation coefficient, that is to say, the 1% we have already mentioned. What if I have a "normal" property? How much do I pay? As of 2019, properties declared as family patrimony - principal residence (through a special procedure at the tax office, because nothing is automatic in Panama) must pay a real estate tax according to the value declared in the Public Registry, i.e.: Between USD$0 and USD$120,000 = exonerated. Between USD$120,001 and USD$700,000 = 0.5% of the value. Over USD$700,000 = 0.7% of the value. My property has not been declared a family patrimony, how much should I pay? From USD$0 to USD$30,000 = exonerated. From USD $30,001 to USD $250,000 = 0.6% of the value. From USD $250,001 and USD $500,000 = 0.8% of the value. Over USD $500,000 = 1.0% of the value. Banks became property tax withholding agents. The amendments to the Tax Code now obligates banks in Panama to help the tax office by withholding the respective tax for each apartment or property in general that has been acquired through a mortgage financing. With the exception of new homes which have an exception for up to three years, with the condition that you have never purchased a property before and that it is your first home. Property Exemptions in Panama: Why? The developers, or construction companies according to the tax office are recognized a type of exoneration to the constructions of those projects which construction permit was in force prior to 2018. After this date the developers must pay the respective tax from the legal birth of the PH property. The exonerations in Panama are created with the purpose of promoting the economic development of the country encouraging people, nationals or foreigners who want to do business in Panama and develop the country, and in return the Panamanian government grants them tax incentives. Therefore, farms dedicated to agricultural activities which cadastral value does not USD$350,000.00 are exonerated from taxes every 5 years while maintaining their activity.
  9. Panama has always positioned itself as an attractive destination for expats, businessmen, retirees and foreign investors. Forty percent of real estate assets in Panama above USD$140,000 are purchased by foreigners. Despite the pandemic we can see that the Panamanian real estate market is going through a boom by international buyers. Work from Anywhere Both commercial and residential real estate market trends are changing due to COVID-19. Before the pandemic, digital nomads were a phenomenon of the digital revolution. Traveling and seeing the world with a flexible job working online was a unique way of life for a small group of freelancers, innovative entrepreneurs or highly digitized specialists. But in 2020 an emerging trend became a mass movement. Large, traditional companies that previously demanded a work culture from their employees where the team must be physically "present" in one place, suddenly felt compelled to jump into the 21st century, and all within a few days. Home Office - The New Normal But the home office lifestyle has not only created new fashion trends, sudden shortage of office supplies such as home printers, change of laws, and strange and sometimes even comical situations due to the use of new means of communication such as Zoom, Google Meet, Skype among others, for team and client meetings. People are waking up to new possibilities: Why do I live in an apartment whose rent eats up most of my income, if work can be done after a morning run on a Caribbean beach, while saving a lot of money living in a warm place? Because of the COVID-19 crisis, millions of people are starting to work from anywhere. Even big hotel chains are remodeling their rooms in order to convert them into small, temporary, beach-side home offices for holidaying remote workers. Something for Everyone The type of real estate available in Panama is very varied. The isthmus of Panama boasts mountains and beaches, and allows you to wake up in the Caribbean and have lunch overlooking the Pacific. Although Panama City is a dynamic and modern city, much of inland Panama remains quiet and remote. This geographical diversity converts Panama into an interesting market for buyers who prefer the city, as well as those who do not. In recent months we can observe two trends of real estate buyers in Panama, the purchase of unique spaces located in the interior of the country and the investment in centrally located apartments in Panama City with the aim to put them up for rent and thus create an additional source of income in the long term. Foreign Real Estate Investment in Panama Alberto Grajales, commercial director of encuentra24, a digital portal specialized in classified ads, indicates that 250,000 visitors are registered monthly in the English version of the portal, of which the vast majority are looking for information about real estate properties in Panama. Unlike other tourist destinations, foreigners and nationals can buy almost any type of property in Panama. It is also possible to own and sell property titles in your own name (although it is not recommended) or through corporations or foundations, even without being a resident, only with tourist status. Panama has a fully dollarized economy, with the US dollar being the legal currency in the country, which allows diversification out of the Euro zone. And the current exchange rate between the dollar and the euro favors European investors even more. New demand and opportunities arise from changing lifestyle circumstances due to the new way of remote working, global economy and financial and personal priorities.
  10. What should I do, sell the shares of the corporation I own or just transfer the title of my property to the buyer? In this week’s blog I explain you two very common situations which only apply to Panamanian corporations (SA - sociedad anónima) since private interest foundations have no legal framework to "sell" a foundation because they are originally used as a living will, for estate planning purposes and therefor the transfer of a foundation is not regulated (from a tax point of view), but this would be a topic for another blog. If I wish to sell my property, that is to say, transfer the title of ownership to the buyer, the taxes that the owner must pay to the tax office must be calculated, that is to say, the Real Estate Transfer Tax ("ITBI") which is 2% that must be paid based on the higher value of either the sale price or the updated cadastral value (VCA). But this value will be different from the one calculated by you, because for the Panamanian tax office, the property has as increase in value over the years (regardless of the global economic situation or crisis). Therefore, the period of time the property has been kept by you without selling it, will influence the calculation of the VCA. That means that the VCA calculated by the tax office might differ from the original value of the property. A property that costs $25,000 dollars, and being kept in your hands during 15 years increases its value. When you sell this very same property, the tax office will take into account this increase in value (the system calculates it automatically and you cannot modify it) using a coefficient of 0.75 for the full 15 years. That is to say that for the tax office that property had an increase of the VCA of $18,750.00 dollars. If you add this increase in value to the $25,000.00 dollars that you have in your deed, then your property is now worth: $43,750.00 dollars (for the tax office, regardless of the market value). Now, this tax for this specific example will be about $875.00 dollars, not much compared to the price, and it is still in your best interest to sell the property and not the shares and I will explain why. We continue with the same example of only 2% but with another sale value: If the sale value of the property is $352,500.00 dollars and under the same example, the property was kept for 15 years in your hands gaining value as a long term investment, the tax office is going to perform the same calculation with a coefficient for the land (0.75) and another for the improvements, the house, (0.5) because the value between land and improvements (house), results in the value of the property; In this example it turns out that the VCA is now $529,375.00 dollars. Even if you sell your property for a lower price, the government will base its calculations on the higher value in order to apply the 2% tax. This means you will have to pay $10,587.50 dollars and on top of that, the cadastral value of the property will increase (if applicable). In this particular case, it is recommended to sell the shares of the corporation that owns the property, because there is a capital gains tax on the sale of securities (shares of the corporation) which is 5%. For territoriality purposes, it is considered as Panamanian source income , an income produced by capital or securities economically invested in the national territory, whether its sale has taken place inside or outside the Republic of Panama. Therefore, if you sell the shares instead of the property, you will not increase the official registered value of the property (remember that annual property taxes are calculated based on this value). You pay your transfer taxes for the share deal and sell the property without further charges. The taxes for a share deal must be withheld and remitted by the buyer to the Panamanian tax office within 10 days after the closing. Taxpayers who commit tax fraud, and do not pay this tax to the national treasury, will be sanctioned with a fine of not less than 5 times nor more than 10 times the amount defrauded. The other tax to be paid is the Capital Gains Tax, which is 3% on the official registered price and the gain (if any) on the sale price. It is said "updated" because if you built "improvements" i.e. a house on the property, the improvements incorporated to the real estate must have been declared and registered in the Public Registry of Panama, otherwise legally they do not exist. These taxes were created to tax transfers of real estate, personal property and securities, made by individuals and legal entities. Each case is unique and special and we cannot guarantee that this example is accurate for your needs, but it does provide you necessary information to understand a little more about how buying and selling in Panama works so you can make an informed decision when selling your property or investing in real estate in Panama.
  11. Foreigners using their country’s driver's license may legally drive a vehicle in Panama for up to 90 days. Once a foreigner obtains temporary or permanent residency in Panama he/she may request the homologation of his/her driver's license and obtain a Panamanian driver's license. To do so, it is not necessary to hand over your current driver's license or take any kind of driving test. The Panamanian government contracts a private company called SERTRACEN for the processing of driver's licenses nationwide. Only foreigners with residency status in Panama (either temporary or permanent) are eligible for a Panamanian driver's license, foreigners with tourist status are not. Below we have summed up the steps to follow to obtain a Panamanian driver's license for you. What documents do I need? 1. Original and copy of your migration ID card (valid and legible). 2. Original and copy of your passport (valid and legible). 3. Your driver's license (valid and legible). 4. Authenticated certification of the validity of your license. 5. Blood type: If your driver's license does NOT show the blood type and RH factor, a certification issued by an authorized Panamanian laboratory must be submitted. The laboratory certification is valid for six (6) months, counted from the date of issuance of the document. Names and surnames must be identical or coincide in all documents or requirements presented. All documentation provided must be in good condition and not damaged. Step 1: How do I get my license certified? The first step is to contact the embassy or consulate of your country to request the certification of your driver's license. The process varies from embassy to embassy, for this reason it is advisable to make an appointment in advance either by phone, online or by email in order to confirm the necessary documentation, how long it takes to issue the certification and the costs. U.S. citizens should approach the American Citizen Services at the U.S. Embassy in Panama City. There is a standard form (sworn affidavit) to request the driver's license certification. Keep in mind to verify that your name, personal information, driver's license number, etc. are written correctly on the certification when you pick it up. In addition, the certification must contain the following information: 1. The term "certify" or "declare", 2. Name of the officer in charge of validating the information, 3. Name of the applicant, identification number, number of the license to be validated; in addition to the date of issuance and expiration. If the license does not have an expiration date (indefinite) the certification must state so. 4. Place or country of issuance of the driver's license. 5. Description of the different categories of vehicles, 6. Stamp and original signature of the officer issuing the certification. 7. Apart from the certification the consulate/embassy must issue an authenticated copy of both sides of your driver's license (front and back), with original stamp and signature of the officer in charge of validating the information. Step 2: How can I authenticate the certification? The certification and the authenticated copy issued by your Consulate/Embassy must be further authenticated by the Ministry of Foreign Affairs (MINREX) in Panama City. The request for authentication by MINREX must be made through their web page https://sigob.mire.gob.pa/registrocorrespondencia/. Once the application is completed, the respective department of MINREX will give you an appointment. The payment must be made at the Banco Nacional after receiving the confirmation by e-mail of the amount to be paid. Step 3: Get an appointment at SERTRACEN Once the documentation described above has been completed, an appointment must be made at one of SERTRACEN's branches. All license applications must be submitted in person by the applicant. The appointment must be requested online through the following web page: https://citas.sertracen.com.pa/Citas/public/cita.jsf . On the day of the appointment you must present all documents to the officer in charge at the SERTRACEN office, your personal data (including emergency contact, organ donor or not etc.) and the photo for your new license will be taken, also an eye and hearing test must be performed. People who wear glasses can use them for the eye test. The cost of the driver's license is USD$40.00 (includes eye and hearing test). The driver's license is valid for four (4) years. If you are a temporary resident in Panama and you do not have your permanent residency yet, your Panamanian driver's license will have the same validity as your residency. Licenses issued with age restrictions will not be approved, nor will international licenses. Licenses issued in one of the EU countries must comply with the new EU format. ”Old” licenses (Papierführerschein) will not be accepted. Special requirements for drivers over 70 years of age All drivers over seventy (70) years of age must opt for a driver's license valid for two (2) years. They must also present a certificate of good physical and mental health from a Panamanian doctor specialized in internal medicine or geriatrics. The document must have the full name, passport number, stamp and original signature of the physician. The medical certification is valid for six (6) months from the date of issuance of the document. Drive carefully!
  12. When investing in a real estate in Panama, it is necessary to consider several factors and numbers in order to analyze if the purchase you want to make is profitable. This is why it is important to foreign investors to understand how the tax system works in Panama and what types of taxes must be paid when investing in real estate. There are three types of property taxes in Panama, which I will explain in detail below. First of all, Panama does not have what is known in Germany as “Grunderwerbsteuer" (real estate purchase tax). That is to say, the fiscal code in Panama does not contain a tax that must be paid for the acquisition of a plot or lot of land. When buying a property it is the seller who must pay the transfer taxes. Nevertheless it is customary that the buyer pays the registration fees of the Public Registry and the notary fees. What transfer taxes must be paid when selling a property? At the time of selling a property, the Panamanian government charges the seller the following taxes: 2% transfer tax calculated based on the cadastral (registered) value "or" the capital gains value (calculated by the system) "or" the selling price. The highest of these values is the one the government chooses as the calculation basis for charging the tax. And then 3% on the cadastral (registered) value "or" the selling price (whichever is higher) as capital gains tax. There are properties that pay annual taxes, others do not, some have exonerations, what does all this mean? In the past all properties whose value exceeded $30,000 were obligated to pay a progressive percentage of taxes on the cadastral value of the property (annually). However, there were different options to request an exoneration on these annual taxes for a maximum period of 20 years. This no longer exists today. But still the tax office respects the exemptions already granted, and for this reason you will see different offers in the real estate market with valid exemptions. Currently there is a new law where properties whose value is less than $120,000 do not pay taxes in Panama, as long as it is your primary residence. For properties with a cadastral value of $120,001 up to $250,000 the annual property tax rate is only 0.5%. Properties from $250,001 and above pay a rate of 0.7% (seven tenths of 1 percent). Now, if we are talking about horizontal property, that is to say, I have an apartment, what taxes do I pay? First of all, there are fixed expenses for the apartment that are calculated based on the registered square meters of construction, and from this measure the monthly maintenance fees that must be paid to the building’s administration is calculated. The maintenance fees must be paid on a monthly basis (you can also pay in advance if you wish) and never stop. The last reform of the law in 2020, made it very clear that for no reason it will be possible to stop paying the common maintenance fees since with these expenses the building exists and is maintained, that is to say as if it were a child's alimony. There is also a real estate tax that is divided in two, i.e. the tax on the apartment and then on the coefficient of participation of the land on which the building was constructed. It is important to mention that the payment of the (annual) property taxes is not included in the payment of the monthly maintenance fees. It is the responsibility of each co-owner to comply and pay their tax obligations for their apartment with the Panama tax office. What is a NIT? In order to have this information of how much you owe and if you are up to date in your tax obligations, it is advisable to process a user and password (called NIT) to have direct access to the electronic platform of the Panamanian tax office called "e-tax". This way you can check your current account statement, pay the corresponding taxes by credit card and even request a certificate of good standing, all of this can be done online. The NIT is also mandatory when selling your property in order to process the payment of transfer taxes and to obtain the documents requested by the notary for the closing of the sale. What if I sell the shares of my company ("share deal") instead of the title of my property ("asset deal")? Years ago the Panamanian government has regulated the sale of corporate shares in order to avoid the evasion of the transfer tax when selling a property. Now there is also a tax that must be paid if you have a corporation and this corporation owns a property and you sell the shares of your corporation (as a package). As the owner of the shares the seller pays a tax of 5% of the sales value, but the payment must be made on his behalf, by the buyer and both will have the legal responsibility before the Panamanian tax office. In the past the sale of corporate shares was a very popular strategy used to optimize the transfer taxes when selling a property, however each case is unique and individual and requires prior analysis by the lawyer. We will talk about this topic in the next blog, stay tuned!
  13. Many clients moving to Panama want to start taking their first steps in the Panamanian banking system, and they always ask me the same questions. It is for this reason that on this occasion I want to talk about banking products in Panama. The Panamanian banking system does not resemble the South American banking system, nor does it resemble or copy the European banking system nor that of the United States. In Panama we are used to take the best of each country and then make our own version. Over the years Panama created its own banking system which I want to explain in general today. What is a Savings Account in Panama? In Europe banks are not paying interests for keeping our money with them. If we remember well a bank lives by using other people's money and makes money that way. There are many ways how the bank can make money from other people's money, but we are not going to talk about that subject this time. When we say that we want a savings account in Panama, it is not the same as a savings account in Germany, nor is it the same as a checking or commercial account. That is to say, the savings account in Panama can be opened by any person, but it does not mean literally that it will be used exclusively to save up money. For the Panamanian banking system you can manage the savings account as you see fit. That is to say, you can use it to receive your salary, to pay the expenses of your household and you can even give the account a commercial use, in case you are an independent entrepreneur or freelancer. It is important to mention that banks in Panama do not distinguish between accounts that are being used for savings, for personal use, or even commercially. It is even possible for a corporation to open a savings account. The bank will pay you interests on your Panamanian savings account. These interests are calculated per year and are paid monthly at the closing date of each month. In Panama, bank accounts are not restricted or limited to a number of monthly transactions, as it is the case with certain banks in the United States where they tell you that you can issue transfers or move your money from one place to another only for a certain number of times. In Panama there is no limit, I can wire as many times as I want from the bank account and I am not charged for it. There will be charges made by the bank for the handling, that is, if I send money abroad from Panama or receive money from abroad into my Panama account. There are also fraud insurances that are basically deducted on a monthly basis, but they are no banking fees charged for the bank account to exist. If you want to withdraw money from your bank account in Panama using your ATM card (tarjeta clave) it is recommended that you use an ATM of the bank where you have your account. Otherwise, banks usually charge a small fee for the use of the ATM. In Europe there are still banks that offer savings passbooks, which are exclusively for personal savings. This modality existed in Panama, but was discontinued. Perhaps a reference of this can be found in the state bank called Caja de Ahorros de Panama. Bank interests are not taxable in Panama. In Panama the updated Tax Code states that interests recognized or paid on savings, fixed-term deposits or any other type of account held in banking institutions physically established in the Republic of Panama, whether they are local or foreign deposits, will not be subject to income tax in Panama, according to the definition provided in article two of Cabinet Decree 238 of 1970. What is the difference between a Savings Account and a Checking Account in Panama? A savings account pays interests, but a checking account does not pay interests. A checking account is entitled to a check book, which will be charged separately by most banks. This type of account exists practically for doing business or execute commercial activities. The conditions to open a savings account in Panama reduce the initial deposit amount, as it is a savings account, but when it is a checking account the initial deposit is higher. This initial deposit cannot be withdrawn and must always be kept as a minimum monthly balance of the checking account. Otherwise the bank will penalize you. What types of cards exist in Panama? The three most common types of cards issued by banks in Panama are: ATM cards, debit cards (with Visa or MasterCard logo, etc.) and credit cards. ATM cards are exclusively connected to a savings account. This type of card only works in Panama and the bank handling fees are very low. This card usually has no name, some have numbers, some do not have much information, this is normal. They can be used to withdraw money at any ATM nationwide or to pay in supermarkets or stores by using a PIN number. Debit cards with Visa, MasterCard or other logos basically work like a prepaid credit card, i.e. you pay with your own deposited money, but without entering a PIN code, but like a credit card; However, the card has no credit line. If the bank account that is connected to this debit card does not have sufficient funds, the card will be rejected. Credit Cards in Panama Credit cards in Panama works like the credit cards in the United States, this means, the bank opens a credit line for a specific amount depending on your income. The bank will lend you that money and with that money you pay with the card. The money the bank lends you is not connected to your savings or checking account. The bank will give you 30 days to pay back the money. In the practice the bank will give you the opportunity to pay back the amount well before the 30 days, but they will not tell you until the end of the month. Then the bank can charge you a monthly interest for the money you borrowed. Mismanagement of a credit card can create indebtedness. If you pay the full amount spent on the card before the closing date, you owe the bank nothing. If you don't, you must make at least the minimum monthly payment to be “in good standing” with your obligations to the bank. And so the monthly cycle begins again. In Panama there exists the Panamanian Credit Association (APC) which registers the credit and service relationships that a person maintains. Based on this registry the banks investigate and verify your degree of indebtedness. Therefore, banks may contact you to offer you more banking services and products. In Panama it is normal for people to keep three, four or five bank accounts since each bank can offer them different products and services in competition with other banks and there are banks that will offer to pay you better interest rates than others. It is well known that in Europe people often stay with one bank for 40 years, this practice is not the same in Panama. Online Banking in Panama Banks in Panama also offer online banking, many with their own mobile APP. We recommend that when you are opening your bank account in Panama you do not leave the bank until a bank officer helps you get the online banking running and your card activated. There are banks in Panama that do not invest much in the quality of customer service and although they offer to pay good interests and have a nice selection of banking products they are very deficient in customer service. So, if you are abroad, getting the bank to help you with Online Banking is going to be a problem. Digital Banks and Fintech Banks In Panama there are no Fintech banks. For this reason banks with banking licenses are very jealous and for this reason there are banks that will not accept to receive international transfers from Fintech banks (like Wise, formerly known as Transferwise). Fintech banks as we know are digital banks that are very economical and have zero maintenance costs because they do not exist physically in one place and do not have employees in an office offering walk-in customer service, and therefore they can compete. These Fintech banks are distinguished by handling multiple currencies in a single account and thus compete with the fees of physical banks. But as everywhere in the world, demand creates new services and products and we might see some interesting changes in the Panamanian banking market in the future. What is your experience with the banking system in Panama? Send me your questions!
  14. Foundations are a fantastic tool for estate planning and to structure and administrate your assets, but is a foundation really necessary? The answer to that question is not that simple, as there is no golden rule that is applicable to everyone and everybody. It depends on the type of assets you own and their value. If you purchase titled real estate in Panama you practically have three options: 1. Register the property in your personal name, 2. Register the property in the name of a corporation, 3. Register the property in the name of a foundation. Due to Panamanian inheritance law and its legal procedures I will always recommend my clients to avoid option number 1. Why should I avoid buying real estate in Panama in my personal name? When you own real estate in Panama in your personal name and you have a will, or otherwise you do not have a will, after your demise the procedure for your heirs to claim their inheritance will always be the same in Panama: 1. Your heirs must hire a Panamanian lawyer 2. The lawyer must file a lawsuit of succession (with will/ without will) with the court in Panama. 3. The process of the lawsuit will take from one (1) to two (2) years to be completed (given there are no complications in the process). 4. Meanwhile, you heirs cannot take possession of the assets until the Judge passes judgment in their favor. In other words, it is the Judge who has the order and the last word. 5. According to the minimum fee scheduled established by the Bar Association in Panama the lawyer handling the lawsuit has the legal right to charge 10% to 25% of the total commercial value of the estate as legal fees. Is it better to buy real estate in the name of a corporation of foundation? If you invest in real estate in Panama you should always register the title either in the name of a corporation or foundation in Panama. But using a foundation might not always be the best choice. Why? It depends on the type of real estate and the usage you want to give the property. The character and objective of a foundation in Panama is to hold and protect assets, while a corporation is per se created to execute commercial activities. Foundations in Panama are prohibited to execute regular business activities. So, if you plan to purchase real estate in Panama as a private retirement home and keep the asset as a long-term investment, a foundation sounds like a solid option. But if you want to invest in real estate as a short-term investment in order to rent, sell, and make it a profitable business , a corporation might suit you better. In fact if the property already has a very low cadastral value or a high cadastral value, it might be smart to use a corporation. Are there examples where a foundation is not necessary at all? Yes, I recommend my clients to never ever register a car title in the name of a foundation. Also, if you have a personal (savings) bank account, depending on your bank you can nominate a beneficiary at the bank. After your demise, your designated beneficiary(ies) can access the funds in the bank account (the procedure varies from bank to bank, so comparing different options is recommended). And if you are a permanent renter in Panama and only own a average bank account and a car, using a foundation or even a corporation to hold those assets is not worth it. Stay safe and healthy!
  15. Rights of Possession (ROP) or “Derechos Posesorios” may seem a simple way of investment...but they are not. In fact, they are more complicated if you really want to prevent a legal problem in the near future. In order to explain the difference between a property that has ROP and a property that is titled, we must first know how the Panamanian government legally creates a property. In simple words, the land from the beginning belongs to the government of Panama. Then the government "assigns" those rights so that there is supply and demand and the land increases in value as it passes from hand to hand (buying and selling) that is where the government starts to make money from taxes. As the government of Panama is not a real estate company, nor is it dedicated to real estate activities, they have to guarantee that the land that belongs to the government are for public use and benefit, of course protected by the law. Faites votre jeux - Get your game on. Once I know that I want a property "without title" the first thing I must do is to have the right to "occupy" it, that is why they are called “rights of possession", because I must possess it as my own. If a person "occupies" a property but it belongs to another person, and this person does not care, because it is a "possessory" right, he can lose this right in a period of one (1) year. Obviously, in Panama, nothing is automatic. This person who is the new unregistered owner, and just arrived and occupied the property, can approach the government and ask to be given that ROP. If there is someone who opposes, then they don't give it to him. If nobody objects, then it is theirs. The same happens if you want to title the property, that is to say, a public deed is drawn up, registered and it is known to all, that this property belongs to you. To do so, you will have to prove that you are the owner. If you are thinking of buying ROP, keep in mind the following (as a frame of reference, remember that every case is different). You need to ask for the plan with the geographic coordinates, to define exactly where the property is located. Also, your seller has to prove that he is the "de facto" owner, that is to say, by means of a certification from the police authority stating that the seller has been living there for five (5) years, you can also ask for affidavits from the neighbors as witnesses. In addition, receipts for electricity, water and telephone expenses must be presented, as well as all other suitable documentation that may prove that this person exercises the spirit of owner over this property. This happens because, although a property has ROP, according to the law in Panama, you can lose your right when another person takes the property for himself in a "peaceful" way. Or in short, another person lives on the property for more than one (1) year and you allowed him to do so without expelling him. The stakes are set, or not? The law in Panama establishes that the person who has the ROP has to occupy the property, has to fence the property, has to work it, has to build on it, has to preserve nature, watch over it and protect it so that other people do not take it. There is a technical legal word for this situation and it is called "Acquisitive prescription of dominion”. That is to say, if I have a ROP and I did not exercise my right, and I allowed another person to do so, according to the law in Panama, I can lose my ROP in one (1) year, and that gives the right to another person to prove in the courts of justice in Panama that he is the legitimate owner. Another important issue to know is that the ROP can be registered by a natural or corporate body. When the land titling process is finished, the natural person will pay a symbolic price to the public office of the government, but when it is a corporate body it can be very expensive compared to what a natural person would pay. You should also keep in mind that not all properties that have ROP can be titled, i.e. it must not be a protected area, comarca territory, private estate, administrative concession area, land assigned in use and administration, among others, as well as it must not have a conflict, or judicial/administrative litigation. If you wish to title an island or insular territory, you must prove the occupation for more than five (5) years and the physical dominion with owner's intention, in a pacific and interrupted way, through suitable means, that is to say, certifications of the Mayor's Office (this documents by itself is not enough as a proof), affidavits of witnesses of the community or of the neighbors, photos of the land and of the constructions made on the property, plans with GPS position and detailed location, with its boundaries, measurements and neighbors, public services contracts, construction permits, among others. Rien ne va plus - The die is cast. In summary, buying a ROP can be cheaper compared to a property that has registered title. However, as lawyers we do not gamble, and due to our professional experience we strongly recommend buying titled properties in order to guarantee your investment in the future.
  16. The government of Panama has created over the years more than 50 immigration categories to facilitate the immigration of foreign professionals, investors, entrepreneurs, family members, or retirees. In recent years, Panama has become a popular emigration destination. The constant economic growth, the warmth of the locals, the pleasant climate, the extensive beaches, as well as attractive investment opportunities, and the US dollar as local currency are among the many advantages that Panama offers newcomers. The six most common residence permits in Panama, either as a part-time resident or to stay permanently in the country are: Retire in Panama: "Jubilado Pensionado" visa. The "Friendly Nations" Visa Especially for Italians: "Convenio Panama - Italia" For investors: "Golden Visa” Application for family reunification "Dependiente de Residente Permanente" Panama "Marriage Visa” Step by step: How to get your residence permit We have listed for you the steps to apply for a residence permit in Panama below. The individual procedures may vary in detail depending on the immigration category and the personal situation of each client: Step #1: Choosing a lawyer and first contact: The Immigration Law in Panama requires that all applications for residence permits in the previously mentioned immigration categories must be submitted by a licensed attorney in Panama. Step #2: Which Immigration category fits you: Together with your attorney you select which category suits you best and which are the required documents. Step #3: Compilation of documents: Collect all necessary documents and papers required for the application. Pay attention to the validity of the various documents and take care of the necessary certifications (apostille) in time. Step #4: Review of documents: It is best to email all documents and papers to the lawyer in Panama in advance for review in order to be sure that everything is complete and nothing is missing. At the same time, the documents can already be forwarded for translation in Panama. Step #5: Trip to Panama: Once all documents are ready, a personal trip to Panama is necessary to complete your file and submit the application in person together with your lawyer. Step #6: Completion of your file: Once you have arrived in Panama you will meet with your lawyer and hand over all original documents, sign the lawyer's power of attorney and any other documents necessary, make copies of your passport, fill out the immigration forms, get your health certificate and any other procedure where your personal presence is required. Step #7: Filing your application at the immigration office: As a rule, the file must be complete and all applicants must be present in person in order to submit the application. Step #8: Registration of the passport ("registro de pasaporte"): The registration of the passport is done in advance online by your lawyer. During the application process, all information is checked again and an immigration officer stamps the registration stamp ("sello de registro") in the passport of each applicant. Step #9: Temporary migration card ("carné de migración"): Once the application has been submitted, your status in Panama also changes. You are no longer considered a "tourist" but a "resident". All applicants receive an identity card from the immigration office. This card is valid for six months (enough time to process the application within this period). A photo is taken on-site for the ID card. From now on your migration ID card must be shown at passport control every time you enter or leave Panama. Step #10: Multiply Visa ("visa multiple"): The multiple entry and exit visa is a stamp in the passport that allows you to enter and exit Panama while your residence permit application is being processed. The multiply visa is valid for six months (just like the migration ID card). The Immigration Department takes about 48 hours to issue the Multiply Visa. They will hold your passport for this period. Foreigners (with ongoing immigration proceedings) who leave Panama without having a Multiply Visa stamped in their passport, or whose Multiply Visa has expired, must pay a fine of 2,000.00 US dollars (per person) to the Immigration Department upon re-entry into Panama. Step #11: Processing your application: Upon receipt of the application, the National Immigration Service assigns a case number to the file and transfers it internally to the responsible department in Panama City. After the application has been successfully processed by the responsible caseworker, the decision ("resolución") is reviewed by the head of the department. Then the Director of Immigration signs your resolution and the file finally moves to the Notifications Department. The processing of the application usually takes three to four months. Step #12: Receiving your residence permit and a second trip to Panama: Once the residence permit has been approved, you will be notified by your lawyer. A second trip to Panama is required in order to undergo the notification process and obtain your new migration ID card. Upon completion of this procedure, you will be allowed to stay in the country permanently or temporarily, depending on your immigration category. Foreigners who hold permanent residence status in Panama can also apply for a Panamanian identity card (Panama E-card or Cédula E) at the Civil Registry (Tribunal Electoral). This process is a separate procedure and is not done automatically as part of the application process. The application for the Cédula E must be submitted separately and the decision is forwarded internally by the Immigration Department to the Tribunal Electoral. Subsequently, an appointment at the Tribunal Electoral is required to verify the personal data of the applicant and to take a photo for the Cédula E. The Cédula E is not printed immediately and will be available for pick-up after approximately two to three weeks. It is not mandatory to have a Cédula E. However, in daily life, it facilitates many administrative, legal and/or business procedures such as opening a bank account. Furthermore, the Cédula E is a prerequisite to register with the tax authorities in Panama and to apply for a personal tax number.
  17. The process of buying real estate overseas can be complicated, time-consuming, and stressful. But it should not be like this. Read our guide below on the biggest mistakes buyers make and how you can avoid them: Mistake #1: Location is Everything Almost everything can be fixed, but the location, the location, the location cannot be fixed. Buy location, NOT price. When investing in real estate overseas remember to do your due diligence and pay attention to the small details that can turn your dream home into the home of your worst nightmare. Before buying try to get information from different local sources in order to be sure that the location you chose is really the right one for you. Besides common factors such as traffic connection, security, neighborhood, distance to the nearest hospital, and infrastructures such as supermarkets, shops, and restaurants, it is important to verify the connection to basic public services. That is water, telephone, internet, electricity, and garbage collection. Which are the available providers and how reliable are their services? Are there any (regular) interruptions or connectivity problems with one of the basic services in the sector? Does the availability of one of these services vary according to the season (rainy season/dry season)? Speaking of seasons, although Panama is a tropical country without seasons, there are sub-climates in different areas of the country. Depending on the location and time of the year there are regions that are more humid than others, in certain areas, there is a constant strong wind during the dry season, others where heavy rain falls during certain months of the year, while there are zones suffer from drought during the dry season. Mistake #2: Not thinking about selling the house someday Buyers often forget that they will most likely sell their home at some point. Personal circumstances can change, and eventually, you have to sell. The purchase of a home should be structured well from the beginning to avoid headaches and bad surprises in the future: What will be the taxes to pay when you sell your home? Which legal figure is the most convenient to acquire a property? If something happens to me, what is the quickest and least expensive way to transfer the house to my heirs? Mistake #3: Falling blindly in love with a house Just as in love relationships there are properties that are "problematic". Some details are cosmetic and can be solved in one way or another, but there are real estate options that can be called an "uncontrollable risk". Whether it's a lawsuit, a conflict of interest, or some kind of encumbrance. Unless you like to play Russian roulette, don't get distracted by the "flashy" details of a house. Mistake #4: Trying to buy without a lawyer Last but not least, one of the biggest mistakes we can observe in our legal practice is when buyers try to buy without an attorney. There are too many factors that cannot be calculated and making a mistake is somehow inevitable. Lack of experience combined with the desire to save “some pennies" can have serious consequences. The Laws and the legal basis in Panama are not the same as in other countries. You should not sign contracts or legal documents that were not reviewed by a trustworthy lawyer. If you have doubts about a transaction, seek advice from an experienced lawyer who will not only protect your interests during the purchase transaction, but also your wallet by avoiding problems in the future.
  18. On December 3rd, 2020 the President of Panama announced the creation of a new type of legal entity called “Startup Company" in order to increase entrepreneurship in Panama, facilitating the formalization of companies and at the same time providing tax incentives for new startups. How can I create a new startup company? Two to five natural persons, of any nationality, may form a startup company in Panama. The subscribers of the articles of incorporation will be at the same time the partners and therefore the final beneficiaries of the company. Unlike other company types in Panama, this information will be publicly available. But in order to avoid the abuse of the benefits and incentives for this type of company, no natural person who was previously part of a startup company will be able to belong to another startup company. The new startup companies are similar to the limited liability companies in Spain. The economic liability of each partner for the obligations contracted by the company will be limited to the amount of their participation made or promised. The minimum capital of the company is US$500 and can be contributed by the partners in money, goods, or services. It is possible to transform an already existing company (as long as it has not been operating for more than three years) into a startup company, and thus take advantage of the benefits and incentives of this new figure. Administration of the startup company As with Spanish limited companies, startup companies will have at least one administrator. The administrator must always be one of the partners and can celebrate or carry out all the activities and contracts related to the operations of the company. An interesting detail is that the new startup companies do not require a resident agent. All companies and private interest foundations in Panama must have a registered resident agent (a licensed attorney or law firm in the Republic of Panama that acts as a point of contact between the company and the national authorities). In the case of the new startup companies, the appointment of a resident agent is optional. If the startup company does not have a resident agent, the administrator must be assigned as the legal representative and contact person for the authorities. In addition, the domicile and physical address where the offices of the startup company will be located must be registered. What are the advantages and incentives for the new startup companies? Startup companies will be exempt from paying income tax during the first two (2) years of their operation. In addition, they do not have to pay the annual franchise tax and will be exempt from using a cash register (but they must issue electronic invoices and manage an electronic invoicing system). Additionally, the startup companies will be able to apply for a discount for up to 50% on the import taxes of the raw materials required by the company for the creation of its products, services, or innovative processes. What kind of economic activity can be carried out with a startup company? Startup companies may execute any legal economic activity, but may only operate within the Republic of Panama. In addition, startup companies must not be used to carry out one or more of the following activities: Companies operating in one of Panama's free trade zones Casinos, gaming, gambling, and similar activities Developer companies, real estate agents, or brokers Construction companies and contractors Security transport companies Pawnshops Commercialization of precious metals or gems Buying and selling new and used cars Legal and/or accounting services (lawyers, accountants) Startup companies must not be listed on the stock exchange. There is a limit of one million US dollars gross income per fiscal year in order to qualify for the tax benefits of the startup companies. If the company's income exceeds this amount, it must transform into another type of corporate body in order to continue operating. Curious? For more information, contact us for a free video consultation!
  19. Do You Want to Expand to the LATAM Market? Consider These Three Key Factors Due to the current situation caused by COVID-19, we can observe an explosive growth in online sales. This ongoing trend brings new business opportunities, as well as new ways to access the Latin American market (LATAM) for entrepreneurs from Europe, the United States, and Canada. The LATAM e-commerce market is expected to grow by 29% from 2020 to 2024. 25% of online customers made their first online purchase in March of this year. The products with the highest online sales in LATAM include computers and accessories, home appliances, clothing and shoes, tools and building materials, home accessories, and furniture. But in order to sell successfully online, you have to analyze and study the consumers, their preferences, and local tastes, as well as cultural differences. For this reason, in this week’s Blog, I have summarized three key factors to consider when expanding or starting your online business in LATAM: 1. Web Design In the virtual world the website of any business, store, or professional service is a business card to the outside world. Just like any restaurant, hotel, dental clinic or law firm tries to create a pleasant physical space to receive their diners, guests or clients. The creation of a business web space should follow the same concept to receive its virtual clients. When creating a website for the LATAM market local consumers expect its content to be visually pleasing, fast website navigation, and preferably a chatbot that is available 24/7 to answer the most urgent questions. LATAM online consumers appreciate the ability to purchase without registering and a variety of payment methods which, of course, should ensure a safe shopping experience. 2. Marketing and Customer Interaction The typical LATAM online consumer is young and likes technology. 85% of the population in LATAM is an active user of social networks, the most popular being Whatsapp, Facebook, Youtube, Instagram, and Twitter. This is why network marketing campaigns and constant interaction with customers are key in the online expansion into the LATAM market. The communication methods preferred by consumers are email (57%), text messages (27%), via a business' own mobile app (26%), Facebook (23%), Whatsapp (10%), and Instagram (10%). 3. Seasons and Shopping Campaigns Let's be honest, we're all bargain hunters. The typical LATAM consumer loves bargains. It's very common to wait for a special campaign or sale to make purchases. In the retail sector, 78% of sales are made for Christmas, 68% for Black Friday, 58% for Cyber Monday, 53% for Mother's Day, and 52% for Valentine's Day. Other special occasions for smart spenders are Children's Day, Father's Day and Back to School. Before launching a new business or expanding your existing company into the Latin American market, remember to study and analyze the preferences of your market and your future customers. Although LATAM is a large market with a lot of potentials, it is necessary to fragment the various regions taking into account that there are cultural and traditional differences along with specific local characteristics and challenges.
  20. When making a trip from your country of origin to Panama, each traveler or family traveling together has a limit of cash that they can take with them which is $9,999.99. If you travel with cash exceeding $10,000, and you do not duly declare it at Customs, the total amount of money can be taken away. This modality is called "Commission of a Customs Fraud Crime" or even smuggling. The reason is mainly that by not declaring the "extra" amount of money, the customs authorities assume that the intention is to harm the tax interests of the country or even to use that money for illegal purposes. Therefore, the sworn statement that is signed to confirm the amounts is a legal document, and the declaration of "false" facts is a crime. In addition to that, if you cannot prove the origin of the funds to the authorities, for example through an income tax return, bank account, or some other means that prove the origin of the money and the use that will be given to it, the respective authority will automatically think that money is supposed to be used for illegal purposes. Many times language barriers prevent us from explaining ourselves easily. If the origin of the funds is not confirmed, the customs authorities will confiscate the total amount of the money and in addition to that, they may initiate a criminal investigation. By not declaring the origin of the funds at customs, you may have legal problems and even be prevented by the competent authority from leaving the country, until the investigation is completed. Do not sign if you do not understand what you are signing In Panama the customs declaration is made by using a form under oath of the traveler, at the moment of your entrance to the territory of Panama (the airport). I personally received that form at one time in English, sometimes in Spanish. Please do not sign if you do not understand what you are signing. It is a binding legal document and no matter how simple the form looks, the problems behind not understanding what you are signing are bigger than they seem. If you don't understand the language, please ask the flight attendant to give you one that you can understand, and if you don't speak English either, ask for help at customs when you arrive at the airport. In our practice we have seen cases where clients traveled with different currencies and had not noticed that the total amount of cash exceeded ten thousand dollars and not understanding what they signed or thinking that the limit applies per person and not per family, the money was confiscated. Do you want to know what the government of Panama does with the money confiscated in Customs every year? I don't think you're going to like it, but I'll tell you. The Law in Panama stipulates that all the money collected by travelers who did not declare their money in Customs, a part of it will be distributed among all the Customs officers at the national level, as a bonus for their work – as some kind of war booty (...); the rest of the money will be distributed among other institutions in Panama, as money for their operations budget. The authority confiscates quickly, but when they have to return the money the process is very slow and nerve-racking. It must be proven to the customs judge that the money is not illegal, and there was never any intention of violating the customs law, but to make investments in the country, that you have a connection with Panama (not as a tourist, but as a resident or potential resident in the country), maybe even a business, and that you pay your taxes in Panama. Remember, that "ignorance of the law does not exempt from responsibility". So, keep learning and informing yourself, and in case of any doubt ask your trusted lawyer, who will surely be happy to help you. Have a nice trip and safe travel!
  21. Moving to Panama Do you want to move to Panama and want to take your household goods with you? The good news, domestic goods can be imported duty-free. But first of all, what are household goods, according to the Panama Customs authorities? The term household goods can refer to the bed, the washing machine, the dryer, the dishes, the dining room table, the sofa, overall the furniture and accessories of the home. The goods must be used and be seen used. Construction equipment, commercial tools/equipment, motorcycles, trailers, new items, and other non-domestic goods will be taxed. What documents do I need? For the process of importing your household goods, you need your passport, your Panama migration ID card (carné de migración), a copy of the Bill of Lading, and a packing list. This means a detailed list of the articles of domestic or personal use that you wish to introduce to the country (in English or Spanish) must be presented prior to the date of arrival of the shipment. Additionally, invoices for newly purchased household goods or non-domestic goods are required, if applicable. What is the procedure to import my household goods to Panama? Importing your household goods to Panama can be a headache for many, but it can be done efficiently, as long as you choose a reliable and experienced international moving company and a reputable customs broker. In general, the process takes between 5 and 10 working days in order to liquidate the household goods. Additional charges may apply for equipment holds, container usage (depending on the shipping company), or deposit and storage at the customs authority's facilities depending on the duration for customs clearance. When the container with your goods arrives in Panama, you must be in the country. All shipments will be personally inspected at the port of entry. We suggest that you pay for the revision in residence due to the congestion of shipments in the fiscal precinct. This in-residence inspection has an additional cost. All shipments entering Panama by sea, land, or air are fumigated at the port and/or airport of entry. Fumigation is a pest control treatment. This procedure may cause a delay in the delivery of the shipment. How much do I have to pay? The final cost of importing your household goods depends on what is in the container (household goods, tools, machinery, valuables, etc.). Non-domestic goods will usually be taxed at about 20% of the resale value. Get different offers from moving companies and compare prices and services included. Some have paid much more than they were originally quoted, due to unexpected additional fees. Get a price with door-to-door delivery and make sure there are no extra charges. Should I bring my car to Panama? According to our professional experience, it is generally not cheaper to bring your car to Panama. The process of customs clearance and vehicle registration in Panama is long, and there are likely to be delayed. The import taxes on your car are approximately 27 to 30 percent of the CIF value. In fact, you will probably be able to buy a car in Panama at a lower price and with less hassle. Are there any goods that cannot be imported? There are some items that can only be imported if they are in limited quantities, have the appropriate additional documentation and the shipper has paid all required duties and taxes. Among them are food, alcoholic beverages, jewelry and coins (gold bullions), leather goods and living plants (it is not advisable to include plants in any shipment). There are also prohibited items like ammunition, firearms, drugs, and narcotics. All shipments of household goods that bring in wood furniture or any other wood items are subject to a Quarantine Import Permit that must be applied for before the shipment reaches Panama. Restrictions also apply to the use of wooden packing materials such as barrels, crates, lift-vans, and pallets. The wood must be treated and sealed. Any wood packaging that is not properly marked may cause extra charges and delays. Plan B Instead of shipping your complete household, you can also consider sending only some boxes with certain items that are important to you. You can even check the possibility of bringing extra luggage on the plane. Keep in mind that many rentals and properties for sale in Panama come fully furnished. So before making a decision, find out what is available in Panama and what the costs are. This will help you decide what to bring with you and what to buy new in Panama.
  22. The death of a loved one takes many people by surprise. Besides the emotional burden and grief, one suddenly has to deal with legal, financial and administrative procedures, especially if the deceased did not have his/her assets organized. Everyday life can very quickly confront us with situations in which it is absolutely necessary to consult a legal expert. Knowledge edge in legal matters helps you to make an informed decision and protect not only your investment and assets, but also your family, heirs and loved ones. Two case studies from our legal practice regarding inheritance law in Panama. Let's make an analysis of two "figurative" case studies with their respective pseudonyms: Due to unpredictable circumstances, Michael Bauer arrives at the hospital in critical condition. He and his wife Carola moved from Canada to Chiriqui over three years ago. While the doctors try to establish his health status, Michael asks his lawyer to prepare the necessary documents to leave "everything in order”, and transfer his share of the family home located in an exclusive residential area in Boquete to his wife. I have a will, why do I need a foundation? Michael never wanted to create a foundation to protect his family's assets because he felt it was "too expensive" and an "unnecessary" expense. Unfortunately, Michael passes away before he could sign the legal papers. He leaves a vehicle (worth $10,000), his share of the house (worth $300,000 in total) in Boquete and a savings account at a local bank. There is a formal will signed before a Notary Public in Panama, declaring his wife Carola as the sole heir. She feels alone in Panama and wants to sell everything fast in order to return to Canada. However, two long years go by before she is able to transfer the title of the car and her deceased husband’s share of the house in Boquete to her name, and finally put the property and vehicle up for sale. But what happened? And, how could they have avoided this situation? Inheritance Law in Panama and its pitfalls The delay in the inheritance procedure is due to the legal basis in Panama. If the deceased had assets within Panama, in his own personal name, regardless of whether or not he has a will, a probate proceeding must be completed. In order to do so, it is necessary to hire a lawyer and to file a probate lawsuit (tested if there is a will, or intestate if there is no will, which in practice is almost the same procedure) before a judge in Panama. Courts and Judges Your file must go through different stages and hands in the court and once all the formalities are completed the judge will make a decision and assign the final beneficiary(ies). Legal procedures in Panamanian courts take their time, and even under the best conditions, it will take at least two years until your heirs have the right to transfer your assets to their names, so that they can finally sell them. In the meantime, they will have to pay for expenses, lawyer's fees (15% of the total inherited assets according to the minimum lawyer's fee in Panama), among others. Being Prepared… On the other hand, our second “figurative” case study is the case of Max Mueller. He has been a part-time resident of Panama for five years. Max has been traveling back and forth between Panama and Germany, but now it is too exhausting, his health is not good. Mr. Mueller owns a piece of land in Las Lajas (with a value of 40,000US$) in the name of a foundation, and a personal savings account at a local bank. On his last trip, he spoke with the bank official and filled out a form to leave his son Robert as the final beneficiary of the account. His lawyer has an original copy of his foundation's by-laws that declare Robert as the secondary beneficiary and secondary protector of the foundation. A foundation does not die After Max passes away in Germany, his son Robert contacts his father's lawyer in Panama. He sends him his father's death certificate, duly apostilled, and a few weeks later he travels to Panama. Since the foundation (which is a legal entity) is the owner of the land in the Public Registry of Panama and the duration of the foundation is perpetual, no lawsuit, process or legal procedure has to be filed. Robert now, in his role as universal beneficiary and protector of the foundation, leaves a signed mandate for the sale of the land, and immediately hires the service of a local real estate broker to sell the property. Before returning to Germany, he goes to the local branch of his father’s bank, complies with the internal procedure and can access the funds in the account. Create your individual estate plan A Panamanian Private Interest Foundation (PIF) can ensure that after your death, your estate passes to your chosen beneficiaries without any stressful complications, delays, or litigation. For legal purposes, the assets of a PIF constitute a separate estate from the assets of its founder and the beneficiaries. Just as in a will, the foundation's private by-laws govern the conditions of the PIF. It can be established how the assets will be distributed, and who has control over the administration of the foundation's assets. It is not required that the Founder be a resident in Panama, and with the telematics, originated due to the Covid-19 pandemic, Panama made an effort so that lawyers can create corporations and FIPs without the need for their clients to appear before a Notary Public. The commercial registry of the legal entity is filed electronically, making the registration process more expeditious. Knowledge edge makes the difference Carola is hopeful that the title to the house in Boquete will be transferred to her name soon, so that the property can be put up for sale. She has already traveled many times to Panama and sometimes she feels tired and exhausted due to so much protocol, stress and expenses. Robert received a message from the broker a few weeks ago. There is an interested party who wants to buy the land in Las Lajas. The down payment has been already made and the deal will be closed this week. In a few more days he will receive the funds from the sale in his bank account in Germany.
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    Free consultations at GOMEZ TOMICZEK LAW FIRM (ENGLISH AND/OR SPANISH SPOKEN) Instructions: The consultations will be managed by a first-come, first-served basis. Our address in Plaza San Francisco (second floor), office #23, near Magda Crespo Seguros. The free consultations will be performed by Lcdo. Abel Gomez covering his different legal expertise areas, as: -Corporate and Commercial Law -Relocation Services and Migration -Foreign Investment -Asset Management -Maritime Law -Tax Law -Intellectual Property and Patents -Real Estate Law
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