Traveling to Panama is the perfect experience for those seeking a unique blend of modernity and pristine nature. This small but fascinating Central American country is an ideal destination for exploring culture, breathtaking landscapes, and incredible biodiversity. Traveling to Panama offers significant tax advantages: Panama's zero-tax system, offered by the territorial tax system, taxes only locally generated income. Income earned abroad is exempt, making Panama an ideal tax haven for global entrepreneurs and investors. Before traveling to Panama, make sure you have all the necessary documents: European citizens can enter the country without a visa for up to 90 days. Bring light clothing, but don't forget a raincoat, as the tropical climate brings frequent rains, especially in the wet season. Visiting Panama for tourism allows many to get a glimpse of what the country might hold in terms of immigration.

Territorial taxation is a simple system: a state taxes only income generated within its borders and ignores foreign income. Italy does not adopt this system: the TUIR (Consolidated Income Tax Code) imposes the principle of worldwide taxation, meaning Italian tax residents pay on all their income, wherever it is generated.

From a European legal perspective, territorial taxation is not the norm: large EU countries follow the global model to avoid tax base erosion. Some microstates and specific jurisdictions, however, maintain territorial systems to attract capital and residents.

Countries such as Panama, Costa Rica, Uruguay, Singapore, and Hong Kong currently apply territorial taxation. In Europe, it only exists in limited versions, such as in Andorra and San Marino. The result is clear: those who choose these systems pay taxes only on locally generated income, leaving income earned abroad untaxed.

In recent years, Panama has become a prime destination for those seeking a favorable investment climate, an advantageous tax system, and a high quality of life. An increasing number of retirees, entrepreneurs, and professionals are choosing this country for tax-free pensions in Panama , taking advantage of a stable economic environment and clear rules for obtaining permanent residency in Panama .

One of the main reasons for moving is Panama's zero-taxation on foreign income. Panama's tax system is territorial, meaning that if income is earned outside of the country's borders, it is not subject to local taxes. This has earned Panama a reputation as a tax haven, particularly among those seeking to protect and grow their assets.

For retirees, the territorial taxation for applying for tax exemption on their pension in Panama is particularly attractive. Not only is pensions earned abroad exempt from taxation, but there are also discounts and benefits for those who obtain residency as "pensionados." These include discounts on transportation, services, and entertainment, as well as mortgage and loan benefits.

Obtaining permanent residency in Panama is a relatively simple process, especially for citizens of countries with bilateral agreements, such as Italy. The Panama–Italy Friendship Treaty allows for rapid residency, tax exemptions, and citizenship after a period of legal residence. Citizenship brings an additional benefit: a second Panamanian passport, which opens the door to over 140 countries without a visa.

Those who choose Panama do so not only for its zero-tax territorial taxation, but also for its political stability, the US dollar as its official currency, and a growing economy. For many, living in a tax haven like Panama also means having a strategic foothold in Latin America, with direct connections to North America, Europe, and Asia.

From an investment perspective, Panama offers attractive real estate opportunities, both in the tourism and residential sectors. Local law strongly protects private property, and those who obtain permanent residency in Panama have no particular restrictions on purchasing property.

In short, choosing Panama means combining tax advantages with quality of life. Panama's tax-free pension guarantees tax-free income, Panama's zero-tax system protects those earning abroad, and permanent residency in Panama opens the door to a stable, secure future with a wealth of opportunities. It's no coincidence that the country is considered by many to be a true tax haven : it's a place where money works for you, not against you.

Tax residency in Panama requires, first and foremost, permanent residency in the country in question. Anyone considering moving to Panama to obtain a tax benefit, such as paying zero taxes or tax-free pensions, must understand that in addition to permanent residency, such as the residence permit offered by our firm, you must also obtain a permit to reside in Panama; you must live there for a certain period of time to also validate your tax residency (optional; you are not obligated to live there if you don't want to). After spending at least 183 days in the country, you can apply for a tax residency certificate in Panama through our service. This is done by providing us with a power of attorney and a complete copy of your passport showing your migratory movements and clearly stating your stay of at least 183 days in the country where you are requesting the tax certificate. Furthermore, to be tax-exempt and pay zero taxes in Italy, Italians from Panama or Paraguay must register with AIRE at their Italian embassy in Panama or Paraguay. Migration to Panama therefore requires understanding these details to best navigate your move without obstacles.

Tax residency in Panama is characterized by being a residency that allows you to declare to your home state, your home tax office, your employer or bank. Tax residency in Panama requires a tax residency certificate generated by the DGI of Panama. We at Studiopanamaitalia can produce your certificate of tax residence in Panama for financial and tax reasons.

Moving abroad is a practice that Italians and Spaniards confirm is increasingly common. Now one Italian in two normally travels outside Europe with a passport, and there are hundreds of thousands who move abroad permanently. Those who move from Europe to the Americas generally do so for work/study or freedom reasons. For Italy alone we are talking about almost 8 million expatriates if we count the approximately 2 million non-AIRE members who are fictitiously registered in the municipal registry office in Italy. An army of people who find increasingly convincing and clear reasons to move outside Europe. Generally speaking, new economic expats move to Latin America, leaving out Asia, especially Thailand, which occupies less and less space in Europeans' expatriation requests, in favor of the ever-green Panama, Mexico, Paraguay, Colombia. But expatriating means closing accounts with the fiscal and financial past only if it is done in the right way. Over the years we have been able to ascertain how hordes of poorly assessed expatriates have carried out their transfer procedure badly without carrying out the legal steps necessary to stay clean with the Italian tax authorities or those of any other European country.

The first thing to know is that you will become richer when you move. The reason is simple: less or zero taxes, and greater investment in your work both in terms of available economic resources and time, which allow you to build a present and a future that is proof against any serious economic problem. On average, when you move to Panama you will save around 250 thousand Euros in contributions every 10 years to be paid to the coffers of your European country in the form of taxes. You will also save on VAT which drops from the European average of 22% to 7%. But above all you will save time with an absent bureaucracy and the Latin way of carrying things forward, where for every problem there is always a solution. Without ever getting discouraged. The cons of moving abroad to Panama or Latin America essentially concern that you will have to make a transfer with AIRE for Italians or with Hacienda for Spaniards in a precise manner, to avoid that over time the transfer turns out to be fraudulent even if you actually live in Panama . You can request a personalized paid consultation to understand how to carry out your transfer safely.

More and more families are deciding to move to Panama. When a family unit contacts us, we are faced with a group of people who, taken individually, have different needs and in a certain sense recall the legal practice of establishing residence in Panama for a single person. The husband must plan the move, possibly the sale of his property in Italy or its rent, the wife asks for a work permit or resigns definitively with all the bureaucratic paperwork, the children must plan the end and start of the new school year in new country and finally everyone must plan a date of entry into the new property which they will have had to rent months in advance with a real estate agency here in Panama. When you decide to move as a family unit to Panama, we can guarantee a turnkey transfer concierge service including the keys to your new apartment. Try to contact us months in advance, on average we work with families who wish to live in Panama, at least 4 months in advance of the date of arrival in the country.

Want to tax-exempt your pension correctly? Here's a clear guide with official sources. The goal is twofold: tax-exempt your pension in Italy when you become a resident abroad and, where legally permitted, avoid paying taxes on your pension in your new country.

1) Tax residency: the point that really matters.
To obtain tax exemption on your pension, you must change your tax residency . In Italy, a resident is someone who, for the majority of the year, has registered residence, domicile, or habitual residence in the country. Only by properly changing your residency can you exempt your pension from tax and request the INPS to pay net payments abroad. Without this step, you cannot avoid paying taxes on your pension in Italy.

2) AIRE registration and actual transfer.
To exempt your pension from tax, an address isn't enough: you must register with AIRE within 90 days of the transfer and be removed from the Municipality's APR. This step is essential; without AIRE, you'll have a hard time avoiding paying taxes on your pension in Italy because you'll remain a tax resident.

3) Pension Payment Abroad:
After AIRE, to exempt your pension from tax, you must request payment from INPS in your country of residence: credit to your account or at the branch. This is the practical step that makes your new status effective and helps you avoid paying taxes on your pension in Italy when you are entitled to them under the rules.

4) Double taxation treaties:
Many countries have agreements with Italy. If there is a treaty, you can exempt your pension from tax according to bilateral rules and avoid double taxation. Without a treaty, domestic regulations apply: this is why it's essential to check before moving to avoid paying taxes on your pension twice.

5) Certificate of Foreign Tax Residency:
To exempt your pension from tax, you almost always need a certificate issued by the administration of your new country. This document proves your tax status. Without a certificate, you might not pay taxes on your pension abroad but remain taxed in Italy: the opposite of what you intended.

6) Be careful where you move.
In countries with territorial taxation, foreign income may be exempt. In these cases, tax-exempting your pension is easier and often allows you to avoid paying taxes on your local pension; however, you still need to meet the requirements regarding presence, registration, and documentary proof.

7) Final, simple checklist for Italian pensioners
– Register with AIRE (real transfer).
– Ask INPS for payments abroad.
– Check if there is an agreement with Italy.
– Obtain a tax residency certificate.
– Keep proof of address, bank account, and rental agreement.

By following these steps, you can make your pension tax-exempt and aim to avoid paying pension taxes where permitted. The process is simple, legal, and verifiable.

Many Italian retirees are discovering an exciting opportunity: tax-free pensions by moving to Panama. This small Central American country offers a tax system based on the principle of territorial taxation. Essentially, if you receive a pension from Italy and live in Panama, your foreign income is not taxed locally.
In addition to the tax advantages of tax-free pensions, Panama offers a lower cost of living than Europe, a tropical climate, and a well-established international community. The "Pensionado" program is one of the most advantageous in the world: it requires a minimum demonstrable pension income and guarantees discounts on transportation, restaurants, and services.
The process for obtaining permanent residency through the Pensionado visa to tax-free pensions is relatively simple, especially for citizens of countries with friendship agreements, such as Italy and Europe. The paperwork is quick, and with the support of a good law firm, everything can be completed in just a few weeks. For those seeking a more peaceful and tax-free future, Panama represents a solid choice.

In Panama, you can exempt your pension from tax with zero taxes. To do so, you need to distinguish between state and private pensions. Private pensions enjoy a special regime whereby you automatically acquire residency in Panama, and the pension is tax-exempt. The Italian government applies a different approach to state pensions (INPS or former INPDAP). In this case, in addition to being registered with AIRE, you must also obtain tax residency in Panama and obtain a certificate of tax residency from the Panamanian Directorate of Occupation and Family Affairs, the Panamanian Tax Office, or the Panamanian Revenue Agency. To meet the requirements for obtaining tax residency, you must have lived in Panama for 184 days per year and have a RUC (personal tax code) and the mandatory Cedula E.

The concept of "zero taxes" in Panama is not a slogan, but a reality for those earning income abroad. The Panamanian tax system is based on the principle of territoriality: only income generated domestically is taxed.
This means that a professional who invoices abroad or a retiree receiving a pension from Italy pays no income tax in Panama. Some local taxes on real estate and consumption remain, of course, but they are marginal compared to Europe.
Many choose Panama to open offshore companies or manage international holding companies thanks to this regime. However, it is essential to rely on expert advisors to comply with local and home country laws, avoiding double taxation issues. With proper planning, Panama can offer a legal and secure environment for legitimately reducing your tax burden.

The ISR (Impuesto Sobre la Renta) is the direct income tax in Panama. It applies to taxable income generated within Panamanian territory, following the principle of territoriality.

• Up to USD 11,000 : exempt, 0% tax rate.

• From $11,000 to $50,000 : 15% on income exceeding $11,000.

• Over $50,000 : Flat rate of $5,850 plus 25% on the excess

Knowing how to calculate the correct ISR avoids penalties and surprises on your paycheck: those who declare incorrect income or make incorrect deductions can risk disputes with the DGI (General Directorate of Income).

The Embassy of Italy in Panama is the institutional headquarters where you must present yourself in order to carry out any registry procedure relating to the AIRE member in Panama. Italy and Panama have had an exceptional commercial, diplomatic, friendly and political relationship for over 80 years.

The same website of the Italian Embassy in Panama reports:

“The economic-commercial relations between Italy and Panama are ancient, consolidated over time and develop today in the context of common membership of the World Trade Organization, of which Panama has been a member since September 1997, and within the scope of the Association Agreement between the European Union and Central America (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama) signed in 2012.

Being a country of services (over 65%), Panama's economy is generally open and favorable to the liberalization of foreign trade. The Government of Panama has among the lowest customs tariffs in all of Latin America.

The services mainly concern: the administration of the Canal (from which most of the country's resources derive), banking and insurance activities, the management of the free zone of Colón and tourism.” Source 

The headquarters of the Italian Embassy in Panama is located at this address:

PH Plaza 58, 6th floor

Calle 58 Este with Ricardo Arango, Obarrio, Panama City.

Apartado Postal 0816

Tel: +507 225 8948/49/50

E-mail: consolare.panama@esteri.it

PEC: amb.panama@cert.esteri.it

The headquarters offices

There's one crucial step to moving to Panama: choosing a truly competent law firm that won't overcharge you with exorbitant fees. Many people contact us because they've been unable to obtain a Panamanian residency due to legal issues or problems with the companies opened by the law firm they've chosen.

If you do not operate your residency with us and prefer another firm, please verify that the firm opens a company that truly complies with the rules and regulations governed by the constitution and corporate law of the Republic of Panama. If you have any doubts, please do not be ashamed to contact us for a paid verification of the practice carried out by another lawyer.

As official residency providers in Panama, our verification fee is affordable—just $350—so you can rest easy and continue your process with your lawyer in the most appropriate and proper manner. Alternatively, you can rely on our firm's years of experience and obtain residency with a 100% success rate in just 48 hours or 72 hours in Panama.