Friendly Nations Residence – Investment Route in Panama

Executive Summary

Panama’s Friendly Nations Residence Program, commonly referred to as the Friendly Nations Visa, allows nationals of designated countries to establish legal residence in Panama based on specific economic, professional, or investment ties.

Under the investment route, an eligible applicant may qualify through either:

• Real estate investment of at least US$200,000, or

• A fixed-term bank deposit of at least US$200,000 maintained with a qualifying bank in Panama for a minimum of three years.

The current framework grants an initial two-year provisional residence permit. Once that period has been completed and the applicable conditions continue to be satisfied, the applicant may apply for permanent residence. Panama’s National Immigration Service currently lists both real estate and fixed-term deposits as qualifying investment alternatives under this category.

Introduction

For investors considering residency in Panama, the Friendly Nations Residence – Investment Route offers an alternative to employment-based residency and other investor programs.

The program is particularly relevant for nationals of eligible countries who already intend to:

• acquire real estate in Panama;

• maintain significant liquidity within Panama's banking system;

• establish longer-term personal or economic ties with the country; or

• structure their investment through a Panamanian company or Private Interest Foundation.

The investment route does not require the applicant to establish an employment relationship with a Panamanian company. Instead, eligibility is supported by a qualifying investment and the documentation required by Panama's immigration regulations.

The current rules are primarily based on Executive Decree No. 226 of July 20, 2021, which modified the Friendly Nations framework established under Executive Decree No. 416 of 2012 and subsequently amended by Executive Decree No. 197 of 2021. Panama's National Immigration Service continues to recognize the category under its current immigration requirements.

Who Can Apply for the Friendly Nations Investment Route?

Eligibility is based first on nationality.

Executive Decree No. 226 establishes the countries whose nationals may apply under the Friendly Nations residence category. The current list contains 50 jurisdictions.

They include:

Andorra, Argentina, Australia, Austria, Belgium, Brazil, Canada, Chile, Costa Rica, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Israel, Japan, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Monaco, Montenegro, Netherlands, New Zealand, Norway, Paraguay, Peru, Poland, Portugal, Serbia, Singapore, Slovakia, South Africa, South Korea, Spain, Sweden, Switzerland, San Marino, United Kingdom and Northern Ireland, United States, Uruguay, and the Hong Kong Special Administrative Region.

Nationality alone, however, is not sufficient. The applicant must also satisfy one of the qualifying grounds established by the regulation.

For the investment route, there are two principal alternatives.

Option 1: US$200,000 Real Estate Investment in Panama

An eligible Friendly Nations applicant may establish the required economic connection with Panama by owning qualifying real estate with a minimum value of:

US$200,000 / B/.200,000

Panama uses the balboa at parity with the U.S. dollar, so B/.200,000 is equivalent to US$200,000 for this purpose.

The National Immigration Service requires a certificate from Panama's Public Registry demonstrating ownership of the qualifying property.

How Can the Property Be Held?

A particularly important feature of this immigration category is that the property does not necessarily have to be registered directly in the applicant's personal name.

Executive Decree No. 226 allows the property to be held:

1. Personally by the applicant;

2. Through a legal entity in which the applicant is the ultimate beneficial owner of the shares, interests, or participation rights; or

3. Through a Panamanian Private Interest Foundation where the applicant is both founder and ultimate beneficiary.

This can be particularly relevant for investors who wish to coordinate immigration planning with corporate structuring, succession planning, or asset-holding arrangements.

However, using a corporation, LLC, or Private Interest Foundation should not be viewed purely as an immigration decision. Ownership structure can have corporate, tax, banking, inheritance, accounting, and beneficial ownership implications that should be evaluated separately.

Can the Property Be Financed?

Yes.

Executive Decree No. 226 expressly provides that the acquisition of the qualifying real estate may be financed through a local bank in Panama.

This is an important distinction from investor programs that require the entire qualifying amount to consist of unencumbered investor capital.

The regulation nevertheless requires the real estate to satisfy the minimum qualifying value. For that reason, the proposed financing structure, ownership documentation, registered value, and Public Registry evidence should be reviewed before relying on the property for immigration purposes.

Option 2: US$200,000 Fixed-Term Deposit

Instead of purchasing real estate, eligible applicants can qualify by placing at least:

US$200,000 / B/.200,000

in a fixed-term deposit with a bank holding a general banking license and operating in Panama.

The bank must certify:

• the existence of the fixed-term deposit;

• the identity of the holder;

• the amount deposited;

• the term of the deposit;

• that the deposit is free of liens or encumbrances; and

• that it has a minimum term of three years.

Ownership of the Fixed Deposit

Similar to the real estate route, the qualifying investment may be held:

• personally by the applicant;

• through a legal entity in which the applicant is the ultimate beneficial owner; or

• through a Private Interest Foundation where the applicant is founder and ultimate beneficiary.

This flexibility can be useful for investors already maintaining corporate or wealth-management structures in Panama.

Real Estate vs. Fixed-Term Deposit

For an investor who already intends to acquire property in Panama, the real estate route may provide greater economic utility, because the same asset can potentially serve both an investment purpose and an immigration qualification.

Conversely, investors who prefer liquidity management over property ownership may find the fixed-term deposit route more appropriate.

Neither option should be selected solely on immigration considerations. Investment return, liquidity, financing costs, banking requirements, property taxes, transaction costs, and succession planning should also be considered.

General Requirements

In addition to proving the qualifying investment, the current National Immigration Service requirements include the following documentation for the principal applicant:

1. Notarized power of attorney and application, including the names and nationalities of the applicant's parents.

2. Three passport-size photographs.

3. Authenticated or properly certified copy of the passport.

4. Criminal background certificate.

5. Health certificate.

6. Certified check for B/.250 payable to the National Treasury.

7. Certified check for B/.800 payable to the National Immigration Service.

8. Personal Background Affidavit Form.

9. Documentation proving the applicable qualifying investment.

These are statutory and administrative requirements and may be supplemented by additional documentation depending on the applicant's circumstances.

Foreign Documents, Apostilles and Spanish Translations

Documents issued outside Panama generally require appropriate legalization.

Under Panama's immigration rules, foreign documents must generally be:

• apostilled, when the issuing country participates in the Hague Apostille Convention; or

• otherwise authenticated through the appropriate Panamanian diplomatic or consular process.

Documents that are not in Spanish must generally be translated into Spanish by an authorized public translator in Panama.

This is particularly relevant for:

• criminal background certificates;

• marriage certificates;

• birth certificates;

• corporate documents; and

• other foreign records supporting the application.

Can Dependents Be Included?

Yes. Dependents may qualify subject to the additional requirements applicable to dependents of permanent residents.

Typical supporting documents include:

• a letter of responsibility;

• marriage certificates for spouses;

• birth certificates for children; and

• evidence of the principal applicant's financial capacity.

For dependent children who are over 18 but under 25, Panama's current immigration requirements generally require evidence that the dependent is single and enrolled as a full-time student.

Because family circumstances differ, dependent eligibility should be evaluated individually.

Provisional Residence and Permanent Residence

Despite its formal classification within Panama's permanent residence framework, the Friendly Nations program currently operates in two legal stages.

The National Immigration Service may first grant the applicant a:

Two-Year Provisional Residence Permit

After completing the provisional residence period, the applicant may subsequently request:

Permanent Residence

The National Immigration Service states that the permanent residence application generally requires the previously applicable documentation, subject to certain exceptions such as the criminal-record certificate and specified government checks.

This should not be confused with the processing time of the application itself. The two-year period is part of the substantive legal structure of the immigration category.

Does Investment Residence Automatically Allow Employment in Panama?

Not necessarily.

Immigration status and authorization to work are separate legal matters in Panama.

Obtaining residence through investment should therefore not be interpreted as automatically granting unrestricted employment rights.

Foreign nationals intending to work in Panama should separately determine whether a work permit is required under the rules administered by the Ministry of Labor and Workforce Development (MITRADEL) and whether the intended profession is subject to restrictions applicable to foreigners.

Practical Considerations Before Investing

Investors should ideally evaluate the immigration implications before completing the investment, rather than purchasing an asset and subsequently assuming that it qualifies.

For real estate, particular attention should be paid to:

• Public Registry ownership;

• title due diligence;

• registered property information;

• financing arrangements;

• beneficial ownership;

• property taxes;

• condominium obligations where applicable; and

• whether the property will be held individually, corporately, or through a foundation.

For fixed-term deposits, applicants should consider:

• bank onboarding requirements;

• source-of-funds documentation;

• beneficial ownership verification;

• deposit maturity;

• early termination restrictions;

• interest rates; and

• compliance requirements imposed by the financial institution.

Panamanian banks maintain their own Know Your Customer (KYC), Anti-Money Laundering (AML), source-of-funds, and risk-assessment procedures. Satisfying immigration requirements does not guarantee acceptance by a bank.

Frequently Asked Questions

What is the minimum Friendly Nations investment in Panama?

The current minimum is US$200,000 for either qualifying real estate or a qualifying fixed-term bank deposit.

Can I finance the US$200,000 property?

The applicable regulation expressly permits the real estate acquisition to be financed through a local Panamanian bank.

Does the property have to be in my personal name?

No. The regulation also permits certain corporate and Private Interest Foundation ownership structures, provided the applicant satisfies the applicable beneficial ownership requirements.

Can a corporation own the property?

Yes, where the applicant is the relevant ultimate beneficial owner of the legal entity, subject to the regulatory requirements.

Can a Private Interest Foundation own the property?

Yes. The regulation recognizes qualifying ownership through a Private Interest Foundation where the applicant is the founder and ultimate beneficiary.

How much must be placed in a fixed-term deposit?

At least US$200,000, maintained for a minimum term of three years and free of encumbrances.

Does Friendly Nations residence immediately grant permanent residence?

No. Under the current framework, the applicant initially receives a two-year provisional residence permit and may subsequently apply for permanent residence.

Can family members be included?

Yes, subject to the rules applicable to dependents and the required evidence of family relationship and financial support.

Does buying any US$200,000 property automatically guarantee residence?

No. The investment is one element of the immigration application. The applicant must also satisfy nationality, documentation, background, immigration, and other applicable regulatory requirements. All residence applications remain subject to governmental approval.

Conclusion

The Friendly Nations Residence – Investment Route in Panama provides eligible foreign nationals with two principal ways to establish the economic connection required for residency: a US$200,000 real estate investment or a US$200,000 fixed-term bank deposit.

The program is particularly attractive because qualifying investments can, under specified conditions, be held personally or through corporate or Private Interest Foundation structures, while the real estate option may also be financed through a Panamanian bank.

However, immigration qualification should form only one part of an investment decision. Real estate ownership, financing, tax treatment, banking compliance, corporate structuring, beneficial ownership, and succession planning should be evaluated together before committing capital.

Panama Entity can assist with the legal assessment and preparation of Friendly Nations residence applications, including coordination of qualifying corporate, real estate, and investment documentation. All immigration applications are subject to review and approval by the competent Panamanian authorities.