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TRANSCRIPT
Legal landmarks for residence, investing
and doing business in PANAMA October 14th, 2011
RAINELDA MATA-KELLY, LL.M.
Relocating to Panama:
Immigration update
• Your move to a new country will be as smooth as the preparation and good advise you receive in advance.
• The Immigration legal framework of Panama was changed on 26th February 2008 after nearly 50 years. This legislation came into effect on 26th August 2008, with a further update on 11th March 2009.
• The focus remains in attracting pensioners and high worth investors.
Most Popular Types of Visas
• SPECIAL RESIDENCY PERMITS
- Pensioner
- Private Income Retiree
• PERMANENT RESIDENCY PERMITS
- Business Investor
- Forestry Investor
- Person of Means
• Other residency permits are available not covered in this presentation:
- Italian Treaty Residency permit
- Work residency permits
- Married to Panamanian
- Executive Visa, etc.
Requirements for all
residency permits:
• From Home:
Valid Passport.
Police Record.
Marriage Certificate.
Birth Cert of children travelling with you.
6 Photographs.
• In Panama:
Health Certificate.
Other depending on type of permit.
• Note: All documentation from overseas must be authenticated by Panamanian consul or with the “Apostille”
PENSIONER
• Additional Requirements:
Letter from Pension Provider
confirming lifetime pension
above $1,000.
• In addition, for Private Pensions:
Pension Manager confirmation of
pension fund
Goodstanding Certificate (of
pension provider and pension
manager)
5 Check stubs or 5 bank
statements
Pensioner
EXCEPTION:
Pensions between
$750 and $999 are
accepted if
applicant has real
estate in Panama
for $100K
Timetable:
- One time
application.
- Upon applying get
1 year interim card
and multiple entry
permit.
- Approval in 2-6
months
Special Benefits:
• One time import tax exemption for used household goods
• Discount on import duties for a car (some taxes still apply)
• Discounts:
20% medical & professional services,
25% airplane tickets,
30% transportation,
15% to 25% restaurants,
15% hospitals and clinics
15% dental services
10% prescription drugs
etc.
Pensioner
Special Benefits:
• One time import tax exemption for used household goods
• Discount on import duties for a car (some taxes
still apply)
• Discounts:
20% medical & professional services,
25% airplane tickets,
30% transportation,
15% to 25% restaurants,
15% hospitals and clinics
15% dental services
10% prescription drugs
etc.
Pensioner
Quic kTime™ and a decompress or
are needed to see th is p ic ture.
PRIVATE INCOME RETIREE:
• Additional Requirements:
Fixed term deposit at the National Bank of Panama or “Caja de Ahorros” for FIVE (5) YEARS with enough funds to yield $850.00 x month (approx $340,000 at 3%)
TIMETABLE:
Upon application 1 year interim card and multiple entry permit are issued.
Approval for 5 year Residency in 6-8 months.
Residency Permit must be renewed every 5 years, as well as the fixed term deposit.
Private Income Retiree
Special Benefits:
• One time import tax exemption for used household goods
• Special Travel Passport
(does not grant nationality)
• Discounts:
20% medical and
professional services,
25% airplane tickets,
30% transportation,
15% to 25% restaurants,
15% hospitals and clinics
15% dental services
10% prescription drugs
etc.
Private Income Retiree
PERSON OF MEANS
OPTION 1:
Open a Fixed term deposit for $300K in any bank in Panama for 3 years; or
OPTION 2:
Purchase real estate for $300,000, or
OPTION 3:
Open fix term deposit and purchase real estate to total $300K
OPTION 1:
Deposit may be in
US$ or other
currencies available
at the bank.
Must be in name of
applicant
OPTION 2:
Title may be in the
name of a Private
Interest Foundation
There may be a
mortgage on the
excess of $300,000 of
real estate price
Real estate must be
paid up and titled.
Person of Means
BUSINESS INVESTOR VISA:
• Additional Requirements:
Evidence of $160,000 investment in a business
Company’s Tax Return & Payroll (with 5 Panamanian employees)
• Restrictions:
Investment must be in a non-retail business.
Shares must be in the name of the applicant.
Must be an operating business
Small business
investor visa for
$40,000 is no
longer available
Business Investor
Quic kTime™ and a decompress or
are needed to see th is p ic ture.
FORESTRY INVESTOR:
• Additional Requirements:
Evidence of minimum $80,000 investment in 5 hectares;
Investment or shares of corporation must be in applicant’s name.
Applicant must be an officer of the corporation.
Registration with Environmental Agency
OPPORTUNITY:
1. May use your
IRA to invest
2. Profits are
free of
income tax
Forestry Investor
Quic kTime™ and a decompress or
are needed to see th is p ic ture.
Permanent Residency Permits
Timetable
• These permits are granted in two stages.
• FIRST APPLICATION:
• Upon application, a 1 year interim card and multiple
entry permits are issued.
• Approx. 6-8 months after application a 2-year
provisional visa is granted.
• SECOND APPLICATION:
• Just before the end of the second year, apply again.
A 1-year interim card and multiple entry permits are
issued.
• Approx. 6-8 months after application the Permanent Visa
is issued.
• Approx 2 months later you are issued with national
identity card valid for 10 years. This card is renewed
every 10 years without much process.
Timetable
NATURALIZATION
• Five years after obtaining permanent visa and national identity card (cedula), you may apply for Panamanian nationality and passport (not aplicable to Pensioners or Private Income Retirees).
• To apply for Panamanian nationality, you must:
a) know Spanish,
b) renounce your existing nationality and
c) comply with other requirements.
Dependents
• If you have dependents which will relocate to Panama with you under your residency permit, your basic investment covers your whole family, but you will need to show additional funds to cover their needs (US$2,000 per dependent deposited in a local bank).
• Kinship must be established by Marriage Certificate (for spouse) and Birth Certificate (for children). You must present a current official printout of these certificates (NOT the originals).
• Unmarried partners and children 25 or older cannot be included as dependents and will need to qualify on their own for a residency permit.
Working in Panama
• Residency permits mentioned herein do not include the benefit of a Work Permit. Work Permits are handled by the Ministry of Labour.
• Recipients of the residency permits detailed in this presentation may only work in their own businesses.
• There are several types of work residency permits / work permits. Some grant permanent residency after 6 applications such as the one which allows you to work in a business where there are more than 90% Panamanian employees. In the latter case, the job needs to be obtained first and then a work permit is requested.
• Retail business and certain professions are reserved for Panamanians.
Asset Protection & Doing business
in Panama
• Whether you are planning to do business,
invest or protect your assets, you may find
that Panamanian entities can be effective,
easy to create, and operate.
• Stay away from “packages”, one-size-fits-all
solutions and structures that may be too
complicated or costly to preserve your
assets.
• Personalized attention and analysis of your
situation is key in making your investment a
success and protecting your assets. Also a
consultation with a tax specialist of your
own jurisdiction is necessary to understand
any reporting requirements.
Corporations
Created by law of 1927
Requirements:
• 3 Directors (persons or companies of any nationality)
• Bearer or Nominative Shares
• Resident Agent
• Annual Tax
• No annual Board
Resolutions
required
Incorporation Process:
• Confirmation of
name availability
• Registration in 2-3
days
• References,
passport copy,
Incorporation
Questionnaire and
Release Form (only
for internal
purposes)
Advantages
• Excellent for business endeavours or as a
holding company for property, bank accounts
and other assets worldwide.
• Property holding: avoid probate and increase
confidentiality.
• No tax implications in Panama if operating
abroad.
• Names of directors are registered, but names of
shareholders are not. However, new legislation
requires the Resident Agent to disclose
information on ultimate beneficiaries, upon
official request.
• Limited liability.
Private Interest Foundations
Created by law of 1995
Requirements:
Founder
Protector (optional)
3 Managers or 1 corporation of any nationality
Beneficiaries
Resident Agent
Annual Tax
Formation process:
Confirmation of name
availability
Registration in 2-3
days
References, passport
copy, Incorporation
Questionnaire and
Release Form (for
internal purposes
only)
Advantages
• Excellent estate planning tool.
• Property holding: avoid probate
• Assets are protected against liens or attachment, except for PIF debts and for fraud of creditors within 3 years of the transfer.
• Unlike trust, allows founder to be part of the management and beneficiary.
• Beneficiaries are appointed by notarized (not registered) document, which may be changed at the Founder’s will or with the Protector’s consent.
• However, new legislation will requires the Resident Agent to disclose information on ultimate beneficiary upon official request.
• Not a charitable foundation for tax purposes.
Bank accounts
• Generally banks all over the world open
accounts for Panamanian entities.
• There are just over 90 banks, both foreign and
local operating in Panama, within a fully
supervised Banking Center. (No paper banks)
• Regional Banking Center
• FATF compliant
• U.S. Currency
• No currency controls.
• No gold or bullion markets
• TIE Treaty: banks disclose information to local authorities on specific U.S. citizen accounts, upon request by IRS.
Bank accounts
• Your personal presence is necessary to start the account opening process.
• Timeline: 3 weeks to a month.
• Banks will require the following before opening
an account:
a) bank references, and attorney or accountant
reference,
b) proof of source of income, tax return and credit
report
c) copy of utility bill (as proof of address)
d) full copy of your passport
e) personal details and ownership disclosure (if
account is owned by Corporation)
f) local introduction / reference
Taxes
• The Panamanian taxation system does not
discriminate between Panamanians and
foreigners.
• The rules are the same: tax is paid only on
income generated in Panama.
• Interest on bank accounts is not considered
taxable income in Panama.
• NOTICE: Tax free in Panama, does not mean
tax free in your jurisdiction, please verify your
reporting requirements.
Conveyancing
• Foreign nationals may own property in
Panama, whether or not they are permanent
residents. Only exception: border with
neighbouring countries (10km).
• There are no longer restrictions for foreigners to own islands.
• Title searches are done prior to purchase.
• Ownership Title is registered at the centralized Public Registry.
• Rights of Possession are not title, nor are they advisable in many cases.
Conveyancing process
• First you sign a Promise to Purchase Agreement and the first down payment is given. Before signing you should have your attorney review title and negotiate the contract. Down payments will vary: 5-10% if buying from an individual and 20-30% if buying from a developer.
• The Seller receives the down payment directly (no escrow).
• Then, final price is escrowed with a bank and the title deed is prepared and registered. Title is not conveyed until the title deed is registered.
ALTERNATIVE: Sale of shares if property is owned by a corporation
• Moving to or investing in a new country may be as pleasant or difficult as the amount of faithful information and qualified assistance you have.
• This is an exciting adventure, but do not forget the due diligence you would carry out in your own country.
By Sharon Bailey-Bok
• Contact in Panama:
Rainelda Mata-Kelly
Tel. (+507) 216-9299
Fax (+507) 216-9298
www.mata-kelly.com
Office 406-407, Tower B,
Torres de las Americas
Punta Pacifica
Panama City, Panama