Working in Panama as a Foreigner
Panama is one of the world's top jurisdictions for digital nomads and online entrepreneurs — but working for Panamanian employers comes with important restrictions. Here's what you need to know.
The key advantage: Territorial Tax System
Under Panama's territorial tax system, income from remote work or online businesses with clients outside Panama is not taxed in Panama. This makes Panama one of the world's most favorable jurisdictions for digital professionals and online entrepreneurs.
What Your Visa Allows
Pensionado Visa
No local workThe Pensionado visa prohibits working in Panama. You cannot sell products or services on Panamanian soil under this visa. Remote work for foreign employers or clients is fine — income earned abroad is not taxed and not restricted.
Friendly Nations Visa
Work permittedIncludes a work permit. More flexible for formal employment at Panamanian companies. Also leads to citizenship eligibility after 5 years. The recommended visa for those who want to work locally.
Digital Nomad Visa
Remote work onlyDesigned for remote workers with foreign income. Allows legal residence while working for foreign employers or clients. Income earned abroad is not taxed. Does not permit local employment or selling services to Panamanian clients.
Qualified Investor Visa
Work permittedAllows living, working, and studying in Panama. Designed for investors making a qualifying investment. Work permit is included with permanent residency.
Key Employment Restrictions
Foreign-worker quota
Without special authorization, companies may have only 10% foreign employees on their payroll.
Protected professions
Law, medicine, accounting, engineering, and others are largely reserved for Panamanian nationals or require local validation.
Minimum wage
~$2.40/hour for unskilled labor. Specialized skills command significantly higher salaries.
Working without permits
Working without the appropriate visa or permit can jeopardize both your income and your residency status.
Remote Work & Online Businesses
Panama is particularly attractive for digital professionals because the territorial tax system applies clearly to remote income:
Remote Employee
If your employer is a foreign company and you work remotely, your income is not taxed in Panama. You remain taxable in your home country depending on your citizenship (US citizens are taxed globally; most others are not).
Online Business Owner
If your business earns income from foreign clients, Panama imposes no income tax on those earnings. One of the world's most favorable jurisdictions for e-commerce, SaaS, consulting, and service businesses with an international client base.
Freelancer / Contractor
Freelancers with foreign clients benefit from the same zero-tax treatment on foreign-sourced income. Setting up a Panamanian company (S.A. or SRL) is common for asset protection and banking purposes.
Important Note
US citizens and Green Card holders must still file US taxes on worldwide income regardless of where they live. The Foreign Earned Income Exclusion (FEIE) and Foreign Tax Credit may apply. Consult a US expat tax specialist.
Starting a Business in Panama
Foreigners can own 100% of a Panamanian company. The most common structures are:
Sociedad Anónima (S.A.)
The equivalent of a corporation. Flexible, common for holding assets and operating businesses. Shareholders can be anonymous.
Sociedad de Responsabilidad Limitada (SRL)
Similar to an LLC. More transparent ownership structure. Less common than S.A. but gaining popularity.
Sole proprietor (empresa individual)
Simplest structure but personal liability exposure. Less common among expats.
Want to work remotely from Panama?
See the Digital Nomad visa — designed exactly for this situation.
Digital Nomad visa →