Panama Changes the Rules

I’ve written recently that it seems Europe’s residency rules are changing all the time…

Now, change is coming to the Western Hemisphere as well… In Panama, one of the most popular expat destinations.

Panama has long offered multiple pathways to permanent residency—the right to live in the country without time limits or the need to reapply periodically. But the rules governing one of the most popular visas are changing.

The Qualified Investor Visa (QIV) is Panama’s version of a “Golden Visa,” where you get residency by making an investment. Most European countries have removed real estate from the list of qualifying investments, but Panama still includes it. Since 2020, purchase of a property worth at least $300,000 has been a ticket to Panamanian residency.

That changed last month, when the government published a decree altering the requirements.

Five new rules will apply to new applications under the QIV:

1. Previously, any type of property qualified, as long as it was worth $300,000 or more. Going forward, the $300,000 limit will apply to newly-built properties only. Properties purchased on the secondary market will carry a minimum purchase price of $500,000 to qualify. No surprises here: Every country that has offered residency by real estate investment eventually realizes that it needs to protect its existing housing stock from visa hunters.
2. Panama’s National Land Administration Authority May require a QIV-qualifying property purchase to be assessed by an independent appraiser. This appears intended to combat money laundering—for example when a property is purchased at far above its market value, in order to transfer money to someone on the sly.
3. When deciding whether a property purchase qualifies for the QIV, the government will take the lower of the price actually paid or the appraised market value of the property, less any liens. Let’s say you pay $550,000 for an existing Panamanian condo. But a commercial appraisal says that the property is only worth $520,000. That’s fine if you pay cash. But let’s say you borrow $30,000 to add to your own money. The government will consider the total investment as $490,000, which won’t qualify for the QIV.
4. The government will also be paying much closer attention to the origins of funds used to purchase QIV eligible properties. Any funds received from third parties as donations, gifts, or other transfers won’t count toward the required minimum investment.
5. For those pursuing a QIV using fixed-term deposits at Panamanian banks, the minimum deposit for private banks will now be $750,000. If an applicant makes a fixed deposit at the National Bank of Panama, on the other hand, the amount remains $500,000. For those qualifying by investing in Panamanian securities, the amount remains at $500,000. The requirement to maintain the investment or deposit for a minimum of five years is unchanged.

This is the same pattern we’ve seen in Mediterranean Europe over the last few years:

1. The government launches a visa category based on property investment, which proves popular.
2. The government soon realizes that this has unwanted side effects on domestic property markets… and in any case, the demand for visas is such that it can easily raise the price without losing any customers.
3. The government then tweaks the policy to do more than just bring in investment money. It starts directing that money to the creation of new housing stock and toward financial institutions, especially government banks.

Many foreigners, of course, get residency in Panama using its popular Pensionado visa rather than property investment. But Pensionado status isn’t permanent residency; it needs to be renewed regularly. By contrast, the qualified investor visa grants immediate permanent residency (although the permanent part only kicks in once you’ve held the investment for five years).

But that’s not the end of the story by any means. In an upcoming article for International Living, I’ll explain how Americans, Canadians, and citizens of several dozen other countries can get Panamanian permanent residency through a different route that has several distinct advantages over the QIV. Stay tuned.

Of course, if you are interested in Panamanian residency, or residency anywhere else, you can book a consultation with me—I’ll be happy to help.