Michelle Hammond: So I think Panama is a really attractive and popular destination for investors, entrepreneurs and expats, and I think that's a combination of many things. Panama is affordable. There's a very high quality of life. It has a very pro-business atmosphere. It has a very favorable tax environment, and it's also very modern and diverse. I also think the location of Panama is very important because it's very strategically located. It has access to the Pacific and Atlantic Ocean. It has an international airport. So ease of travel is an important factor too.

Salman Siddiqui: Welcome to the Investment Immigration Podcast by UGlobal.com with weekly in-depth interviews with the world's leading investment immigration professionals. Welcome to the Investment Immigration Podcast, everyone. Today we are going to talk about Panama Residency by Investment Program, which is said to be among the most liberal in the Western Hemisphere, with options for everyone from retirees to high wealth individuals to those from friendly nations. In this episode, we will talk about this program and also how one could gain a path to citizenship after living for five years in the country. To help us unpack the program, we have today with us Michelle Hammond, who is the vice president at Offshore Circle. Offshore Circle advises its clients on offshore strategies, including citizenship and residency by investment programs in Panama and other programs around the world, as well as wealth and asset protection strategies. Welcome to the show, Michelle.

Michelle Hammond: Thank you so much for having me.

Salman Siddiqui: So, Michelle, a lot of people don't know about Panama visa programs, so if you could just share with our listeners what options they have and especially if they're seeking long term residency visas there.

Michelle Hammond: Sure. So Panama is actually - they offer a lot of different residency programs. And I think this is because Panama is one of the fastest growing economies in Latin America and they are really looking to attract foreign investments. So they offer a variety of different programs and each one can offer certain benefits to either investors, entrepreneurs, expats and other business professionals. So when you're looking at the residency visas, there's probably more than a dozen. But I just want to touch base on just a few of the most popular. So the Friendly Nations visa, I think is the most well known visa, and it probably was the most popular visa in Panama up to 2021 when they implemented some changes. And they implemented those changes because I feel that the residency visa before really just showed paper ties to Panama and they implemented those changes to move it to a more traditional residency by investment program just to realign with the values of residency programs that promote that economic development within the economy. So under this new visa, they changed it from gaining permanent residency from six months to three years. So under the new changes, you can obtain provisional residency for a two year period and then you need to resubmit your application in order to obtain that permanent residency status. And under this visa you have a couple of different options to invest. So the first option is to invest into real estate, which you have to invest a minimum of $200,000 and you do have to maintain that for a period of three years. The second option is to invest into a fixed deposit same investment threshold. You have to invest $200,000 for a minimum of three years in a Panamanian bank account. Now, the third option is actually more affordable. You can just get a work sponsorship from a Panamanian company. So we do see a few of those just because it is a more affordable option. However, it's not as easy to find a job in Panama at the moment.

Salman Siddiqui: Thank you for sharing all of that. And just for our listeners, I also want to mention that there are so many other visa categories that you also refer to. Like for example, there's the reforestation visa, there's the self economic solvency visa, the business investor visa and so many more. There's something for the people who rely on their pensions, right? The retiree visa. There's a private annuity and there's also one called qualified investor immigration visa.

Michelle Hammond: Yeah, the qualified investor visa has actually become one of our most popular visas. And I believe for a number of different reasons. I think the first reason is the investment is actually quite comparable to the Friendly Nations visa. So right now the minimum investment required is $300,000 in real estate, and you can also obtain permanent residency within one month. So that makes it one of the fastest residency programs in the world.

Salman Siddiqui: And that's what I want to also understand from you is why should a foreign investor or entrepreneur consider Panama? What do you say to them?

Michelle Hammond: So I think Panama is a really attractive and popular destination for investors, entrepreneurs and expats, and I think that's a combination of many things. So Panama is affordable. There's a very high quality of life. It's very welcoming to expats because it has a very pro-business atmosphere. It has a very favorable tax environment and it's also very modern and diverse. I also think the location of Panama is very important because it's very strategically located. It has access to the Pacific and Atlantic Oceans. It has an international airport. So ease of travel is an important factor, too. So I think a combination of all of this makes Panama very attractive and popular.

Salman Siddiqui: But what kind of investors usually come to Panama? Is it mostly people from non-US countries, or do you see people from even the US coming to Panama? I mean, what kind of advantages different groups have there?

Michelle Hammond: Yeah. So our firm actually predominantly works with the North American market. So we typically only serve US and Canadian clients, but we have seen an increase coming from Australia, Europe, Latin America. And I think that has to do with what happened during the pandemic. I think a lot of people started realizing, okay, I need a plan B, there's so much uncertainty in the world. So we did see an increase from other countries during that time, but we've always had a steady flow from the US. And I think just because there are strong ties with the US from Panama.

Salman Siddiqui: So somebody who is coming from, say, Australia or say, China - do they come to Panama to set up base in Panama, or is it like they are looking to expand in the whole North American region and then they are looking for a way to get there? What kind of options are they looking for themselves?

Michelle Hammond: So we have different clientele. The first one is people who are actually looking to relocate for a number of different reasons; affordability, tax reasons is probably one of the most important reasons why we see people move to Panama, especially from jurisdictions that are heavily taxed. So Canada, Australia… they want to move their residency and their tax residency to Panama, which has a more favorable environment. And then we see clients who are setting up just a plan B, so US clients, they don't necessarily want to relocate, but they want to have that residency in place if need be. And then our third group of clients are just looking for investments. So a lot of Chinese and Indian clients, they're looking just to set up the investments in Panama without having to relocate.

Salman Siddiqui: Thank you for sharing all of that. And you mentioned about the impact of the pandemic on Panama's program. I want to talk a little bit more on that and especially about your own experience during that time. Was it, I mean, good for business for you, or was it a hard time for you? Because I've been talking to a lot of people from different parts of the world about specifically on this point. And I've got some mixed reviews about that.

Michelle Hammond: So it was actually really tough. We were in a bit of a harsh lockdown for the majority of the year in 2020. There were really strict measures in place and it obviously impacted the economy. I don't think Panama would be able to sustain their economy if they prolonged the lockdown. But after that, we did see an increase of people looking to move the investments to Panama, looking to relocate to Panama. So I think 20, 22 and 2023, we were able to pick up the pieces from the pandemic.

Salman Siddiqui: So you're saying now everything is back to normal, business is as usual?

Michelle Hammond: Yeah.

Salman Siddiqui: Okay. That's good to hear. So moving on, let's now also talk about -you mentioned the Friendly Nations visa. Now, a lot of people don't really understand the Friendly Nations visa. What does that mean? If you could elaborate a little bit on that and if you could talk about more advantages of that visa.

Michelle Hammond: Yeah. So it is a residency by investment program. It's open to nationals from 50 countries. So that includes the US, Canada, South Africa, Australia and most countries in Europe. So you do have to be from one of those 50 countries to qualify and you just have to make one of the qualifying investments from those three choices that I spoke about before. Submit your application to immigration and you can obtain provisional residency, which eventually leads to permanent residency and eventually citizenship after that. So there's a lot of benefits. The first one is that you are obtaining that residency, which can be a great Plan B or insurance policy for yourself or your family. The second benefit is having the ability to actually live in Panama so you can live, work and study. And yeah, it's a pretty affordable residency program compared to others, and I think it offers a lot of great benefits in terms of business tax advantages and just quality of life.

Salman Siddiqui: Okay, great. And under this visa category, is it just people can buy real estate or they can operate in a business like or is it just limited to real estate?

Michelle Hammond: So it's real estate or a fixed deposit into a Panamanian bank account for $200,000. What a lot of our clients do because we do focus on servicing entrepreneurs and investors, is they set up a corporation in Panama and they sponsor themselves through that corporation. That way they can fulfill that qualifying investment option.

Salman Siddiqui: Right, okay. Let's talk about the process of buying property in Panama for long term residency. I mean, what's the red tape involved, the time it takes to gain residency? Our listeners would love to know about the criteria, minimum thresholds and all that.

Michelle Hammond: Yeah. So buying real estate in Panama is actually quite a simple process and very similar to other countries for a simple transaction. It only takes 1 to 3 months from when you sign the purchase agreement to actually registering the title deed in the public registry. There is no restrictions for foreigners, so the process is the same for locals and foreigners. The only exceptions, I would say, is that foreigners can't buy land in like military zones or reservations for Indigenous people. And the other exception is the down payments. So for locals it's around 10%. And for foreigners we do see it up to 30%. So that's a good thing to keep in mind. Other than that, it's a pretty simple process. You can register it within three months in the public registry. The only thing I would keep in mind with Panama specifically is there are a lot of properties that have rights of possession, and that's essentially when the land is legally owned, but there's no title deed. So Panama does actually allow for this because they can consider private documents as sufficient proof. But these types of properties are not good for the residency programs because you do need to have that title deed to qualify for the residency programs.

Salman Siddiqui: And how can one avoid that? Foreign investors wouldn't know about this. So how do they ensure that they don't fall into this sort of trap?

Michelle Hammond: So it's really important that you work with a knowledgeable agent. And when you're proceeding with the contract, we highly recommend working with a licensed attorney in real estate. So they will do the due diligence for you. They will look for the title searches, they will look for any liens or issues that could affect that sale.

Salman Siddiqui: Right. And is there a government approved list of agents who can help them with that? Is it available on some site? I mean, how do they go about this and is it available in English? I mean, or is it just in Spanish?

Michelle Hammond: There is a list of licensed attorneys. So if you would like to hire an attorney, there is a list of attorneys available and yeah, you can find it in English.

Salman Siddiqui: Okay, Great to hear that. And now let's also talk about the other options. Apart from real estate. For example, suppose an American business person, I mean, assuming American - could be Australian as well - wants to open a local branch of their business in Panama, how do they go about that?

Michelle Hammond: So there's different ways to open a business in Panama. You could definitely go the route in opening a new corporation, a new business, or if you prefer to proceed with a branch, you can also do that when you do proceed with the branch. It's basically just an extension of the headquarters just in a different location. So when you're registering a branch, it has to meet certain criteria. It has to have the same name as the headquarters, it has to have the same legal structure. So if the headquarters is, let's say, an LLC, you need to incorporate the branch as an LLC as well. And it also has to have the same business operations as the headquarter. And basically what you have to do is, the first step is compile all the required documents that can be the articles of incorporation, the bylaws, financial statements, the minute from the board of directors authorizing the company to register in Panama, as well as designating a legal representative. The second step is to find a registered agent. So this has to be a Panamanian attorney or a law firm. And once you find that, all you do is submit your paperwork to the registered agent and then they'll take it from there. So they will do all the due diligence on the headquarters or the due diligence on the members of the company. And then they'll prepare a deed to transcribe that act and file it in the public registry.

Salman Siddiqui: Right. And what do your clients mostly do? I'm just curious to know, do they open a local affiliate of their business? Do they start a new business in terms of setting up a new shop in the country? What is the usual trend there?

Michelle Hammond: Yeah, so I feel for the most part, small businesses will just open a new operation. So a new IBC or an LLC and determining depending on what the business operations are, they'll just proceed with one of those options for larger companies. They'll either open up a branch or one of the special regimes in Panama, which is like the multinational companies, or setting up a corporation in the colon free zone or Panama Pacifico.

Salman Siddiqui: All right. And if a foreign investor wants to invest in a commercial property, say, hotels, is that also an option for them?

Michelle Hammond: Yeah, absolutely. So Panama really does do a lot in terms of attracting foreign investment. They don't restrict you in that sense. So you can proceed with residential or commercial properties such as hotels.

Salman Siddiqui: Right. And are you seeing that, like, are people going for commercial properties more? What have you observed over the years?

Michelle Hammond: For us specifically, we typically deal mostly with residential properties, so we work a lot with clients looking to relocate to the to Panama. So they'll be buying properties for themselves to reside in. And then we also work a lot with clients who are looking for investment properties.

Salman Siddiqui: I see. Okay. Then in residential properties, do you see people moving with their families there or do they just buy property, rent it out and keep it as a safe investment option for them?

Michelle Hammond: I would say half and half. So when you're looking at retirees from the US, they're looking to relocate. Also, when you're looking at entrepreneurs, they're looking to relocate their families. Panama has a lot of great private schools here, affordable housing and medical. So we do see a lot of families relocating. And for the other half, yeah, they're looking for investment properties, so they'll purchase apartments in with developments that offer a high return, such as the Trump or the Santa Maria Golf Club.

Salman Siddiqui: I see. Okay. And for people who are coming from outside the US, what trends have you observed, say, pre pandemic and post pandemic? Are you seeing more clients from, say, for example, China or Australia over the years, or has that trend changed in any way?

Michelle Hammond: Yeah, we've definitely seen a huge increase from Australia and Europe, I think partly because of the pandemic, but also because of tax reasons.

Salman Siddiqui: So let's talk about the tax advantages that Panama offers. How big of an advantage is Panama offering? I mean, compared to so many other jurisdictions.

Michelle Hammond: Panama is a territorial tax system, so they do not tax on global income. They will only tax on income that is sourced within Panama, within the borders. So when you're looking at companies, even if you set up a Panamanian IBC, if your operations are elsewhere and your income is sourced elsewhere, you're not taxed on that. And when you're looking at like digital nomads or other individuals looking to relocate to Panama but have their income coming from outside, they're not going to be taxed on that either. And also, when you're looking at companies like I mentioned, the special regimes, there are a lot of tax incentives. So if you set your company up in one of those locations, you can really benefit from tax exemptions and tax reductions.

Salman Siddiqui: Right. And there's also options for environmentally conscious investors. If you could talk also a little bit about the Panama reforestation visa. I read that you needed just about $100,000 in a government certified reforestation project and you could put your money there and you also get your residency permit. Is that option still available there?

Michelle Hammond: Yeah, absolutely. So it's been around for a long time, but we've actually only seen an increase in the leads for that recently, in the past year or two. So like you mentioned, you do have to invest in an approved forestry project. I think it's increasing the potential of investing in like an eco friendly and sustainable investment, which I think is great. So there's two options under the reforestation visa. The first option is to invest $100,000 in one of the projects and you can obtain permanent residency in a three year period. And the second option is to invest $350,000 into one of the approved projects and obtain residency within 2 to 6 months. So it is a lot faster.

Salman Siddiqui: Right. And from which countries are you seeing more interest in this sort of visa?

Michelle Hammond: So for this visa it is open to all nationalities and it is more affordable compared to the other visas that are open to other nationalities. So we are looking at clients from China, India, mostly those countries.

Salman Siddiqui: I see. Okay. That's interesting. But do you have those sort of conversations with investors who are - they have concern for where their money is going into or where it helps the environment or is eco friendly? Are those conversations now happening?

Michelle Hammond: Yeah, absolutely. I think for the most part, they want to invest in an eco friendly investment. And then the second part is they want to see that stable return on investment. So when you're looking at the reforestation projects, especially like when it comes to teak or timber, it's a long term investment. Typically the trees are only harvested after like a 25 year period. So it is a very long investment which investors need to keep in mind, but they do typically see it as a very eco friendly, sustainable and long term investment.

Salman Siddiqui: Right. And I always feel that the investors, if they know about such an option, they would go for it. But most of the time in many countries, that option is just not on the table. So they just don't - they can't do that. So it's good that Panama has that. And thanks for sharing that. Now let's also talk about the other category that Panama offers. It's the business investor visa. If you could talk a little bit about that, how it differs from the other categories and should entrepreneurs only go for this option?

Michelle Hammond: There's different types of visas. So the residency by investment visas, you're looking at the friendly nations visa, the qualified investor visa, reforestation, visa, self economic, and the only visa in that category that offers you the opportunity to get long term residency is through the friendly nations visa, where you can incorporate a business and sponsor yourself. But then you can look at the special regimes category where you can set up a business and offer foreign staff different types of special visas, which can lead to long term residency but in a longer period of time. So these special visas can range from 3 to 5 years and they have to be sponsored by that company that you incorporate in that special regime zone, right? So I think there is a clear distinction between that.

Salman Siddiqui: Right. And so the foreign business owners can bring foreign staff to the country and operate from there.

Michelle Hammond: Yeah, absolutely. So I think there's a few things that people need to keep in mind before bringing their staff to Panama. So the first thing to keep in mind is that Panama does place measures to protect their people, so they start in occupations that are restricted. So you're looking at professionals that require a license. So in the medical field or attorneys engineers, that's restricted in Panama. That doesn't mean that you can't bring an engineer to Panama. They just won't be able to sign off legally as an engineer. But they can work in like, let's say, a consultancy capacity. The second thing to keep in mind when bringing foreign staff to Panama is that there is a 10 to 15% rule. So only 10% of your company's workforce can be foreign staff if they ordinary personnel and 15% if they specialize. But again, with the special regimes you can incorporate in one of those zones and offer your foreign staff a special type of visa, because these zones offer more flexibility in terms of immigration and labor laws.

Salman Siddiqui: I see. That's an important point. Thanks for sharing that. Let's move on to another topic, and that's about digital nomads. And firstly, are they coming to Panama and what residency options are available to them there?

Michelle Hammond: Yeah. So the Digital Nomad Visa was also recently introduced, I think in 2020. One. So it's only been around for a little while. This type of visa is not a resident visa, so it doesn't lead to permanent residency or citizenship. It's granted for nine months and you can actually renew it for an additional nine months. So 18 months in total. So it is very short term. And in order to qualify for this visa, you do have to make a minimum income of $36,000 per year from a foreign company. And you do have to show proof of that.

Salman Siddiqui: So you're saying that anybody who comes as a digital nomad and starts to like the country a lot and starts to build a life there and decides to stay there, they'll have to change their visa then.

Michelle Hammond: Yeah, absolutely.

Salman Siddiqui: All right. And let's talk about the path towards citizenship. Is that possible then, for just certain categories of visas after you get your permanent residency?

Michelle Hammond: No, actually, all visas that lead to permanent residency can qualify for naturalization after maintaining that permanent residency status for five years. But the path to citizenship is not as easy as most people would say. So in order to do that, you do have to firstly maintain that residency for five years. You have to pass a test conducted in Spanish about Panama's politics history, and you also have to go for an interview at the tribunal electoral. Once you pass all of that, your file gets sent to the president and they give the final approval. So you're looking at a process of 2 to 5 years, which is a fairly long time.

Salman Siddiqui: Yes. And that's a lot of time and effort for a lot of people, especially in terms of language. So, I mean, I'm imagining somebody coming from Australia or say, from Beijing and then they have to give the Spanish language test as well. I mean, but some people do have that drive and commitment to do if they really want it. But is that a big advantage for investors that they're looking for citizenship or is just with permanent residency, they can get basically all the benefits. What do you recommend to your clients?

Michelle Hammond: It depends what their priorities are. When you're looking at clients from the US and Canada, they're not typically looking for a citizenship. And if they are looking for citizenship, they're going to go to the Caribbean because it's cheaper and faster. When you're looking at clients, maybe such as myself, I moved to Panama about five years ago and I'm from South Africa. I couldn't afford to go to the Caribbean and buy a passport for $100,000. So I am myself going through the naturalization process next year because I do qualify. I'm more dedicated to spending that time in order to qualify for that citizenship.

Salman Siddiqui: Right. And I mean, for people who are listening and they're terrified of the language test that they have to pass, is it a very difficult one? Do they have to be fluent to a native level? Is that how it is?

Michelle Hammond: You do have to have at least basic and conversational Spanish, but there is a study guide. So if you just study the guide, you should be able to pass without any problems.

Salman Siddiqui: I see. Okay, so we are coming now towards the end of our show. And Michelle, if there's something that you would like to share with the listeners specifically about the Panama program, about where they should be looking into and why do you recommend to them, you've got 30 seconds for that.

Michelle Hammond: Okay. I think Latin America in general is a really safe option right now. I think the residency programs are super popular and they pretty are easy to qualify for and I think they're very comparable to other residency programs in the world. And I think Panama in itself is such an attractive and popular destination that it fits or ticks the boxes for most investors and entrepreneurs and other expats.

Salman Siddiqui: Thank you so much, Michelle, for sharing all of those details about Panama's program. I'm sure a lot of people are closely watching that space and they're looking into that option. Really appreciate you taking this time. Yeah, I just wanted in the end to give a shout out to our listeners and please keep listening to our show. There will be more episodes from all around the world. So stay tuned. And thank you.

Salman Siddiqui: You've been listening to the Investment Immigration podcast by UGlobal.com. Join us again soon for more in depth conversations exploring investment immigration opportunities from around the world.

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