Panama Company Formation for Digital Nomads: Is It the Right Choice?

In recent years, Panama has quietly become one of the most attractive destinations for digital nomads and entrepreneurs seeking an international base for their operations. Its tax-neutral environment, efficient company setup process, and flexible legal framework make it a preferred choice for freelancers, remote workers, and global founders.

But is incorporating a company in Panama truly the right choice for digital nomads? Let’s examine the facts, requirements, and advantages of Panama’s corporate system in 2025.

Why Panama Appeals to Digital Nomads

Panama follows a territorial tax system, meaning that only income derived from activities within Panama is taxed. Foreign-source income is completely exempt from Panama’s corporate tax, which is particularly beneficial for international service providers and digital businesses.

(Official source: Panama Ministry of Economy and Finance – DGI)

Other advantages include:

• Stable political and financial environment

• US-dollar-based economy

• Strong legal protection for investors

• High-speed digital infrastructure

• Special visa options for remote workers

Legal Structure: Panama Corporation (Sociedad Anónima)

Most entrepreneurs incorporate a Panama Corporation (S.A.) under Law 32 of 1927, one of the world’s most respected corporate laws. Y

Official Reference: General Corporation Law of Panama – Law 32 of 1927 (PDF).

Key features

• Minimum three directors/officers (any nationality, individuals or entities)

• Directors’ names and addresses are publicly filed with the Panama Public Registry (shareholders remain private)

• Incorporation must be carried out through a licensed resident agent in Panama

• No minimum paid-up capital required

• Shareholder and board meetings may be held anywhere in the world, as allowed by company bylaws

Accounting & Compliance Obligations

All Panama entities must maintain accounting records and supporting documentation for at least five years and provide them to their resident agent on request, as required by Law 52 of 2016, amended by Law 254 of 2021.

Each corporation must also pay an annual government franchise tax (Tasa Única) of USD 300 to remain in good standing. Details are published on the DGI official portal. Failure to pay may result in late-fee penalties or temporary suspension of corporate rights.

Bearer shares, if issued, must be immobilized with an authorized custodian under Law 47 of 2013, ensuring transparency while preserving shareholder confidentiality.

Taxation in Panama

Panama’s territorial tax model provides clear, predictable rules:

• Foreign-source income → exempt from Panama tax

• Panama-source income → taxed at 25 %

• Dividends from Panama-source profits → 10 % withholding tax

• Dividends from foreign/exempt profits → 5 % withholding tax

This framework allows global entrepreneurs to manage international operations efficiently while complying with international standards such as OECD BEPS 2.0 and CRS.

Banking and Financial Considerations

Panama’s banking sector is modern and internationally connected but operates under strict KYC, AML, CRS, and FATCA regulations.

Foreign or non-resident entities must submit:

• Beneficial-owner identification documents

• Proof of business activity and contracts

• Source-of-funds documentation

Corporate bank accounts are opened directly through Panamanian banks following their own due-diligence procedures, usually in coordination with the company’s licensed resident agent.

Remote-Worker (Digital Nomad) Visa

Under Executive Decree 198 of 2021, Panama introduced a Short-Stay Remote-Worker Visa, allowing foreign professionals to live in Panama while working remotely for overseas employers. Official details are available on the Panama National Immigration Service website.

Main requirements

• Valid foreign employment or ownership of a foreign-based company

• Minimum annual foreign income of USD 36 000

• Valid health-insurance coverage

• Visa valid for 9 months, renewable once for another 9 months

This visa offers digital nomads the ability to enjoy Panama’s infrastructure and quality of life without becoming tax-resident on their foreign income.

Incorporation Timeline & Process

Setting up a corporation in Panama is fast and straightforward, typically completed within about five business days, depending on document readiness and registry workload.

Main steps

1. Choose company name and structure

2. Draft and notarize the Articles of Incorporation (pacto social)

3. Register with the Panama Public Registry

4. Appoint three directors and issue shares

5. Pay government fees and Tasa Única

6. Obtain official certificates and corporate documents

Why Panama Remains a Strategic Base for Global Entrepreneurs

For remote professionals and international founders, Panama combines:

• Tax neutrality on non-Panama income

• USD economy and strong banking system

• Predictable corporate law under Law 32 of 1927

• Efficient incorporation process

• Remote-worker visa program for global mobility

When properly structured and maintained with full compliance, a Panama company remains a legitimate, future-ready vehicle for international business growth.