Company Formation in Panama Offers Strategic Advantages for International Investors
Company formation in Panama gives you one dollar-based company to hold shares, property and other assets across borders. Many investors do not plan to run a business in Panama. They want to own assets through it.
Two changes in 2026 matter to you. In October, the EU removed Panama from Annex I of its list of non-cooperative tax jurisdictions. In September, Panama set new investment amounts for its Qualified Investor residence program.
Some rules are also stricter. From the 2027 fiscal year, certain Panama companies in multinational groups must meet economic substance requirements to keep their foreign passive income untaxed. You need to know whether that applies to you before you set up.
Why investors choose company formation in Panama
Investors choose Panama for three reasons: how it taxes foreign income, how it treats foreign owners and how it handles money.
Know how Panama taxes your income and dividends
Panama generally taxes only income from Panamanian sources. The standard corporate tax rate is 25% of net taxable income. If your Panama holding company earns income from investments abroad, that income is generally outside Panama’s tax.
Dividends work differently. Your dividend tax depends on where the profits came from and whether your company falls under Panama’s dividend withholding rules.
Where those rules apply, the company generally withholds 10% on Panama-source profits and 5% on foreign-source or export profits. Do not assume foreign-source dividends are automatically tax-free. Check how the rules apply to your company before you pay yourself.
Use tax treaties and the US dollar
Panama has double taxation treaties with countries including Spain, Mexico, the United Kingdom, the United Arab Emirates, Singapore and the Netherlands. Your company only gets treaty benefits if it is a genuine Panama tax resident.
Panama uses the US dollar alongside its own balboa. If your assets are priced in dollars, you can cut currency conversion costs. Your home country can still require you to report in your own currency.
Own 100% without living in Panama
You can own 100% of most Panama companies. You do not need to live in Panama, and you do not need a local partner.
Panama’s constitution treats nationals and foreigners as equal before the law. Some regulated activities still have their own rules, so check yours before you set up.
Panama’s standing with regulators has also improved. Panama left the FATF grey list on October 27, 2023. On October 9, 2026, the EU moved it to Annex II, its watch list.
Panama stays on Annex II until an OECD Global Forum review confirms it shares tax information properly. Expect your bank to ask detailed questions about your structure until then.
Pick the right structure for company formation in Panama
Your choice depends on what you hold and who will inherit it. Most investors choose between two legal structures:
| Structure | Best for | Annual government fee |
|---|---|---|
| Corporation (sociedad anónima) | Holding shares, property or a trading business | US$300 |
| Private interest foundation | Family wealth and succession planning | US$400 |
The government fee is only part of your yearly cost. You also pay for a resident agent, a registered address and bookkeeping.
Hold your assets in one corporation
The corporation is the standard choice for investors. One corporation can own your shares in foreign companies, Panama real estate, bank accounts and investment portfolios.
Shares in the corporation can change hands without re-registering each asset. If you sell a property-holding company, you transfer its shares, not the title to each property. Panama still taxes gains on Panama-source assets, so the sale is not tax-free.
Specialists in company formation in Panama can set up your corporation, appoint the resident agent and prepare your bank file before the first asset moves in.
Plan succession with a private interest foundation
A private interest foundation, created under Law 25 of 1995, has no shareholders. The foundation holds assets for beneficiaries named in its rules, often family members.
You can use a foundation to plan succession outside a will. A common setup places a Panama corporation under the foundation. The foundation owns the company, and the company owns the assets.
A foundation is a planning tool, not a tax shield. Your home country’s rules on trusts, foundations and inheritance still apply to you and your beneficiaries.
Qualify for Panama residence through investment
Residence is an immigration status, not a company structure. Many investors still combine the two. Executive Decree 17 of September 8, 2026, in force from September 16, 2026, sets these minimums for the Qualified Investor program:
| Qualifying investment | Minimum amount |
|---|---|
| New real estate, first sale | US$300,000 |
| Resale real estate | US$500,000 |
| Securities | US$500,000 |
| Fixed-term deposit in a state-owned bank | US$500,000 |
| Fixed-term deposit in a private bank | US$750,000 |
You must keep the investment for at least five years. Bank deposits carry extra restrictions.
You can hold the qualifying real estate through a company, as long as you are its ultimate beneficial owner. The program offers permanent residence to applicants who meet the investment, document and immigration requirements and receive approval.
Meet your duties after company formation in Panama
A Panama company is cheap to keep, but you still have yearly duties. Missed filings now carry real penalties.
Pay the annual fee and file your records on time
Your corporation pays an annual fee, the Tasa Única, of US$300. If it was registered between January 1 and June 30, you pay by July 15. If it was registered between July 1 and December 31, you pay by January 15.
The tax authority’s Tasa Única guidance adds a US$50 surcharge for late payment. After three unpaid annual fees, the corporation is suspended. Reactivation costs a US$1,000 fine plus a US$25 registry charge, on top of the overdue fees.
You also have accounting duties. If your company operates outside Panama or only holds assets, you must deliver the previous year’s accounting records to your resident agent by April 30.
A holding company can file a simpler report. The report must still show the company’s assets, liabilities and income, with the supporting information needed to prove their value. Inactive companies file a separate declaration.
Your resident agent records your company’s beneficial owners in a private government registry. Anyone who owns or controls 25% or more generally counts. A person who controls the company in other ways counts too, whatever their share.
Check whether the 2027 substance rules apply to you
Law 526 of 2026 applies from the 2027 fiscal year. The law covers Panama companies in multinational groups that earn foreign passive income, such as dividends, interest and capital gains. A standalone investment company outside a group is not automatically covered.
A covered company must show adequate staff and premises in Panama, local decision-making and real operating costs. Holding real assets alone does not meet that test. Qualifying holding companies face lighter requirements, but only if they meet the law’s conditions.
Take a hypothetical example. Your holding company is part of a family group, so the law covers it. The company earns US$400,000 of net taxable foreign dividends in 2027 and fails the substance test. With no exemption or credit, the Panama tax is US$60,000 at 15%.
Report the company in your home country
Panama decides what Panama taxes. Your home country decides what you owe at home.
Canada, the US, the UK and many other countries tax residents on some or all of the income of foreign companies they control. If you manage the company from home, your tax authority can also treat it as resident there.
A Panama company works when it holds real assets, has a clear purpose and is reported properly at home. Using it to hide income creates serious tax, reporting and enforcement risks.
Plan company formation in Panama around your assets
Start with your assets, not the company. Before you form anything, answer four questions:
- What will the company hold, and where are those assets?
- Who will receive the income, and where do they pay tax?
- Who will inherit the assets, and does a foundation help?
- Do you want Panama residence, and does your investment qualify?
Your answers decide whether you need a corporation, a foundation, both or neither. They also shape your bank application, because banks ask about your source of funds and the purpose of the structure from day one.
One decision touches company law, tax, banking and residence together. You save time by working with one adviser who coordinates all four. Company Formation in Panama, a project by Bestax Accountants, handles incorporation, resident agent coordination, bank account preparation and ongoing records.
Set up for clear, documented holdings, a Panama company gives you a dollar-based option for holding assets across borders.
