Panama Tax on Foreign Pensions 2026: The Territorial System for Retirees

Does Panama tax foreign pensions and investment income?

Panama does not tax foreign pensions or foreign investment income, because its income tax reaches only income produced within Panamanian territory. Article 694 of the Código Fiscal, restored in its current form by Ley 1 of 2014, makes this the object of the tax: income from any source produced inside Panama, wherever it is received.

The official wording is short: "Es objeto de este impuesto la renta gravable que se produzca, de cualquier fuente, dentro del territorio de la República de Panamá sea cual fuere el lugar donde se perciba." The final clause matters for retirees. Bringing a foreign pension into a Panamanian bank account does not turn it into Panamanian income, because the test is where the income is produced, not where it lands. You can read the text in Ley 1 of 2014 as published by the Asamblea Nacional (Gaceta Oficial 27450-A).

The balboa (B/.) is at par with the US dollar, so the figures below read the same in dollars.

What is Panama's territorial tax system?

Panama's territorial tax system is a source rule: Panama taxes income because it is produced in Panama, not because the person who earns it lives there. A Panamanian citizen and a foreign retiree are treated the same way, so a resident with only foreign income generally has no Panamanian income tax to pay on it.

The article also defines the taxpayer as any natural or legal person, Panamanian or foreign, who receives taxable income. Its first paragraph lists what the law deems Panama-source, such as pay for work done in Panama and certain payments to people abroad for services that benefit someone in Panama. Its second paragraph lists what is deemed not Panama-source, such as directing from a Panamanian office transactions that take effect abroad.

Has the rule changed recently?

The territorial principle has held since Ley 1 of 2014, which repealed a short-lived 2013 amendment and restored article 694 as reformed by Ley 8 of 2010. A 2015 law, Ley 27, changed only the withholding paragraph on payments to non-residents. Our review of the laws published since then found no other change to article 694.

How are a retiree's pension, dividends, interest and gains treated?

A retiree's foreign pension, foreign dividends, foreign interest and gains on foreign assets are all outside Panamanian income tax under the territorial rule, because none of them is produced in Panama. Income with a Panamanian source, such as rent from a local property or interest paid by a Panamanian bank, is assessed under Panamanian rules.

The table reflects how the source rule applies to typical retirement income. The statute sets the principle rather than a list of pension types, so a mixed case, for example a pension for work partly done in Panama, deserves individual review.

What if you move your savings to a Panamanian bank?

Moving savings to a Panamanian bank changes where interest is produced: interest paid by a Panamanian bank is local income, while interest from your existing foreign accounts stays foreign. Before you move money, ask how the specific product is taxed in Panama and in your home country.

What is Panama tax residency and does the 183-day rule apply?

Panama tax residency applies to a person who stays in Panama for more than 183 days, consecutive or not, in a fiscal year or in the year immediately before, or who has established a permanent home in Panama. The test is set by article 762-N of the Código Fiscal, in the wording given by Ley 52 of 2012.

Under a territorial system, becoming a Panamanian tax resident does not bring your foreign pension into Panamanian tax, because the source rule applies to residents and non-residents alike. Tax residence matters for other reasons: it is the basis on which the Dirección General de Ingresos certifies residence for tax-treaty purposes, and it is often the fact your home country asks about when you leave.

Is a residence permit the same as tax residence?

A residence permit is not the same as tax residence. A Panama Pensionado visa or a Qualified Investor permit gives you the right to live in Panama, but Panamanian tax residence turns on days present or a permanent home under article 762-N. Holding a permit also does not end tax residence in the country you leave; that depends on that country's own rules.

Which Panamanian residence routes suit a retiree with foreign income?

The Panama Pensionado visa suits most retirees with foreign income, because it grants indefinite permanent residence on a lifetime pension of at least B/. 1,000 a month, or B/. 750 with Panamanian property bought for more than B/. 100,000, plus B/. 250 per dependant, according to the Servicio Nacional de Migración requirements sheet.

Retirees whose nationality is on Panama's list may compare the Friendly Nations visa, and investors who prefer a capital route can review the Qualified Investor visa, which grants permanent residence directly on first approval. Our Panama residency hub sets the routes side by side, and Italian nationals have a dedicated page on Panama residency for Italians. The tax rule is the same whichever route you hold.

For the full requirements of the main retirement route, see the Panama Pensionado visa page, and for the wider comparison read our guide to countries that don't tax foreign pensions and our best retirement residency programmes hub.

What do retirees still pay in Panama?

Retirees in Panama still pay income tax on any Panama-source income, at 0% on taxable income up to B/. 11,000, 15% on the part from B/. 11,000 to B/. 50,000, and B/. 5,850 plus 25% on the part above B/. 50,000, under article 700 of the Código Fiscal as set by Ley 8 of 2010.

A retiree living only on a foreign pension has no Panama-source income to declare under this scale. A retiree who lets a Panamanian flat or takes paid work locally does, and should plan for it.

How is property tax treated for retirees?

Property tax on a home is frozen for retirees under Ley 6 of 1987, the retiree benefits law, when the home is in the beneficiary's own name and is their only property, according to the consolidated text published in the Gaceta Oficial. The same law exempts that home from the valorisation levy.

The law covers residents above the qualifying age (55 for women, 60 for men) and all retirees and pensioners, but it does not set out which document a foreign Pensionado holder shows to claim the benefit, so confirm this before you rely on it. Our guide to Panama Pensionado benefits lists the full Ley 6 schedule. Property tax rates and other property costs depend on the property and are outside the scope of this guide.

Can your home country still tax your pension?

Your home country can still tax your pension, even when Panama charges nothing, because Panama's territorial rule limits only Panamanian tax. The country that pays the pension may keep the right to tax it under its own law or a tax treaty, and the country you leave decides for itself when your tax residence there ends.

Three questions are worth settling with a tax adviser in your home country before you move:

• Who may tax the pension? Depending on the tax treaty between the two countries, some pensions, for example a pension paid by a government for public service, may be taxable only in the paying country.
• When does your residence at home end? Days, a home, family ties or a registration may keep you resident at home whatever your Panamanian status.
• Do citizenship-based or exit rules apply? Some countries tax by citizenship or on departure, and those rules are unaffected by a move to Panama.

This article is general information, not tax advice. Mirabello Consultancy is an immigration advisory and works alongside licensed tax advisers in Panama and in your home country. Contact us for a complimentary consultation and we will help you frame these questions before you apply.

How do you plan a tax-aware move to Panama?

A tax-aware move to Panama starts with mapping each income stream by source, then confirming your exit position at home, and only then choosing the residence route and the timing of your move. Doing it in that order avoids paying tax twice or keeping a residence you thought you had left.

1. List your income by source. Separate foreign pension, foreign investments and any income you will earn in Panama.
2. Take home-country advice. Confirm how your pension is taxed after you leave, and what ends your tax residence.
3. Choose the residence route. Pensionado, Friendly Nations or Qualified Investor, according to your income, nationality and capital.
4. Plan local income. Rent or work in Panama is taxed locally, so structure it with a Panamanian adviser.
5. Keep records. Days in Panama and abroad, and where your home is, are the facts both countries will ask about.

For a first check in your own words, ask Mira, by Mirabello, the AI advisor of Mirabello Immigration Intelligence, which draws on the same verified data as this article. If you are comparing Panama with other regions, our golden visa hub sets out investor routes worldwide.