Panama Permanent Residence for Building a Base Outside the US

Why the client wanted a permanent base outside the US

Andrew had worked as an independent cloud infrastructure consultant for more than 10 years. Most of his clients were technology companies in the US, Canada, and Europe, and he could perform the majority of his work remotely.

His business had become increasingly international, but his personal structure had not. He still relied on the US as his only long-term base, held most of his assets there, and organised his travel around temporary stays abroad. Andrew wanted to change that without giving up his US citizenship or closing his American business.

He set 3 objectives:

1. Establish a permanent home and legal status outside the US.
2. Diversify part of his capital into property in another jurisdiction.
3. Review whether spending substantially more time abroad could legally reduce his US federal income tax through the Foreign Earned Income Exclusion, or FEIE.

Tax planning was one of the factors Andrew considered when comparing residence options, but no immigration status could automatically reduce his US taxes. Once Panama emerged as the preferred option, his advisers assessed the Panamanian residence, US tax position, and potential local tax obligations separately.

Comparison of residence options

Andrew initially considered several routes suited to remote professionals. Passportivity compared them not only by cost, but also by duration of status, residence requirements, investment structure, and how well each option fitted Andrew’s plan to create a permanent base rather than spend a year or two abroad.

Residence options Andrew compared

Option	What Andrew considered	Fit for his strategy
Portugal Digital Nomad residence	2-year temporary residence, renewable for 3-year periods, suitable for remote professionals planning to live in Portugal	More relocation-focused — Andrew did not want his strategy tied to long-term residence in the EU
Costa Rica Digital Nomad programme	1-year stay, renewable for another year, with specific benefits for remote workers	Good short-term option, but Andrew wanted permanent status rather than a temporary nomad arrangement
Panama Qualified Investor	Direct permanent residence through investment, property ownership, and no requirement to live in Panama continuously to maintain the status	⭐ Best fit — provided a permanent base and a tangible asset

Portugal’s tax-residence rules were also relevant to the comparison: an individual may become tax resident after spending more than 183 days there or by maintaining a home indicating an intention to occupy it as a habitual residence.

Costa Rica’s Digital Nomad programme, meanwhile, generally grants a 1-year stay with the possibility of one further year, which was too temporary for Andrew’s objective.

Panama gave Andrew something different: permanent residence from the outset through a qualifying investment. The Qualified Investor programme permits real estate investment as one of the routes to permanent status.

Why Panama permanent residence matched the client’s plans

Panama combined the immigration status Andrew wanted with the possibility of purchasing an apartment he could use as his own base.

1. Permanent residence through property investment

Andrew preferred property to securities or a fixed-term bank deposit because he wanted the qualifying investment to serve a practical purpose.

He selected a new 2-bedroom apartment in Costa del Este, Panama City, with an area of 96 m². The purchase price was $315,000.

When Andrew started the property purchase in 2024, the minimum real estate investment under the Qualified Investor programme was $300,000. This threshold was initially due to apply until October 15th, 2024, but Decree No. 193, adopted on that date, retained the $300,000 minimum. Andrew’s $315,000 apartment therefore met the requirement when his residence application was filed later that month.

The rules changed again in September 2026. Under the current framework, qualifying new first-sale properties require a minimum investment of $300,000, while secondary-market properties require $500,000. 

2. Long-term base outside the US

Andrew did not want a temporary digital nomad status that had to be replaced after one or two years. Panama granted him permanent residence. The status is indefinite, although the residence card itself requires periodic renewal. The qualifying investment must generally be maintained for the required programme period. 

The apartment also gave Andrew a fixed address between business trips. He continued working with American clients but started using Panama City as his regular base for travel across Latin America and Europe.

3. Residence became one part of US tax planning

Andrew retained his citizenship and therefore continued to file US tax returns. His residence card did not exempt him from American tax. Instead, his tax adviser assessed whether his new lifestyle could meet the separate requirements for the Foreign Earned Income Exclusion.

4. Why the 330-day rule mattered

Andrew travelled frequently, so the physical presence test fitted his situation better than building the strategy around residence in one foreign country for an entire tax year. The test requires physical presence in one or more foreign countries for at least 330 full days during a period of 12 consecutive months. The days do not have to be consecutive or spent in the same foreign country. During 2025, Andrew spent 334 full days outside the US.

His year included time in:

• Panama, where he maintained his apartment and regular base;
• Mexico and Colombia for client projects;
• Spain and Portugal for work and personal travel;
• US for several short visits totalling fewer than 31 days.

His US tax adviser also reviewed whether the facts supported a foreign tax home. The Panama residence card helped document the wider move abroad, but it was not sufficient on its own.

5. Panama’s territorial tax system required separate analysis

Panama generally applies a territorial principle: individuals are taxed on Panamanian-source income rather than automatically on worldwide income. This did not mean that all Andrew’s fees from foreign clients became tax-free simply because the clients were located outside Panama.

For professional services, where the activity is performed matters. Panama’s tax authority states that income from activities performed within Panamanian territory may be subject to income tax regardless of the recipient’s nationality or residence. 

Andrew’s tax adviser in Panama therefore separated his consulting income according to where the work was actually performed. Income from services carried out abroad could fall outside local income tax under the territorial principle, while work physically performed in the country required a separate assessment. This distinction became an important part of his travel and tax records.

6. Property diversified part of Andrew’s assets outside the US

Before the project, most of Andrew’s assets consisted of US brokerage investments, retirement accounts, and cash. The $315,000 Panama apartment added real estate in another jurisdiction.

Andrew did not purchase the property primarily for speculative returns. He intended to use it as a home base while satisfying the investment requirement for permanent residence.

After the mandatory investment-holding period, he could reassess whether to continue owning the apartment, replace the asset where programme rules permit, or change his investment strategy. Passportivity notes that qualifying investments are generally maintained for at least 5 years. 

7. Permanent residence did not require giving up US citizenship

Andrew had no plans to renounce his citizenship. The two statuses served different purposes: his US passport remained proof of nationality, while permanent residence in Panama gave him an indefinite right to reside in another country.

He also remained subject to US filing requirements. FEIE potentially reduces federal income tax on qualifying foreign earned income, but it does not end US tax residency or eliminate all US taxes.

For a self-employed consultant, this distinction was particularly important because FEIE does not automatically eliminate US self-employment tax.

How Passportivity coordinated the residence and tax strategy

Passportivity handled the immigration and property components of the project while keeping specialist tax advice separate.

The team first established what Andrew actually wanted the Panama status to achieve. Passportivity then:

• compared permanent and temporary residence options;
• conducted Preliminary Due Diligence;
• helped select the qualifying property route;
• coordinated property Legal Due Diligence;
• prepared the residence application;
• documented the source of funds used for the purchase;
• coordinated the timeline with Andrew’s US CPA and Panamanian tax adviser.

Passportivity did not promise a particular tax saving. 

Andrew’s accountants determined separately whether he met FEIE requirements, how much income qualified, and which part of his professional income required. 

Buying an apartment in Panama

Andrew wanted a property he could use himself rather than an investment unit chosen only to meet the programme threshold.

Property selection

Passportivity’s real estate specialists shortlisted apartments in Panama City with three priorities:

• purchase price comfortably above the qualifying threshold;
• completed or near-completed building;
• convenient location for Andrew’s day-to-day life and business travel.

Andrew selected a 96 m², 2-bedroom apartment in Costa del Este for $315,000.

Legal Due Diligence

Before Andrew transferred the purchase funds, local specialists reviewed the property documents. The check covered ownership, existing liens, developer documentation, property registration, and whether the apartment met the requirements for the residence application. No issues preventing the purchase were identified.

Purchase and ownership registration

Andrew transferred the purchase funds from his US account. The transaction was completed and ownership was registered before the permanent residence application was filed, allowing the property documents to serve as evidence of the qualifying investment.

How Andrew qualified for FEIE

Andrew’s tax strategy was implemented after he established his base abroad. Permanent residence was useful evidence of a genuine international move, but FEIE eligibility depended on US tax rules rather than Panamanian immigration law.

Establishing a tax home abroad

Andrew moved his regular home abroad and used his Panama apartment as his stable residential base.

His US tax adviser reviewed his business arrangements, travel pattern, home, and personal connections before determining that his circumstances supported a foreign tax home for the relevant period.

Meeting the physical presence test

Andrew kept a detailed travel calendar and supporting flight and immigration records. During the qualifying 12-month period, he was physically present outside the US for more than 330 full days, meeting the physical presence requirement.

Determining qualifying foreign earned income

FEIE applies to earned income from personal services performed in a foreign country. The source is generally determined by where the work is physically performed, not where the client is incorporated or where payment is received.

Andrew’s accountant therefore separated work performed while he was abroad from work done during his short visits to the US, and earned income from non-earned items such as investment income.

For the 2025 tax year, the maximum FEIE was $130,000 per qualifying individual. Andrew’s adviser determined the actual amount he was entitled to exclude based on his qualifying foreign earned income and business expenses.

Filing for FEIE

Andrew continued filing a US federal tax return. His accountant elected the Foreign Earned Income Exclusion using Form 2555. The exclusion reduced the amount of qualifying earned income subject to US federal income tax. It did not remove all filing requirements, investment-income tax, or self-employment obligations.

Expenses on obtaining Panama permanent residence

Andrew spent approximately $329,200 on the property and residence project, excluding Passportivity professional services. 

The apartment remained Andrew’s asset; the $315,000 was not a non-refundable government contribution.

Andrew’s expenses on Panama permanent residence

Expense	Amount	What it covered
Apartment purchase	$315,000	96 m² apartment in Costa del Este
National Migration fee	$5,000	Government residence fee
National Treasury fee	$5,000	Government payment under the investment route
Property registration and document expenses	≈ $4,200	Notary, registration, apostilles, translations, medical certificate and related documents
Total	≈ $329,200	Excluding Passportivity professional services

Result: permanent residence and an international base

Andrew did not move his consulting business out of the US. Instead, he added a second permanent base to his existing structure.

Residence. Andrew obtained indefinite permanent status in Panama and a home he could use between international trips.

Business. Working remotely from abroad allowed him to keep existing US clients while spending more time developing contacts in Latin America and Europe.

Assets. The $315,000 apartment added property outside the US to Andrew’s portfolio and became his regular international base.

Taxes. The residence itself changed nothing in Andrew’s US filing position — the tax outcome depended on separate tests. After he met the tax-home and physical-presence requirements, his accountant used FEIE to reduce US federal income tax on qualifying foreign earned income, and he continued to file in the US while remaining responsible for taxes the exclusion did not cover. 

In Panama, his advisers applied the country’s territorial rules according to where his services were actually performed, rather than assuming that payments from foreign clients were automatically exempt.