Living in Panama: The Complete Expat Guide for 2026
Panama has built a reputation — thoroughly deserved — as one of the most expat-friendly jurisdictions in the Western Hemisphere. Its territorial tax system means that income earned outside Panama is simply not subject to Panamanian tax. Its USD-denominated economy eliminates currency risk for dollar earners. Its visa programmes are among the most accessible in Latin America. And the Canal-derived wealth has built an infrastructure — financial, medical, logistical — that sits well above the regional average.
From the gleaming towers of Panama City to the cloud forests of Boquete and the Caribbean langour of Bocas del Toro, Panama offers a remarkable variety of environments. This guide covers the essentials for UK nationals considering a move.
Choosing Your Base
Panama City is the undisputed commercial and financial centre — a modern metropolis that would not look out of place in Miami or Singapore. The financial district (Via España, Obarrio, El Cangrejo), the upscale residential areas of San Francisco, Punta Pacifica, and Costa del Este, and the historic Casco Viejo (a UNESCO-listed colonial quarter undergoing significant gentrification) each offer distinct characters. The city has direct flights to London via various connections, excellent international schools, world-class hospitals, and an English-speaking business community of significant size.
Boquete, in the Chiriquí Highlands, is a cool-climate mountain town at around 1,200 metres elevation that has become one of the most celebrated retirement destinations in the world. The combination of perpetual spring weather (18–24°C year-round), dramatic scenery, fertile agricultural land, and a large English-speaking North American expat community has made it a reference point in global retirement planning. It is quieter, simpler, and far cheaper than Panama City.
Bocas del Toro is an archipelago of Caribbean islands in the northwest of the country — mangroves, coral reefs, surf beaches, and a relaxed bohemian character. The expat community here tends towards the younger, lifestyle-driven end. Infrastructure is more limited, but that is part of the appeal. It attracts those who prioritise environment and pace of life over urban convenience.
Visas: Friendly Nations and Pensionado
Panama operates a range of visa and residency categories. The two most relevant for UK nationals are:
The Friendly Nations Visa: The UK is on Panama's list of "friendly nations" — countries whose nationals are considered low-risk for residency purposes. Since the 2021 reform (and subsequent decrees), the route requires demonstrating economic ties through one of a limited set of qualifying options — most commonly a real-estate purchase of at least USD 200,000, an equivalent fixed-term deposit in a Panamanian bank, or qualifying local employment. Applicants now first receive provisional (temporary) residency, typically valid for two years, before becoming eligible to apply for permanent residency on continued compliance. Conditions should be verified with a Panamanian immigration attorney, but the Friendly Nations pathway remains one of the more accessible residency routes available anywhere.
The Pensionado Visa: One of the world's most generous retirement residency programmes. Applicants must demonstrate a guaranteed lifetime income of at least USD 1,000 per month (from a pension, annuity, or similar source). UK state pension plus any private pension income typically satisfies this requirement comfortably for many retirees. Benefits are extensive: 50% off entertainment, 30% off public transport, 25% off utility bills, 20% off medical consultations, and significant discounts on hotel stays and flights. The Pensionado visa is permanent once granted.
The Territorial Tax System
This is perhaps the single most important feature of Panama's fiscal environment for UK expats.
Panama taxes only income sourced within Panama. If your income — whether from salary paid by a foreign employer, investment returns on offshore portfolios, UK pension withdrawals, rental income from UK property, or capital gains on foreign assets — is generated outside Panama, it is simply not subject to Panamanian tax. This is not avoidance; it is the explicit design of the system.
There is no capital gains tax on gains from foreign assets. Dividends and interest from foreign sources are not taxed. This makes Panama structurally attractive for individuals with investment portfolios, foreign pension income, or overseas business interests.
Local income (from Panama-source employment or business) is taxed at progressive rates up to 25%.
Panama has no double taxation agreement with the UK. UK nationals who become genuinely non-UK resident (meeting the Statutory Residence Test conditions) and whose income is not UK-sourced in a way that triggers UK withholding taxes will in many cases significantly reduce their overall tax burden. However, UK tax obligations — including on UK-source income — do not simply disappear on departure. Specialist advice is essential.
The Dollar Economy
Panama has used the US dollar as its currency since 1904 (alongside the balboa, which is pegged 1:1 to the dollar in coin form only). There is no Panamanian paper currency — dollars circulate directly.
For UK expats, this means carrying currency risk on GBP-denominated income against the USD, but it eliminates local currency volatility risk entirely. The dollarised economy also facilitates ease of commerce, pricing transparency, and integration with the global banking system.
Panama's banking sector — centred on the Panama International Banking Center — is substantial. There are over 70 internationally licensed banks. Opening accounts is straightforward for those with proper documentation, and Panama's banking system, while offshore in character, is no longer the secretive haven it was historically perceived to be following significant FATF and OECD compliance improvements.
Healthcare
Panama's private healthcare infrastructure is the best in Central America and compares favourably with many Western European standards.
Punta Pacifica Hospital (Panama City): The flagship facility — affiliated with Johns Hopkins Medicine International since 2012. JCI-accredited, with US-trained physicians across a wide range of specialities. The hospital was built to serve the upscale residential area of the same name and is the first choice for most expat patients in the city.
Pacifica Salud (Hospital Nacional): Another high-quality private option in Panama City, well regarded for general and specialist care.
In Boquete, healthcare is more limited — the Hospital Chiriquí in David (the nearest large town, 45 minutes away) is the main private reference. Many Boquete-based expats maintain health insurance that covers evacuation to Panama City for serious cases.
International health insurance covering Panama is widely available and advisable. US-focused plans often include Panama well. UK expats should ensure cover is in place before arrival.
Canal Zone History and Context
The history of the Panama Canal — built by the United States between 1904 and 1914 and returned to Panamanian sovereignty in 1999 — has shaped everything about modern Panama. The Canal generates around USD 5 billion in total revenue annually (of which roughly USD 3 billion is tolls) and has made Panama a logistics and financial hub of global importance. For expats, this history manifests in the strong US cultural influence, the English-speaking business community, the dollar economy, and the extensive infrastructure that Canal revenues have funded.
Cost of Living
Panama City is not cheap by Latin American standards but is moderate compared to Western European capitals. A furnished apartment in a good Panama City neighbourhood (San Francisco, Marbella) costs USD 1,200–2,500 per month. Eating out is reasonable; domestic help is inexpensive; private health insurance is affordable.
Boquete is considerably cheaper — a comfortable house with mountain views can be rented for USD 600–1,000 per month; living costs are a fraction of the capital's.
How Global Investments Can Help
Panama's territorial tax system is one of its greatest attractions, but the UK-side planning — establishing genuine non-residency, managing UK-source income correctly, and structuring investment portfolios for the Panama environment — requires expert cross-border advice.
Global Investments works with UK nationals relocating to Panama on pre-departure UK tax planning, management of UK investment portfolios during overseas residence, and coordination of financial structures that take full advantage of Panama's fiscal framework.
Contact Global Investments for an initial consultation.
This guide is for general information only and does not constitute financial, legal or tax advice. Rules, fees and regulations change frequently; verify current requirements with a qualified adviser before acting.