Panama attracts a growing number of foreign investors and individuals each year, drawn by its economic stability, favorable tax regime, and openness to international buyers. Strategically located at the crossroads of the Americas and benefiting from the Panama Canal as an economic engine, the country has become a prime destination not only for businesses but also for retirees, real estate investors, and families seeking a sunny and financially advantageous lifestyle.
A Legal Framework Favorable to Foreigners
One of Panama’s major advantages in real estate is its legislation favorable to foreigners. Since Law 54 of 1998, a clear principle applies: foreigners enjoy the same property rights as Panamanian citizens. Unlike other Latin American countries, there are no restrictions regarding nationality, land size, or the number of properties a foreigner can acquire.
In practice, a Swiss citizen can buy, rent, transfer, or resell property in Panama under the same conditions as a local, which greatly simplifies planning a real estate project or a long-term relocation. Panamanian law, however, provides several legal structures for holding property, each with its own characteristics, advantages, and limitations.
Why Invest in Panama?
For a Swiss investor, real estate in Panama can serve three main purposes:
- Primary or secondary residence: enjoy a tropical lifestyle with a cost of living lower than in Switzerland.
- Rental investment: diversify your portfolio and generate income in U.S. dollars in a growing market.
- Retirement planning: benefit from specific programs that ease relocation while offering attractive fiscal and social advantages.
Understanding the Local Market
Before buying, it is essential to understand Panama’s legal framework, as well as the fiscal and wealth implications for a Swiss citizen. This guide covers:
- Types of property: titled properties, rights of possession, and concessions.
- Steps of the purchase process: from legal due diligence to official registration.
- Fiscal and wealth considerations: what you need to know.
- Visa and residency options: to facilitate your relocation.
With this approach, investing in Panama becomes not only a financial opportunity but also a chance to experience life in a dynamic and welcoming country.
Different Forms of Real Estate Acquisition in Panama
1. Purchasing Titled Properties
In Panama, buying a titled property remains the most secure form of real estate acquisition. These properties are registered in the National Public Registry, the Panamanian equivalent of the Swiss land registry, ensuring full traceability and maximum legal protection. It is also the only way to finance a purchase through a mortgage.
Key Advantages:
- Complete legal security: The state officially recognizes the owner, greatly reducing the risk of disputes.
- Ability to mortgage the property: useful for financing projects or expanding investments.
- Ability to mortgage the property: Useful for financing projects or expanding investments.
Purchase Process
- Initial agreement: the buyer and seller agree on the price, often with the assistance of a Panamanian lawyer who drafts a formal purchase contract.
- Promise to purchase: this contract usually includes a deposit and allows the buyer to verify the legal status of the property. The lawyer ensures that the seller is the legitimate owner and that no debts, taxes, or disputes affect the property. A surveyor may also confirm the exact boundaries of the land.
- Signing the final contract: the purchase-sale deed is signed before a notary, and the final payment is often handled through an escrow account for added security.
- Registration in the Public Registry: this step officially transfers ownership, granting the buyer full rights to the property.
Practical example: for a Swiss investor looking to purchase an apartment in Panama City or a villa in a residential neighborhood, acquiring a titled property is almost always the standard approach. This ensures legal protection comparable to that in Switzerland, while also allowing the property to appreciate in value and be resold easily.
2. Possession Rights
In addition to titled properties, it is possible in Panama to acquire possession rights over land owned by the state. These legally recognized rights allow an individual to occupy, improve, and use public land. They can be inherited, sold to third parties – including foreigners – and, in some cases, converted into a formal property title.
The main advantage of possession rights is that they are exempt from property taxes, since the land remains state-owned. However, any buildings constructed on the land are still taxable. These rights cannot be mortgaged and are not registered in the Public Registry, making them less secure than titled properties. The absence of a centralized database can sometimes lead to disputes when multiple parties claim the same land.
The acquisition process is more complex than a standard purchase. After signing a promise to purchase before a notary, thorough due diligence is essential: verification of the possession certificate with the competent authority, review of the topographic plan certified by a licensed surveyor, physical inspection of the land, and confirmation that there are no conflicts or objections. Then, the parties sign a notarized purchase-sale agreement, and the possession certificate is transferred to the buyer. In some cases, it may be simpler to acquire the shares of a company holding the certificate rather than requesting the reissuance of a new document.
Main Features of Possession Rights:
- Transferable and inheritable, and in some cases convertible into a titled property.
- Typically located in coastal, island, or rural areas.
- Exempt from property tax, since the land technically remains state-owned.
Precautions Before Acquisition:
Before any purchase, it is essential to verify the validity of the documents, identify any potential disputes, and assess the possibility of converting the property into a titled asset. This requires legal due diligence, a topographic survey, and a physical inspection of the land.
Practical Use:
Specific Use: Each concession is restricted to a designated activity, such as constructing a hotel, developing a marina, or establishing a tourist complex. The purpose is to ensure optimal land use while complying with environmental and urban planning regulations.
3. Real Estate Concessions
In Panama, certain highly attractive areas—beaches, islands, or protected zones—are reserved for the State, and private ownership is prohibited. To promote tourism and commercial development, the government offers concessions, which are temporary usage rights on public land. These concessions allow investors to access strategic land without owning it, providing a flexible and legal way to launch a project.
Key Points to Know:
- Duration: Concessions are typically granted for 20 years and are renewable. In some tourist areas, they can extend up to 40 years, providing sufficient stability for large-scale projects.
- Specific Use: Each concession is limited to a specific activity, such as building a hotel, developing a marina, or creating a tourist complex. The goal is to optimize land use while respecting environmental and urban planning regulations.
- Transfer and Assignment: Unlike traditional real estate, the land cannot be transferred as private property. However, the concession agreement can be assigned or transferred to a third party under certain conditions, providing some flexibility for investors.
Why Choose a Concession?
Concessions are particularly suited for investors looking to benefit from Panama’s economic and tourism growth without acquiring traditional land ownership. They allow:
- Access to strategic locations that are otherwise difficult to obtain.
- The opportunity to test a commercial project before committing long-term.
- Minimization of certain costs and constraints associated with land ownership, while complying with local regulations.
Precautions When Investing in Panama:
As with any investment, it is essential to verify the contract’s validity, the exact duration and renewal conditions, as well as the permitted use of the land. Comprehensive legal and administrative due diligence is strongly recommended to avoid surprises.
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4. Investment Vehicles: Companies and Trusts
In Panama, it is common not to purchase property in one’s own name, but to do so through a local company (S.A. – Sociedad Anónima) or a trust.
Investment Vehicles: Companies and Trusts
- Facilitate property management, especially for multiple rental investments.
- Optimize estate planning (for example, transferring company shares instead of the property itself).
- Benefit from enhanced privacy, since the company appears as the registered owner in the Public Registry.
- Take advantage of more flexible taxation in certain cases.
Practical example: A Swiss investor who wants to buy multiple apartments for rental purposes can set up a Panamanian company to hold all the properties. This centralizes management, structures rental income efficiently, and makes the resale of assets more flexible.
Summary for investing in Panama:
Panama offers Swiss investors a range of property ownership structures, allowing them to choose according to their objectives: asset security, investment opportunities, tourism development, or estate and tax optimization.
Four main options:
Titled properties: The most secure option, registered in the Public Registry. They provide maximum legal protection and allow financing through a mortgage, making them ideal for residential property or a second home.
Possession rights: Accessible to foreigners and often less expensive, these rights allow one to occupy and improve public land. However, careful verification of legal documents and the absence of disputes is required.
Concessions: Intended for temporary commercial use in strategic areas (beaches, islands, tourist zones). Perfect for tourism or commercial projects, they allow investment development while complying with local regulations.
Companies and trusts: Used to optimize taxation, protect assets, or facilitate estate planning, offering additional flexibility in property management. For example, an investor can acquire property through a Panamanian company or place it in a trust, simplifying succession and protecting assets from certain risks.
The choice among these options depends on the buyer’s objectives: securing a residential property, investing in rental real estate, developing a tourism project, or planning estate transfer. Each structure has its advantages and limitations, making it essential to understand Panama’s legal framework to make an informed decision.
Overall Real Estate Purchase Process in Panama for a Swiss Citizen
Buying property in Panama may seem complex at first, but the process is actually structured and fairly standardized. Whether the goal is a primary residence, a rental investment, or a retirement home in the sun, there are essential steps that ensure the legal security of the transaction.
Typical steps for buying real estate in Panama:
1. Property identification
The first step is naturally to select a property that suits your project:
Primary residence: Expats often favor secure residential neighborhoods in Panama City, Pacific coastal areas (Coronado, Playa Blanca), or cooler regions like Boquete.
Rental investment: City apartments near business centers or universities are in demand, as are tourist properties in coastal and island areas.
Retirement home: Buyers usually choose houses or condos in quiet areas with accessible medical facilities and an established expat community.
Practical tip: Visit several properties, compare prices by area, and work with a local agent familiar with legal specifics, especially the differences between titled properties and possession rights.
2. Due Diligence (Legal and Cadastral Verification)
This step is arguably the most important. Before committing, the buyer must hire a Panamanian lawyer to conduct a thorough due diligence.
This includes:
- Verification of the property title or possession certificate,
- Checking cadastral boundaries and compliance with the topographic plan,
- Examining any mortgages, tax debts, or disputes related to the property,
- Confirming that the seller is the registered owner and has full rights to sell.
Unlike in Switzerland, where the land registry provides absolute security, in Panama it is essential to protect oneself with independent legal verification.
3. Offer and Promise to Sell
Once the verifications are satisfactory, the buyer can make a purchase offer. This is often formalized through a Promise to Sell (Promesa de Compraventa) drafted by a lawyer and signed before a notary.
This promise sets the price, the terms of the transaction, and the deadline for the final signing.
An initial deposit, usually around 10% of the purchase price, is paid by the buyer.
The contract also specifies the conditions for refund or forfeiture of the deposit in case of withdrawal.
In practice, this step is equivalent to a preliminary sales agreement in Switzerland.
4. Escrow
To secure the payment, it is common to use an escrow account managed by a bank or the lawyer handling the transaction.
The buyer deposits the balance of the purchase price into this account.
The funds are released to the seller only once the transaction is officially registered, preventing any fraud.
This practice, common in international transactions, provides particular reassurance for foreign buyers.
5. Signing before the Notary
The final purchase-sale contract (Escritura Pública) is signed before a Panamanian notary.
The notary plays a key role: verifying identities, the legality of the contract, and ensuring that all conditions are met.
Unlike in Switzerland, where the notary often represents the state and advises both parties, in Panama the notary mainly acts as a formal guarantor of the transaction. The buyer’s lawyer remains the primary protector of the buyer’s interests.
6. Registration at the Public Registry
The last step is registering the property at the Public Registry.
For a titled property, ownership transfer is only effective once registration is complete.
For a Right of Possession (ROP), registration in the Public Registry is not possible: transfer occurs via notarized contract, and it is crucial to keep original certificates and proof of possession.
This formality is essential: without registration, the buyer is not legally recognized as the property owner.
Summary: The property purchase process in Panama involves six key steps: selecting the property, conducting legal due diligence, signing a promise to sell, securing payment via escrow, signing before a notary, and registering the property at the Public Registry.
With the guidance of a competent local lawyer and a clear understanding of the differences between titled property and rights of possession, Swiss buyers can safely invest in Panama, whether for a residence, rental project, or peaceful retirement.
Taxation for Real Estate Investment in Panama
Investing in real estate in Panama requires understanding local taxation, which is relatively simple but varies depending on the type of transaction and property use. For Swiss nationals, this knowledge helps anticipate costs and plan the investment efficiently.
1. Transfer Tax
When purchasing real estate, a transfer tax of 2% of the total transaction amount applies, payable by the buyer at the time of property transfer. This fixed tax simplifies financial planning.
2. Annual Property Tax
Panama also imposes an annual property tax calculated on the cadastral value. It can reach up to 2.1% depending on the property’s value. Partial or full exemptions exist, notably under the “Family Heritage” program, which exempts properties up to 120,000 USD. This is particularly attractive for primary residences or family properties.
3. Capital Gains Tax
In case of resale, Panama applies a capital gains tax, with rates varying according to the seller’s status:
- 10 % for individuals,
- up to 27 % for brokers,
- 30 % for companies.
It is possible to reduce this tax burden by selling through the shares of a real estate company, which can lower the effective rate to 5 %.
4. Rental Income
Income from renting real estate is also taxable. However, there is an exemption threshold of 30,000 USD per year. Above this amount, rental income is subject to a progressive rate of up to 27 %, depending on the total received.
Tax and Legal Considerations for Swiss Nationals Investing in Panama
Investing in Panamanian real estate can be very attractive, but Swiss nationals must understand the fiscal and legal implications in their home country. Switzerland taxes worldwide income, meaning all income earned abroad, including rent and capital gains from Panamanian real estate, must be declared to Swiss tax authorities.
1. Declaration of Rental Income and Capital Gains
If you receive rental income from a property in Panama, it must be included in your Swiss tax return. Likewise, selling a Panamanian property generating a capital gain may have a tax impact, even if taxes were already paid in Panama.
2. Absence of a Comprehensive Tax Treaty
Panama and Switzerland do not have a complete bilateral tax treaty. There is no automatic mechanism to avoid double taxation, so investors must anticipate and plan to avoid paying taxes twice on the same income or gain.
3. Tax Planning and Advice for Investing in Panama
To limit double taxation and secure your investment:
- Work with a tax advisor familiar with both Swiss law and Panamanian legislation.
- Using legal structures such as companies or trusts can help organize income, protect assets, and optimize taxation.
- Advance planning is essential for long-term investments, especially for those expecting regular rental income or planning to sell in the future.
4. Importance of Documentation
Keep all contracts, receipts, tax returns, and proof of payment related to your Panamanian properties. These documents are essential for Swiss tax reporting and to demonstrate compliance in both countries.
In summary, investing in Panamanian real estate as a Swiss national offers attractive opportunities but requires careful tax planning to avoid surprises and optimize returns.
Visas and Residency Through Investment
Panama is highly attractive for foreign nationals due to flexible visa programs and an investment-friendly legal framework. Whether for permanent residence, retirement, or managing rental properties, several options are available.
1. Permanent Resident Visa Through Investment
This visa allows foreigners to live in Panama indefinitely. Several pathways exist:
- Real estate investment: Purchasing property of a minimum value, often around 300,000 USD, can serve as a basis for permanent residence.
- Business creation: Investing in a company or economic project in Panama can also provide access to this visa.
This status offers multiple benefits, including the right to work legally, access to local healthcare, and the ability to open Panamanian bank accounts.
2. Retiree Visa or “Pensionado” Program
Panama offers a special program for foreign retirees, providing attractive fiscal and social benefits:
- Discounts on medical care, transportation, and certain local services.
- Simplified entry requirements and facilitated permanent residence.
- Ability to receive Swiss or international pensions while benefiting from favorable tax conditions.
This visa is ideal for those seeking a comfortable lifestyle with legal clarity for residency and property ownership.
3. Temporary or Extended Tourist Visa
For investors not ready to settle permanently, Panama offers temporary or extended tourist visas, allowing several months’ stay to evaluate the real estate market or manage rental property.
4. Process and Requirements for Investing in Panama
Obtaining a visa involves:
- Preparing a complete file with legal documents, proof of income, and purchase or investment contracts.
- Assistance from a Panamanian lawyer specialized in immigration is strongly recommended to secure and expedite the process.
- Compliance with local obligations, especially fiscal and administrative, to avoid legal issues.
Conclusion for Investing in Panama
Property acquisition in Panama by a Swiss national is accessible and secure when local formalities are respected and professional legal advice is sought. Advantages include diverse property types (titled, ROP, concessions), competitive taxation, and the possibility of obtaining residency through investment. However, Swiss tax obligations and double taxation risks must be carefully considered.
Summary: Panama offers Swiss investors a strategic opportunity for residence, investment, and wealth diversification within a favorable legal and fiscal framework. Contact us to invest in Panama under optimal conditions.
