Panama · Tax on foreign income
Does Panama tax foreign income? A guide for Americans
Short answer
Panama taxes only income from Panamanian sources. A retiree living on US pensions and interest owes no Panamanian income tax, however long they stay.
What you'd pay, by situation
| Retiree on US income $0 a year at 90, 182 or 365 days | Pensions granted abroad and interest from US payers count as foreign income, so Panama doesn't tax them. No social security is due either. |
|---|---|
| Remote worker paid from the US | Not settled yet: the remote-worker visa gives no tax exemption, and work done in Panama can be taxed. Still being checked |
| Working for a local employer On $60,000 a year: about $8,350 income tax plus $6,600 contributions | Pay for work in Panama is taxed through payroll, with social security and education contributions on top. |
Not yet verified The retiree and full-year payroll results, worked out from the official tax rules.
Still being checked How short stays and remote work for a US employer are taxed.
How it works
- Tax residence: more than 183 days in Panama in the current or previous tax year.
- What's taxed: only income from Panamanian sources, for residents and visitors alike.
- Payroll contributions: local employees pay social security of 9.75% and education tax of 1.25%.
- Your US return: you still file every year. Panamanian tax may be credited against US tax; see a tax adviser.
- No Social Security agreement: the US and Panama have none, so US payroll tax continues.
Taxes in Panama, with worked examples → The full Panama guide →
Questions people ask
Does Panama tax US Social Security and pensions?
Pensions granted abroad and interest from US payers count as foreign income, so Panama doesn't tax them. No social security is due either.
Remote worker paid from the US in Panama: what would I pay?
Not settled yet: the remote-worker visa gives no tax exemption, and work done in Panama can be taxed. (Still being checked) Ballpark: .
Working for a local employer in Panama: what would I pay?
Pay for work in Panama is taxed through payroll, with social security and education contributions on top. Ballpark: On $60,000 a year: about $8,350 income tax plus $6,600 contributions.