How to Cut Your Cost of Living | Pathfinder International

Saturday, January 23, 2010

Dear Reader,

So, you've purchased your dream home in paradise. Your plan is living there for six months a year or more, to escape the bitter winter weather back home. You're all set, until you arrive--and get a 30-day stamp in your passport.

Most countries allow tourists a stay of 30-90 days. This is fine if you only want to spend a few weeks or a few months in your new home. Once the 30 or 90 days is up, you'll have to leave, and go back after a fixed time period has elapsed. Some countries will allow you to extend your stay beyond the initial 30-90 days. Others only allow a maximum number of days each year, and will add up all your visits...once you have reached the limit on the number of days, you won't be able to go back until the following year.

For that reason, it's important to decide before you buy a property overseas what your intentions are. Are you an investor, hoping for appreciation, or a good rental yield? Or are you an end-user, wanting a home that you can live in part-time or full-time?

If you're an end-user, it pays to check out the residency options before you commit to buying your second home. It also helps if you're an investor, planning to sell the property, and a chunk of your potential buyers are based overseas...their buying decision will likely be influenced by local residency requirements.

We've already covered Belize, Costa Rica, Brazil, Ecuador, and Nicaragua to date. Each country has different requirements for residency...and in the case of Costa Rica, those requirements will change on March 1.

Today, we investigate Panama's residency programs. I've taken advantage of the forestry investment visa myself, and have many friends enjoying the full range of benefits offered by the retirement or pensionado visa. The pensionado discounts can significantly cut your cost of living. These include:

Up to 50% off entertainment (movies, theaters, concerts, and sporting events)
Up to 30% off bus, boat, train fares and airline tickets
Up to 50% off hotel stays
Up to 25% off at restaurants

When dining with my pensionado friends in Panama, I've let them pick up the bill before paying my split--cutting the cost of dinner for us both.

Rainelda Mata-Kelly, our Panama attorney, outlines Panama's residency programs, including the pensionado, in more detail below.

Margaret Summerfield

PANAMA

Panama has very attractive permanent residency permits for pensioners and investors. These are some of the highlights of the most popular residency permits for relocation to Panama under the new rules that came into effect on August 26th, 2008.

General Information:

All permanent residency permit applications must be made through a Panamanian lawyer.
Generally, there is no age requirement minimum or maximum for applying for any residency permit, save for the minimum legal age of 18 years. Those under 18 will qualify for a visa as dependents of their parents.
All overseas documents to be presented to the authorities in Panama must be authenticated by a Notary and by a Panamanian Consulate or with an Apostille. The Apostille (The Hague Convention of 1961) is a faster way of authenticating documents and is normally obtained through the Secretary of State in your home state (in the USA) or through the Foreign Office (in UK). Not available in Canada.
All documents must be fresh (within 5 months of visa application) and passports must have at least 1 year to run.
Dependents: If your spouse is to be covered by your visa, you need to bring a duplicate original of your marriage certificate. If your children (under 18), are to be covered by your visa, you need to bring duplicate originals of their birth certificates.
None of these residency permits grants work permits, unless specified otherwise.
All residency permits require that you obtain a health certificate in Panama. We will assist you with this, as part of the application process.
All residency permits require that all applicants over 18 years old bring a clean police record of your last place of residence.
All applications require 6 passport-size photos (men in suit and tie; women in blouses or dresses with sleeves - no hats or scarves).
For specific additional requirements of each residency permit, please contact us.

PENSIONER (Pensionado):

This residency permit is designed for persons who are receiving a monthly pension from a government entity or private corporation of $1,000 or more. If your pension is between $750 and $999 and you have real estate in Panama in your name for at least $100,000 you may also apply for this permit. The residency permit is approved after one application. It includes benefits such as an exemption every two years of import duties for the importation of a car (sales tax and luxury tax still apply). All discounts normally associated with the pensionado permit, will apply to any resident of Panama (under any permit) once they reach the age of 60 for men and 55 for women.

PRIVATE INCOME RETIREE (Rentista Retirado):

This residency permit is for persons who despite not receiving a monthly pension, are no longer working and have received a retirement lump sum. It requires that you open a 5-year fixed term deposit with the National Bank of Panama or the Caja de Ahorros, yielding at least $850 a month (at current rates the fixed term deposit would need to be for approximately $260,000). This permit is granted for 5 years (deposit and application need renewal every 5 years).

The Private Income Retiree Permit includes such benefits as a traveling Panamanian passport (it does NOT grant nationality), and an exemption every two years of duties for the importation of a car. These benefits will only be available to the applicant as long as the fixed term deposit is maintained.

PERMANENT RESIDENCY PERMITS:

These permits are granted provisionally for two years and after renewal, they are granted permanently, with an identity card, which needs renewal every ten years. Five years after obtaining the permanent residency status, holders can apply for Panamanian citizenship.

PERSON OF MEANS (Solvencia Económica Propia):
Designed for those who wish to live in Panama, and have independent means of support.
The person must, either:

have a three-year fixed-term deposit in any bank located in Panama with a minimum of $300,000; OR
invest in real estate worth $300,000 in Panama (must be fully paid up and titled in the name of the applicant or under a private interest foundation, where the applicant is founder and beneficiaries are the founder and/or his dependents); OR
have a combination of the above for a minimum of $300,000.

INVESTOR VISA ("Inversionista"):
Designed for those who wish to establish a business in Panama (retail businesses and some professions are reserved for Panamanians only).

There must be a minimum investment of $160,000 and minimum of five (5) permanent Panamanian employees hired.

FORESTRY INVESTOR VISA ("Inversionista Forestal"):
Designed for those who wish to make long-term investments in a forestry plantation, and take advantage of tax break benefits.

There must be a minimum investment of $80,000 in at least 5 hectares in a duly accredited reforestation company.

These are only some of the residency permits offered by Panama. An evaluation of your individual case may be necessary to determine the residency permit best suited to you.

Please feel free to contact me at (JavaScript must be enabled to view this email address) if you have any queries.

Rainelda Mata-Kelly (Attorney-at-Law)