Moving to Panama from the UK: Tax, Visas, Flights and the Realities for British Expats in 2026
For decades, British people looking for sun and a lower cost of living looked to Spain, Portugal and France. Brexit changed the arithmetic. The 90-day Schengen limit, the paperwork around EU residency, and the rising cost of the Algarve and Costa del Sol have pushed a lot of UK buyers to look further afield.
Panama has quietly become one of the beneficiaries. It uses the US dollar, taxes foreign income at zero, has residency programmes designed to attract foreigners, and sits outside the hurricane belt. It is also a country most British buyers know very little about, which means the decision is usually made on worse information than it deserves.
This guide covers what actually matters when you're moving to Panama from the UK: the tax position on both sides, the visa routes, how you get there, and the things that are less comfortable to talk about.
The tax system: Panama's side
Panama runs a territorial tax system. Only income sourced inside Panama is taxed. Income earned outside Panama — pensions, investment income, dividends, capital gains, rental income from foreign property, and remote work paid by foreign companies — is exempt from Panamanian tax, regardless of your residency status.
For income that is generated inside Panama — a local salary, a Panamanian business, rent from a Panamanian property — the personal rates are progressive: nothing on the first $11,000, 15% from $11,001 to $50,000, and 25% above $50,000. Corporate income tax is a flat 25% on Panama-source profit.
The property tax position matters if you're buying. Primary residences pay no annual property tax on registered value up to $120,000, then 0.5% between $120,000 and $700,000, and 0.7% above that. Panama also abolished capital gains tax on real estate in favour of a 2% transfer tax paid by the seller as a final tax, and many new-build condominiums carry multi-year property tax exemptions on the construction value.
Second homes and commercial property sit on a different, higher schedule, so the "primary residence" designation is worth getting right at the point of purchase rather than afterwards.
The tax system: the UK side (this is where people get caught)
Panama exempting your pension does not automatically mean HMRC does. Your UK position depends on breaking UK tax residence under the Statutory Residence Test, which counts days, ties, workdays and accommodation. Leaving in March and returning for three months every summer is not the clean break people assume it is.
Three points British movers consistently underestimate:
There is a UK–Panama double taxation treaty. The Convention was signed on 29 July 2013 and entered into force on 12 December 2013, and it has since been modified by the Multilateral Instrument. This is genuinely useful — it means the two systems have an agreed framework for allocating taxing rights rather than leaving you to argue it out. It does not, however, make UK-source income disappear.
Your UK state pension will be frozen. This is the single most important fact for a British retiree and it is almost never mentioned on Panama property websites. Panama is not on the UK's uprating list, so British pensioners resident there do not receive the annual triple-lock increase. The pension stays fixed at the weekly rate first paid when you became resident in a frozen country. Over a twenty-year retirement, on 3% average uprating, that gap runs into tens of thousands of pounds. It is not a reason to rule Panama out — the tax saving on other income often dwarfs it — but it belongs in your spreadsheet, not in a footnote.
Inheritance tax follows you for years. From 6 April 2025, domicile was replaced as the connecting factor for IHT with a "long-term resident" test: you fall within scope on your worldwide assets once you have been UK tax resident for ten of the previous twenty tax years. When a long-term resident leaves, worldwide assets stay within the IHT net for a tail of between three and ten years depending on how long they were resident. You do not escape UK inheritance tax by getting on a plane.
UK rental income remains taxable in the UK under the Non-Resident Landlord Scheme, and UK residential property remains within UK capital gains tax for non-residents. Get advice from a UK adviser who handles non-residence before you file a P85, not after.
Visas: three realistic routes for British citizens
Panama's residency programmes are among the most accessible in the Americas, and UK nationals qualify for all the main ones.
Friendly Nations Visa
The programme was restructured in 2021 by Executive Decrees 197 and 226, replacing the old loose "economic ties" test with three defined qualifying routes. Applicants qualify through real estate investment of at least $200,000, a three-year fixed-term bank deposit of $200,000, or employment with a Panamanian company holding a valid work permit. Britain is on the list of 50-plus eligible countries.
One change worth knowing: the Friendly Nations Visa no longer grants immediate permanent residency. It is now a two-step process — two years of provisional residency, followed by an application for permanent status.
Pensionado (retirement visa)
Panama's retirement programme is the most generous in the region and has no minimum age. It requires proof of a guaranteed lifetime pension of at least $1,000 per month, or $750 per month if you have bought Panamanian property in your own name worth more than $100,000. A UK state pension plus a modest occupational pension will usually clear the bar comfortably.
Law 6 of 1987 attaches some of the world's strongest legally mandated retiree discounts to the status — covering medicines, restaurants, utilities, airfares, hotels, entertainment, loan costs and property tax. The trade-off: Pensionado holders cannot work as salaried employees in Panama, though they can own businesses, receive dividends, and generally work remotely for foreign clients paid from abroad.
Qualified Investor Visa
The fastest route, and currently the most time-sensitive. Established by Executive Decree 722 of 2020 and updated by Decree 193 of October 2024, it grants immediate permanent residency with no provisional phase, on a minimum real estate investment of $300,000.
A word of caution on the deadline you'll see everywhere. Most advisers and brokerages state that the $300,000 threshold reverts to $500,000 on 15 October 2026. A recent report has questioned that framing, noting that Decree 193 sets the property minimum at 300,000 balboas without attaching an end date to the figure in its text, and that the October date appears in advisory and marketing content rather than an official government notice. We think the honest position is this: the threshold is $300,000 today, the reversion is widely expected and may well happen, and nobody should structure a purchase around a date they haven't had confirmed in writing by a Panamanian immigration attorney on the day they commit.
Before any of that: the visitor rule
A detail that trips British visitors up. Americans and Canadians get 180 days visa-free. British citizens get up to three months without a visa when arriving by land or air, and cannot normally extend beyond that unless they apply to change immigration status within the three months. Border-hopping to reset the clock is a bad idea — immigration officials may detain people who try it, and the British Embassy cannot intervene in their decisions.
Flights: better than it was, but let's be precise
Connectivity between Europe and Panama has improved substantially over the last decade, and Tocumen is the best-connected hub in Central America. But the claim you'll sometimes see — that there are now direct flights from the UK — is not accurate.
The current non-stop routes between Panama City and Europe are: Madrid with Iberia and Air Europa, Paris Charles de Gaulle with Air France, and Amsterdam with KLM. There is no direct London service. Block times on those routes run 9h50 to Madrid, 10h to Paris and 10h20 to Amsterdam, so from London you're looking at a short hop plus a long-haul leg — realistically 14 to 16 hours door to door with a sensible connection.
That's one stop, on a full-service carrier, with four European gateway options. Compare it to where it was fifteen years ago and it's a transformation. Compare it to a direct flight to Alicante and it isn't. Both things are true, and a family deciding whether elderly parents can visit twice a year deserves the accurate version.
Panama sits on UTC-5 and does not observe daylight saving, so it's six hours behind the UK in summer and five in winter. Calling home before work is easy in a way that Asia or Australia never is.
Healthcare
Panama City's private healthcare is the genuine draw. Hospital Punta Pacífica is the only Johns Hopkins–affiliated hospital in Latin America, has held JCI accreditation since 2011 and passed its fifth reaccreditation in 2023. Paitilla, Hospital Nacional and The Panama Clinic round out the top tier, many specialists trained in the US or Europe, and most speak fluent English.
The honest qualification: outside the capital the private sector thins considerably. Boquete and David have good general practice, Coronado handles routine care, and anything complex means a trip to Panama City. Private hospitals also typically require payment or insurance pre-authorisation before treatment begins, even for non-emergencies.
Budget for cover. Local plans run roughly $50–100 a month, comprehensive international policies $150–500. Pre-existing condition exclusions are the thing to scrutinise — arrange cover before you move, not after, and expect underwriting to get harder with age.
Currency: the dollar cuts both ways
Panama uses the US dollar as legal tender. For your day-to-day life that removes exchange-rate risk entirely — no watching the euro rate before a big purchase, no currency spread on your mortgage.
But your income is in sterling. A dollarised economy means every month of your retirement is exposed to GBP/USD, and sterling has had a rough fifteen years against the dollar. Anyone moving on a fixed sterling pension should model what their monthly budget looks like at a materially worse rate, because it will happen at some point in a twenty-year retirement.
Where British expats actually settle
Panama City and Casco Viejo. The capital delivers the hospitals, the international schools, the airport and the restaurant scene. Casco Viejo is the restored colonial quarter — a very European kind of urbanism that appeals strongly to British buyers coming from historic towns.
Coronado and the Pacific coast. Roughly an hour from the city, the established beach corridor, with the most developed expat infrastructure outside the capital.
Boquete. Highland Chiriquí, coffee country, spring-like temperatures year-round. The obvious answer for anyone who finds tropical heat unbearable, and the longest-established foreign community in the country.
Pedasí and the Azuero Peninsula. Quieter, more Panamanian, beaches and surf, a slower pace and better value per square metre. It attracts people who found Boquete too built-up and Coronado too suburban.
Bocas del Toro. Caribbean archipelago, waterfront and island living, a different rhythm entirely — and a market where title diligence matters more than anywhere else in the country.
On costs, a comfortable expat lifestyle broadly runs $2,500–4,000 a month; Panama City central rents sit around $900–1,700 for a one or two-bedroom, and Boquete around $800–1,200 for a comfortable two-bed.
Practical details worth sorting early
Driving. You can drive on a foreign licence as a tourist for 90 days. Once resident, convert to a Panamanian licence — the process is straightforward but requires your UK licence to be validated.
Schools. Panama City has a solid range of international schools following British, American and IB curricula. Outside the capital the options narrow sharply, which is the main reason families with school-age children cluster in the city.
Banking. Panamanian banks apply serious compliance requirements to foreigners. Expect to provide references, proof of source of funds and a lot of documentation, and expect it to take weeks rather than days. Start before you need the account.
Pets. Dogs and cats need a health certificate, current rabies vaccination and a quarantine form filed with the Ministry of Health in advance, plus examination by a Panamanian vet on arrival.
Spanish. English will get you through Panama City, Boquete and Coronado. It will not get you through a notary appointment, a hospital admission in David, or a conversation with your builder in Pedasí.
National Insurance. Many UK movers can keep paying voluntary NI contributions to protect their state pension record. Worth checking with HMRC before you go, because the window to fill past years is limited.
The honest downsides
Titling. Panama has both titled property and derecho posesorio (rights of possession). ROP land is cheaper, common in coastal and rural areas, and carries risks that most British buyers do not intuitively understand. It also doesn't qualify for the investor visa routes. Buy titled property unless you have a very specific reason and very specific legal advice.
Bureaucracy. Everything takes longer than you expect. Utilities, permits, registrations — plan around it rather than fighting it.
Rainy season. May to November on the Pacific side, wetter and longer on the Caribbean. Boquete gets a fine mist called bajareque almost daily. Some people love it; some find it grim by August.
Infrastructure outside the corridors. Roads, internet and power reliability vary considerably once you leave the main population centres.
None of this is disqualifying. All of it is easier to absorb when you knew about it in advance.
Frequently asked questions
Can a British citizen get residency in Panama?Yes. The UK is on Panama's Friendly Nations list, and British citizens are also eligible for the Pensionado and Qualified Investor routes. The Friendly Nations route now runs through two years of provisional residency before permanent status, while the Pensionado and Qualified Investor routes grant permanent residency more directly.
Do I pay tax in Panama on my UK pension?No. Panama's territorial system exempts foreign-source income, including pensions from any country. Your UK tax position is a separate question and depends on whether you have broken UK residence under the Statutory Residence Test.
Will my UK state pension increase each year if I live in Panama?No. Panama is a frozen-pension country — there is no annual uprating, and the pension remains fixed at the rate first paid after you became resident.
Is there a double taxation agreement between the UK and Panama?Yes. The UK–Panama Double Taxation Convention was signed on 29 July 2013 and entered into force on 12 December 2013, and has since been modified by the Multilateral Instrument.
Are there direct flights from London to Panama?No. Non-stop European services to Panama City run from Madrid (Iberia, Air Europa), Paris CDG (Air France) and Amsterdam (KLM), so UK travellers connect through one of those hubs. Total journey time is typically 14–16 hours.
How long can a British passport holder stay in Panama without a visa?Up to three months when arriving by land or air, with extension normally only possible by applying to change immigration status within that period.
How much do I need to invest in property to qualify for residency?$200,000 in titled real estate under the Friendly Nations Visa, or $300,000 under the Qualified Investor Visa, which grants permanent residency from day one. The Qualified Investor threshold is widely reported to be rising to $500,000 — confirm the current position with a Panamanian immigration attorney before you commit.
Do I pay capital gains tax when I sell Panamanian property?Panama replaced capital gains tax on real estate with a 2% transfer tax on the transaction value, paid by the seller as a final tax. If you are still UK tax resident, the UK may tax the gain, so check both sides.
What is healthcare like for British expats?Private care in Panama City is excellent — Hospital Punta Pacífica is Johns Hopkins–affiliated and JCI-accredited — but the private network thins considerably outside the capital. Private insurance is essential; there is no NHS equivalent.
Is Panama safe for British expats?Panama City, Boquete, Coronado, Pedasí and the main expat areas are generally comfortable, with the usual urban precautions in the capital. Check the current FCDO travel advice for Panama before you travel, particularly regarding the Darién region near the Colombian border.
Thinking about it seriously?
Panama Properties is a licensed Panamanian brokerage working exclusively for buyers. We cover Panama City and Casco Viejo, Coronado and the Pacific coast, Boquete, Pedasí and the Azuero Peninsula, and Bocas del Toro — and we tell clients when a property, or a market, isn't right for them.
If you're weighing a move from the UK, we can walk you through what your budget buys in each region, what qualifies for residency, and which immigration attorneys we'd trust to run the visa side in parallel.
WhatsApp: +507 6169-2453 (English)
https://www.panama-properties.com/
Panama Properties is a licensed real estate brokerage. We are not tax advisers, financial advisers or an immigration law firm. Nothing here is tax, legal or financial advice — take UK tax advice from a qualified UK adviser and Panamanian immigration advice from a licensed Panamanian attorney before acting.
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