Canadians Living in Panama and Moving to Panama

Let me start with a little background about myself. Yes, I am Canadian. I was born in Regina, SK, Canada, in the mid sixties, and lived their until my late 20’s when I move to Vancouver, BC in search of business opportunities. I was a partner in a business in Vancouver in the general merchandise import/export trade until 2006. Then I went off on my own and I started an online business, which I had a lot of success in. In 2008, I began thinking about moving abroad, and started doing some research. My reasons were that I was looking for a place with all year good weather, lower cost of living, lower government controls, and lower taxes.

Since I have been in Panama and now working with my business partner, Oscar here in Panama, in an expat relocation business, I have discovered that every country that expats are coming from, seem to have their own set of thoughts and concerns about moving to Panama.

For Canadians, the reasons for moving to Panama seem to revolve around my reasons above and a few others:

– Year-round nice weather

Who likes Canadian Winters? I moved to Vancouver to ease the Canadian winter, still that was not enough for me. In moving to Panama I discovered many climates, from the hot beaches, which was not for me, to the very temperate mountain climate that I choose. Where I live in Boquete, Panama, the we have temperatures between 15°C evenings to 25°C daytime highs, every day of the year.

– Lower cost of living

This is a big one, yes even with the Canadian dollar, your cost of living could be half of that what you have in Canada, depending where you are moving from. I will do a little comparison, using my home town of Regina, SK, as an example, and my personal cost of living here in Panama.

Canadians Living in Panama and Moving to Panama

– Less government regulations or taxes

This was also a big one for me, as I was still in my income producing years, and paying close to a 50% effective tax rate on my self employed income, when you include federal, provincial, HST and all the other taxes Canada has. I will speak more below about how Panama could effectively reduce or eliminate, for some, your taxes.

– Looking for a new adventure

Whether you are young or in your retirement years, and adventure can be for anyone. Change is good for the soul, and keeps us young. Moving to Panama could certainly be that adventure you are looking for.

-Ease of obtaining residency

Panama is probably the easiest country in the world to obtain residency with it’s Pensionado Visa and Friendly Nation’s Visa, which are both offered to Canadians. For the Pensionado Visa if you, single or a couple, have a combined permanent pension from the Government or company that you worked for of more than (as of today’s exchange rate) $1,327.00 CAD, you qualify for this Visa which leads to permanent residency.

The program is very simple, will take about 4 months, and legal and government fees will be about $1,500 for a couple.

For the Friendly Nation’s Visa, designed for someone who has no pension, or may intend to work or conduct business in Panama, requires opening of a bank account, and a deposit of approximately $6,6500 CAD, which can be removed after the process. The fees for this visa, for a couple will be about $6000 CAD, which includes the corporation. To read more about these Visas click here.

The concerns Canadians have are also unique in compared to other countries:

– How will the exchange rate effect my cost of living in Panama?

Panama’s currency is the Balboa, which since the inception of Panama in 1903 has been pegged to the US Dollar. Panama mints it own coins, this are the same denomination as Canada’s, except no Toonie yet. I sometimes get in trouble when I go back to Canada with Panama coins in my pocket, as our $1 balboa, is exactly the size and style as the Canadian Toonie, and could easily be passed off as one. The paper bills in circulation are old US treasury bills. Another interesting fact is currently Panamas coins are being minted by the Royal Mint of Canada.

Canadians Living in Panama and Moving to Panama

The Canadian exchange rate with the US dollar has fluctuated through out the last 10 years between 0.95 and 1.41, so you have to understand that could happen again. One good thing, once you have attained your Pensionado Visa at the required $1,327.00 CAD, if the Canada Dollar drops against the US dollar, you can never loose your residency, you just have to be prepared to have enough money to live.

Canadians Living in Panama and Moving to Panama
The big thing to remember, is if you have a fixed income and plan to retire in panama, you need to consider this exchange rate, and plan for it. Historically the rates have been as low as 0.90 and as high as 1.61, with a 65 year average of 1.30

– Should I become a non Resident of Canada, and how will that effect my medical and pensions.

If you are planning of living permanently in Panama, non-residency in Canada is probably in the future for you. Non-residency will happen when you have no primary residence in Canada, and no major ties to the country, and you are away from Canada for 183 days or more out of a year. You will still receive your government pensions, but you will no longer be covered by Canada healthcare. Please speak to a qualified accountant about non-residence to see how it will affect you.

Be careful researching your move to Panama on social media, as there is a lot of false information out there. Just the other day I saw a post where the person was determined that if you move out of Canada you loose your Canada Pension. This simply is just not true. You will want to keep a Canadian bank open to receive direct deposits of your pension, as a Canadian cheque is of no use to you in Panama. Do take note that there could be a tax with holding on your OAS and CPP if you are a non resident Canadian. Read about it here. So my point is, stay off social media for questions like this, talk to your tax accountant and to the government.

You will probably want to get healthcare insurance here in Panama, for people between 50 and 65 you can get that from $100 – $200 a month, depending on the coverage you desire. Read more about Healthcare in Panama here. For those older, the private hospitals offer co-pay plans, up to any age.

The biggest advantage of non-residency would be taxes if you have investments anywhere in the world. Canada calculates taxes on world-wide income for its residents, where Panama is a territorial tax system, calculating taxes for it’s residents only on Panama sourced income. All you have to do, is after your first full year outside of Canada, and have permanent residence in Panama, and when you no longer have a primary residence in Canada, have your Canadian accountant file non-residency papers with Canada government, and you no longer have to files taxes with Canada.

– If I am still working, or want to open a business, how will my taxes be effected?

This is why you will find a lot of younger people in their income producing years, move to Panama. Especially people that work from home online. Panama is one of about 12 countries in the world with territorial tax systems. I will use myself as an example, when I moved here, I had an online consulting business with clients in the USA and Canada, and also sold product online. Back in Canada I was paying a lot of taxes. Once I achieved my residency here in Panama, and filed non-residency in Canada, my tax rate on this business went to zero, as in Panama my income considered non-Panama sourced income, so it was not taxed.

Now, I am doing business in Panama, with Retire in Panama Tours, but you will find Panama’s personal and tax and corporate tax rates close to half that of Canada, and consumer taxes, property taxes much lower also. I don’t have a problem paying taxes, I just do not like excessive taxes. Read more about taxes in Panama here.

Now, remember, Panama IS NOT Canada, and there will be many things you have back home, that will not have here. You will have to survive without some things like 7 months of winter, Timmies and double doubles, crispy crunch, ketchup chips, real maple syrup, and of course Molson beer.

So, is Panama right for you? Well you will not know until you get here. It is very important to check it our first, and I would suggest our 6 day, 7 night all inclusive Retire in Panama Tour, where we take you to every location in the country that you may want to live, and introduce you to the best people for immigration lawyers, insurance people, bankers and rental and real estate people, so you have the contacts you will need and the information you need to make the decision to move to or retie in Panama.

Just remember, if you decide to become a permanent resident of Panama, you are still Canadian, and you can still be proud of that here with all your Canadian friends who have made the journey before you. There are Canadian expat groups through out Panama, and we all know one thing . . .

“I am Canadian”

It’s more than a tour . . it’s an experience.