Is The“Old” Friendly Nations Visa Back? How To Get A Work Visa In Panama

The Panamanian Ministry of Labor has just published a comprehensive reform of the migration chapter of the Panamanian Labor Code. In the new Law that is effective as of now, the categories of work permits available for foreigners in Panama are reordered, new categories have been created and the requirements and the procedures to apply for a work permit within the different categories have been modified. These changes also affect the Friendly Nations Visa. Below we have summarized the most important and interesting changes within the new Law and its effects on the application for a residence permit.

How do I know which work permit category applies to me?

The Ministry of Labor will determine the category of work permit that corresponds to each immigration status. That is to say, the category of the work permit in Panama depends on the residence permit granted or in process with the National Immigration Service in Panama. However, the new Law creates an exception: Foreigners who have permanent residence in Panama may apply for any category of work permit.

Do I need a work permit?

The Panamanian Labor Code clearly establishes that any work relationship involving a foreign person requires a valid work permit. However, the new Law clearly exempts foreign nationals who carry out economic, business or investment activities within Panama and who are not under the legal subordination or economic dependence of an employer from this obligation.

In the past, the inspectors of the Ministry of Labor often forced foreigners working within their own business to obtain a work permit as well. However, now with the legal changes made by the legislator it is clear that if you run your own business, or execute some kind of economic activity or investment in Panama and you are working under your own account as owner and holder of the same without depending or under the order of a boss you do not require a work permit to do so. Nevertheless there are certain exceptions that may apply for the Friendly Nations Visa which are being explained below.

I am an employer, what happens if I hire a foreigner without a valid work permit in Panama?

It is the responsibility of the employer to guarantee that while the work relationship with the foreign worker lasts he/she must hold a valid work permit. The employer is also entitled to demand that the foreign worker carries his/her work permit card during the entire working day, in addition the employer must keep a copy of the work permit card of his/her foreign collaborators within their administrative files. Hiring foreign workers without the corresponding permits does not cause prejudice to the worker with respect to their labor rights and guarantees. That is to say any foreign worker in Panama, with our without work permit, must received his benefits as established by the Labor Code of Panama. This includes the minimum salary established by the Law, as well as the payment of the thirteenth month salary and proportional vacations, as well as any other money to which a worker is entitled in Panama due to the work relationship.

My work permit application is in process, can I already legally work in Panama?

Previously the inspectors of the Ministry of Labor often accepted the receipt of the work permit application as proof to be able to work legally in Panama. However, with the new changes the legislator clearly defines that this is not allowed. At the time of submitting your work permit application you will receive a certification from the competent authority but it cannot be used as “temporary work permit”. The work permit will be effective from the date the Ministry of Labor issues your resolution. It is for this reason that you must wait until the resolution is issued to be able to legally work in Panama. The only exception applies for cases of work permit renewals where the application of renewal has been presented prior to the expiration date of the previous work permit.

Is the "old" Friends Visa back? How can I get a Panama Work Visa?

The Friendly Nations Visa in Panama has undergone many changes since its creation. In the beginning we processed permanent residency (with indefinite work permit) only by proving a bank account in Panama with a balance of $5,000 and a business license in the applicant's personal name. Then the National Immigration Service required (apart from the bank account) the creation of a corporation to comply with the legal requirements established by the Law. In the year 2021 the Law was reformed and established that in order to obtain residency in Panama under the Friendly Nations Visa the foreign applicant must go through a two-step application process (instead of a one time application) and he/she must also prove an investment in Panama with a minimum amount of $200,000. The investment can be either made in real estate in Panama or in a fixed term deposit (CD) with a Panamanian bank. The third option to qualify for the Friendly Nations Visa is for labor reasons by means of a job offer in Panama, which created "creative" practices to prove the supposed job vacancy in Panama.

Under the current modality of the Friendly Nations Visa the opening of a bank account in Panama (with a minimum balance of $5,000) is only necessary if the visa application is submitted as a married couple or family, regardless of whether the application is submitted through a real estate investment, fixed term deposit or for work purposes.

How does the reform of the labor code affect the Friendly Nations Visa?

With the new reform of the labor code in Panama, the Ministry of Labor creates the option of obtaining a work permit as a self-employer. This offers foreigners the possibility to open and run their own business (limited to economic activities that are not reserved for locals) or work for themselves within a corporation of their own property and still qualify for the Friendly Nations Visa and obtain residency in Panama for "labor reasons” as an independent entrepreneur instead of being hired by a local company.

The Ministry of Labor even goes a step further permitting self-employment as an individual person without the need to create a Panamanian corporation. But since the National Immigration Service and the Ministry of Labor are two different governmental entities, the Legal Department of the National Immigration Service establishes that in order to qualify for the “job offer” option of the Friendly Nations Visa the employer must be a Panamanian corporation. With the amendment of the law it is possible to create and own a Panamanian corporation, run your own business in Panama as a self-employed entrepreneur and still qualify for the Friendly Nations Visa through “labor reasons” in Panama without any “creative” practices or solutions.

It is important to mention that according to the new legislation, the Panamanian corporation must have a valid business license in Panama as well as a registered tax number (RUC) with the Panamanian Tax Office. It must also file an annual income tax return and pay its taxes on time.

How long is the work permit for the Friendly Nations Visa valid?

Previously the work permit for the Friendly Nations Visa was granted for three (3) years, however now the term has been adapted to the length of the residence permit. This means that you will get a two year work permit once your first application has been approved. With each renewal you will receive a three-year work permit. If your permanent residency in Panama has not been approved yet you must keep in mind to renew your work permit on time in order to be able to apply for your permanent residency without delays. Remember that in order to file for renewal of your work permit you must submit your income tax returns from Panama with the respective certificate of good standing issued by the Panamanian tax office.

I have a job offer from a local company in Panama and want to apply for the Friendly Nations Visa, what should I do?

As self-employed entrepreneur you run your own business even if you use a corporation (owned by you) to do so, whereas the Ministry of Labor defines a work relationship as “employee” when the conditions of legal subordination (command) or economic dependence between the worker and the employer are being fulfilled.

According to the updated Labor Code a foreign worker who wants to qualify for the Friendly Nations Visa through employment in Panama must comply with the percentages authorized by the Law. In general this means that there may be one foreigner working in the company for every nine Panamanian workers. These percentages must be proven through the presentation of the Social Security payroll to the Ministry of Labor. There are certain exceptions and additional rules to this requirement which is why each case would have to be analyzed in detail to comply with the current regulations.

My work permit has been approved, how long do I have to pick-up my resolution?

Another very important change is related to the notification process of the resolutions issued by the Ministry of Labor. Once the resolution is issued, the attorney has fifteen days to be notified of it. After this term, if the attorney has not made the notification, a total term of 45 additional days will be granted to complete the notification process. If this term expires without the notification of the resolution issued by the Ministry of Labor, the work permit granted will be automatically revoked and the file will be archived without further actions.

My work permit is about to expire, when should I file an application for renewal?

All work permit renewal applications must be submitted at least sixty calendar days prior to the expiration of the current work permit. Taking into account that it takes at least four to six weeks to prepare the respective file and collect all the necessary documents for the application, you should start the process for renewal four months before the expiration of your current work permit.

Do you have questions about the Panama Work Visa? Schedule a free initial consultation with us!