Special Passport of the Republic of Panama

Special Passport of the Republic of Panama

The Special Panamanian Passport together with Rentier Investor Visa are granted along with other benefits to the qualified foreigners that place a Fix term deposit with the National Bank of Panama and fulfill other legal requierements. The passport allows its holders to travel to a number of countries visa-free Аll countries of the Schengen Area: Austria, Belgium, Germany, France, Spain, Italy, Portugal, Netherlands, Sweden, Switzerland, Latvia, Lithuania, Estonia, etc., some European Union countries that are not members of Schengen area such as Cyprus and others, and other countries of Central and South America, Africa and Asia. Currently there are negotiations between Governments of Russian Federation and Panama to abolish entry visas between the countries. After the conclusion of such agreement all foreign nationals that currently need entry visa to Russian Federation will be able to apply for Special Panama Passport and travel to Russian Federation visa-free.

Current Advantages, of the Republic of Panama The Republic of Panama in recent years has established itself as a stable developing country, with economic indicators forecasting annual growth. Over the last six years, he country has become increasingly open to foreign investments and focused on the development of a modern services sector, including financial, transport and logistics, real estate, tourism and hospitality Unique geographical location Economical stability Stable currency US Dollar is the official currency (Panama s official currency, the Balboa trades at par with the U.S. dollar) Steady banking system Favorable legislation Favorable investment climate Initial focus on the development of investment system Country s relatively low risks (proved by various international ratings agencies) The Colon Duty-Free Trade Zone Extensive transportation and logistics network (Panama Canal, International airport) Favorable climatic conditions for development of tourism industry Sustainable urban infrastructure including subways, highways and public transport facilities under construction Access to frontline services, increasing the life quality for citizens including mobile communications, high-speed Internet, etc. High level of medical assistance Highly skilled workforce, advanced legal and accounting sectors Ability to communicate in main World languages

Regulations on tax privileges and other benefits as provided by panamanian legislation Cabinet decree on rentier investors Since the Seventies of the last century, the Republic of Panama carries out activities aimed at turning the country into an international financial center, one of the main principles of which is the territorial principle of taxation, under which profits earned overseas are exempt from income tax in the territory of Panama. Up to now, individuals, as well as legal persons, incur income tax liability only on earnings generated or produced within the Panamanian territory. Panama charges no income tax on foreign-earned profits. By Executive Decree No. 260 of July 30, 1970, as further reworded by the Laws No. 6 of April 27, 1979 and No.24 of June 8, 1987, later amended by the Cabinet Decree on Rentier Investors status, Panama offers various benefits for foreign retirees or those individuals, who are no longer in their active working life. Provisions of the above decrees applied to the exemption from custom duties imposed on household products and personal-use goods which cannot exceed 10. 000 U.S. dollars, exemptions granted for the importation of motor vehicles every two years and immigration duty exemptions. By the Law No. 9 of June 24, 1987, Panama offers to foreign Rentier Investors the benefit of a Special Passport of the Republic of Panama, giving its holder non-immigrant visa status, with no right to opt for Panamanian nationality. In order to understand the immigration status of foreigners that are eligible to obtain Special Panamanian passport, it is first necessary to determine who Rentier Investors are. Generally, the term rentiers shall mean individuals that receive income derived from assets managed by them or by third parties, which can include income from dividends or securities paid interest. Under all circumstances, Rentier Investor is a person that lives on permanent income derived from assets or property of any kind or other investments profit. According to provisions established by the Cabinet Decree on Rentier Investors No.320 as of August 8, 2008, regulating the Law No. 3 as of February 22, 2008, the Decree on Rentier Investors applies to foreigners, who have finished their active working life and live on the income derived from available assets and functioning business capital. However, such foreigners shall have the right to monitor and manage the company s activities, existing business assets and participate in its profits. Foreign person, who comes under such definition, shall maintain a Fix time deposit, opened in its own name for a period of five years with the National Bank of Panama (Banco Nacional de Panama). Such notion may be applied either to individual foreign applicant or to the head of family with its dependent(s) (husband or wife, may be chose as the main applicant) including their children. As per actual Nation Bank of Panama rates of 2,5-2,8% per annum, Rentier Investors are requested to have a minimum monthly income of 850.00 U.S. dollars which is generated exclusively from a Fix term deposit. Today the minimum amount for a Fix term deposit starts from 390.000 U.S. dollars. The fixed term deposits are set with the National Bank of Panama in order to assure the country s economic stability and is the main objective of establishing of the aforesaid Cabinet Decree. The amounts placed on the deposits shall be completely free of any encumbrance during the whole term of deposit agreement. Once the Fix term deposit is made with the National Bank of Panama, the application shall be filed with the National Migration Service of the Republic of Panama, which after reviewing and positive decision, grants a permission for the applicant to temporarily reside on the territory of the Republic of Panama under Reintier Investor visa status and a right to obtain a Special Panama Passport from the Panamanian Passport Authority. The passport is granted for five years and concurs with the Fix term deposit agreement with National Bank of Panama, concluded for the same period of time. Only applicants, who are qualified under the category of Rentier Investors, shall be permitted (under the Immigration Laws of Panama) to obtain such Special Panama Passports. This permission also applies to their dependents, such as husband or spouse and children under eighteen (18) or under twenty five (25) years old, if they currently enrolled in institutions of higher education (universities) and prove that they are financially dependent from the applicant. All special passports issued to applicants have the same form, color and emblems as a regular Panamanian citizen passport. The only difference is that the regular citizen passport contains an official record of Panamanian citizenship, while the special passport of Rentier Investors includes data on national identity it states the actual citizenship of Rentier Investors and valid passport number of their country of origin.

Rights, obligations and restrictions for persons under the rentier investors status Those individuals, who have obtained Rentier Investor Visa status are subject of the same basic rights granted to foreigners in accordance with restrictions and authorizations pertaining to retail trade and execution of political and electoral rights as well as occupation of positions in Government institutions and bodies as prescribed by the Law. It is important to note that, all foreigners under the Rentier Investors visa status, obtained pursuant to the Law No. 9 as of 1987 and later amended by the Executive Decree No. 62 as of August, 1987, shall have the following rights and responsibilities: Foreign citizens holding Rentier Investor visa status shall notify the Department of Migration of any change in their residential address, Rentier Investors shall be eligible for full or partial exemption from customs duties on motor vehicles and property imported into the customs territory of the Republic of Panama, which is held valid for a year from the notice of the visa application approval, All motor vehicles imported by Rentier Investors into the customs territory of the Republic of Panama free of duty, may not be further disposed of if relevant income taxes have not been previously paid for, If the aforesaid motor vehicles imported into the customs territory of the Republic of Panama free of duty and disposed of pursuant to the income tax payment regulations (as confirmed by respective documents), Rentier Investors shall have the right to import the other motor vehicle, regardless of whether or not two legislatively prescribed years have passed, Household products may not be disposed of within three years, if relevant income taxes have not been previously paid for, Rentier Investors shall have the right to change their current immigration status, yet in this case, all benefits previously granted by the law under the Rentier Investors visa shall be cancelled, including permission to obtain Special Passport of the Republic of Panama. Rentier Investors, who have obtained immigrant visas shall not be entitled to apply for the Rentier Investors visa, Rentier Investors shall not have labor permit, except for the cases, when a person renders special services to the state, invest capital to private companies or is occupied as a member of the board of such companies, Rentier Investors shall establish a long term deposit account at the National Bank of Panama for a period of at least five (5) years, which is renewed, as long as the visa and/or Special Panama Passport are being extended, Rentier Investors shall have the right to qualify their family members as their dependents, Rentier Investors, his or her spouse and their minors dependent up to eighteen (18) years old, shall have the right to Special Panama Passport, Rentier Investors shall have the right to invest funds arising under the Constitution and applicable Laws of the Republic of Panama, Rentier Investors shall have the right to permanent residence in the country (the Republic of Panama), if they refuse from Special Panama Passport and requalify under an immigrant visa status, In case of the death of Rentier Investor, his/her relatives shall have the right for obtaining a temporary status of retiree tourist for the whole time of burial and further apply for an immigrant visa, In case of the death of Rentier Investor, his/her relatives shall have the right to obtain immigrant visa in accordance with the provisions prescribed by the law.

Required documents for rentier investor visa In order to obtain a Rentier Investor Visa, applicants and members of their families should visit the Republic of Panama at least twice. During the first visit it is necessary to open a Fix term deposit with National Bank of Panama and further on submit an application in person to the National Migration Service of the Republic of Panama and to visit the Republic of Panama second time in order to obtain respective notifications, certificates and Rentier Investor cards issued by Panama National Migration Service and further to receive Special Passports trough the Panamanian Passport Authority. It is assumed that the minimum time required for each visit is a minimum of 10 days. 1. To fill in Application request for a visa and grant special Power of Attorney to a Panamanian lawyer, duly admitted to the practice of law in the Republic of Panama. The Power of Attorney should contain full name of the applicant s parents; request for visa should contain the lawyer s personal data (such as, name, identity card number, principal place of business, phone, fax, P.O. Box). All documents required are defined in the first paragraph, Chapter II On the special measures and activities, of the Cabinet Decree No.320 as of August 8, 2008. 2. 3. 4. 5. 6. 7. Medical Certificate of Good Health, stating the absence of any contagious disease, issued no more than three (3) months before the date of the submission of documents to Panama Migration Service (should be signed and sealed with the name, code and registration number of the doctor). Police Certificate of Good Conduct, from the applicant s country of origin - shall be applied only if the applicant has resided continuously in Panama for less than five years. Applied to all Rentier Investors family members older 18 years old. Two photocopies of the applicant s and its dependents entire passport, authenticated by a Panamanian Notary or by an Apostille of the Hague Convention. Four (4) passport-sized photos. Mandatory requirements for men: suit and ties; for women: high neckline dress. Original valid passport of a country of origin. Written confirmation letter, issued by the National Bank of Panama, evidencing that the applicant has sufficient monthly income of at least 850 U.S. dollars, which is generated exclusively from a five years Fixed-term deposit, completely free of any encumbrance and guarantee of any nature. 8. 9. Two copies of Fix term deposit certificates or contracts concluded for a five years period, authenticated by the National Bank of Panama. All original documents must be furnished with two copies, excluding passport. All documents must be translated in to Spanish language and bear Apostille of Hague Convention. The Special Panama Passports are granted for a period of five (5) years. Upon expiration of the five (5) years, extensions may be requested by Rentier Investors as long as the Fixed term deposit is renewed for another period of five years. There are some countries requesting visaentry for holders of Panamanian passports, in this case it is necessary to apply for visa to an Embassy of the country where the applicant plans to travel, as prescribed by the law. Rentier Investors with Panamanian Special Passport need visa for such countries as: USA, Great Britain and Canada.

Main differences of the rentier investor special panama passport from other existing economic citizenship and second passport programs 1. 2. At no time shall a possession of the Special Panama Passport be considered as a proof of the Panamanian nationality (citizenship), thus it does not violate the laws of the countries where dual citizenship is prohibited, including Ukraine, Kazakhstan, Latvia and other countries. In other programs of official second citizenship such as Nevis and Dominica the applicant becomes a citizen of these countries. The possession of the Special Panama Passport and Rentier Investor Visa status are not considered as a residence permit, which is a different type of immigrant status according to Panama Migration Laws and thus it does not violate the laws of those countries, where citizens are prohibited from applying for foreign residence and immigrant permits. 3. 4. All funds deposited in the National Bank of Panama shall not be withdrawn during the whole period of the Rentier Investor visa status duration. Upon expiration of deposit agreement with National Bank of Panama, the holder of such Fix term deposit shall have the right to refuse from the Rentier Investor status and get back the money or to renew the deposit agreement and thus renew the Rentier Investor visa. Under all other existing economic citizenship and Second passport programs, among which are Nevis and Dominica the funds are permanently invested in sugar industry or real estate funds, thus losing their liquidity and as a matter of fact never returned to the investor. Rentier Investors can remain and reside during five year period of time in Panama and declare in Panama their overseas incomes annually under zero tax rate as per territorial principle of taxation under Panama Law.

Midland Counselors The whole procedure, including opening of Fixed-term deposit in the National Bank of Panama, applying to the National Migration Service of the Republic of Panama and obtaining the Rentier Investor Visa and Special Passport shall take about 2-6 months. Personal presence of applicants at the National Migration Service and Panamanian Passport Authority during submission of visa application and obtaining the Special Panama Passport is mandatory. The staff of Midland Counselors Panama s office will be glad to answer all the inquiries and assist at all stages of application of the Rentier Investor visa. Midland Counselors Ave. Ricardo J. Alfaro, «The Century Tower» build., Office 905, Panama City, Republic of Panama. Contact us: Tel.: +507 390 7340 Fax: +507 390 7341 E-mail: Oscar Augusto Cedeno oc@midlandcounselorsatlaw.com Maxim Stepanov ms@midlandcounselorsatlaw.com