Among the most popular offshore banking destinations in the world, Panama offers a range of benefits for individuals and businesses who want to protect their privacy and assets from prying eyes, excessive taxes, or legal risks. To boost your benefits, International Wealth experts will explain how you can open a Panama bank account and enjoy what it has to offer.
Why choose Panama for offshore banking?
Panama has a long history of banking stability, security, and confidentiality. With over 70 banks from different countries, the jurisdiction offers a variety of services and products for local and international clients. Discover some of the reasons why Panama is such an attractive option for offshore banking:
- Panama has strict banking secrecy laws that protect the identity and information of account holders. In the absence of a court order or a serious criminal investigation, banks in Panama do not disclose any details about their clients to third parties.
- Panama comes with no exchange controls or currency restrictions. You are free to deposit, withdraw, or transfer funds in any currency you want, with no limitations or fees.
- The country does not tax interest income or capital gains earned by non-resident account holders. You only have to pay taxes in your country of residence, if applicable.
- It has a stable political and economic system, with a US dollar-based currency and a low inflation rate. Besides, Panama boasts a modern infrastructure, a strategic location, and a friendly business environment.
- Panama offers different types of bank accounts for any of your needs and goals. Whether you’d like to open a personal, corporate, savings, checking, or investment account, you can do it here. The same is true for fixed-term deposits.
How to open a Panama bank account?
Opening a bank account in Panama is not difficult, but it requires some preparation and documentation. You also need to choose the right bank and account type for your situation. Here are the steps to follow:
- Choose a bank: Although they have many banks in Panama that offer offshore banking services, not all of these banks are suitable for your needs. You should consider factors like the reputation, solvency, fees, services, products, and customer support of each bank.
- Select an account type: Depending on your goals and preferences, feel free to choose from different types of accounts in Panama. If you want to save money and earn interest, you can open a savings account or a fixed-term deposit. If your purpose is to access your money easily and make transactions, a checking account or a debit card account will work best for you. About to invest money and diversify your portfolio? Choose an investment or a brokerage account.
- Prepare the documents: Although the exact requirements may vary depending on the bank and the account type, here are the documents you’ll have to provide to prove your identity, address, income, and source of funds to a Panamanian bank:
- copy of your passport or Panama residency ID card (if you have one)
- Panama work permit copy (if applicable)
- proof of address, e.g., a utility bill or a rental agreement
- proof of income or source of funds, such as tax returns, financial statements, bank statements, or business contracts
- reference letter from your current bank or another reputable institution.
- Apply online or in person: Depending on the chosen bank and account type, you may be able to apply remotely for your Panama bank account. Some banks allow you to fill out an online application form and upload documents electronically. Others may require an applicant to send their documents by mail or courier. Occasionally, you may even have to visit the branch in person for an interview and verification. In any case, contact the bank beforehand and confirm their procedures and requirements.
- Activate your account: Once your application is approved and documents are verified, you can activate your account and start using it. For the above purpose, you may need to make an initial deposit or pay an opening fee. The bank will give you your account number, online banking credentials, debit card (if applicable), and other information.
How to protect your privacy and assets with a Panama bank account?
Simply opening a bank account in Panama is not enough to protect your privacy and assets. You also need to follow some best practices and precautions to ensure that your offshore banking experience is safe and secure.
This is why when you access your online banking platform or communicate with the bank by email or phone, use encryption and VPN software to protect your data from hackers, spies, or authorities. Encryption software scrambles the data so that only authorized parties can read it while VPN hides your IP address and location.
If you are a US citizen or resident, avoid opening a bank account in Panama with a US bank or a branch thereof. Subject to US laws and regulations, US banks and branches require that you report your account information to the IRS and other agencies. This can compromise your privacy and expose you to tax liabilities or penalties.
Even though Panama does not tax offshore income or capital gains, you may still have to pay taxes in your country of residence, depending on your tax status and laws. You should follow the recommendations of a tax professional and comply with tax obligations in your home country. Be sure to report your Panama bank account to tax authorities, if required by law. Failing to do so may result in fines, audits, or criminal charges.
A bank account in Panama is a great way to diversify your assets and reduce risk exposure. However, putting all eggs in one basket is never the best idea. Hence, do your best to diversify your assets across different countries, currencies, banks, and investment vehicles.
If you need more information or assistance on how to open a bank account in Panama, don’t hesitate to contact International Wealth for a free consultation. With our extensive experience and well-established relationships with the best banks in Panama, we will assist you every step of the way and ensure your success with opening a bank account there.