Key Takeaways
- A US resident can own 100 percent of a Panamanian corporation and run it remotely, with foreign directors and no requirement to live or hold residency in Panama.
- Because the United States taxes worldwide income, US owners must check IRS rules on foreign companies, including controlled-foreign-company rules and GILTI, plus US reporting obligations.
- Setting up is a document-driven process that rarely requires travel, with steps covering registration, the documents needed from the United States, costs, and timelines.
- Banking, moving money between Panama and the United States, the treaty position, and economic substance in Panama are practical points owners should address early.
Setting up a Panama company from United States
For a US resident, registering a company in Panama is a remote, document-driven process that rarely requires you to set foot in the country. The vehicle that makes this work is the Panamanian corporation, which permits full foreign ownership, foreign directors, and no requirement that you live or hold residency there. Founders typically use it for holding assets, regional trade across Latin America, or maintaining a foreign operating base, and the structure can be run entirely from the United States once it is established.
What you cannot treat as optional is your own tax position. The United States taxes its citizens and residents on worldwide income, and the IRS applies specific rules to Americans who own foreign companies, which shape almost every decision below. This article walks through how to set up, own, and run a Panama company from the US, how to bank and move money, and the home-country rules that decide whether the move is worth making at all.
Why founders in United States look to Panama
Panama operates a territorial tax system, meaning income earned outside the country is generally not taxed locally. For a US owner, this can simplify the Panamanian side of the ledger, though it does nothing to reduce your US tax exposure, which is the point most people misjudge.
The practical draws are geographic and commercial. Panama uses the US dollar as legal tender alongside its own balboa, so there is no currency conversion on most transactions, and its time zone and connectivity suit a US owner managing operations across the Americas.
Panama Company Incorporation in Panama
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Company types available to non-residents
A non-resident from the US has a small number of workable vehicles. Each allows full foreign ownership.
- Sociedad Anónima (corporation): the most common choice, a share-based corporation governed by Panama's long-standing corporation law. It permits foreign shareholders and directors and is widely used for holding and trading.
- Sociedad de Responsabilidad Limitada (limited liability company): a membership-based entity comparable in spirit to a US LLC, sometimes preferred for closely held ventures.
- Branch of a foreign company: registration of your existing US entity to operate directly, used less often by smaller founders because it exposes the parent.
Most US owners incorporate a Sociedad Anónima. The limited liability form can matter for US tax classification, discussed later, so the choice is not purely a local one.
Who can incorporate: eligibility for United States residents
There is no nationality or residency bar on owning a Panamanian company, and a US resident can hold 100 percent of the shares. A local registered agent, which must be a licensed Panamanian lawyer or law firm, is mandatory and handles the filing.
Directors are required, and their names appear in the public registry. Many owners appoint themselves; others use nominee directors for privacy, a choice that carries its own US reporting consequences covered below.
Panama Ongoing Compliance in Panama
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How to register a Panama company from United States
The sequence is straightforward and handled largely by your registered agent.
- Engage a licensed Panamanian registered agent and complete their client due-diligence checks.
- Reserve the company name and settle the directors, officers, and shareholders.
- Prepare and notarise the articles of incorporation through a Panamanian notary.
- File the deed with the Public Registry to bring the company into existence.
- Obtain the company's tax identification and any operating notice required for local activity.
Confirm your registered agent is a licensed Panamanian attorney or firm and ask how they handle US client due diligence; under-resourced agents create compliance gaps you inherit.
Documents you need from United States
From the US side, the work is mostly identity and authorisation paperwork. Your registered agent will specify the exact set, but expect to provide the following.
| Document | Notes |
|---|---|
| Passport copy | Certified or notarised in the US |
| Proof of address | Recent utility bill or bank statement |
| Bank or professional reference | Often requested for due diligence |
| Power of attorney | Authorises the agent to file on your behalf |
Where a document must be recognised in Panama, it is authenticated under the Apostille Convention, to which the United States is a party. A US notary notarises the document, after which the Secretary of State in the relevant state issues the apostille; you can confirm the process with your state authority. Plan for mailing time between the US and Panama, as originals are sometimes required.
Panama Panama Incorporation Pricing
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Costs to set up and maintain
Budget for distinct components rather than a single figure. Set-up costs combine the government incorporation charge, the registered agent's fee, and the registered office. Apostille and courier costs from the US are modest but real.
On an ongoing basis, a Panamanian corporation owes an annual franchise tax to maintain its good standing, plus the recurring registered agent and registered office fees. Confirm the current annual franchise amount with your agent, as it is set by statute and changes from time to time. Optional costs include nominee directors, accounting, and tax filing where the company has local activity.
How long it takes
Incorporation itself is quick once your documents are in order, often a handful of business days after the registered agent files. The longer variables sit on your side: gathering apostilled paperwork in the US and clearing due diligence.
Banking is the real timeline driver and can take several weeks to a few months. A realistic end-to-end estimate, from engagement to a funded, bankable company, is roughly four to twelve weeks.
Banking and moving money between Panama and United States
Opening a bank account is harder than incorporating, and US owners should plan for it explicitly. Panamanian banks apply strict know-your-customer and source-of-funds checks, and many are cautious about US clients because of US reporting obligations imposed on foreign financial institutions. Expect to provide a business plan, proof of the source of initial capital, and references, and to attend an interview, in person or by video.
Some owners keep banking outside Panama entirely, using a US or third-country business account, which is legitimate but does not remove any US reporting duty. Whatever you choose, a foreign account triggers US disclosure once balances cross modest thresholds.
Panama imposes no exchange controls and uses the US dollar, so moving capital in and out faces no local remittance cap. The constraints are practical rather than legal: banks scrutinise large or unusual transfers, and wires between the US and Panama can attract compliance review on both ends.
Treat the bank account as the critical path, not the incorporation. Line up references and source-of-funds evidence before you file.
Tax considerations for a United States resident owner
This is where the decision is genuinely made or unmade. Panama's territorial system does not shield a US owner from US tax, and the US rules below often determine the net outcome.
Home-country anti-deferral rules (CFC and GILTI)
A Panama company owned mostly by US persons is typically a controlled foreign corporation under US rules. That status can pull the company's income onto your US return even if nothing is distributed, through Subpart F for certain passive and related-party income and through the global intangible low-taxed income (GILTI) regime for active earnings. In short, the deferral benefit that an offshore company appears to offer is largely switched off for a US owner, and you may owe US tax on profits left inside the company.
Because the mechanics, rates, and any deductions or credits depend on your overall facts and change over time, confirm the current treatment with a US tax adviser before you incorporate. The entity classification of a Sociedad de Responsabilidad Limitada also matters, because a "check-the-box" election can change whether the income flows through to you directly or is treated as a corporation.
The treaty position
There is no comprehensive double-tax treaty between the United States and Panama. For you, that means no treaty relief to lean on and no reduced withholding negotiated by treaty; you rely on the US foreign tax credit and domestic rules to avoid double taxation.
The two countries do have a tax information exchange agreement, so do not assume the structure is opaque to US authorities. Information about your company and accounts can reach the IRS through exchange and through bank reporting.
Reporting obligations in the United States
US ownership of a foreign corporation carries substantial reporting, separate from any tax owed. A US shareholder of a controlled foreign corporation generally files Form 5471 annually, and the penalties for missing it are severe.
A foreign bank or financial account over the reporting threshold triggers an FBAR filing with FinCEN, and foreign financial assets above the applicable level are reported on Form 8938 with your return. Funding the company may itself be reportable, and serving as an officer or director can affect which schedules apply, so map your filings before money moves.
Bringing profits back to United States
Dividends paid from the company to you are taxable in the US, with credit available for foreign tax already suffered, though Panama's territorial treatment may mean little foreign tax was paid to credit. Salary you draw is ordinary US income and may carry payroll-style consequences depending on structure.
Because GILTI or Subpart F may already have taxed the underlying profit, careful tracking prevents the same income being taxed twice on distribution. This is a coordination exercise best handled with an adviser rather than improvised.
Economic substance in Panama
Panama has adopted substance and reporting expectations in line with international standards, particularly for entities claiming benefits or conducting certain mobile activities. A pure shell with no presence can attract scrutiny and may not achieve what the owner intended.
If the company will hold assets or trade, consider what real activity, accounting records, and local footing it can demonstrate. Substance also strengthens the position you take on your US return.
Common mistakes United States-based owners make
The recurring errors are rarely about Panamanian law; they are about underestimating the US side.
- Assuming territorial tax means tax-free. It does not for a US person. CFC, GILTI, and Subpart F can tax undistributed profits, and ignoring this is the costliest mistake.
- Missing Form 5471 or FBAR. These information filings carry heavy penalties even when no tax is due. Treat them as mandatory from year one.
- Treating banking as an afterthought. Many incorporate first and discover months later they cannot open an account. Validate banking feasibility before filing.
- Believing the structure is invisible. A tax information exchange agreement and bank reporting mean US authorities can see the company.
- Using nominees without understanding US reporting. Nominee directors do not remove your beneficial-ownership reporting obligations and can complicate, not simplify, your filings.
- Skipping substance. A do-nothing shell invites questions in both jurisdictions and undermines the position taken on your return.
Conclusion
For a US resident, a Panama company is a credible holding or regional-trading vehicle, but it is not a tax shelter; the US controlled-foreign-corporation rules largely neutralise the deferral that draws people to it. The right reason to use it is operational fit and dollar-based regional access, not an expectation of escaping US tax.
Before you commit, get a US tax adviser to model your specific facts under GILTI and Subpart F, and confirm exactly which annual filings you will owe. That single step decides whether the structure helps you or simply adds cost and reporting.
How Expanship Can Help You Incorporate in Panama
Expanship sets up and administers Panama companies for owners based in the United States, handling the registered agent relationship, the filing, and the apostille coordination so the process runs without travel. We also support the parts that catch US owners out, from banking introductions to ongoing local compliance, and coordinate with your US tax adviser where the two systems meet.
For a foreign-owned entity, our services cover the full lifecycle of the company.
- Company incorporation and name reservation in Panama
- Licensed registered agent and registered office
- Tax registration and economic-substance support
- Ongoing compliance and annual maintenance
- Accounting and bookkeeping
- Banking introductions for US-based owners
To discuss your structure and next steps, contact Expanship Panama.
Frequently Asked Questions
Yes, in most cases. Your registered agent files on your behalf under a power of attorney, and identity documents are notarised and apostilled in the US and sent over. A bank may still ask for a video or in-person interview.
Yes. There is no nationality or residency restriction on ownership, and you may hold all the shares and act as director. You will, however, carry full US reporting and tax obligations as the owner.
Very likely yes. As a US owner of a controlled foreign corporation, rules such as GILTI and Subpart F can tax the company's profits on your US return even when undistributed, and Panama's territorial system does not change that.
It is the most demanding part of the process. Panamanian banks apply strict due diligence and are cautious with US clients, so expect to provide source-of-funds evidence and references and to allow several weeks to a few months.
Incorporation is often a matter of days once documents are ready, but the realistic end-to-end timeline, including apostilles and banking, runs roughly four to twelve weeks. Banking is usually the slowest element.
Yes. US ownership typically requires Form 5471 each year, an FBAR for foreign accounts over the threshold, and possibly Form 8938, and a tax information exchange agreement means the structure is not hidden from the IRS.
Legal Disclaimer
The information provided in this article is for general informational purposes only and does not constitute legal, tax, or professional advice. While we strive to ensure the accuracy and timeliness of the content, laws and regulations are subject to change, and the application of laws can vary widely based on specific facts and circumstances.
Readers should not act upon this information without seeking professional counsel tailored to their individual situation. Expanship and its authors disclaim any liability for actions taken or not taken based on the content of this article.
For specific advice regarding your business setup, compliance requirements, or any legal matters, please consult with qualified legal and tax professionals in the relevant jurisdiction.
