Panama Work Permits: Complete Guide for Foreigners

To work legally in Panama, you need BOTH permanent residency (Pensionado $1,000/month pension, Entrepreneur $160,000 investment, Investment $300,000 minimum, Professional with job offer, or Digital Nomad $1,500/month) AND a work permit issued by MITRADEL (Ministry of Labor). Companies face strict foreign worker quotas: 10% for ordinary personnel (admin/technical) and 15% for specialized roles (managers/specialists). Minimum salary requirement is $850/month. Work permits typically process in 1-3 months and cost $200-$400. Restricted professions include law, engineering, accounting, psychology, medicine, and teaching (reserved for Panamanian nationals). Penalties for unauthorized work: $500-$2,000 individual fines, $1,000-$5,000 company penalties, deportation, and potential re-entry ban.

Understanding Panama's Work Permit System

One of the most common questions I get from foreigners in Panama is: "Can I legally work here?" The short answer is yes, but you need to understand the system. Panama requires both residency status AND a work permit to legally employ a foreigner. It's a two-step process that many people overlook, leading to serious problems.

The Two-Step Process: Residency + Work Permit

This is critical to understand: owning a business is different from working as an employee. Here's what you need:

Step 1: Obtain Permanent Residence

Before you can apply for a work permit, you must first secure permanent residency through one of Panama's visa programs (Pensionado, Entrepreneur, Investment, etc.). You cannot work on a tourist visa.

Step 2: Apply for Work Permit

Once you have residency, your employer (or you, if self-employed through a Panamanian company) applies for a work permit through MITRADEL (Ministry of Labor).

Residency Options for Working in Panama

Several visa programs allow you to work in Panama:

• Pensionado Visa: USD $1,000/month pension income required (minimum 2 years residency before working)
• Entrepreneur Visa: USD $160,000 investment in a Panamanian business
• Investment Visa: USD $300,000 minimum investment in real estate or other sectors
• Professional Visa: Job offer from a Panamanian company with proof of employment
• Digital Nomad Visa: USD $1,500/month income requirement (Executive Decree 198)
• Family/Marriage Visa: Sponsorship by a Panamanian spouse or relative

Employment Quotas: The Foreign Worker Limit

Panama has strict employment quotas limiting how many foreign workers a company can employ. This is one of the most important restrictions to understand:

Ordinary Personnel Quota: 10%

Administrative and operational staff (clerical, technical, support roles) are limited to 10% of your workforce. For example:

• Company with 10 employees: maximum 1 foreigner
• Company with 50 employees: maximum 5 foreigners
• Company with 100 employees: maximum 10 foreigners

Specialized Personnel Quota: 15%

Managers, supervisors, technicians, and specialists can be up to 15% of your workforce. This includes:

• Executives and management
• Technical specialists with specific expertise
• Highly specialized professionals

These quotas are strictly enforced. If you exceed them, you risk heavy fines and legal action against your company.

Salary Requirements

Foreign employees must earn a minimum salary of USD $850 per month. This is a baseline requirement that hasn't changed significantly in recent years. Many companies pay much more, but this is the legal minimum.

Employment Duration Limits

Foreign workers are typically permitted to stay in Panama for a maximum of six years under work permit status. After six years, they must:

• Apply for a different type of residency (Pensionado, Investment, etc.)
• Leave Panama and return with a different visa classification
• Negotiate a contract renewal with their employer

This is important for expatriates planning long-term careers in Panama, work permits aren't indefinite.

Restricted Professions

Certain professions in Panama are exclusively reserved for Panamanian nationals, regardless of your qualifications or experience:

• Law and legal practice
• Engineering and architecture (some exceptions for specific expertise)
• Accounting and auditing
• Psychology and mental health services
• Medicine and medical practice (with very limited exceptions)
• Education (primary and secondary level teaching)

If you're in one of these fields, you'll need special authorization, additional licensing, or Panamanian citizenship to work. Most foreigners in these professions either own companies in their field (hiring others to practice) or work remotely for foreign employers.

Work Permit Application Requirements

To apply for a work permit through professional legal services, you'll typically need:

• Valid residency visa or permanent residency status
• Valid passport (copy)
• Employment contract (original and copies)
• Company registration documents (articles of incorporation)
• Company's most recent financial statements
• Proof of employee's qualifications or experience
• Medical examination certificate
• Police clearance if required
• Application fee (approximately USD $200-$400)

Processing Timeline

Work permit applications typically take 1-3 months to process, depending on MITRADEL's workload and the complexity of your case. Some applications move faster, while others can take longer. Your lawyer should provide realistic timelines based on current processing backlogs.

The 2025 Humanitarian Protection Work Permit

In March 2025, Panama created a new work permit category: the Humanitarian Protection Work Permit. This is designed for undocumented foreigners who have resided in Panama for more than one year. Key features:

• Valid for two years
• Renewable for up to six additional years
• Designed for humanitarian protection of vulnerable migrants
• Limited employment sectors available

This doesn't affect most expatriates but shows Panama's evolving approach to labor migration.

Self-Employment and Running Your Own Business

If you own a Panamanian company, the process is different. You don't apply for a traditional "work permit" as an employee. Instead:

• You need permanent residency (Pensionado, Investment, Entrepreneur visa)
• Your company is registered with the Public Registry
• You obtain your RUC (Tax ID)
• You can manage and work in your own company

However, if you employ Panamanian or foreign staff, those employees still need work permits under the quota system.

Penalties for Working Without a Permit

Working in Panama without proper authorization carries serious consequences:

• Fines: USD $500-$2,000 per violation
• Company penalties: USD $1,000-$5,000 for employing unauthorized workers
• Deportation: Immigration can initiate deportation proceedings
• Ban on re-entry: Serious violations can result in being banned from re-entering Panama
• Legal liability: Both employer and employee can face criminal charges in some cases

The risks are real. I've seen expatriates receive deportation orders and hefty fines for working illegally, even unintentionally.

Common Workarounds and Their Risks

Remote Work for Foreign Employers

If you work remotely for a non-Panamanian company while living in Panama, the technical requirement is still to have a work permit. However, enforcement is challenging, and many digital nomads operate in a gray area. The Digital Nomad Visa (USD $1,500/month) provides legal cover for this arrangement.

Consulting and Contract Work

Some foreigners register as independent contractors or consultants. While technically you still need residency and potentially a permit, enforcement varies. This is a gray area, getting legal advice before proceeding is wise.

A Consultant's Recommendation

Working legally in Panama requires patience and proper planning, but it's worth the effort. The system is designed to protect Panamanian employment while welcoming skilled foreign talent. My advice:

• Plan ahead: Don't wait until you're already in Panama to arrange residency and work permits
• Get proper legal advice: Work with an immigration attorney familiar with your specific situation
• Follow the rules: The consequences of cutting corners aren't worth the savings
• Consider self-employment: If possible, starting your own business avoids many complications
• Document everything: Keep all employment contracts, permit approvals, and correspondence

Panama's system is more accessible than many countries, but it requires respect and compliance. Do it right, and you'll have a smooth experience working in one of Central America's most dynamic business environments.

Related Panama City Resources

• Panama City Complete Guide
• Legal and Immigration Services in Panama City
• More Panama Living and Working Guides
• List Your Professional Services