Updated May 2026 · The two big LATAM territorial residencies
Last reviewed: Fact-checked against official sources
two LATAM territorial residencies that have drifted apart since 2021.
Panama was the default Latin-American second residency for two decades. Paraguay has spent the last three years quietly taking that crown. Panama's once-easy Friendly Nations Visa got harder in 2021 (now needs a US$ 200,000 real-estate investment or a job-bearing Panamanian company). Paraguay's standard residency under Ley 6984/2022 stayed at ~US$ 460 with no investment threshold. The dollar-economy, the proximity-to-the-US, the banking depth — those are real Panama advantages. But the cost-and-paperwork curve has clearly bent in Paraguay's favour.
At a glance
| Parameter | Paraguay | Panama | Edge |
|---|---|---|---|
| Residency cost (gov fees) | ~US$ 460 | ~US$ 7,500–15,000 + investment | Paraguay |
| Investment requirement | None for standard route | US$ 200,000 real estate OR Panamanian payroll job | Paraguay |
| Time to permanent residency | Direct PR via Investor Pass (~5 days CIE) | Friendly Nations Visa: 30–60 days; PR after 2 yrs | Paraguay |
| Foreign-income tax | 0% (territorial) | 0% (territorial) | Tie |
| Minimum stay to keep residency | None for PR | 1 day every 2 years | Tie |
| Citizenship clock | 3 yrs PR | 5 yrs PR (more discretionary) | Paraguay |
| Cost of living (Asunción vs Panama City) | ~US$ 1,082/mo single | ~US$ 1,650/mo single | Paraguay |
| Currency / banking depth | PYG + USD widely used; BCP-supervised banking | USD economy; one of LATAM's deepest banking sectors | Panama |
What does each residency actually require?
Both run a temporary → permanent arc. The bar to enter is the differentiator.
Standard temp residency: ~US$ 460, no investment. Clean federal criminal record + birth certificate apostilled + ~3 months. Convert to PR after 2 years. Investor Pass route: US$ 70,000 (productive) to US$ 200,000 (real estate / financial) for direct PR in ~5 days under Resolución MIC 0283/2026.
Friendly Nations Visa (FNV) — Panama's old fast track. Restructured in 2021: now requires either US$ 200,000 in Panamanian real estate (titled, not promised), or a 3-year contract with a Panamanian company on Caja Social Seguro registration (i.e. a real job paying into Panama's social security). Gov + legal fees ~US$ 7,500–15,000. Other routes: Pensionado (US$ 1,000/month foreign pension), Qualified Investor (US$ 300,000 real estate, US$ 500,000 securities).
How is foreign income taxed in each?
Both territorial. The mechanics differ.
Foreign-source income outside the IRP base under Ley 6380/2019 — permanent, no holiday expiry. Paraguay-source IRP capped at 10%. Corporate IRE 10% flat on Paraguay-source. No wealth tax. No inheritance tax on foreign assets.
Foreign-source income outside the ISR base. Local income taxed at progressive 15–25% (personal) and 25% (corporate flat). Dividends from Panamanian-source income 10–20%. Bigger withholding apparatus than Paraguay (banks withhold ~5% on foreign transfers as anti-money-laundering compliance). No wealth tax. No inheritance tax on foreign assets.
Cost of living — what daily life costs
Panama City is substantially more expensive than Asunción, similar to Mexico City.
Asunción ~US$ 1,082/month single all-in. Villa Morra 1-bed US$ 700; mid-range restaurant meal for 2 US$ 40; specialty coffee US$ 3–5.
Panama City ~US$ 1,650/month single all-in. El Cangrejo or Casco Viejo 1-bed US$ 1,200; supermarket basket roughly 1.4× Asunción; restaurant a step above. Mid-tier private health insurance US$ 80–140/month.
How long until a passport?
Panama's 5-year clock is shorter than most LATAM countries but slower than Paraguay's 3-year rule.
3 years of PR + Spanish/Guaraní conversational test + Supreme Court ruling. Constitution Art. 148. Court queue 12–24 months once filed.
5 years of PR + Spanish language interview + civics test + demonstrated economic ties. More discretionary in practice; absence-heavy applicants are routinely refused even at the 5-year mark.
Which one fits your situation?
If you have US$ 200,000+ ready to deploy and want the dollar economy, Panama still wins on banking and US proximity. If you don't, Paraguay wins on every other axis.
Pick Paraguay
You want the cheapest serious second residency in the Americas. You don't have US$ 200,000 sitting in liquid form to anchor a Panama application. You value the 3-year (vs 5-year) citizenship clock. You don't need to do business in dollars at scale. You're fine with PYG + USD being both common.
Pick Panama
You have US$ 200,000–500,000+ to deploy and want to put it in Panamanian real estate or securities. You need a USD-denominated banking and business base, with the depth Panama City offers (regional HQ of many multinationals; fiber-optic network with US Latency parity). You're closer to the US and need short-haul commutes.
Frequently asked
Not anymore, and the gap is large. Pre-2021 the FNV was the easiest fast-track in LATAM: prove economic ties with US$ 5,000 in a Panama bank or a simple letter from a Panamanian company and you were in. The 2021 reform pushed the bar up to US$ 200,000 in Panamanian real estate or a genuine Panama-payroll job registered with Caja Social Seguro. That puts Panama's cost-of-entry closer to Uruguay's than to Paraguay's.
Panama, clearly. Panama City is one of Latin America's deepest banking centres — multinational presence, USD denomination, sophisticated wealth-management infrastructure. Paraguay's banks (Itaú, Continental, BBVA) are competent and use IBAN-like CBU equivalents, but the depth and product range is a step below. For PHN portfolio management or international corporate banking, Panama is better. For day-to-day life as a relocator, Paraguay's banks are sufficient.
It's a bit more complex on the Panama side. Both are territorial at the core. Panama runs more local-income brackets (15–25% personal against Paraguay's 8–10%), and Panamanian banks withhold more aggressively for AML compliance. Paraguay is the cleaner pick if you want a pure-territorial play with nothing moving behind the scenes. Panama does hold tax treaties with more OECD countries, which matters for certain structures.
No wealth tax in either country. No inheritance tax on foreign assets in either country. Both treat local real-estate transfers separately (Panamanian property has a transfer tax; Paraguayan real estate has IVA + transfer fees).
Next steps
Confirm Paraguay is your fit on the eligibility quiz, see the actual numbers on the cost calculator, then walk the full process on the residency guide.