Banking, pensions and tax in Panama
Panama taxes only income earned inside the country, so pensions paid from abroad are not taxed in Panama at all.
How your pension reaches a Panama bank, what Panama taxes, and what you still report at home. Checked against official sources on Oct 7, 2026.
- Tax on a foreign pension
- 0% A foreign pension is not taxed. PwC Tax Summaries. Checked Oct 7, 2026.
- Top rate, local income
- 25% Over $50,000. PwC Tax Summaries. Checked Oct 7, 2026.
- US Social Security
- Direct deposit Social Security Administration; SSA POMS. Checked Oct 7, 2026.
- UK State Pension
- Paid abroad GOV.UK. Checked Oct 7, 2026.
- Canada OAS
- 20-year rule Canada.ca. Checked Oct 7, 2026.
- US FBAR
- Over $10,000 Combined foreign accounts at any time in the year. FinCEN. Checked Oct 7, 2026.
Getting your pension paid in Panama
United States
Social Security
Yes. Social Security can be paid straight into a Panamanian bank account: the Social Security Administration has a direct deposit sign-up form for Panama and rules for coding Panamanian bank details.
Social Security Administration; SSA POMS. Checked Oct 7, 2026.
United Kingdom
State Pension
It can be paid into a bank in Panama or a UK account, with a 0.39% charge when converted. It rises each year only if you live in the EEA, Gibraltar, Switzerland or a country with a UK social security agreement; Panama is not in the first three, so check GOV.UK's agreement list. Elsewhere it stays at the rate you first got abroad.
GOV.UK. Checked Oct 7, 2026.
Canada
Old Age Security
Paid while you live outside Canada only if you lived in Canada for at least 20 years after age 18, or reach 20 years by combining time in a country with a social security agreement with Canada.
Canada.ca. Checked Oct 7, 2026.
Other countries: check whether your pension can be paid abroad, whether it keeps rising with inflation there, and whether your country has a social security agreement with Panama.
How Panama taxes you
Panama taxes residents only on income earned in Panama. A pension, dividends or rent from abroad are outside it. The income tax scale:
| Taxable income | Rate |
|---|---|
| Up to $11,000 | 0% |
| $11,000 to $50,000 | 15% |
| Over $50,000 | 25%, plus $5,850 |
PwC Tax Summaries. Checked Oct 7, 2026.
What US citizens still report
US citizens file a US return on worldwide income wherever they live; there is no US income tax treaty with Panama. Two reports cover money held abroad:
| FBAR (FinCEN Form 114) | Over $10,000 combined, any time |
| Form 8938, single, living abroad | Over $200,000 at year end or $300,000 any time |
| Form 8938, married filing jointly | Over $400,000 at year end or $600,000 any time |
FinCEN; IRS. Checked Oct 7, 2026.
Pension and tax questions
Can I get US Social Security paid in Panama?
Yes. Social Security can be paid straight into a Panamanian bank account: the Social Security Administration has a direct deposit sign-up form for Panama and rules for coding Panamanian bank details.
Will my UK State Pension go up each year in Panama?
It can be paid into a bank in Panama or a UK account, with a 0.39% charge when converted. It rises each year only if you live in the EEA, Gibraltar, Switzerland or a country with a UK social security agreement; Panama is not in the first three, so check GOV.UK's agreement list. Elsewhere it stays at the rate you first got abroad.
Is my pension taxed in Panama?
No. Panama taxes only income earned in Panama, so a pension from abroad is not taxed there. US citizens still file a US return.
Do I still file a US tax return?
Yes, US citizens file on worldwide income wherever they live, and report foreign accounts on an FBAR once they pass $10,000 combined at any point in the year.
