Many professionals are embracing the digital nomad lifestyle. Traveling while doing your job from anywhere with an Internet connection — isn’t that living the dream?
The digital nomad lifestyle has become so popular that several Latin American countries like Panama have created a special category of nomad visas.
However, employing remote workers living temporarily in Panama can create challenges for employers if they are unfamiliar with the rules and laws surrounding these visas.
To help you better understand what it means to work with an employee with a Panamanian nomad visa, we have created this helpful guide that covers:
- Nomad visa requirements
- Panamanian labor laws
- Factors to consider when working with digital nomads
What Is a Digital Nomad?
A digital nomad is a remote worker that does not have a permanent address. Digital nomads travel frequently to different countries and bring their work along with them, typically only staying in a particular location for a few months to one year.
The Benefits of Working With Digital Nomads in Panama
Here are some advantages of hiring a digital nomad living in Panama.
- Lower overhead costs
- Access to a wider talent pool
- Workers with specialized skills and knowledge
- Adding staff in different timezones, so you can have people working at all times
What Is Panama’s Nomad Visa?
Panama’s digital nomad visa, officially known as the Short-Stay Visa for Remote Workers, was introduced in May 2021 in response to the COVID-19 pandemic.
The temporary work and residence permit is available to self-employed individuals and remote employees working for employers based outside of Panama. To qualify, they must earn at least USD 36,000 per year.
The visa is valid for nine months and can be extended only once for an additional nine months.
Applicants must pay two fees – $250 for the National Immigration Agency and $50 for a Visa Card.
What Does the Application Process Look Like?
The process of applying for a Panamanian nomad visa is fairly straightforward.
Step 1. Book an Appointment With a Panamanian Embassy or Consulate
Applicants need to make an appointment with the Panamanian embassy or consulate in their local country. This must be done before completing the visa application.
Step 2. Prepare the Required Documentation
When applying for a Panamanian nomad visa, all applicants must provide the following documents:
- A valid passport
- Three passport-sized photos
- A clean criminal record
- Bank statements with proof of income and evidence that they are able to support themself financially in Panama
- Proof of health insurance
- A certificate stating they are in good health
- An Affidavit that states they will only work for employers outside of Panama
- A letter signed by their employer’s legal representative that states their role, income, and work modality
Step 3. Attend the Appointment at the Consulate
The applicant will fill out the visa application and submit the required documents during an appointment at the Panama consulate. They must also pay the required fees.
Step 4. Wait For the Application to Be Approved
After the application is submitted, the applicant must wait for a response from the consulate.
The waiting period is typically around 30 days. However, the processing time can be longer if any issues arise. .
Step 5. Travel to Panama
Once a nomad visa has been approved, the applicant is free to travel to Panama and start working.
Things to Consider When Hiring a Digital Nomad in Panama
There are several important factors to consider anytime you hire remote workers in a different country.
Here are a few things you’ll need to know before hiring a digital nomad in Panama.
Panamanian Labor Laws
Panama’s labor laws are quite complex, making it tricky to remain compliant without the help of an Employer of Record (more on this later).
Here are some specific legal requirements you should make note of if you are considering hiring a digital nomad in Panama:
- The minimum wage in Panama ranges by industry, but is on average 450 USD per month.
- An employee can only work eight hours during the daytime and seven hours at night.
- If an employee works more than eight hours in a day, they must be paid 25% more than their hourly wage.
- If an employee works more than seven hours in a night, they must be paid 75% more than their hourly wage.
- Employers must withhold a percentage of wages to go towards income tax, social security tax, and an education fund.
- Employees must be paid an annual 13th-month bonus that amounts to 30 days of wages.
- Employers must pay between .98% – 5.6% into Panama’s worker's compensation system.
- New mothers are entitled to up to six weeks of maternity leave before a child is born and eight weeks afterwards.
Panama’s Holidays
In Panama, there are 13 official holidays that all workers must get paid time off for. This includes:
- New Year’s Day - January 1st
- Martyr Day - January 9th
- Shrove Tuesday - February 21
- Good Friday - April 7
- Labor Day - May 1st
- Separation Day - November 3rd
- Flag Day - November 4
- Columbus Day - November 6
- Los Santos Uprising Day - November 10
- Panama Independence Day - November 28
- Mother’s Day - December 8th
- National Day of Mourning - December 20
- Christmas - December 25th
Working With an Employer of Record
If you are looking to hire workers abroad, considering partnering with an Employer of Record (EOR).
An Employer of Record acts as a surrogate for your business abroad and will be considered your international employees’ legal employer on paper. An EoR is a great option for companies looking to hire digital nomads in Panama because it will take care of all the complex legal requirements, ensuringthat you are fully compliant with Panama’s labor laws.
Borderless is an Employer of Record that is set up to help manage employees in over 170 countries, including Panama. Our platform is designed to help companies like yours grow their team and hire, pay, and manage international workers.
Contact our team today to set up a demo or discovery call.
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
