Civil Partnership (Sociedad Civil) in Panama

Civil Partnership · Formation from $50

Last verified: June 13, 2026

Corporate Tax

25.0%

State Tax

0.0%

Formation Cost

$50

Annual Fee

Comparison Scores

Privacy, remote setup, banking, and tax efficiency

Privacy7/10

Remote Setup8/10

Banking6/10

Tax Efficiency9/10

Overall Score6/10

Calculate full formation cost

Break down one-time filing fees and recurring costs for any supported entity type.

Who Should Choose This?

Profiles that typically benefit from this entity

Licensed professionals (architects, accountants, consultants) operating jointly in Panama.
Small groups of partners providing specialized services who do not require limited liability.
Founders seeking a pass-through tax structure combined with Panama's territorial tax benefits.
Joint ventures where partners are comfortable assuming mutual, unlimited liability.

Who Should Avoid This?

Scenarios where another structure may be better

E-commerce, manufacturing, or high-risk businesses that require strict personal liability protection.
Startups looking to raise venture capital, issue equity, or offer employee stock options.
Solo founders, as a civil partnership requires a minimum of two partners to be formed.

Advantages

+Pass-through taxation avoids double taxation, as profits are taxed only at the individual partner level.
+Benefits from Panama's territorial tax system, meaning foreign-sourced income is legally tax-exempt.
+High degree of financial privacy, as there is no requirement to file public financial statements.
+Flexible management and governance structure compared to a traditional corporation (Sociedad Anónima).
+Ideal structure for licensed professionals (lawyers, architects, accountants) to pool resources and operate jointly.

Disadvantages

-Unlimited personal liability for partners, meaning business debts and legal judgments can reach personal assets.
-Not suitable for raising external capital, issuing shares, or attracting venture capital investors.
-Requires hiring and maintaining a local resident agent (lawyer or law firm) in Panama.
-Subject to the annual $300 Franchise Tax (Tasa Única) despite being a partnership rather than a corporation.
-Less recognized internationally for general commercial trading compared to an S.A. or LLC (S. de R.L.).

Formation Steps

Step 1: Choose a unique name for the Sociedad Civil and verify its availability in the Panama Public Registry.

Step 2: Draft the Partnership Agreement (Pacto Social) detailing partner contributions, profit-sharing ratios, and management rules.

Step 3: Execute the Partnership Agreement before a Panamanian Notary Public to create a Public Deed (Escritura Pública).

Step 4: Register the Public Deed at the Panama Public Registry (Registro Público de Panamá).

Step 5: Pay the initial Annual Franchise Tax (Tasa Única) of $300 to activate the entity.

Step 6: Obtain a Tax Identification Number (RUC) from the Directorate General of Revenues (DGI).

Step 7: Register ultimate beneficial ownership (UBO) information in the Panamanian UBO registry through your resident agent.

Step 8: Obtain a Notice of Operation (Aviso de Operación) from the Ministry of Commerce if engaging in local commercial activities.

Cost Breakdown

Detailed breakdown of formation and ongoing costs

Item	Type	Amount
State filing fee (Public Registry)	One-time	$50
Initial Annual Franchise Tax (Tasa Única)	Annual	$300
Notary fees	One-time	$100
Resident Agent / Legal fees	Annual	$500
First year total		$950
Annual ongoing		$800

Real-World Examples

Typical use cases for this entity type

A local Panamanian law firm operating as a partnership to share office costs and distribute profits directly to partners.
An architectural or engineering consultancy firm pooling resources for large infrastructure projects.
A group of international consultants providing offshore advisory services, benefiting from Panama's territorial tax exemption.

Common Mistakes

Pitfalls to avoid during setup and operations

Assuming the entity provides limited liability protection (partners are personally liable for debts).
Forgetting to pay the $300 annual Tasa Única, which leads to late fees and suspension of the entity.
Foreigners attempting to use this structure to practice restricted professions (e.g., medicine or law) in Panama.
Failing to register the Ultimate Beneficial Owner (UBO) with the resident agent, violating compliance laws.
Not drafting a clear profit-sharing and dispute resolution clause in the initial Partnership Agreement.

Other entity types

Other formation options in Panama

Corporation (Sociedad Anónima)

Primary

Tax: 25.0%
Formation: $300

Sociedad de Responsabilidad Limitada (SRL)

Tax: 25.0%
Formation: $250

Individual Limited Liability Company (EIRL)

Tax: 25.0%
Formation: $360

Private Interest Foundation

Tax: 25.0%
Formation: $350

Branch of a Foreign Company

Tax: 25.0%
Formation: $250

Limited Partnership (Sociedad en Comandita Simple)

Tax: 25.0%
Formation: $350

Partnership Limited by Shares

Tax: 25.0%
Formation: $60

General Partnership (Sociedad Colectiva)

Tax: 25.0%
Formation: $350

Compare with Other Countries

Country / Type	Tax	Formation	Annual
🇵🇦 Civil Partnership (Sociedad Civil)(Civil Partnership)	25.0%	$50	$0

🇵🇦 vs 🇺🇸 United States 🇵🇦 vs 🇪🇪 Estonia 🇵🇦 vs 🇬🇧 United Kingdom 🇵🇦 vs 🇮🇪 Ireland All comparisons →

FAQ

What is a Sociedad Civil in Panama?

It is a civil partnership typically used by professionals (like lawyers and architects) where two or more partners pool resources but retain unlimited personal liability for the business.

Does a Sociedad Civil pay corporate income tax?

No, it is treated as a pass-through entity. The partnership itself does not pay corporate tax; instead, profits pass through to the partners who report it on their personal income tax returns.

Are foreign earnings taxed in a Sociedad Civil?

No. Panama applies a territorial tax system. If the partnership's income is generated entirely outside of Panama, it is legally exempt from Panamanian income tax.

Do I need to visit Panama to form a Sociedad Civil?

No, you can form the partnership remotely. A local Panamanian lawyer acting as your resident agent can handle the incorporation process using a Power of Attorney.

What is the Tasa Única?

The Tasa Única is an annual franchise tax of $300 that all registered entities in Panama, including civil partnerships, must pay to remain in good standing.

Can foreigners form a Sociedad Civil?

Yes, foreigners can form a civil partnership. However, certain professions (such as practicing law, medicine, or retail trade) are legally restricted to Panamanian citizens.

Do partners have limited liability?

No. Unlike a Corporation (S.A.) or an LLC (S. de R.L.), partners in a Sociedad Civil have unlimited personal liability for the debts and obligations of the partnership.

Do we need to file annual financial statements publicly?

No. While you must maintain proper accounting records, Panama does not require civil partnerships to file their financial statements publicly, ensuring a high level of privacy.

Detailed Tax Rates

Corporate Income Tax

From	To	Rate

The standard corporate income tax rate is 25%. Companies with taxable income over $1.5 million are subject to the Alternative Calculation of Income Tax (CAIR), paying the greater of 25% on net income or 4.67% on gross taxable income. Civil partnerships (Sociedades Civiles) of professionals may often pass through income to partners.

Personal Income Tax (Top rate: 25.0%)

From	To	Rate
$0	$11,000	0.0%
$11,000	$50,000	15.0%
$50,000	No limit	25.0%

Panama applies a territorial tax system; only Panama-sourced income is taxed. Foreign-sourced income is fully exempt.

Capital Gains Tax

10.0%

Capital gains are generally taxed at a flat rate of 10%. For real estate sales, a 3% advance withholding tax on the gross transaction value applies, which can be treated as the final tax.

VAT / GST

7.0%

Registration Threshold: USD36,000

Foreign providers of digital services to consumers in Panama are generally required to register and charge 7% ITBMS.

Withholding Tax

Dividends10.0%

Royalties12.5%

Interest12.5%

Dividends from domestic income are subject to 10% withholding tax, while dividends from foreign or export income are taxed at 5%. Royalties and interest paid to non-residents are subject to an effective withholding rate of 12.5% (25% CIT applied to 50% of the remitted amount).

Payroll & Social Security

Employer14.8%

Employee11.0%

For 2026, the employer contributes 13.25% for social security and 1.5% for educational insurance. Employees contribute 9.75% for social security and 1.25% for educational insurance.

Other Taxes

Annual Franchise Tax (Tasa Única)

An annual flat fee of $300 is required for all registered corporate entities and partnerships to maintain good standing.

Notice of Operation Tax (Aviso de Operación)

An annual local business tax of 2% on the company's net worth, with a minimum of $100 and a maximum of $60,000.

Incentives & Support

Territorial Tax System Exemption

Income generated entirely outside of Panama is 100% exempt from local income tax.

0% corporate and personal income tax on foreign-sourced earnings.

Eligibility: The partnership must not conduct commercial activities or generate income within the territory of Panama.

Formation Requirements

Minimum Capital

No requirement

No minimum capital requirement for a Sociedad Civil.

Local Director

Not Required

A local resident agent (lawyer or law firm) is required. Note that practicing certain professions requires Panamanian citizenship.

Registered Office

Required

Virtual office allowed. $300-$600/year

Notarization Required

Yes

Power of Attorney (Remote)

Required

Must be notarized and apostilled if signed outside of Panama.

Timeline

Standard: 5-7 business days days

Expedited: 2-3 business days days ($200)

Required Documents

1Passport copyApostille needed
2Proof of address (utility bill)
3Bank or professional reference letter
4Partnership Agreement (Pacto Social)Apostille needed
5Power of Attorney for the resident agentApostille needed

Compliance & Reporting

Annual Filings

Annual Franchise Tax (Tasa Única)

Penalty: $50 late fee, plus potential suspension of corporate rights.

January 15 or July 15 (depending on incorporation date)

Income Tax Return (Declaración Jurada de Rentas)

Penalty: Fines starting at $100 and loss of good standing.

March 15 (individuals/partnerships) or March 31 (legal entities)

Audit Requirement

Not Required

Audits are generally not required for standard civil partnerships unless gross income exceeds $3,000,000 or required by specific regulations.

Accounting Standard

IFRS

Tax Return Deadline

March 15 (individuals/partnerships) or March 31 (legal entities)

VAT Filing Frequency

Monthly (if annual gross revenue exceeds $36,000)

Data Protection

Subject to Law No. 81 of 2019 on Personal Data Protection.

Banking & Payments

Towerbank

Remote-friendly

Crypto-friendly bank that allows remote account opening with the assistance of a resident agent.

Credicorp Bank

Traditional bank with strong corporate services, often requiring an in-person visit or extensive documentation.

Multibank

Popular for international business and trading companies, offering multi-currency accounts.

Banistmo

One of the largest banks in Panama, ideal for businesses with significant local operations.

Payment Gateways

2Checkout, PayPal, PagueloFacil, NOWPayments, Checkout.com

Currency

USD

Multi-Currency: Supported

Account Opening

Opening a corporate bank account in Panama can be rigorous due to strict KYC and AML regulations. While remote opening is possible with the assistance of a resident agent, it often takes 4 to 8 weeks and requires extensive documentation, including apostilled passports and reference letters.

Practical Information

Timezone

UTC-5

Business Language

Spanish (official) and English (widely used in business)

Legal System

Civil law

Ease of Doing Business

#86

IP Protection

Intellectual property is protected under Law 35 of 1996 and managed by DIGERPI. Panama is a member of WIPO and a signatory to the Paris Convention, offering standard protections for trademarks, patents, and copyrights.

Double Tax Treaties

17 countries

Notable treaties: Spain, United Kingdom, France, Netherlands, Singapore, Mexico

Visa & Residency Options

Qualified Investor Visa

Grants immediate permanent residency for a minimum investment of $300,000 in Panamanian real estate (threshold valid until October 2026), $500,000 in the stock market, or $750,000 in a fixed-term bank deposit.

Friendly Nations Visa

Allows citizens of over 50 eligible countries to obtain residency by investing $200,000 in real estate or a bank deposit, or by securing employment with a Panamanian company.