In the U.S., for instance, the IRS treats cryptocurrency as property, meaning capital gains tax applies every time one sells, trades, or uses crypto. When it comes to the UK, HMRC imposes capital gains tax above certain thresholds. Switzerland, while friendlier, still applies cantonal and federal rules. And in China, crypto trading is outright banned, and although there have been calls to allow crypto trading considering the massive hoard of seized Bitcoin the government has, there has been no legislation to ease crypto-related regulations.
High-net-worth individuals and active crypto traders should translate the crypto tax rules properly in order to prevent significant loss of wealth and financial freedom over time.
Panama’s Territorial Tax System Focuses on a Territorial Principle
Panama’s tax code (New Updated Law 76 of 2019 , Published in the Official Gazette N-28714B of 14 February 2019) is based on the territorial principle (article 694 of the Fiscal Code ) and on 3 general principles : Taxpayers must be taxed in direct proportion of their economic capacity; taxes should not be confiscatory, and must respect the principle of substitute income and the principle of periodicity. What the article 694 means is that the sovereign country of Panama taxes only income generated within its borders. If one’s income, including crypto capital gains, is earned outside Panama, it won’t be taxed according to Panamanian tax laws. This holds even if the income comes from a foreign exchange, a wallet is located abroad, or there is an offshore entity Panamanian residents control.
Residenza Permanente via Trattato Panama–Italia is often considered a suitable pick for Italians looking for a fast-track Panama residency without any investment requirement. It can essentially legally exclude foreign crypto gains from Italian taxation. Americans, British, Canadians, and most European or Asian citizens can apply through the Panama Friendly Nations Visa Program, which requires a small local economic activity, which users can satisfy by opening a Panamanian bank account or forming a small company. Both treaties grant Panamanian citizenship and passport, after 5 years of permanent residency in Panama
The Banking Advantage: Crypto-Friendly and Non-CRS
Crypto Investors in Panama can open non-CRS offshore bank accounts to manage fiat inflows from exchanges and wallets, protect privacy and avoid automatic exchange of information ( CRS) as Panamanian residents.
CRS refers to Common Reporting Standard, which is an OECD-driven system where banks automatically share account information with a user’s home tax authority. Panama does not participate in CRS for its Panamanian legal residents, which means accounts are not reported to Italy, the UK, or other participating countries if you get a panamanian residency
One of the ways to do so is using Studio Panama Italia. It can complete the process in as fast as 48 hours for residency approval, including the opening of a non-CRS Panama Offshore Bank account in just 30 minutes. The caveat, however, is that the client has to start the process remotely in advance.
How Different Jurisdictions Tax Crypto and Why Panama Works
- United States (IRS): In the U.S., crypto is property, taxable on every disposal. Citizens must pay tax on short-term gains according to the income tax rate. And when it comes to long-term gains, the tax rate is up to 20%.
- United Kingdom (HMRC): In the UK, the capital gains tax is up to 20% after the annual exemption.
- Switzerland (ESTV/AFC/FTA) : Switzerland exempts crypto tax for private individuals. Professional traders, however, are taxed. Wealth tax applies in most cantons.
- Italy (AdE) : Italy established a rule in 2023 that crypto gains above €2,000/year are taxed by Agenzia delle Entrate (Italian Fiscal Authority) at 26%.
- China (STA / SAT): Crypto trading is outright banned in China. Furthermore, moving funds offshore is also heavily restricted.
Due to the restrictions in these regions, Panama offers a suitable alternative to high net worth individuals looking for tax saving, financial privacy and freedom.
Legal Residency Pathways
Two pathways are available that users can follow to achieve legal residency in Panama.
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- Residenza Permanente via Trattato Panama–Italia: This method is exclusive to Italian citizens and requires very minimal paperwork and no investment.( Law 15 of 1966, Tratado de Amistad Comercio y Navegacion entre la Republica de Panamá y la Republica de Italia )
- Panama Friendly Nations Visa Program: This method is open to U.S., UK, Canadian, European, and many Asian citizens. Requirements include either forming a Panamanian company or securing local employment (often satisfied with a nominal directorship). ( Executive Decree 416 of 2012 updated with Executive Decrees 197 and 226 of 2021)
In both cases, Studio Panama Italia provides Panama residency approval in 48 hrs, after which users can apply for a non-CRS bank account as Panamanian residents .
Corporate Structures for Structured Cash Out
Panama offers corporate tools to optimize crypto cash outs. For instance, a Panamanian corporation (Sociedad Anónima, Law 32 of 26 February 1927) can be used for structured cash out, staking, or tokenization projects. With a Panama Private Interest Foundation (Law 25 of 1995) , users can hold wallets and manage inheritance.
For very high-value portfolios, a combination of residency, corporate structuring, and crypto-friendly banking can offer legal protection and flexibility.
Who Benefits Most from Panama Residency for Crypto
Here are the entities that benefit the most from Panama residency for crypto:
- High-volume traders on offshore exchanges
- Early-stage token project founders
- Investors seeking to move significant fiat from crypto to bank accounts without CRS reporting
- Italians using the Trattato Panama–Italia to sever Italian tax liability
- Americans, Brits, Canadians, and Asian nationals seeking to bypass domestic capital gains taxes on offshore crypto profits
Compliance Matters in Panama
Panama’s system offers a legitimate, legal way to reduce taxes approved by OCSE / OECD countries. However, authorities warn that it should not be considered as permission to evade. Users must comply with Panama’s local laws, which means maintaining the residency, meeting exit requirements from their former tax jurisdiction, and being fiscally resident in Panama. Panama is moving forward with a new crypto law to regulate digital assets and blockchain services. The Bill dated 5 February 2025 recognizes BTC, ETH and stable coins as a legal means of payment.
Disclaimer: This article is part of a paid partnership and should not be construed as financial advice. The views, statements, and opinions expressed herein are solely those of the sponsor and do not necessarily reflect those of Coingape. Cryptocurrencies are highly volatile, unregulated in many jurisdictions, and carry significant risk, including total loss of capital. Always conduct your own research and consult a qualified adviser before making any investment decisions. Coingape does not endorse or guarantee the accuracy, timeliness, or completeness of any information provided by the sponsor.
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