How to Start a US LLC From Panama

Panama maintains a comparatively limited network of double-taxation agreements, roughly 17 treaties, and the United States isn't among them. Given Panama's territorial system, this matters less than it would in a worldwide-taxation country: since foreign-source income generally isn't taxed in Panama in the first place, there's typically no Panamanian tax on the LLC's income for a treaty or foreign tax credit to offset. The treaty gap becomes more relevant only if a Panamanian founder's business activity shifts toward something Panama would actually classify as Panama-source, at which point the absence of a US treaty could matter for structuring decisions. For a typical non-resident-alien-owned LLC serving customers outside Panama and the US, this is a background fact worth knowing rather than a practical obstacle.

Panama's economy is fully dollarized: the balboa is pegged 1:1 to the US dollar and US dollar bills circulate as everyday currency alongside balboa coins. For a founder moving money between a Panamanian bank account and a US LLC's Mercury or Relay account, this eliminates an entire category of complexity that dominates several other pages in this series — there's no currency conversion, no exchange-rate risk, and no central-bank FX quota or registration requirement tied to the transfer amount, because both sides of the transaction are effectively denominated in the same currency. Funds still move as an international wire subject to normal banking KYC, but the currency-mismatch friction that shapes India's LRS story or China's SAFE story simply doesn't exist for a Panamanian founder. This is a genuinely unique structural advantage among the countries covered here.

Putting it together: form the LLC (Wyoming and Delaware remain the two most common choices), get the EIN using the international applicant line above, submit a complete, well-documented Mercury or Relay application given the extra scrutiny Panama-linked applications can attract, and take comfort in the fact that Panama's own tax position on your LLC's profit is about as simple as this series gets — no CFC attribution, no wealth tax, and a territorial exemption that's been stable for nearly seventy years. The 2026 economic substance reform is worth knowing about, but it targets a different, corporate-group structure than a typical solo founder's US LLC.

Panama has spent decades building one of Latin America's most recognizable international banking and business hubs, and a growing number of Panamanian founders now use that same instinct toward US-facing structures for their own SaaS, consulting, and e-commerce businesses. For these founders, a US LLC offers direct Stripe and PayPal access as a genuine US entity, immediate familiarity for US clients and payment processors, and a formation process that's simpler than setting up a Panamanian corporate structure specifically to sell abroad. What makes Panama's version of this story different from every other country covered in this series is that Panama's own tax system already does most of the reassuring work before the US LLC even enters the picture — this is one of the few pages in the entire series where the honest answer to 'will my home country tax my LLC's profit' is close to a flat no, without caveats about CFC attribution, wealth taxes, or recent reform.

This also means there's genuinely no CFC question to work through here, in a different way than even Paraguay's no-CFC-rules story covered elsewhere in this series. Paraguay has no CFC regime, but its territorial exemption still depends on classifying income as foreign-sourced in the first place. Panama's system is simpler still: because foreign-source income is categorically outside the tax base for a Panamanian resident regardless of how it's earned or through what structure, there's no separate attribution question to ask about a US LLC at all. Whether you own the LLC directly, take distributions, or leave profit inside it indefinitely doesn't change the Panamanian tax answer, because the income was never Panama-source to begin with. This is about as close as this entire series gets to 'the home-country tax question genuinely isn't a factor' for a founder's own personal tax position.

Getting an EIN as a Panamanian founder works exactly like it does for any other non-US resident. Without a US Social Security Number or ITIN, you can't use the IRS's online EIN application — you'll file Form SS-4 and either call the IRS's international applicant line (267-941-1099, staffed 6am-11pm ET, for international applicants only) to receive the EIN over the phone, or fax the SS-4 (855-215-1627 from within the US, 304-707-9471 from outside) for a roughly 4-business-day official turnaround that often takes 1-2 weeks in practice. Mailing to Cincinnati, OH takes 4-5 weeks and should be a last resort. On Line 7b, write 'Foreign' or 'N/A' rather than leaving it blank. The responsible party listed must be the actual Panamanian owner, not EasyBrise or any formation agent. If you lose your CP 575 confirmation notice, request Form 147C — a letter, not a duplicate — instead. Don't skip Form 5472 plus a pro forma 1120 each year; the penalty for missing it starts at $25,000.

Panama's decades-long association with international banking, and the global scrutiny that followed the 2016 Panama Papers leak, mean founders should expect somewhat more thorough due diligence from US fintechs than founders from countries with less complicated financial-secrecy reputations, even though Panama itself isn't on Mercury's or Relay's prohibited-country list. Panama has also formally joined the Common Reporting Standard, meaning Panamanian banks now automatically share account information with other participating jurisdictions' tax authorities — a meaningful shift from Panama's older reputation for financial opacity, and a genuine point of contrast with Paraguay's still-provisional CRS commitment covered elsewhere in this series. None of this should discourage a legitimate founder from applying; it just means having a clear, well-documented business, a real website, an actual product or service, transparent beneficial ownership, matters more for a Panamanian applicant than it might for some other countries in this series, where reputational scrutiny is lower to begin with.

Panama's territorial system, rooted in the Fiscal Code (Law 8 of 1956) and consistently maintained ever since, taxes only Panama-source income — income generated from activities carried out within Panama or from assets used inside the country — for both individuals and companies, residents and non-residents alike. Foreign-source income, including dividends, capital gains, interest, and business profits earned from activity conducted outside Panama, sits entirely outside the tax base. Unlike Uruguay's system covered elsewhere in this series, which just underwent a partial reform in January 2026, or Colombia's, which layers CFC and wealth-tax rules on top of worldwide taxation, Panama's territorial principle isn't a temporary incentive, a holiday, or a legacy rule being slowly narrowed — it's the permanent, structural foundation of the entire tax code, and it's stayed that way for nearly seven decades.

Mercury and Relay both accept applications from Panamanian founders through the same standard non-resident process as other countries in this series — passport, LLC formation documents, and EIN. Given the context above, it's worth putting extra care into a complete, credible application from the start: a real business website, a clear description of what the LLC actually does, and accurate beneficial-ownership disclosure, rather than assuming Panama's international banking reputation will smooth the process rather than add friction to it. Neither platform singles out Panama for automatic rejection; the difference shows up in review thoroughness, not eligibility.

One important 2026 development is easy to misread if you skim it: Law 526, enacted May 28, 2026, introduced new economic substance requirements for foreign-source passive income, but it targets a specific and narrower case than 'any Panamanian holding a foreign company.' The rule applies to Panamanian entities that are part of multinational corporate groups and that receive foreign-source passive income like dividends, interest, royalties, or capital gains — think a Panamanian holding, financing, or IP company sitting inside a larger multinational structure. Effective for fiscal year 2027, entities that fail to demonstrate genuine economic substance in Panama on this specific income lose the territorial exemption and face a 15% tax instead. This does not describe a Panamanian individual who personally owns a US LLC directly — that's the reverse structure, a Panama-resident individual owning a foreign entity, not a Panamanian entity receiving foreign passive income as part of a corporate group. Don't let headlines about this reform create confusion about a fundamentally different, more common founder setup.