The European Union has saved Panama on its record of “non-cooperative tax jurisdictions,” successfully a blacklist that alerts larger danger for tax avoidance.
The choice, taken on October 10, 2025, activates three exams the EU applies to exterior nations: transparency (sharing tax information), truthful taxation (no dangerous regimes), and anti-avoidance guidelines to curb revenue shifting. The subsequent evaluation is due in February 2026.
Panama’s president, José Raúl Mulino, says leaving the record might be gradual and tedious. The authorities will preserve the nation’s territorial tax system—the place most foreign-source revenue is exempt—however plans to modernize it.
In sensible phrases, meaning proving “substance”: corporations registered in Panama should present actual operations at dwelling, with native employees, prices, and decision-making. Authorities additionally say they may tighten automated tax-information change with European counterparts.
The story behind the story is Panama’s function as a regional hub. Its financial system depends on logistics across the Canal, free zones, and providers that appeal to holding corporations and multinationals. Territorial taxation helped construct that mannequin.
The EU’s stance challenges Panama to maintain its attraction to traders whereas shutting the door on constructions that exist solely on paper.
Officials level to Costa Rica and Uruguay as examples of nations that saved territoriality however launched strict substance guidelines and anti-abuse safeguards.
Remaining on the blacklist has fast prices. European nations can apply “defensive measures” that make cross-border offers pricier and slower: additional withholding taxes, limits on deducting funds to entities in Panama, more durable controlled-foreign-company guidelines, and stricter financial institution due diligence.
Panama Navigates EU Compliance and Tax Pressure
At the EU stage, entry to some funds might be restricted. For Panamanian corporations coping with Europe—notably in transport, logistics, finance, and company providers—this implies longer onboarding, larger compliance payments, and extra scrutiny of constructions that lack real presence in Panama.
There is one shiny spot: earlier in 2025 Panama was faraway from the EU’s anti-money-laundering high-risk record, a separate course of that eased some banking friction.
But to exit the tax blacklist, Panama will want verifiable reforms that protect competitiveness whereas proving actual exercise at dwelling. That is the stability to observe within the months forward.
