Panama payroll for foreign companies with employees in Panama
We run Panama payroll for foreign companies that hire here but manage from abroad. Social security, tax withholding and labor rules are handled locally, and your finance team gets one contact and clear monthly reports.
- Since 2005
- Certified public accountants
- Member of Kudos International
Who it is for
US or Latin American company entering Panama
You are hiring your first people in Panama and your finance team sits in another country.
Subsidiary or branch already set up
The entity exists, but payroll is handled remotely or by a provider who is slow to respond.
Regional group with key staff in Panama
A regional manager or sales team works from here and headquarters needs control over cost.
Problems we solve
Unclear whether you can hire without a local entity
Employer registration with Panama's social security fund (CSS) requires the company's incorporation document. We walk you through the options before you hire.
Employment costs missing from the budget
Social security, education insurance, occupational risk and the 13th month sit on top of salary. We cost them before you make an offer.
Labor rules unlike those at home
The 13th month is paid in three installments and vacation is 30 days for every 11 months worked. Better to know before signing.
Funding from abroad that nobody reconciles
Headquarters wires money and no one matches it to payroll, CSS and the tax authority (DGI). At year end, numbers do not tie.
A different provider for every filing
One for taxes, another for social security, another for contracts. You end up coordinating all of them from abroad.
What is included
Everything Panama payroll requires, handled by one team:
- Fully loaded cost per employee before the offer: salary, contributions and benefits
- Employer registration with the CSS and onboarding notice for each employee
- Payroll calculation and monthly filing in SIPE, the CSS payroll system
- Income tax withholding and the monthly Planilla 03 report to the DGI
- 13th-month pay, vacation and final pay under the Panama Labor Code
- Exact funding amount for each pay period, so headquarters can wire from abroad
- Monthly payroll cost report in English or Spanish
- Bookkeeping and tax returns for the Panama entity, if you need them
- Coordination with your lawyer for contracts, entity setup and work permits
Can a foreign company hire employees in Panama?
Yes. With your own entity, there are two routes: register a branch of your foreign company, or incorporate a Panamanian company. A branch keeps separate books and is taxed on its own in Panama.
Either way, the entity registers as an employer with the CSS. Registration asks for the employer form, the incorporation document and the legal representative's ID.
A third route is an Employer of Record: a provider that is already an employer in Panama hires your staff for you. ARVA is not an Employer of Record. If that model fits you better, we will tell you.
A lawyer handles incorporation or branch registration. We refer you to one we trust and coordinate with them.
Panama payroll costs on top of salary
Rates in force as of October 2026:
- Social security: 13.25% employer and 9.75% employee. The employer rate rises to 14.25% on March 1, 2027 (Law 462 of 2025).
- Education insurance: 1.50% employer and 1.25% employee.
- Occupational risk: 0.33% to 6.25%, paid by the employer depending on the activity.
- 13th month: total earnings in each four-month period divided by 12. Paid on April 15, August 15 and December 15.
- Vacation: 30 days for every 11 months of continuous work.
Paying Panama payroll from abroad
Before each pay date we send you the exact amount: net salaries, CSS contributions and income tax withheld. Headquarters wires it to the Panama entity's account.
Does the Panama entity pay service fees or royalties to headquarters? Those payments carry an effective 12.5% withholding. A double tax treaty may change the rate.
Bringing staff from your home country
A foreign employee needs a work permit from Panama's Ministry of Labor (MITRADEL). The Labor Code sets limits: 10% of ordinary staff and 15% of specialized or technical staff may be foreign. Your immigration lawyer files the permit; we reflect it in payroll.
How we work
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Discovery call
We review your Panama setup (branch, local company or none yet) and your hiring plan.
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Costing and roadmap
You get the full cost per employee and the steps to operate as an employer.
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Setup
We register the company and employees with the CSS and prepare the first payroll.
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Monthly run
You approve and fund payroll; we calculate, file and report back.
Want to know what an employee in Panama really costs?
Message us on WhatsAppFrequently asked questions
Can I have employees in Panama without a local entity?
To register directly as an employer with the CSS, you need to provide the company's incorporation document. That is why most foreign companies register a branch or set up a Panamanian company. The alternative is an Employer of Record, which hires your staff for you. We help you compare cost and risk before you decide.
How are social security contributions paid in Panama?
Every month the employer files payroll in SIPE, the CSS system used to enroll workers and report salaries. SIPE generates the invoice with employer and employee contributions, and the company pays it. We prepare and file payroll; you approve it and fund the payment.
What does an employee cost on top of salary?
The employer pays 13.25% social security, 1.50% education insurance and between 0.33% and 6.25% occupational risk. On top of that comes the 13th month, roughly one extra month of salary per year, and 30 days of vacation for every 11 months. When employment ends, a seniority premium and severance may apply.
Can you work with us remotely and in English?
Yes. We work with foreign clients by video call, email and WhatsApp. You have one contact for payroll, social security and taxes, and one monthly report that your finance team can consolidate.
Do you incorporate the company or register the branch?
No. Incorporation and branch registration are done by a lawyer, and we refer you to one we trust. We step in once the entity exists: employer registration with the CSS, payroll, taxes and bookkeeping. We coordinate with your lawyer so timelines line up.
