International Living’s 2019 Annual Global Retirement Index sees Costa Rica once again pitted against Panama for the top expat destination. North American expats love these neighboring Central American nations for their affordable ocean view real estate, less stressful lifestyle, and proximity to the US. Retired expats love that both countries have pensionado programs that make it easy to gain residence as a pensioner plus receiving special benefits. And expats can receive universal healthcare in modern facilities in either country. So how do expats choose between Panama and Costa Rica?

Welcome to a land of magic and wonder: a thin strip of land that connects two massive continents. This small stretch that is the narrowest point is home to two nations that are filled with some of the wildest ecosystems and most incredible biodiversity spanning the globe. Costa Rica, and its neighbor to the south, Panama, have an amazing variety of landscapes between their Atlantic and Pacific coastlines.

Tucked away just beyond the hurricane belt, these breathtaking tropical nations are edging their way to the top of expat destinations — with good reason. Both of these countries are considered bastions of good social care that includes quality, affordable healthcare for residents, plus top-notch, English-speaking private clinics and hospitals that are popular for medical tourism. And either nation feels close enough to the U.S. and Canada, with many new opportunities for direct flights to Europe.

So what is it that has expats saying that they like Panama but love Costa Rica? As realtors representing the Southern Zone of Costa Rica, we did some digging on expat message boards and came up with a few consistently repeated ideas from expats who have lived in, or visited, both Central American countries. We are excited to know what makes foreigners choose Costa Rica as their new home above anywhere else. We have compiled a list below of some of our favorite things that expats are saying about life in Panama vs. Costa Rica.

Clean, Green Environmentcosta-rica-waterfall-otp

World-renown for having a delightful tropical climate all year long, as well as awe-inspiring natural beauty, Costa Rica is a popular expat destination for good reason. These qualities are not unique, though, when compared to neighboring Panama. Costa Rica’s neighbor to the South also possesses many natural wonders and protected biodiversity. What makes the two nations different, though, is that Costa Rica’s rich biodiversity is also richly represented within popular expat destinations. Compare Costa Rica’s popular international community of Ojochal, and its thick, green, forested hillsides, with Pedasi, one of the more popular expat destinations in Panama. Both communities face the gorgeous azure waters of the Pacific Coast. However, Ojochal’s homes and businesses feel integrated with nature, surrounded by lush jungle and wildlife. Much of Pedasi is clear cut, other than the narrow strips of forest that separate properties.

Twelve microclimates around Costa Rica allow for a large diversity of organic foods to be grown and sold locally at farmer’s markets all over the country. You can find many of the same microclimates in Panama, but due to less consistent environmental regulations, you won’t find the same spread of biodiversity across the whole of the country.

Costa Rica is clean and green, living up to its international reputation as a sustainable eco-tourism destination. Environmental policies are strengthening with each successive, democratically-elected government, and more money is being allocated to national parks and reserves every year. The government of Costa Rica recognizes that this country’s strength is in being recognized as a green-economy leader. The nation’s electric grid continues to report long stretches of operating on 100% renewable energy, even supplying neighboring nations like Panama with power when their grids become overloaded.

Expats admit that Panama is noticeably dirtier than Costa Rica. Garbage lines the streets in Panama, where there are more disposable goods being sold for cheaper prices due to Panama’s open trade policies. Panama’s economy features far more fast-food chains and big-name brands, which has its pluses and minus. For those who really love to spend their money on knick-knacks and snacks, Panama may place higher on your expat checklist. But in the Southern Zone of Costa Rica, we consider ourselves lucky to live a short 2 hour drive from the border of Panama, where we can resupply our bulk closet with less expensive goods every once in a while.

Friendly Cultures

Costa Rica is a nation with a peace-loving culture and a tradition of stable democracy. The Costa Rican army was abolished in 1948 and the army’s budget was indefinitely pledged towards free education and universal health care. This is a progressive nation, with LGBT rights increasing steadily, whereas public displays of homosexuality are not widely accepted in Panama. These and many other reasons give Costa Ricans their pura vida attitude that has them smiling and friendly with everyone who visits or chooses to stay for longer.

Expats find that Panamanians are polite to visitors, although not as polite as Costa Ricans. Panamanians are said to tolerate all sorts of differences in race, religion, and socio-economic background because of their more diverse cultural history. Panama has a long history of foreign business owners bringing workers and their individual cultures from all over the world to Panama’s shores. And these different cultures have influenced Panama with many diverse international flavors over time, which can be found now within their food, politics, and ethics.

Due to some bad history over the canal, Panamanians can be less welcoming to “gringos.” People do not smile and wave as readily as they do in Costa Rica. Panama also has a militarized police force, authorized by their president. Soldiers in fatigues carry rifles to patrol the streets and guard many of the large stores and businesses in Panama. This strong military presence makes many expats and visitors feel uncomfortable. High levels of poverty (up to 14% live below the international poverty line, compared to around 2% in Costa Rica⁠—the lowest in Latin America) make for more feelings of insecurity.

Ticos (a term that Costa Ricans identify as) are a proud people with a good work ethic — if you can ditch your expectations of clockwork predictability. They start their workdays early and labor diligently, no matter the type of work. The Panamanian work ethic tends to have a lesser reputation on expat message boards. Both cultures, however, value their time off. Attachment to schedules is dependent on circumstances like family, weather, special occasions, and other moving pieces. Both cultures possess strong ties to family that are founded on Catholic values, which make for overall pleasant people on both sides of the border.

Costa Rica is a country known for its safety, neutrality and a secure banking system. Nothing is perfect and there will always be opportunists trying to take advantage of the under-educated. But most people in Costa Rica are friendly and welcoming, with many able to speak at least partial English, and most feeling genuinely happy with whatever effort new comers put forward to learn Spanish. So rather than putting up higher fences with more barbed wire like they do in the expat communities south of the border, expats in Costa Rica choose to take their concerns to the community. We have many cross-cultural meeting spaces and online message boards where we work things out as a community in whatever language people bring to the table. Everyone living in our integrated communities is equally concerned about keeping their property and livelihood safe so we are always working to create the solutions that help us move forward together.


Considered by many expats to be the “51st state,” the primary reason that Americans choose to expatriate to Panama is for ease of transition. Panama City is a first-class, cosmopolitan capital, and the only first-world city in Latin America. Huge skyscrapers and an advanced metro system make it easily digestible to move near Panama City, where expats can experience exciting food, beer, jazz, film, golf, tennis, and shopping. Panama also uses the U.S. Dollar, making it easier to track spending as an American. 

Costa Rica does not have nearly the same first-world infrastructure, even in the capital, San Jose. However, essential services and luxury amenities are becoming more prevalent in our Southern Zone of Costa Rica, which until recently was not very developed. Today, our Costa Ballena communities are thriving, with schools, doctors, pharmacies, and essential services all available locally. Delis, boutiques, restaurants, spas, and an excellent live music scene are some of the many highlights of our growing international expat destination.

Expats acknowledge that there are better roads and signage in Panama. Costa Rica’s potholes and problematic roads are legendary, although the national highways have improved significantly in the last 10 years. Travel in Costa Rica is much slower than visitors assume because the distance as it appears on a map can be misleading due to the quality of roads. Gravel roads are still the norm in Costa Rica’s many small villages, including within popular expat destinations. But it is important to acknowledge that the quality of roads in Panama is maintained for the benefit of military and transport vehicles, rather than for the expats. Our higher tax brackets in Costa Rica pay for our roads in a more earnest manner, and our politicians are not solely in the pockets of big business, as can be seen in the recent stop to the pineapple plantation that was set to be planted near the Terraba-Sierpe Wetlands in Southern Costa Rica. Our tax money means that our local voices are heard more loudly in Costa Rica.

Investing in Costa Rica

The World Bank considers Costa Rica to be a success story in terms of development. It is considered an upper-middle-income country, which has shown steady economic growth over the past 25 years. This growth comes as a result of an “outward-oriented strategy” that is based on openness to foreign investment and gradual trade liberalization. The growth of these policies over the years has led to an increase in the number of expats who feel safe and welcome to open corporations, and to own assets in Costa Rica. This country’s economy is well-diversified and has proven to have stable growth in the last 10 years. Rental income has become a fantastic asset to owning Costa Rica real estate, especially in our Costa Ballena region. We have seen a spectacular rise in rental incomes and it has become a big draw for investors in our region.

Panama is also currently a hot investment destination for expats. Over the past decade, Panama has been one of the fastest growing economies in the world, with an average annual growth rate of 5.6 percent over the last five years. However, because much of Panama’s growth is dependent on free trade coming through the Panama Canal, their economy is heavily affected by international trade disputes or by global economic downturns. And although Panama is a great location for purchasing cheap commodities, the local Panamanian population hardly benefits, with very few tax dollars being earned from all of the trade that crosses its borders.


Low taxes are the case in both Costa Rica and Panama, but Panama has zero income tax. Costa Rica’s income tax is between 10-15%, depending on the worker’s residence scheme. Daily life expenses are also said to be cheaper in Panama than in Costa Rica, largely due to global tariff-free importation via the Panama canal. Panama does not have a duty tax on expats importing household goods up to $10,000, while Costa Rica does not have this exemption (unless you can prove that they are for personal use). Costa Rica does have tax-free zones in which expats travel to do bigger shopping excursions for things like appliances, electronics, wine, and bulk groceries. Vehicles are the main item that expats notice to be less expensive in Panama than in Costa Rica. 

Property taxes in Costa Rica are especially low. Owners of Costa Rica real estate pay just 0.25% of the value of any property in taxes every year. In Panama, they pay 2.1% annually for any property valued above $75,000 USD.


Panama’s pensionado program is a popular attraction for retired expats from around the world. To obtain residency in Panama, single retirees need to show that they receive a stead income of $1000 per month from an official retirement scheme, and couples must show a combined income of $1250. Costa Rica has similar figures, but Panama’s pensionado program also offers 25% off airline tickets, 25% off monthly energy bills, and 50% off hotel stays. These benefits are given to all who qualify by age, including expats (55 for women, 60 for men). Costa Rica’s senior citizen discount program, Ciudadano de Oro, is an opt-in scheme that any resident aged 65+ can apply to receive discounts in a variety of businesses, including free bus rides, and to never stand in line again.

For those who want to apply for residency before retirement, both countries offer investor paths to residency. In Costa Rica, this involves making a $200,000USD investment into assets (land, house car rather than mortgage and loans) in this country. Panama has an additional friendly nations policy for fifty countries (including most expat origin countries) that boasts very low requirements for gaining residency.

So which expat destination is right for you?

For those expats who require a large selection of goods at great prices, Panama will likely be a better fit. But if you value living a high-quality lifestyle in safe, peaceful, and ecologically beautiful communities, we highly recommend you choose Costa Rica. Cheaper and more abundant shopping in Panama is just a short drive or flight away from the Southern Zone of Costa Rica⁠—our favorite expat destination in the world! We chose South Pacific Costa Rica to be our home and we invite you to try it out, too. Our fresh climate, friendly people, diverse wildlife, all exist on this spectacular landscape, where green mountains stretch down to our pristine Pacific beaches. This magical environment draws in anyone who truly cares about achieving a relaxing, enjoyable, pura vida quality of life.

Contact us to learn the more intricate details of what makes life and purchasing property different in Costa Rica. Our goal is to make this an easy and enjoyable transition for anyone who wants to take the leap towards living a better lifestyle. Contact us at [email protected] and we will be happy to answer any questions you may have.

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