ARTICLES

Open and run a B&B in Panama

  • November 29th, 2021
Category: Commentary
Services: Other

Panama has one of the fastest-growing economies in the Americas and is a global hub attracting international expats eager to capitalize on local opportunities. This includes digital nomads, expats around the world seeking a tax-efficient jurisdiction, or the regular Joe who wants to enjoy vacations with his family or friends.

Expats who become residents choose to operate a Bed & Breakfast, not only because of the rising trends in the hospitality and tourism industries but also because Panama offers multiple beautiful places to live and run a B&B.

Is a property suitable for a B&B?

So, you find a great property in Panama where you’d like to live and make an income out of it. But, would it be a profitable B&B?

The profitability of a Bed and Breakfast in Panama depends on factors such as property size, the area where it operates, and property conditions. You want to dig deeper into questions that help you understand the local market dynamics and the property’s potential:

  • What makes the location desirable?
  • Is the property the right size?
  • Is the decor in good shape or does it need upgrading?
  • What guest profile does it attract?
  • Is business seasonal or year-round?
  • How soon would renovations be required?

Legal considerations to keep in mind

Although every district can have particular requirements to open and run a B&B, there are four basic legal aspects to consider: zoning, operations permit, insurance, and fire regulations. Let’s take a look at each of them

Zoning

You might not need to renovate much of the property to set up a B&B. However, you may be required to apply for a change of use of your property. You need to check with local authorities (usually the city hall – the Alcaldía) to verify the property follows the rules and any housing regulations.

Operations Permit for Public Lodging Establishments

In Panama, you need to meet the property requirements to request an Operations Permit for Public Lodging Establishments. The requirements include:

  • Ownership certificate from the Public Registry. If the property is under a lease, a contract copy signed by the Ministry of Housing and Land Management (MIVIOT)
  • Invested capital certificate, prepared by a local CPA.
  • Architectural plan, including elevations, and sections of the building
  • Urban zoning issued by the competent authority

If you plan to run the B&B under a Legal Entity (e.g. a Corporation):

  • Certificate of incorporation and articles of incorporation
  • Public registry certificate
  • Notarized copy of identity card or passport of the legal representative
  • Power of attorney

If you plan to run the B&B as a natural person:

  • Notarized copy of identity card or passport.

The process to obtain the permit for Public Lodging Establishments usually takes 1 month.

Insurance

A standard home insurance policy will not be sufficient to operate a B&B. Although a homeowner’s insurance might sound simpler and convenient, it is recommended to be covered by business insurance and civil liability since it will protect you from personal injury or property damage.

You will also need to check with your insurance provider that other items in your insurance policy are not void as a result of taking paying guests.

Fire regulations

A fire risk assessment is another point recommended to carry out when setting up a B&B.

In Panama, you can request a special inspection from the Firefighters Department. The requirements for a special inspection include: applicant name, identification number, work address, reasons for inspection, and details of the inspection requested.

This will enable you to identify any hazards that could cause a fire and establish measures to reduce the risk of a fire. This is a process carried out by the corresponding local firefighter department.

Food Safety

As the name would suggest, breakfast is often the only meal served by B&Bs. Nevertheless, as a guesthouse owner, it is recommended to make sure that you’re on the safe side serving food. In Panama, you can request a Sanitary Operating Permit for Food Preparation and Dispensing Establishments (POS).

Some of the basic requirements to obtain this permit include the power of attorney and list of food handlers and a copy of their respective Health Card.

The right legal assistance available to you

Opening and running a B&B in Panama comes with challenges and rewards. Kraemer & Kraemer can assist you and give you the proper legal advice to set up your B&B. Send us a note to info@kraemerlaw.com, our team will be glad to review your case.