Panama Foundation
Ultimate Asset Protection with Legal Security
Panama Foundation
Registering a Foundation in Panama
The Private Interest Foundation Law of Panama draws its foundation from both Panama’s Trust Law (Law No. 1 of 1994) and the Liechtenstein Family Foundation Law from the Principality of Liechtenstein in Europe. Panama’s Legislative Assembly passed Law No. 25 on June 12, 1995, establishing the regulations governing private interest foundations. Below is a summary of the key aspects of this legislation.
Establishing a Panama Foundation may seem intricate, but with appropriate guidance and expertise, the process can become clear and manageable. This guide provides a detailed overview of the steps needed to create a foundation in Panama, including an understanding of its benefits and legal framework, along with the critical procedures to follow. By adhering to this guide, you can ensure the successful and efficient formation of your Panama Foundation without unnecessary complications.
Key Points:
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- A detailed guide is essential for successfully establishing a Panama Foundation.
- It’s important to understand the advantages and legal structure of Panama Foundations.
- Following the outlined steps carefully is crucial in the foundation setup process.
Asset Protection
Tax Exemption
Privacy
Benefits and Legal Framework
A Panama offshore foundation offers a range of advantages for individuals and businesses looking to safeguard their assets, enhance tax planning strategies, and maintain confidentiality. Additionally, establishing a Panama Foundation is relatively simple and quicker than in many other jurisdictions
+ Asset Protection
One of the primary benefits of a Panama Foundation is asset protection. The founder can transfer their assets to the Foundation, which then becomes the legal owner. As an independent legal entity, the Foundation manages these assets and distributes them to beneficiaries according to the foundation charter.
+ Confidentiality
One of the primary benefits of a Panama Foundation is asset protection. The founder can transfer their assets to the Foundation, which then becomes the legal owner. As an independent legal entity, the Foundation manages these assets and distributes them to beneficiaries according to the foundation charter.
+ Taxes
Another significant advantage lies in its tax benefits. Panama Foundations are exempt from income and capital gains taxes, making them a highly attractive option for international tax planning. Furthermore, there is no requirement for the Foundation to maintain accounting records or submit tax returns.
+ Legal Structure
Legally, Panama Foundations are governed by the Panama Private Interest Foundation Law of 1995. While the Foundation is not classified as a separate legal entity, it operates as a fiduciary arrangement involving the founder, a Foundation Council (similar to a board of directors), and the beneficiaries. The foundation charter specifies the Foundation’s objectives, as well as the duties and responsibilities of all parties.
In summary, Panama Foundations provide an excellent means for asset protection, tax optimization, and confidentiality.
Key Steps to Set up Panama Foundation
Setting up a Panama Foundation requires thoughtful planning and compliance with legal regulations. Below are the essential steps involved in the process:
Select a distinctive name that aligns with the foundation’s purpose and adheres to the relevant naming regulations.
Appoint a founder, who may be either an individual or a legal entity, and clearly define their roles and responsibilities.
Step 03
Draft the foundation constitution
Appoint a founder, who may be either an individual or a legal entity, and clearly define their roles and responsibilities.
Submit the notarized charter along with any other necessary documents to the Panama Public Registry for official registration.
Step 05
Check compliance
Ensure compliance with all legal and regulatory obligations, including maintaining accurate records, filing tax returns, and submitting annual reports.
Panama Foundation
Constitution
Detailed Information
The foundation may be established through the following methods:
- A private document signed by the founder, with the signature authenticated by a Notary Public.
- Directly before a Notary Public in the location of its formation. If the foundation is to take effect after the founder’s death, no testamentary formalities are required.
The foundation charter must include:
- The name of the foundation, which must not be identical or similar to any existing foundation in Panama, and must include the word “foundation.”
- Foundation capital, which must be at least US$10,000.
- Names and addresses of the foundation board members, including the founder if applicable.
- The foundation’s domicile.
- The name and address of the foundation’s resident agent (a lawyer or law firm) who must authorize the charter before it is registered at the Public Registry Office.
- The purpose of the foundation.
- Procedures for appointing the foundation’s beneficiaries, including the option to name the founder as a beneficiary.
- A reserved right to modify the foundation charter as needed.
- The duration of the foundation.
- Instructions for asset distribution and liquidation upon dissolution.
- Any other lawful clauses the founder deems appropriate.
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Capital
Setting up a Panama Foundation
Atrium Professional Assistance
Establishing a Panama Foundation can be a complicated process, requiring a solid grasp of the legal and regulatory framework. Therefore, it is highly recommended to seek professional assistance.
Atrium & Associates offers expert guidance throughout the process, from choosing a name and drafting the foundation charter to registering with the appropriate authorities and ensuring compliance with all legal obligations. By partnering with the Business Development Team, you can streamline the process, reducing the risk of errors or delays.
In addition, Atrium provides valuable insights into the advantages of a Panama Foundation and helps you develop strategies to meet your financial objectives. Our team can offer advice on asset protection, tax planning, and confidentiality, ensuring you make well-informed decisions to optimize your financial position.
Atrium’s professional support can be a crucial investment in your financial future, offering expert advice and assistance throughout the foundation’s establishment.
Establishing a Panama Foundation is a smart choice for those seeking asset protection, tax benefits, and confidentiality. However, it is essential to follow a detailed guide to ensure success and full compliance with legal requirements.
By thoroughly understanding the advantages and legal framework of Panama Foundations, selecting an appropriate name, appointing a founder, drafting the foundation charter, and registering with the relevant authorities, the setup process can be smooth and efficient.
It is also crucial to seek professional advice from experts experienced in Panama Foundation formation. Their guidance can be invaluable in ensuring the process is executed correctly and successfully.
With careful planning and attention to detail, a Panama Foundation can be a highly beneficial tool for both individuals and businesses.
FAQ
Panamanian Private Interest Foundations (PIFs) are widely used for asset protection, estate planning, and privacy. Below are some frequently asked questions (FAQs) about Panamanian foundations, covering their features, benefits, and legal aspects
1. What is a Panamanian Private Interest Foundation?
A Panamanian Private Interest Foundation is a legal entity established under Law 25 of 1995. It combines features of a trust and a corporation, primarily used for estate planning, asset protection, and holding assets like bank accounts, real estate, or shares. It does not engage in commercial business but may hold investments and generate passive income.
2. What are the main purposes of a Panamanian foundation?
The foundation can serve various purposes, including:
Estate planning (passing wealth to heirs)
Asset protection from creditors or legal claims
Managing family wealth and investments
Protecting anonymity and privacy of ownership
Charitable purposes
3. How is a Panamanian foundation structured?
A foundation has the following key components:
Founder: The person or entity that creates the foundation.
Foundation Charter: A public document outlining the foundation’s name, purpose, and initial assets. This is filed with the Public Registry.
Foundation Council: Similar to a board of directors, it manages the foundation’s activities. The council can be individuals or corporate entities.
Protector (optional): A person or entity that can oversee the Foundation Council’s activities, ensuring they follow the founder’s wishes.
Beneficiaries: Those who receive benefits from the foundation’s assets. Beneficiaries do not need to be publicly disclosed.
Assets: Property, bank accounts, or investments the foundation holds.
4. Are the identities of the founder and beneficiaries kept private?
Founder: The founder’s identity is part of the public record as they are named in the Foundation Charter, but the founder can use a nominee to ensure privacy.
Beneficiaries: The names of beneficiaries are not publicly disclosed. Their identity is protected through a private letter of wishes or regulations kept confidential.
5. Can a Panamanian foundation engage in commercial activities?
No, a Panamanian foundation cannot engage in regular commercial business. However, it may hold investments (e.g., stocks, bonds) and earn passive income. Any commercial activity must be incidental to achieving the foundation’s objectives.
6. What are the tax benefits of a Panamanian foundation?
Panamanian foundations are exempt from local taxes on any income earned from activities or assets outside of Panama.
There is no capital gains tax, income tax, or inheritance tax for foreign assets held by the foundation.
However, individuals must ensure compliance with tax laws in their home countries.
7. How does asset protection work with a Panamanian foundation?
Once assets are transferred to the foundation, they no longer belong to the founder. They are legally owned by the foundation, providing protection from personal creditors or legal claims.
Panamanian law does not recognize foreign court rulings related to asset seizure unless the case involves fraud, making it harder for creditors to access foundation assets.
8. Is there a minimum capital requirement for a Panamanian foundation?
There is no minimum capital requirement for establishing a Panamanian foundation. However, a nominal amount (e.g., $10,000) is often used in the Foundation Charter to demonstrate initial funding.
9. What is the role of the Foundation Council?
The Foundation Council is responsible for managing the foundation’s day-to-day affairs and administering its assets according to the Foundation Charter and the founder’s wishes. They act similarly to directors in a corporation but cannot distribute assets for purposes other than those defined in the charter or by the founder.
10. Can the founder retain control over the foundation?
Yes, the founder can retain control by:
Appointing themselves or trusted individuals as members of the Foundation Council.
Appointing a Protector who can oversee and approve decisions made by the council.
Issuing a private letter of wishes to guide the foundation’s operations.
11. How long can a Panamanian foundation last?
A Panamanian foundation can be established for an indefinite period or for a specific term. The foundation will continue to operate until the assets are distributed or its objectives are fulfilled.
12. Can a Panamanian foundation be used for charitable purposes?
Yes, a Panamanian foundation can be used for charitable purposes, either partially or fully. It can be set up to benefit a cause, group, or specific charity, providing flexibility in managing philanthropic goals.
13. How can assets be distributed to beneficiaries?
The Foundation Charter or a private letter of wishes sets out how and when beneficiaries receive assets. Distributions can be made during the foundation’s lifetime or upon its dissolution. The foundation can also distribute assets upon the death of the founder, making it a useful estate planning tool.
14. Can the foundation be dissolved?
Yes, a Panamanian foundation can be dissolved when its objectives are fulfilled or if the founder decides to terminate it. The dissolution process involves transferring the remaining assets to the beneficiaries as outlined in the foundation’s documents.
15. Are there any reporting requirements for a Panamanian foundation?
Panamanian foundations are not required to file annual financial statements or disclose the identity of beneficiaries. However, the foundation must pay an annual government fee and maintain its legal status in good standing. Depending on where the assets or the founder are located, there may be foreign reporting obligations (e.g., CRS for bank accounts).
16. How secure is the banking secrecy related to a Panamanian foundation?
Panama offers a high level of privacy. However, international standards for transparency have increased, and Panama now complies with the Common Reporting Standard (CRS) for the automatic exchange of financial information. While the names of beneficiaries remain private, information about bank accounts may be shared with foreign tax authorities as part of international agreements.
17. Can I amend the Foundation Charter?
Yes, the founder can amend the Foundation Charter to reflect changing goals, provided the amendments do not violate Panamanian law. The founder’s private letter of wishes can also be updated, as it is not part of the public record.
Panamanian foundations offer flexibility, privacy, and strong asset protection, making them a popular tool for individuals seeking estate planning solutions. It’s important to consult with legal professionals to ensure compliance with both Panamanian laws and the laws of the founder’s home country.
Why not contact Atrium company formation specialists today to speak to one of our advisors on private foundation start-up in Panama?
These experts will guide you towards the correct package for you and your foundation’s needs. We are a highly reputable, reliable company incorporation service provider. Atrium are specialists in guiding clients through the process, from documentation required to submit an application, to post formation considerations.
Why Partner with Us?
- Expertise: Years of experience in offshore company registration.
- Global Reach: Support for international entrepreneurs and businesses.
- Transparent Pricing: No hidden fees—just clear, upfront costs.
- Dedicated Support: Guidance at every step of your offshore journey.
Start Registering Your Foundation in Panama Today
Take advantage of Panama’s business-friendly environment and establish your Foundation in a thriving offshore jurisdiction. Contact us now for a free consultation and start your journey toward global business success!
