is an international center
for banking, insurance, finance and shipping.
Hundreds of thousands of corporations from
around the world are established here, and
enjoy Panama’s offshore tax-free status
and strict regulatory and confidentiality
years ago, the Panamanian government enacted
a new law (Law #25 of June 12, 1995) establishing
the formation of Panamanian Private Foundations.
The law is based on similar legislation
regulating private foundations in Switzerland
and Liechtenstein, but with several innovative
the law’s enactment, thousands of
Private Foundations have been established
and are in operation for clients around
the world. The Panamanian law governing
the establishment and operation of Private
Foundations is simple, yet complete.
It affords the Private Foundation the legal
security of established judicial
and confidentiality protection,
while allowing for complete and unrestricted
action by the Foundation’s founders
Private Foundations operate very much like
a trust. Normally, Foundations
are endowed with a patrimony (liquid or
non-liquid assets) which is held in trust
by the Foundation. This endowment is thereinafter
disbursed to the beneficiaries
as stipulated by the founder.
The founder can also be a beneficiary of
an asset (liquid or non-liquid) is endowed
to the Foundation, it becomes a part of
the Foundation’s patrimony, and is
and apart from the founder’s estate.
Third parties, such as governments or creditors,
may not attach liens against the Foundation’s
assets for personal obligations of the founder,
except in the case of fraudulent or criminal
establishment of the Foundation, the founder
(or the founder’s designate, heir
or assign) exercises complete
control over the Foundation.
The Foundation’s designation of beneficiaries,
distribution of patrimony, etc., can be
changed as often as desired at the discretion
of the founder.
Private Foundations are proven legal entities
utilized by thousands of individuals and
families around the world to protect
assets and to provide for
the planned, orderly transfer
of patrimony from one generation
of Panama levies no taxes
on foreign income derived from Foundation
assets, nor does it tax interest income
generated from monies deposited in Panamanian
banks. Panama only taxes domestic income
from active business enterprise. The U.S.
dollar is Panama’s national currency,
thus eliminating monetary devaluation risk.
is duly registered in Panama’s Public
Registry, thus ensuring its
legal status. However, the
Foundation’s internal Regulations
are privately held by its founder,
thus ensuring its confidentiality.
Assets placed in the Foundation become its
sole property and are legally autonomous
from the founder’s estate. Thus, third
parties, such as governments or litigants,
cannot attach the Foundation’s
assets, except where the assets
were derived from fraudulent or criminal
INITIAL CAPITAL REQUIREMENTS & TAXES
law requires that the initial capital pledged
by the Foundation shall be not less than
$10,000.00. This amount does not have to
be paid in to the Foundation in advance.
Thereafter, the Foundation can receive additional
liquid or non-liquid assets from its founder
or third parties.
Private Foundations enjoy very
low filing and annual fees.
As with Panamanian corporations, Foundations’
initial registration tax is 300.00. Thereafter,
the Foundation’s annual franchise
fee is $400.00, regardless of the amount
of capital in the Foundation.
taxes are levied on foundation assets or
income, as long as that income is derived
outside the Republic of Panama. Additionally,
interest income on a Foundation’s
bank deposits within the Republic of Panama
are also tax free.
STRUCTURE & FILING
is formed via a Foundation Charter, which
is a legal instrument
similar to articles of incorporation. The
Charter is required to state certain basic
information such as Foundation name, initial
capital, Foundation Council members’
names, Resident Agent in Panama, etc.* The
Charter is registered in Panama’s
Public Registry and is issued a “Public
Registry Certificate” and is thus
established as a legally-recognized
Private Foundation. Thereafter, it can accept
assets, open bank accounts, and begin operations.
above, the Charter must list members (minimum
of three natural person or one juridical
person, as a corporation) of the Foundation
Council, who are appointed by the founder.
The Council serves as an active or passive
board of directors, at the discretion of
the founder, who can also serve on the Council.
with the Charter, a confidential internal
document known as the Foundation Regulations
is created. The Regulations, which are similar
to corporate bylaws, normally name the beneficiaries
and their rights to Foundation assets, terms
of disbursement, etc.* The Regulations are
not registered with the Public Registry,
and are not revealed to third parties (gov’t.
agencies, etc.) except at the
discretion of the founder.
Foundation operates similar to a trust or
holding company. It cannot be used simply
to operate a business or for purely commercial
enterprise. Assets, both liquid (bank transfers,
stocks, bonds, etc.) and non-liquid (real
estate, real property, titles, etc.) are
transferred into or deeded to the Foundation.
They then become the sole property
of the Foundation. The assets can and normally
do generate income (interest on deposits
and bonds, stock dividends, real estate
founder or protector) names the beneficiaries
(and can in fact be a beneficiary), establishes
the terms and conditions of asset disbursement,
and appoints Council members, outside auditors,
etc. via the internal Regulations. The founder
can change the Regulations in whole or in
part via amendments to the Regulations,
at the founder’s or protector
and distribution of assets are made according
to the Regulations. The Foundation is perpetual
unless closure provisions are specifically
stated in the Regulations, i.e., upon the
founder’s death and subsequent disbursement
of all assets.
like trusts, are used to protect assets
and to allow for the planned, orderly distribution
of said assets to beneficiaries. These Foundations
have been called “the
perfect living will”.
Foundations are set up as instruments for
the programmed disbursement of assets from
one generation of family members to another.
The assets can be managed and distributed
by “protectors” named by the
founder, and the disbursements can be specifically
tied to the founder’s
or protector wishes, i.e.,
for beneficiaries’ education or health
expenses, general living expenses, etc.
can contribute to other entities such as
charities, institutions, churches, etc.,
at the behest of the founder.
Foundations can also be set up as retirement
annuities for the founder
as beneficiary. Others set up unfunded Foundations
as a ready precaution against potential
Requirements Document [+]
for further details.
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100 street Beatriz Cabal
Panamá, Rep. of Panamá
Telephone: + (507) 269-2523
Fax: + (507) 269-2548
Mail: P.O. Box 081903288
El Dorado, Panamá, Rep. of Panamá
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