A Panamanian Private Interest Foundation, which is also known as a Panama foundation, which came into law in 1995 is modelled on the Liechtenstein Family Foundation. Foundations for wealth management have existed since medieval times in one form or other. In this article we will look at the principal benefits of Panama Private Interest Foundations.
This type of entity brings together the benefits of a Trust, for asset management, and the practicality and flexibility of a Corporation, for its legal existence and structure. Unlike a Corporation or trust, however, the Private Interest Foundation has no owner, instead it has a founder, a foundation council, and beneficial interests.
The law was initially established as a private patrimony foundation for families as an inheritance tool to protect a family’s wealth across generations. There are no shareholders, partners, members, or participants. Its sole purpose is to benefit a specific class of individuals or charities.
The founder of the Foundation can be a natural or legal person who may create a letter of wishes, to outline in greater detail the goals and intent of the foundation.
A Panamanian Private Interest Foundation cannot engage in commercial or for-profit activities as a day-to-day activity but can benefit from a passive Income such as rents, securities, interest, royalties, fees, and investments. A corporation, owned by a foundation, can, however engage in commercial activities which benefit the foundation.
Benefits of Panama Private Interest Foundations
A Panama Private Foundation has the following benefits:
- Privacy and Confidentiality
- Asset Protection
- Estate Planning
- Low registration and renewal fees
- Potential tax advantages
- Accounting Can Be Kept Privately and Abroad
- Ability to Transfer A Foreign Foundation to Panama.
- Fast incorporation time frame.
Privacy and Confidentiality
The creator of the foundation and beneficial interests need not be named in any public documents or registered with the government. The only names to be included in public documents are the Council members and the founder.
The founder can be a natural person or act through a corporate entity or other nominee. He or she can also appoint a protector or adviser.
A Panama Private Interest Foundation provides asset protection. The foundation acts as a holding company by owning all assets protecting them from outside creditors and foreign lawsuit judgments. Panama laws do not recognise foreign government seizures or court orders pertaining to foundation-owned assets.
Once the founder has transferred the desired assets into the foundation, they are legally no longer his or hers.
The Panama Private Foundation can be used for the orderly transfer and disposition of the assets to the beneficiaries upon the death of the Founder.
Any Inheritance laws that apply in the domicile of the Founder or the beneficiaries, shall not be effective against the foundation’s assets nor may these laws affect the validity or performance of the foundation’s objectives.
Panama Private Foundations can protect your estate from legal disputes after death to ensure that your estate will pass to your chosen beneficiaries without undue complications.
There is no need for Wills or Probate.
The Panama Private Foundation can also continue in perpetuity according to the wishes of the founder.
Foundation Authorised Capital
The payment or deposit of the foundation’s authorised capital (minimum US$10,000) is not required for the incorporation of the foundation and there is no deadline to make the payment.
Low initial and government maintenance cost
Currently, the initial government registration fee is $410 USD with annual renewal fee of $400 USD.
Panama only taxes income produced or generated by economic activities carried out within the country. So, any income of the Foundation earned outside of Panama shall not be subject to taxes within Panama.
There are annual tax filings, however, if no income is earned in Panama, a simple declaration that there were no Panama earnings is all that is required.
Annual general meetings by the Council are not required but if they are called, they can be held anywhere in the world in person or online.
The Founder can appoint him/herself as a Protector or Adviser who virtually controls the entire private foundation.
Accounting Can Be Kept Privately and Abroad
Accounting for Panama Private Interest Foundation can be completed anywhere in the world.
Ability to Transfer A Foreign Foundation to Panama.
A Private Interest Foundation set up in other countries, may be migrated to Panama and foundations organised in Panama can be redomiciled to other jurisdictions.
Fast Incorporation Time Frame
There is a process which allows for a foundation to be formed and registered in a matter of one or two days.