CREATE YOUR PRIVATE INTEREST FOUNDATION IN PANAMA

Name: Create Your Private Interest Foundation in Panama | Panama Tax Lawyers
Price: 1500.00 USD
Availability: InStock

Why Panama PRIVATE INTEREST FOUNDATIONS?

WHAT IS A PANAMA PRIVATE INTEREST FOUNDATION (PIF)?

A Private interest foundation is a legal entity, it was created to provide the benefits of a trust with the flexibility of a company. A foundation is managed by a foundation council similar to the trustee in a trust and had control over the foundation assets. Here below we detail the main differences between a trust and a private interest foundation.

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Type of Entity	Legal Status	Operation	Registration	Establishment	Administrator	Assets	Protector
Private Interest Foundation	Autonomous Legal Entity	Founder has some level of discretion on the operation	Registration of foundation Charter but not of the private document	Founder	Foundation Council (minimum 3 individuals or 1 corporate director)	Foundation can Own assets or open bank account	Yes
Trust	Legal Act	Settlor transfers ownership and has no operational discretion	Not necessarily has to be registered	Settlor	Trustee (Minimum one with no maximum)	Trust can not have assets ownership only trustee	Yes

The Panamanian territorial regime of taxation, makes a huge advantage for International business establishment, because all the income generated overseas is never taxed and no tax returns need to be filed.

WHAT IS A FOUNDATION USED FOR?

A Foundation is a very discreet good planning tool mostly use for asset protection against creditors, political instability, or safeguard your business continuity, charitable purposes, spousal claims, administer portfolios of securities or as holding company of other company’s shares.

Can be used to hold or manage the assets for the interest of charitable, educational, scientific, or benevolent purposes.

HOW IS THE FOUNDATION FORMED?

The foundation charter is the legal document where is established the transfer of assets from the founder, the assets can be transferred immediately or in a time and conditions defined in the foundation charter. It is noteworthy that on the foundation Charter can be stated that the foundation may also receive properties transferred from a third party as well.

FOUNDER

Has the power to appoint the members of the foundation council or remove same as Protector or beneficiaries. It can be an individual or a legal entity, the minimum capital is USD $ 10.000 (this don’t have to be paid or disbursed at the time of formation in order to operate or after formation), the Founder is allowed to participate as Protector and Beneficiary as well. In order to preserve anonymity, the owner can designate a Lawyer or an individual to act as a founder by issuing a Special Power of Attorney.

FOUNDATION COUNCIL

Is the equivalent to the trustee in a trust, or the directors in a company, the Panamanian foundation allows the appointment of 3 directors individuals of any nationality or residence, or composed by only one corporation, or a combination of both.

The Foundation council is responsible to execute the objects of the foundation in accordance with the Foundation Charter and of the daily management in respect of established policies and provisions. However, the Protector or the appointed supervision body has to concede approval for allowing the council to execute any decision on regards to the foundation.

PROTECTOR

The Guardian or protector is not mandatory on a Panama foundation, this entity (legal or individual person), has supervision duties and can be appointed by the founder or the foundation council, the identity of the Guardian can be publicly disclosed or not depending if it is mentioned in the Charter.

The different powers the protector is granted normally refer to remove council members, confirm decisions of the Foundation Council, ensuring Council comply with its functions.

BENEFICIARIES

Panama Foundation has not shareholders or owners, it has beneficiaries. Those can be appointed by the Founder, Council or Protector, depending on the regulations structure. The beneficiary can be a minor, adults or another entity and may not encumber, pledge or transfer its benefits. The foundation Charter does not need to identify the beneficiaries but in the regulations.

DURATION

It could be perpetual unlike a trust that is necessary to establish a time limit or defined events that will terminate the foundation validity.

REGULATIONS

This document and none of its content is publicly available, the information included deals with the council establishment, protector appointment and how the beneficiaries will receive their benefit.

RECORDS & ACCOUNTING

The register agent is obliged to keep yearly register of the accounting activities of the foundation and when requested must be disclosed to the regulator. The foundation council has to report to the beneficiaries if the foundation charter established a term for this purpose, after the presentation of such report the beneficiaries have 90 days to object any unconformity, if not, then the council is exonerated of any liability that occurred on such period, unless the council has demonstrated to act against the provisions of the regulations and interest of the beneficiaries or negligence.

TAXES

The Panama Foundations that own property or receive income from overseas are not subject to tax income. The Supreme Court of Panama on its decree of 23 June 2008 has extended this benefit to the legal foundations that operate in Panama, relieving them of the requirement to submit tax returns.

As the foundations are not dedicated themselves for profit generation o commerce but administration, the law provides that the foundations won’t be generating taxable income.

Panamanian Foundations are not required to prepare or file annual tax returns, unless they produce income from a local source. If the foundation owns a property in Panama, has to pay property taxes, or in the case of transferring the ownership of the property is liable of the 2% land transfer tax. Other type of assets like money or securities are not subject to this taxation, same any donation or transfers of assets that are not in Panama are not subject to transfer tax. In the case of beneficiary benefits or interests paid out from the foundation are not taxable on Panama.

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