OUR OFFICES: LONDON, UK Office | +44 20 3769 1690  –  CORK CITY, Ireland Office | +353 21 202 8069  –  Contact Monday to Friday: 9 am to 6 pm GMT time  –  Skype: CALL | CHAT

OUR OFFICES:
LONDON, UK Office | +44 20 3769 1690
CORK CITY, Ireland Office | +353 21 202 8069
Contact Monday to Friday: 9 am to 6 pm GMT time 
Skype: CALL | CHAT

WHAT MAKES A PANAMA FOUNDATION
UNIQUE
USES AND ADVANTAGES OF A PANAMA FOUNDATION
(PIF)

SET UP YOUR
PRIVATE INTEREST
FOUNDATION IN PANAMA

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Entrepreneurs
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Eurofinanzza Tax Legal Law Center
Corporate Tax & Legal Consultors
Since 1998

Taking the Mystery out of
Panama Foundations

Provide yourself the legal structure to reduce your tax liabilities and protect your assets from needless claims and lawsuits.

A Panamanian Private Interest Foundation (PPIF), more commonly known as a Panama foundation, can protect your estate from legal disputes after your death to ensure that your estate will pass to your chosen beneficiaries without undue complications.

First introduced in 1995, the Panama foundation is modeled after the Liechtenstein Family Foundation, or Stiftung, which has been the preferred vehicle for wealth management for generations of Europeans. The Panama foundation, though, has been developed to offer its holders and their assets superior protection from prying eyes than Liechtenstein.

The benefits offered by these types of foundations differ from trusts in significant ways, which may not be known or fully understood by many in the western world. The best place to start demystifying Panama foundations may be to explain what a Panama foundation consists of.

Benefits of Panama Foundation

A Panama foundation takes the best elements of a trust and an offshore company, or IBC, to create a legal entity to passively hold the assets of those who formed it.

A foundation has no owners, so assets of the foundation, such as corporations, shares of stock, real estate and bank accounts are held for the foundation’s beneficiaries (e.g. your heirs). Traditionally they were used to protect the wealth of the family and to make sure that its assets were passed on to succeeding generations.

Because there are no owners of a Panama foundation, reporting requirements are not necessary in many countries. For example, foundations are not specifically recognized by US tax Law, which allows you to decide the way in which your foundation is declared, and it may be structured in a way that allows it to legally avoid the reporting requirements of the IRS.

One way of doing this is to structure it as a charitable foundation rather than just as a family foundation. Using a private interest Panama foundation for private international church, humanitarian, philanthropic or other charitable activity is quite a well-established concept and we have a healthy number of clients that have pursued this path.

What makes a Panamanian Foundation unique
  1. Complete customised by-laws that go into great length to detail the operation of the foundation, define who gets what and when, as well as establish whether the foundation will continue indefinitely (and, if so, who would take over).
  2. Customised charter to reflect the unique mission of the charitable, church or humanitarian nature of the foundation.
  3. The flexible nature of Panama’s Foundation Act allows for a private entity to be turned into a quasi-public one without the government meddling and oversight.
  4. Freedom to pursue spiritual, humanitarian, charitable purposes of the foundation in complete privacy.
Panama Foundation
The 3 Key Positions that need to be considered
  1. The founder, which for privacy purposes can be our nominee company, if desired. (The founder is the same as a settlor in a trust).
  2. The council, which for the same reason can be our nominee company, if desired. (The council is the same as a trustee in a trust).
  3. Just as with a trust the protector appointment is a private agreement and should be decided by the client. The protector can have certain powers such as dismissing and appointing new council and is a check-and-balance feature common to both.

There are ways to ensure that a private interest charitable foundation can also meet the goals that would be normally desired for a private interest family foundation, as their two principal aims are not mutually incompatible.

TBA is engaged to providing our clients with the best possible consultation and legal services. We have been helping our clients protect their interest and assets since 1998. We are committed to building trust and creating long-term relationships, and we strictly observe attorney-client privilege.

Uses and Advantages of a PIF in Panama

With regards to uses that can be given to a PIF we can find the following:

Family support
For Tax purposes
For the protection and management of assets
For educational purposes
Testamentary purposes
For life annuity purposes
For charitable purposes
To receive and manage capital and titles
For the purpose of serving as guarantee or collateral
For the management of insurance

We must comment that there are no restrictions as to the objects or uses one PIF can be given. For example, one PIF can be created to protect assets, but also with a testamentary use or in any case, with all the above-mentioned uses. However, a PIF cannot engage in commercial or for-profit activities as a day-to-day activity.

Information of Public and Private Knowledge

The only information made public are the names of the Founder, the member (s) of the Foundation Council and the name of the Protector, this last if it is so established on the Foundation Charter, as the Protector can be appointed by means of a private and confidential document.

The Foundation Regulations are for internal purposes of the Foundation and are not a matter of public records. Information regarding names of beneficiaries and of the protector and method for distribution of assets can be contained within the Regulations thus will not be publicly disclosed.

Confidentiality

The Law 25 of 1995 innovates in this field when it stipulates on Article 35 that all the members of the Foundation Council, Protector, public or private servants that have knowledge of the activities, affairs, transactions and operations of the PIF must maintain reserve and confidentiality at all moments. Violation of these Articles carries a sanction of 6 months of jail time and a fine of Fifty Thousand Dollars (US$50,000), without prejudice to the civil liabilities.

The content of this article is intended to provide a general guide to the subject matter.
Technical advice should be sought about your specific needs and requirements.

The content of this article is intended to provide a general guide to the subject matter.
Technical advice should be sought about your specific needs and requirements.

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