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Private
Interest Foundations
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Among the many offshore services this Law Firm offers include organizing, from the Republic of Panama, a variety of economic operations and activities such as opening bank accounts, operations financing, and tax planning and administration.
A great part of these activities are conducted through a Private Interest Foundation or through a Corporation, especially constituted as an instrument used for owning property or bank accounts, for
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We organize a variety of economic
operations
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asset protection, for inheritance
administration, for creating mutual funds, for making re-invoicing operations, or for other operations, for which Panama offers many operations and tax advantages, as an offshore operations’ center.
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PANAMANIAN PRIVATE INTEREST FOUNDATIONS are a novelty instrument used for protecting assets to compliment the legal structure of offshore services Panama offers as a financial and banking center, having its technical origins in the commonly known family foundations of Liechtenstein. The difference is that Panamanian Private Interest Foundations serve not only family members but also company groups.
Foundations, as they are usually denominated, is an act by which a person donates goods or assets in favor of the foundation, for the fulfillment of objectives previously established in a Foundations’ Charter, which, at the same time, are extended and explained in a set of Private Regulations, under the administration the Foundations Board of Directors, who must comply and abide to the rules set in both documents, for the benefit of the persons designated as beneficiaries.
Differing for Corporations, Foundations have no partners or shareholders and can’t conduct business or commercial activities in a regular and habitual manner. However, it can do business in an accidental manner and it can work as a holding company.
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Benefits
and Advantages
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Personal information will be kept confidential
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Privacy of Beneficiaries will be maintained and nominee directors and founders can be designated
- Keep 100% control of the foundation assets or goods by having a general power of attorney granted in your favor and allowing for the full administration of all goods and assets
- Avoid succession proceedings by establishing, in the Private Regulations, your wishes on the destination of your goods and assets after death
- Avoid risks at times of illness and accidents, by establishing what should be done with your goods and assets under such circumstances
- Foundations’ goods and assets can’t be subject of attachments, sequestration, or similar actions
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Objectives of Private Interest Foundations
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Objective of Private Interest Foundations may be diverse, except for those linked to lucrative or commercial activities in a habitual or continuous manner, with the possibility of serving as:
1. Foundations may be holders of valuables (stocks, bonds, shares, etc.) for which they may receive dividends for its shares or interests.
2. Foundations do not depend on the life time or death of its founder. Depending on the conditions established in the Foundation’s Charter, foundations may have a permanent character. In this sense, Foundations are similar to Trusts, except that the Foundations Board of Directors does not obtain title to the property as the Trust’s administrator does and a Trust does not become a legal and separate person as a Foundation does. It is also similar to corporations and testaments, as they may be used for testamentary purposes, avoiding a succession legal process.
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Asset Protection
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Private Interest Foundations work as an asset protection tool. With this purpose the law establishes that the Founder can designate the persons, either natural or juridical, such as professional counselors, auditors, or any other to execute the tasks of supervising the fulfillment of the foundations’ objectives and the rights and interests of the beneficiaries, for demanding rendition of accounts, and to guarantee its application for the correct use as to comply with what is described in the Foundations Charter and regulations.
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Constitution
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For the constitution of a Private Interest Foundation under Panamanian Laws, registration of the Notary protocol of the Foundation Charter in the Public Registry is required.
Contrary to a public or social interest foundation, that needs the approval of the Ministry of Government and Justice, Private Interest Foundations do not require any authorization, only the free act of its Founder and its registration in the Public Registry.
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Private Interest Foundations do not require any
authorization
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Characteristics and requisites
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In general terms, Private Interest Foundations have the following characteristics and requisites:
1. Panamanian Private Interest Foundations require an initial nominal capital equivalent to the sum of USD 10,000.00 which may be paid after its constitution.
2. Founder has no property rights over the foundation assets.
3. There must be a designated Legal Representative.
4. The foundation’s Charter becomes the legal instrument governing the foundation, and must contain, among other information, the foundation’s name, objectives and purposes, the designation of the members of the Foundations’ Board and information on the use and destiny of the foundation’s assets in the event the foundation is dissolved.
5. Founder can establish a set of private regulations, which will remain undisclosed and where he can include the rules about the beneficiaries, in a way that the information will not become public and will only be known by the interested parties. In these regulations, founder may issue, following the rules of the Foundations Charter, instructions for the administration of the foundations capital and funds compatible with the foundations’ objectives and purposes.
6. Name and domicile of a resident agent in the republic of Panama, who must be a lawyer or a law firm and who must also sign the Foundation charter.
7. The foundation charter and the private regulations can be modified, as long as it has been foreseen in those instruments and it the manner expressed thereof. Duration of the foundation may be perpetual or not.
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Protecting the assets
belonging to Private Interest Foundations
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For legal effects of Private Interest Foundations, the foundation estate is constituted by an estate separate from that of his Founder and Beneficiaries. Sequestration, Attachment and any other similar action is not possible against Foundations’ assets except for actions exclusively related to obligations or damages caused during the execution of the objectives of the Foundation or for legitimate rights of beneficiaries.
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Nationality of Private Interest Foundations
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The Foundation’s Counsel (Board of Directors) or the Protector or Comptroller (if there is one), may change or transfer the Foundation to another jurisdiction or country, as this is permitted under Panamanian Laws.
At the same time, Panamanian Laws allow for a foreign foundation to continue existing as a Panamanian Foundation.
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Tax
Benefits
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Private Interest Foundations, local or offshore, are exempted from every tax, contribution, government fee, or encumbrance, to the same extent Trusts are, except for the annual tax payment of USD 250.00, increased to USD 300.00 from January, 2006.
Therefore, any act of constituting, modifying, or dissolving a foundation, and of transferring or making encumbrances over the Foundation’s assets or any income received from those goods, or any act related to them, are exempted
if
1. Goods or assets are located outside Panama;
2. Moneys deposited by natural or juridical persons or any of its income does not arise from Panamanian sources or not taxable in Panama;
3. Stocks or valuables of any kind are issued by corporations which income is not form a Panamanian source or are not taxable, even when those stocks or valuables are deposited in Panama
4. All acts for the transfer of real estate property, titles, certificates of deposit, valuables, money, stocks, done for fulfillment of the objectives or for dissolution of the foundation, in favor of relatives within the first consanguinity grade or to founder’s spouse.
The only taxable economic activities are those carried on within Panama, as long as the income arises from a Panamanian source.
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