So, a foundation is right for you, but where? Key jurisdictions include the Cayman Islands, Curacao, Guernsey, Isle of Man, Jersey, Liechtenstein, and of course Panama.

The Panama Private Interest Foundation (PPIF) is a secure vehicle for confidential asset protection.

The government of the transcontinental country itself cannot seize any of its assets. It does not matter whether it is money, real estate, precious metals, or some other property of value. Take the worry out of protecting assets. They can have a protector controlling it on their authority. The details thus are also safe.

 

1. Second most popular location in the world

As of 2022, Panama had over 400,000 registered incorporations including foundations, making it the most popular offshore location for registration after Hong Kong.

 

2. Partial Anonymity

In Panama, complete founder anonymity is possible. Panamanian law offers stakeholders with any information about a foundation, be it about assets or protection, the highest level of confidentiality. With a PPIF, one has the guarantee that no one has any information about their wealth without consent and disclosure. The founder’s decision about the foundation cannot be challenged.

In Panama, complete founder anonymity is possible.

The situation is not the same in other places. In the US foundations have extensive oversight. In Singapore, foundations must be public and for charitable purposes only. Similarly, the Belize Foundation must provide some records to the registrar, which means it is not confidential compared to Panama. Even in Seychelles, the founder may need to register, meaning the confidentiality level cannot match Panama’s.

 

3. Optimal Taxation Choice

The territorial tax system in Panama allows a foundation to hold assets abroad without taxes. Being a foundation protector or beneficiary is open without stipulations on nationality. When opening a foundation in Panama, one should establish a tax residency there. By doing so, Panama will not ask the founder about tax compliance documents. Asking for tax compliance documents is a common practice in other jurisdictions. For instance, the law in most jurisdictions delineates foundation types in different ways.

In contrast, in the US, The Tax Reform Act of 1969 provides those private foundations, in exchange for being exempt from most taxes, have accounting and annual pay-out requirements (currently 5% of the total endowment). The PPIF avoids these requirements. The founder of a Panamanian foundation can thus buy a property or invest in other jurisdictions.

 

4. No judicial in-roads to assets

A PPIF is protected from judge-made law. This means the courts in Panama will not have a crucial role when setting up a foundation. And the legislature has a provision that does not need the payment of taxes.

 

5. No income tax for Panama Private Interest Foundations

PPIFs aren’t allowed to carry out on-going and routine commercial activities and thus, it is not subject to income tax. Yet, it is quite common to have an IBC (in Panama) fully owned by the foundation to run commercial activities.

That means the law does not have taxable income considerations or options. So, they are not subject to the tax code, foundations do not fall within the bracket of the payers of income taxes.

 

6. Activities outside Panamanian jurisdiction are not taxable

That means they are tools of tax planning. While we do not advise that one uses them to defraud the foreign tax offices, activities outside Panamanian jurisdiction are not taxable. One does not necessarily have to live in a tax haven as it is meant to create a separate estate.

 

7. Own Legal Personality

The PPIF has its own separate legal personality. That feature creates a veil that even creditors cannot penetrate. Creditors with any claim have only three years when there is a transfer of assets. The legal structure protects the founder even in divorce fights or false creditors’ claims. As a founder, one has control but does not “own” it, meaning creditors and other claimants cannot access the assets.

 

8. Discretely hold offshore shares

With a PPIF, the asset owner can hold offshore shares and other assets anonymously. So, it acts as bearer shares, which are no longer allowed in many jurisdictions. But some institutions such as banks can ask for the identity of the protector when performing due diligence.

 

9. Panama ideal for charitable endeavours as well as for-profit

The Panama Charitable Public Foundation (PCPF) offers many world-leading administrative benefits. They provided management for scientific and philanthropic benefits. They can be used for humanitarian purposes. Of course, in Panama, foundations do not carry out commercial activities, but they can manage assets to support good initiatives.

 

10. No capital requirements

A PPIF has no paid-in capital requirements. This makes them vastly different from those in the US, where the founder will need about $500,000. This is classified as the Initial Fund Establishment. Thus, the difference is visible.

 

11. Access to professional representation

A foundation council is akin to the board of directors in a company. They are the governing body of the foundation. They run its operations according to its charter and regulations to ensure it meets its obligations. If one begins a foundation as a natural person, the law requires the council to comprise three members. The good thing is that they do not need to be Panamanian. If one feels they want to be part of the council, they have the liberty. The information is ultimately available to the public. In Panama, a law firm usually acts as the de facto council, but others will be in charge behind the scenes.

 

12. Foundation Charter

The rules are straightforward with a PPIF. The founder can limit or expand the council’s powers as described in the foundation charter. This is the basic instrument required by the law when creating a foundation. It should be registered with the Public Registry. It is the official document. The legal formalities to be provided are not as complex. While it is confidential, the document is publicly available through the registry. But then, information such as the name of the owners and beneficiaries should not be disclosed without cause.

 

13. Confidential Foundation Regulations

Unlike the charter, this one is private. The law does not need it. The Panamanian regulations give founders the benefit of keeping information there. The public cannot access such information. The regulations can be used to store the names of the beneficiaries, so, keeping their information private. It helps in the provision of flexible arrangements.

Panamanian lawmakers know the benefit of privacy and confidentiality. Anyone who breaches the duty is liable to a fine of $50,000 or imprisonment. So, the law in Panama guards’ confidentiality. Even employees are not supposed to breach that duty. Supervisory bodies also are not allowed to breach their duty, especially on the activities and transactions of the foundation.

Whatever the founder instructs the lawyer to draft as the regulations are confidential. It means the founder will state how the assets will be managed, how the revenue should be invested, and what should happen should they become incapacitated. And with all that vital information, it will be confidential; thus, no need to worry.

 

14. Advantages of appointing a Panamanian Protector

The founder does not have to run the foundation personally. Panamanian law provides for the appointment of a protector. Such a person will ensure that the charter and regulations are followed. Even in death, the protector will ensure the foundation’s objectives are carried out. In other words, the protector is like a trustee to those familiar with the common law jurisdiction. That means in Panama; they will get top-notch estate planning instruments.

They are not obligated to appoint one, but it is advisable. However, when a client decides to use nominees as council members, it is required that the client appoints their own protector. The protector has control. The council appoints them during establishment. Although the council appoints him, he has the strength to substitute for them. He does not need the consent of the other members to do so. Unlike in companies where such decisions would need approval by the board, making the process tedious, this one is easy and flexible. Also, the protector does not have to be in the public domain. He can be appointed discreetly. The protector can be in control without anyone noticing it.

 

15. Beneficiaries

A foundation operates to offer benefits to third parties. They can be but are not limited to heirs. In Panama, foundations do not have owners. As in, they do not have shareholders. Instead, the beneficiaries are the ones who enjoy the assets of the foundation. So, it is nice and safe for creditors. They are kept private since they are usually listed in the regulations. There is no need to describe them in detail, so no name and surname required in the documents. Beneficiaries are products of legal creativity. There is no limitation to the number of beneficiaries who can be limited and although institutions are required to conduct KYC for due diligence purposes and to avoid fraud, that is not a fundamental requirement for a foundation.

 

16. Forced Heirship

In some countries, one is restricted from writing their will. However, when one distributes his wealth upon death, most jurisdictions provide that some of the wealth should be distributed equally. In such countries, a will that does not adhere to such laws will be nullity. What does that mean? That means the legislature can tell the founder how to share lifetime savings and wealth. Imagine someone who does not know the founder dictating how their property will be inherited.

But that is avoidable. One needs to transfer assets abroad. Specifically, one can start a foundation in Panama and circumvent such rules if their country has them. Article 14 of the Panamanian Private Foundation Law places the foundation charter and its regulation on a higher pedestal than those laws of other countries that would place forced heirship on the founder. Isn’t that a win? That is what is called freedom of wealth distribution. That is also applicable in other jurisdictions, such as Jersey and Lichtenstein.

 

17. Arbitration Prevails

When setting up a foundation, one does not have to worry about the complex judicial system in Panama. That is particularly so for foreigners. Even lawyers from common law jurisdictions will usually be at loggerheads with those from civil law jurisdictions. There are many differences in their approaches. Yet, to avoid that, one only needs to use arbitrators. That is provided under Article 36 of the Panamanian Private Interest Foundation Law. That means the disputes will be solved quickly, and the process will not compromise confidentiality.

For years, Panama has been using arbitration. They appreciate its advantages. The process is used in Maritime and Transport Law. So, the founder does not have to worry about having Panama as the arbitration seat. But the founder also has the freedom to choose any other seat. The founder can choose their arbitration experts from wherever.

 

18. The creativity of the law

Panama has attained the status of the home of foundations. Thousands are attracted to the country to set up theirs. Panama has over 40,000 foundations. The law creatively creates a discreet environment. Founders or the council do not need to be citizens. Nationality does not matter. What does that tell us about the advantages? While there is a new requirement for filing annual financial services, that does not need to be an issue. We offer such services, which make Panama the best destination.

 

19. Entrepreneurial Aspect of the Panama Foundation

A foundation cannot run commercial activities. But it is possible to hold any legal assets as the founder and the council wishes. It is not a tool for asset protection alone. It can receive profits from dividends. So, it is not a dormant legal entity. For instance, one can also own apartments through the foundation. Such properties will lead to profits without subverting any law. With the tourism industry booming in Panama, it is possible to make profits using the foundation to develop and lease apartments.

So, reading between the lines, Panamanian foundations are also investment avenues. And then? Well, the profits yielded from such investments are safe under the foundation, and to top it all, creditors cannot touch them.

Panama has many advantages. The founder enters a free zone and can have a company under the foundation and remain confident, knowing that operations are confidential and well-protected.

 

20. International Advantages

Private foundations in Panama have lots of international flexibility. A foundation can change its jurisdiction at will. It can even change its domicile. Ideally, a Panamanian foundation has an international life. They are at liberty to change the governing laws. Although that is not something we could advocate for, considering the benefits we outlined earlier. They have international advantages since they allow all nationalities to set up a foundation. It means that a person facing taxation and jurisdictional challenges in their country can opt for Panama. Even persons from blacklisted or sanctioned countries can open up foundations in Panama. The offshore nature of the foundation creates numerous fiscal advantages. Patrimony is essential.

 

21. A Comparison – Panama and Liechtenstein

Liechtenstein has a long record of foundation creation for asset protection so it is important to highlight some of the advantages the PPIF has over its European rival.

As mentioned, while in Liechtenstein, founders need to have at least an initial capital of 30,000 USD, EUR, or Swiss Francs, Panama requires none.

Paperwork is heavier in Liechtenstein. Bookkeeping and issuing financial statements is one of the key requirements. Similarly, in Seychelles, a foundation must keep up globally acceptable accounting practices showing a genuine financial position. In the US, even if the foundation files nil returns, the records, and books should always be available for inspection by the IRS, as stated in their compliance guide.

What of liability? In Liechtenstein, the liability is limited, but in Panama, it is an absolute zero, as per the Panamanian Civil Law. There can be no dispute about the assets by a claimant since articles 9 and 14 of the law are clear that the assets cannot be encumbered. That is not the case in Liechtenstein since the courts can issue adjustments courtesy of art 560 of the Liechtenstein Act.

On the issue of taxes, that is where most of the benefits lie. For example, a foundation in Panama only pays an annual maintenance tax equivalent to those established in Articles 318 and 318A of the Fiscal Code.

But what about Liechtenstein? The charge depends on the value of taxes being managed.

Privacy and confidentiality are also essential considerations when setting up foundations. The two are fundamental considerations. For example, while in Panama, the issue of governance and supervision is the preserve of private law, in Liechtenstein, it is subject to public law. That means the information that those behind the foundation would want to be kept confidential may leak and get into the public domain.

 

22. Decentralised Autonomous Organisation

Hierarchies are usually used for management. Institutions mainly rely on a centralised system that offers direction for human activities. Centralisation comes with costs. Only a few at the apex are responsible for decision making. That creates some opaqueness. But there has been a paradigm shift since the invention of blockchain technology.

Decentralised Autonomous Organisations (DAOs) are emerging structures that do not have a central governing body. The members share a common goal. Private foundations in Panama are instrumental in running them. Foundations can be used to create and manage DAOs.

 

Summary

Indeed, the accumulation of wealth is often a fundamental human aspiration. But what matters is whether such wealth is protected. Foundations offer ample protection. Indeed, offshore foundations have many similarities, but Panama comes out as the best, especially considering issues such as minimum capital, regulations, and confidentiality. Panama stands out.

Confidentiality and protection of wealth are essential for personal development and heritage. Panama provides one of the best environments for foundations. The regulations and charter provide for confidentiality. The law is protective since it ensures that confidentiality is protected. According to the law, there are fines and possibilities of imprisonment when one breaches the duty of confidentiality. Besides, the founder will enjoy freedom from issues such as forced heirship. Thus, one is at liberty to manage their wealth.

Tax is also another issue. With private foundations, one is guaranteed a big 0% of taxes. Any earnings or incomes from foreign countries are not subjected to Panamanian taxes. Only a small annual charge is available. It only means there is a plethora of benefits in Panamanian foundations. Other jurisdictions offer the same settings, but Panama beats them all. It has overtaken Liechtenstein, Austria, and Switzerland.

Get away from the complex environments and enjoy the liberty of Panama. Consult us for more advice. We are here to guide you.

Panama is the ideal destination for confidentiality and wealth protection.

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