Main Advantages of the Private Interest Foundation in Panama

As from 1927, it is common knowledge that the Republic of Panama has been establishing other types of legal entities other than corporations, as new vehicles for tax and patrimony planning known as private interest foundations, with specific advantages for our local and international clientele under the legal name of “Private Interest Foundation”.  Its regulatory guideline has been useful for our clientele as from the approval of Law 25 of June 12, 1995 due to its numerous advantages, for example:

•  Full Confidentiality:  All members of the Foundation Council, as well as the Founder, the person designated as Protector, the Resident Agent, the Notaries and the officials of the Public Registry are under a legal mandate for at all times to maintain complete reservation and full confidentiality of all activities, transactions or operations of the Foundation. Any violation of this confidentiality duty is punished with a jail time of six (6) months and a fine of fifty thousand American Dollars (US$50,000.00), also, civil responsibility applies pertaining to any losses and damages that may have arisen.

Although, in the event that there is in effect an agreement to avoid double taxation or an agreement for the exchange of tax information, it is possible for an exchange of information to be made due to fiscal matters, this is not automatically in effect in Panama’s case. It only applies when the premises established in the pertaining agreement and in the decree that regulates the exchange of information are complied with.  Likewise, due to judicial investigations on crimes related to drug trafficking, terrorism or money laundering within a Criminal Procedure in Panama. Only through a specific channel of a request by the Judge duly assigned as in changed of a matter of such nature, the information could be given to the judge of the pertaining court on some of the aspects of the foundation or of the persons in the event of criminal conduct that have been duly established.

•  Exemption from Taxes:  Are exempted from all types of taxes the transfers of the assets of the Foundation that are outside of Panamanian territory, the income, money deposits and the products from assets in favor of the Foundation that do not arise from a Panamanian source, be these Bills of Sale of ownership of funds and titles or securities of any nature that arise from corporations whose income is not from a Panamanian source.

•  Autonomous Patrimony:  The assets transferred in favor of the Foundation cannot be subjected to attachment, embargo or of a precautionary measure, as they constitute a separate patrimony from the patrimony of the Founder or of its beneficiaries. The Founder, at the time of making the transfer of its assets in favor of the Foundation, makes the Foundation the new owner of said assets.

•  Effective against the rules of forced inheritance:  The laws on hereditary matters at the domicile of the Founder or Beneficiaries will not be effective against the wishes of the Founder included in the Foundation Charter or in the Regulation of the Foundation. Meaning, that the legal heirs will not have any right to revoke the establishment of the Foundation, nor its transfers in detriment to the Beneficiaries of the Foundation.

•  Simple and expedite procedure for the establishment:  The process for the establishment of a private interest foundation in Panama is simple and can be carried out within an estimated time of 3 to 4 working days, and it will be fully operational and in use immediately.

Featured image from Deposit Photos: depositphotos_77519988_xl-2015