Panama Foundation Formation

DeltaQuest offer expert advice and guidance on the formation of a Panama foundation. We will support you with every stage of your offshore Panama foundation, from the completion and filing of foundation application documents, to the actual creation of the foundation and its efficient management. Our dedicated consultants provide comprehensive advice throughout the entire process in obtaining a Panama foundation, and will guide you to ensure that the foundation is fully compliant with relevant laws.

In order to proceed with the formation of an offshore Panama foundation, please complete our Trust Application Form.

Conditions for a Panama foundation formation

Legal form: A Private Interest Foundation includes a body of regulations that must be adhered to. Unlike the Memorandum of Foundation, the regulations remain private and confidential; they are not filed in any public registry. Therefore, it is within the regulations that individuals typically articulate their wishes regarding beneficiaries and distribution of foundation assets. Additionally, in this private document, a protector may be named, whose role is to oversee the activities of the Foundation Council. The Regulations may be amended at any time. The by-laws are private and not available to the Public Registry. In order for a third party to identify the beneficiaries, he must have a court order to gain access to the foundation. The foundation’s name may be in any language and must include the word ‘foundation’.

Chapter of Foundation: A foundation is established by a founder, who may be one or more individuals or corporations. It may be created either directly or through a third party, such as a resident agent. It is legally established when a Charter of the Foundation (which may alternatively be referred to as a Memorandum or Deed) has been drafted and filed at the Public Registry.

Founder: The founder is the individual or group who establishes the foundation and transfers their property into the foundation. The nominee may fulfill the role of a founder. This makes it possible for the individual’s name not to appear in public record. The founder’s heirs do not have the right to revoke the creation of the foundation, nor do they have the right to object the transfer of its assets. The founder can obtain control of the foundation by retaining the power of appointment of the Foundation Council.  A founder may serve as a member of the Foundation Council, as a Beneficiary or as Protector, and has the power to remove council members, beneficiaries or a protector if he desires. He can also assign these powers to another person in the foundation.                                

Protector: A protector performs the function of the ultimate controller of the foundation. Immediately upon incorporation of the foundation, the council appoints a protector, through a notarized Private Protectorate Document. Since the document is a private, non-publicly registered document, the protector remains 100% anonymous. From that point, the protector has full control over the foundation and all of its assets.

Beneficiaries: The beneficiaries are those that have been nominated to directly benefit from the formation of the foundation.

Foundation Council: The foundation Council members are those who implement and supervise the foundation’s activity and purpose. The foundation’s council is composed of at least three natural persons, who may include the founder. These persons are not required to be Panamanian residents. The council makes all the decisions for the benefit of the foundation and is charged with the responsibility of ensuring that the foundation’s purposes are correctly fulfilled. The Council has the obligation to administer the foundation’s assets for the benefit of the beneficiaries, who also have the right to object to the actions of the council.

Assets of a Foundation: The assets of a foundation comprise a separate and independent estate from that of the founder. Once the assets have been transferred to the foundation, it then becomes the property of that foundation. Therefore the estate cannot be attached, seized or be subject to any lawsuit or legal actions as a result of obligations and liabilities of the founder or the beneficiaries of the foundation.

Taxation:  There is total exemption of taxes in the Republic of Panama, including, without limitation, income tax, wealth tax, real estate tax, inheritance tax, sales and transfer tax. The creation, modification and extinction of a foundation are not taxable events. In addition, the transfers and encumbrances of foundation assets are also non taxable. Income generated by a foundation is exempt from tax in the Republic of Panama. All of the foregoing are not only exempt from tax, but from all assessments, rates and liens of any kind or description. These exemptions apply when the patrimony consists of assets located outside of Panama, and shares or securities of a company whose source of income is outside of Panama.

Audit and Financial Returns: There is no requirement to prepare, maintain or file financial statements or annual returns. The foundation accounting books and associated documents may be maintained in Panama or abroad.

Meetings: There is no obligation to hold an annual meeting of the foundation council, the founders or the protectors. The founders and the members of the foundation council may hold their meetings in any country and may be represented by proxy.

Practical uses of Private Interest Foundations

• To protect family business providing continuity to second and third generations
• To protect defenseless persons such as minors, disabled and persons incapable of managing their assets
• To carry on scientific, philanthropic, religious, humanitarian purposes, or to manage funds or assets for the benefit of these activities
• To manage profit sharing as well as pension plans of employees
• As a sophisticated and efficient substitute of the testament or will
• As a holding of shares, participations or interests in private or public corporations
• As a vehicle for the collection of royalties
• As a vehicle to invest in shares, bonds, mutual funds, bank deposits or other assets
• As a vehicle to own real estate or other assets of considerable value such as art works
• As a vehicle to protect assets against excessive taxes, claims by creditors, political instability or forced heir ship
• To operate bank accounts in any part of the world

Time needed for Formation: Usually it is 3 working days, but we need up to 7 working days for legalization of the documents and delivery by courier.

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