Uses of a Panama Foundation

Panama Private Interest Foundations may be established for the benefit of a person or persons, a family, or a specific social purpose.

Panama Foundations are primarily used for asset protection as holding entities for personal assets such as shares of corporations, real estate, bank accounts and investment accounts.

Instead of holding the asset, such as shares in a corporation, in their personal name the client would establish a Private Interest Foundation in Panama that holds and owns the shares. The advantage of using the Panama Foundation as a shareholder for their corporation is to remove ownership from one’s personal name and transfer ownership to the name of a foreign entity which does not have owners, rather has privately appointed beneficiaries, which are anonymous. In this way, there is no question as to who owns the company, since the company’s shares are issued to the Panama Foundation name.

The Panama Foundation provides additional advantages other than just ownership. The Panama Foundation can be useful in transferring funds offshore or receiving funds from offshore. In some cases, people use Panama Foundations as vehicles for these purposes. Some people donate their funds to their Panama Foundations and later use the Panama Foundation to give educational or special grants to their children, grandchildren, or any one else they choose.

In general, Private Interest Foundations may not engage in habitual profit-making commercial activities as a corporation can. Nevertheless, they may carry out commercial activities from time to time, as long as the profits of those activities are used for the objectives of the foundation. For example, a Private Interest Foundation may engage in passive real estate investments, or banking and other investment activities, such as investing in bank time deposits (Certificates of Deposit – CD’s), stocks, bonds, mutual funds, options, money markets, etc. so long as the proceeds from these investment activities are for the benefit of the beneficiaries of the foundation. Panama Private Interest Foundations should not be utilized for traditional business activities such as providing services or selling products to the public.

Under Panamanian laws, the assets held in a Panama Foundation are non-sequestrable and non-embargable, meaning that the assets cannot be seized or have liens placed on them in the event of a civil legal proceeding. This protection applies only to those assets held within the Panama jurisdiction. Important to note that criminal proceedings can be brought against a Foundation. 

In addition to the above the Panama Private Interest Foundation is used for testamentary purposes, for passing family assets from one generation to the next, while avoiding inheritance taxes, probate, a prolonged legal process and expense that a succession process involves. The beneficiaries of the foundation receive the assets exactly as they were left, without any deductions, taxes, or expenses. Many Panamanians hold their assets in a foundation and non-Panamanians are now realizing they can also benefit from utilizing a Foundation.

The Panama Foundation, also know as a Private Interest Foundation, is a hybrid between a trust and a corporation. A Panama Foundation is an entity that is different from any other legal entity known in Anglo-saxon law because it is not the legal personification of a person or group of persons (as with a corporation), rather it is a legal entity that does not have owners (share-holders, participants, or partners), and it traditionally has a specific purpose for the benefit of a general group of individuals.

Private Interest Foundation History

The concept of a “Foundation” began during the Roman Empire, under the influence of Christianity. As an example, the Catholic Church was considered a divine foundation, and the various sub-organizations within the church had the legal control for administrating its’ patrimony. The original foundations were not created for serving a private need for a specific individual or family, rather they were formed for serving the needs of a community. Several centuries later, the legal entity denominated as a “Foundation” continues to exist and is widely used and accepted around the globe for personal and private needs.

The concept of a “Private Interest Foundation” began when the Principality of Liechtenstein created the “Law of Persons & Companies”, the 20th of January, 1926 (Personen und Gesellschaft Recht – P.G.R.), which created the “Family Foundation”, (for the private benefit of the members of one or more families) and the “Mixed Foundation” (for the private benefit of not only families, but also for other persons or institutions).

Historically, wealthy families in Europe have established Family Foundations incorporated in the Principality of Liechtenstein (a Neutral jurisdiction for purposes of wars, etc.) for the purpose of estate-planning necessities, to ensure the safe transition of assets to the family’s beneficiaries. Today, Liechtenstein Foundations can cost upwards of US$25,000 to incorporate, and up to US$10,000 per year to maintain.

Panama Foundation Estate Planning

The Panama Private Interest Foundation is a legal entity that was developed based on the Private Interest Foundation models from three different jurisdictions including the Principality of Liechtenstein, Switzerland, and Luxembourg. The Panamanian Government designed the Panama Private Interest Foundation with the intentions of creating a more modern, flexible, and more affordable estate planning vehicle for people from around the globe. The assets of the Private Interest Foundation take on a separate legal identity from the personal assets of the Founder, Protector, Council, or Beneficiaries.

Panama foundations offer distinct advantages for international estate planning, providing privacy, anonymity, and protection to the Protectors, Founders, and Beneficiaries of the Panama Foundation. 

A Panama Private Interest Foundation comes into existence upon its registration in the Public Registry. No approval from any public authority is required. Law No. 25 of June 12, 1995 regulates Panama Private Interest Foundations.

A foundation in Panama can also be used for estate planning where the founder transfers title to current assets and has the Foundation acquire Panama real estate, Panama assets, open a Panama bank account and Panama investment accounts.

A Panama Foundation provides international estate planning and asset protection by owning the shares of a Panama Corporation.

The annual maintenance costs for Panama Corporations and/or Panama Foundations are the following:


Paid To




Corporate Franchise Tax – Panama Foundation




$350 First Year

$400 Subsequent Years

Corporate Franchise Tax – Panama Corporation





Resident Agent / Office Fee

Law Firm




Nominee Directors / Council Fee

Law Firm




Mail Drop Services Fee

Law Firm




Below you will find a detailed description of each of the above mentioned costs.


To keep a corporation or foundation in good standing with the Panamanian Government, each entity must pay a flat annual corporate franchise tax (“tasa unica”) to the Panamanian Government (Public Registry). This annual corporate franchise tax is to be paid on the anniversary date that the entity was incorporated.

Please note that if the annual corporate franchise taxes are not paid, the Public Registry will not permit any changes to the entity at the Public Registry and will not allow you to obtain any Certificates of Incorporation (certificate of good standing) for the entity which are required by financial institutions from time to time as part of their due diligence. In addition certificates of good standing are generally required for transferring of property held within corporations and/or foundations.

According to Panamanian Law, the government corporate franchise tax payment deadlines are based on the Incorporation date, as follows;

Incorporation Date: Tax Payment Deadline:

From 1 of January to 30 of June 30 : July 15

From 1 of July to 31 of December 31 : January 15

Late Payment Penalty:

If the annual government corporate franchise tax is not paid on or before the due dates mentioned above, the entity will be charged a late penalty of US$50.00.

Second Late Payment Penalty:

If the annual corporate franchise tax and first late penalty is not paid after the second deadline period the entity will be charged a second late penalty of US$300 for every additional period missed.

TAX FILING FEE (Not Applicable to Offshore Entities)

There are two types of tax filings in Panama:

Operational Tax Filing: this is a tax filing for operational entities, specifically entities that are operating physical businesses or generating income from sources within the territory of the Republic of Panama. This type of tax filing requires a detailed declaration of income, duly audited by a Panamanian Certified Public Accountant (CPA). The costs for operational tax filings can vary from $250 or more depending on the nature and size of the business.

Non-Operational Tax Filing: this is a tax filing for Non-Operational entities (corporations or foundations), in other words, entities that are operating offshore, outside of the territory of the Republic of Panama or entities that are not operating businesses or generating income from sources within the territory of the Republic of Panama. This type of tax filing requires a simple declaration of non-operation (or offshore operation), duly signed by a Panamanian Certified Public Accountant (CPA). The costs for Non-Operational tax filings are a flat $65 per filing. Please note that, if your entity was registered as an “Offshore” entity, it is not required to file the non-operational tax filing.
Annual tax filings are done from January 1st to March 31st.


The resident agent/office is the law firm or attorney that represents the entity (corporation and/or foundation) and the name of the law firm or attorney and office address of the entity is stated on the public deed of the entity at the Public Registry. To keep a corporation or foundation in good standing with our law firm, each entity must pay an annual resident agent/office fee of US$300 per year, starting one year from the date of incorporation.


Nominee directors or nominee council members are an optional service provided by our law firm. If requested, our law firm provides the directors or council members that are required for the formation of the corporation or foundation. The fees for nominee directors or council services are $150 per year, starting one year from the date of incorporation.


Mail drop (mail forwarding) services provides you with a post office box, and a physical address in Panama where your corporation and/or foundation may receive correspondence. As the correspondence is received it will be forwarded to you as per your instructions. If you have subscribed to the Mail Forwarding Service, then you paid for the first year of service at the initiation of your subscription. To renew your Mail Forwarding service, there is an annual fee of $300.00.