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Panama Private Interest Foundation - Incorporation Information
legislative source |
public information | private
information | incorporation |
taxes and duties | advantages & disadvantages
Law 25 of the 12 of June of 1995
| Status: |
Foundations
are registered at the Public Registry, as a legal entity.
|
| Available: |
All information contained in the
Foundation Charter, which is presented to the Public Registry (as well
as any amendments thereto) are available to the Public. This
includes all of the details indicated below. |
| Name: |
The name must
include the word "Foundation" or "Fundación". It may be in any
language, but must be in the Latin Alphabet. |
| Authorised Capital: |
A Foundation
should have a minimum authorised capital of $10,000.00. It is not
necessary to establish an authorised capital in accordance with the
assets which are later donated to the Foundation, so most Foundations
are left with the original authorised capital of $10,000.00.
It is
necessary to capitalise the Foundation with the minimum of $10,000.00,
but the law does not establish a time limit for how quickly this
capitalisation must be completed.
The law does
not establish any "maximum" for the authorised capital, which leaves the
capital entirely to the discretion of the parties. |
| Founder: |
The Founder is
the person that decides to establish the Foundation. It is
possible for the Founder to give a Special Power of Attorney to the
lawyer or another person to appear in the Foundation Charter as the
Founder, in order to maintain the anonymity of the Founder. The
Founder is the person who has all of the powers (originally) to
establish the rules relating to the Foundation, such as who will be the
Foundation Council, whether the Foundation will have a Protector, and
who the beneficiaries of the Foundation will be. It is also
possible for the Founder to transfer his rights, powers, and duties to
another person, whether irrevocably or not. |
| Foundation Council: |
This is the
Board of Administrators of the Foundation, who are responsible for the
day-to-day management and policy decisions with respect to the assets
owned by the Foundation. |
| Composition of the Foundation Council: |
The Foundation
Council may be composed of:
1- three
(3) natural persons, of legal age, of any nationality or place of
residence; or
2- a
corporation or other legal person; or
3- a mix of
legal and natural persons.
The Foundation
Charter should include the addresses or places of residence of the
Foundation Council Member(s). |
| Officers: |
A Foundation may have a President /
Secretary / Treasurer and such other officers as deemed necessary or
convenient. It is not necessary, however, to appoint these persons
as officers in the Foundation Charter. They may be appointed on an
Ad-Hoc basis as and when necessary. |
| Registered Agent: |
A Foundation must have a Registered
Agent, which must be a lawyer or law firm in Panama. (For more
information see the law
which regulates legal practice in Panama). |
| Registered Office: |
The Foundation may have its office
anywhere in the Republic of Panama or overseas. |
| Protector: |
The Foundation may or may not appoint a
Protector (or other supervisory bodies). The Protector may be
appointed in the Foundation Charter, in which case the identity of the
Protector will be publicly available. This provides certainty for
the Protector and anyone dealing with the Foundation, but does not
protect privacy or anonymity. It is also possible to appoint the
Protector in the Bylaws (Regulations), which are not available to the
public. |
| Shareholders: |
A foundation
does NOT have shareholders, as it is not subject to "ownership" in the
typical sense. It is much more akin to a Trust, in that it has
beneficiaries. |
| Beneficiaries: |
The
Foundations Beneficiaries may be appointed in the Bylaws (Regulations)
or Private Document (similar to a letter of wishes). The Founder
(or the Protector or Foundation Council) may establish whether the
beneficiaries have a specific right (for example, to receive an annual
income of $50,000.00), or whether they are simply potential
beneficiaries of the Foundation, to receive income or benefits from the
Foundation at the discretion of the Founder / Protector / Foundation
Council.
The
beneficiaries are not considered by law to have a legal interest in the
assets of the Foundation, as they are simply beneficiaries and not
"owners". This can be very important when establishing
a Foundation to ensure that a spend-thrift beneficiary is not given
control of the assets. |
| Bylaws: |
The Foundation Bylaws (Regulations) are
not publicly available, nor any of their contents. This may
include information regarding how the assets of the Foundation are to be
managed, how beneficiaries may be appointed or removed, or any other
administrative information.
The Protector may be appointed in the Bylaws.
|
| Private Document: |
This is often referred to as the "Letter
of Wishes", in which the Founder (or Protector) identifies who the
beneficiaries of the Foundation are, and their entitlements with respect
to the assets or income of the Foundation. |
| Minutes: |
All minutes from meetings are privately
held by the Foundation, and do not need to be filed at the Public
Registry, unless the Minutes include some amendment to the Foundation
Charter, in which case an extract of the relevant part of the amendment
must be filed. |
| Records: |
All financial records and other
corporate books are completely private. |
| Time: |
A foundation takes approximately 3 days to establish
in the Public Registry. However, given that the Foundation is an
estate planning and asset protection vehicle, the drafting of the
Foundation Bylaws (Regulations) and Private Document (Letter of Wishes),
may take longer. |
| Shelf Foundations: |
Shelf Foundations: while it is possible to
establish Shelf Foundations, it is not our practice to do so, since each
Foundation is established according to the particular needs of each
client. |
| Tax Registration: |
It is necessary to register the
Foundation with the Tax Department in Panama after incorporation, in
order to ensure that in the following years the Annual Renewal Fees (Tasa
Única) are correctly applied to the Foundation, so that it is kept in
Good Standing. |
| Seal: |
The Foundation may adopt a seal or
stamp, but there is not requirement to do so. |
| Travel to Panama: |
It is not necessary to travel to Panama
in order to establish a Private Interest Foundation. However, it
is recommendable to meet with the lawyer or professional that is
preparing the Foundation documents, or to have your legal or tax adviser
meet with the Panamanian professional that will be responsible for
drafting, to ensure that all personal needs have been incorporated into
the Foundation documents. |
| Capital Duty: |
There is no Capital Duty payable on the Foundation,
although at incorporation the Public Registry Fees for incorporation are
established according to the amount of the authorised capital.
|
| ARF: |
Every year the Foundation must pay the
Annual Renewal Fees,
including the Government Fees of $300.00 (Tasa Única). |
| Tax Returns: |
Panamanian Private Interest Foundations
are not required to prepare or file annual tax returns in Panama, unless
they receive income from a source in Panama (for example, from rental
properties). |
| Tax Treaties: |
Panama is not a member to any double tax
treaties, nor does it have any arrangements for the exchange of
information with other tax authorities internationally. This may
or may not be to the benefit of a beneficiary. |
| Property Taxes: |
Where a Panamanian Foundation owns real
estate in Panama, it will be subject to Property taxes, like any other
person in Panama. For more information regarding Panama's property
taxes, please see
our real
estate section. |
| Transfer Taxes: |
Where a
Panamanian Foundation transfers land in Panama, this transfer is not
exempt from the land transfer tax (2%). While property in Panama
may be donated to the Foundation, this donation will still be subject to
the 2% land transfer tax.
Nevertheless,
any donations or transfer made to the Foundation of other types of
assets (money, securities, etc.) are not subject to transfer taxes.
Any donations made to the Foundation of assets which are not located in
Panama are not subject to transfer taxes of any nature.
|
| Exchange Controls: |
Panama has no
exchange controls, since the currency in circulation locally is the US
Dollar. Given the country's strategic location with respect to
shipping and trade, Panamanian banks generally accept wire transfers in
any currency, although it is not possible to have accounts in all
currencies. Major currencies are generally accepted in Panamanian
banks. |
| Beneficiaries: |
Any person
(natural or legal, minor or of legal age) may be a beneficiary of the
Foundation.
It is possible
to establish a corporation or legal entity as the beneficiary of the
Foundation, or a group of persons, should the Foundation be used for
management of a Pension Plan or other type of Employee Benefits.
|
| Perpetuity: |
A Foundation
may be established as a perpetual legal entity. Beneficiaries may
be appointed, who are yet unborn.
Unlike a
common law trust, it is not necessary to establish a time limit or
establish a date according to "lives in being" or an event which will
terminate the existence of the Foundation. |
| Donations: |
Any donations
which are made to the Foundation are not taxable in Panama, nor are any
benefits paid out by the Foundation to a beneficiary.
However, if
the beneficiary is in Panama and is considered to be "working" for the
Foundation and earning a salary or other regular monthly income, this
income will be subject to the usual Panamanian income taxes.
|
For more information regarding Panamanian Foundations and our services,
please see Panamanian Foundations.
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Last modified
08-May-2009 12:07 -0400
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