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Information About Panama Foundations
History of Panama Foundations The Panama Private Interest Foundation is a type of entity that is a cross-breed between a trust and a corporation, however, it is neither. A 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. 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. 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 carefully designed the Panama Private Interest Foundation with the intentions of creating a more modern, more flexible, and more affordable estate planning vehicle for people from around the globe. The assets of the Panama Private Interest Foundation take on a separate legal identity from the personal assets of the Founder, Protector, Council, or Beneficiaries. The Panama Private Interest Foundation offers clear advantages for international estate planning, providing the ultimate in privacy, anonymity, and protection to the Protectors, Founders, and Beneficiaries of the Foundation. The Panama Foundation is a solution to a global need for an affordable, anonymous, flexible, private, estate planning vehicle that can be used to hold assets such as corporations, trusts, bank accounts, investment accounts, real estate, or any other type of asset. 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.
Panama Private Interest Foundations may be established for the benefit of a person or persons, a family, or a specific social purpose. In general, Panama Private Interest Foundations are used by people who wish to control and maintain ownership of foreign corporations, however, they do not wish to own their corporations themselves directly, due to the Controlled Foreign Corporation (CFC) rules in their home countries. Several highly taxed countries such as the UK, Canada, USA, Australia, New Zealand, France, Italy, Spain, etc. have CFC rules which require that their citizens submit declarations (reports) to the appropriate tax authorities, in which they declare that they are the shareholders of such foreign corporations. Instead of holding the corporations' shares in their personal name or in bearer form, they establish a Private Interest Foundation in Panama that holds or owns the shares of their foreign corporation(s), thus avoiding the CFC reporting rules. Hence, the advantage of using the Foundation as a shareholder for their corporation is to remove ownership from one's personal name (or through a Bearer Share arrangement), 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 Foundations' name. Another advantage of utilizing the Foundation as a shareholder applies in the following scenario: In many cases, when opening corporate bank accounts or investment accounts, the financial institutions require that you reveal the beneficial owners of the corporation. Through the Foundation ownership strategy, one can state that the Foundation is the owner of the corporation. Again, the objective is to remove ownership from their personal name, to the name of a foreign entity whose ownership is anonymous. The Panama Foundation provides additional advantages other than just ownership. For example, 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 Foundation to give educational or special grants to their children, grandchildren, or any one else they choose. The advantage in this case, is to avoid fiscal regulations surrounding donations, where some governments impose "gift taxes" and exhaustive reporting requirements. 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 banking or 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. Elements of a Panama Private Interest Foundation The Foundation has a Founder, a Council, a Protector, and Beneficiaries. Below we have explained what role each of them plays in the Foundation: Founder: The Founder is the person or entity that establishes the Foundation in the Public Registry of Panama. Our law firm is generally the Founder of each Foundation that we establish, since it is our law firm that goes to the public registry to incorporate the Foundation. The Founder has no influence over the control of the Foundation, and is only recognized as the individual who presented the Foundation articles in the public registry when the entity was originally registered. Council: The Foundation's Council serves the same purpose as the board of directors on a corporation. The council members are each registered in the public registry with their names, addresses, and identifications as council members to the Foundation. Our firm generally appoints a "Nominee Foundation Council" to fill the council positions, so to provide additional privacy and confidentiality for our clients. When we appoint a nominee council, we provide our client with pre-signed, undated letters of resignation from each nominee council member so that our client can replace the council at any time. The nominee council has no control over the Foundation or any of its' assets, they are only there to fill in the blanks in the public registry. Protector: The Protector is the person or entity who ultimately Controls the Foundation and all assets held within it. The Protector is appointed by the Foundation Council when the Foundation is created, however, once the Protector is empowered, the Protector can then remove the council members at any time without consent of any one else. The Protector can be appointed privately, through a Private Protectorate Document, signed by the Foundation Council. Hence, the Protector can maintain this position free of public knowledge. We generally appoint our client as Protector of the Foundation, through a notarized Private Protectorate Document so that our client maintains complete control over the Foundation, in a private and anonymous manner. Once the Protector is appointed, it can always be changed per the Protectors wishes. However, a Protector is not required and if you prefer, you can choose to not use a Protector, or to use a nominee Protector. Beneficiaries: Unlike a corporation that issues share certificates to certify who the owners are, the Panama Private Interest Foundation does not have owners, rather it has Beneficiaries. The Foundations Beneficiaries are appointed by the Protector through either a simple, privately written Letter of Wishes, or through a more formal set of Foundation By-Laws (Foundation By-Laws should be written with the assistance of a Panamanian Attorney). Either way, the privacy and confidentiality of beneficiaries can be protected through their appointment in the Letter of Wishes, or By-Laws of the Foundation, since the contents of the Letter of Wishes or By-Laws may remain private and need only be known to interested parties. Also, a Panama Foundation may be set up so that the Protector is the sole beneficiary until his or her death, at which time the foundation continues for the benefit of other beneficiaries. Letter of Wishes: The Letter of Wishes is a simple letter, written by the Protector, which specifies exactly how the Foundations assets should be handled or distributed upon a triggering event such as the death or incapacity of the Protector. The Letter of Wishes should also state whether the Foundation should continue existing, and have a new Protector appointed, or if the Foundation should be dissolved upon the death of the Protector. There is no specific format that the Letter of Wishes must be written, and it can be written or changed at any time after the Foundation is incorporated, per the Protectors wishes. The Letter of Wishes can be held privately, or can be registered publicly. Generally, most people prefer to maintain the Letter of Wishes privately, so that the Beneficiaries and Protector remain anonymous and private. Foundation By-Laws: The Foundation does not need to have By-Laws, since a Letter of Wishes is legally sufficient for expressing the Protectors' requested testamentary instructions. However, if one wishes to have a more formal Foundation testamentary document, written and signed by a Panamanian Attorney, and notarized by a Panamanian notary, then one can request the assistance of a Panamanian attorney to draft the Foundations By-Laws. The Foundations By-Laws essentially handle the same function as a Letter of Wishes since the By-Laws should specify exactly how the Foundations assets should be handled or distributed upon a triggering event such as the death or incapacity of the Protector. The By-Laws should also state whether the Foundation should continue existing, and have a new Protector appointed, or if the Foundation should be dissolved upon the specified triggering event(s). There is a specific format that the By-Laws must be written, yet the contents of the By-Laws can be changed at any time after the Foundation is incorporated, per the Protectors wishes. The By-Laws can be held privately, or can be registered publicly. Generally, most people prefer to maintain the By-Laws privately, so that the Beneficiaries and Protector remain anonymous and private Notice of Anual Fees Panama
Offshore Legal Services Dear Sir or Madam: We hope this email finds you well. We wish to communicate to all our clients about the annual renewal fees of Panamanian entities (corporations & foundations). The information pertaining to annual resident agent fees and the government corporate franchise tax was sent to you in the package of corporate documents you originally received when you purchased the entity(s). The purpose of this notice is to remind you of this topic. After reading this notice, you will need to contact us regarding your entity(s) balance to bring them to good standing with our law firm and with the government of Panama. For this information, please contact us by email at: renewals@pos-inc.com . ANNUAL FEES The Annual Renewal Fees are composed of three (3) elements: 1
- Annual Law Firm's Resident Agent Fee (Mandatory) Below you will find the detail of each of these elements. ANNUAL LAW FIRM'S RESIDENT AGENT FEES This shall serve as a guide to clarify the annual resident agent fees for your corporation and/or foundation. The law of Professional Legal Services of Panama, authorizes Panamanian law firms to charge annual fees for resident agent, nominee directors, registered office and corporate administrative fees. To keep a corporation or foundation in good standing with our law firm, each entity must pay an annual fee of US$450 per year, which is broken down as follows: US$300 for resident agent/office & US$150 for nominee directors.. Our law firm's annual fees are due each year, starting one year from the date of incorporation. Payment of our law firm's annual fees may be paid by any of the methods mentioned below.
This shall serve as a guide to clarify the annual government corporate franchise taxes for your corporation and/or foundation. To keep a corporation or foundation in good standing with the Panamanian Government, each entity must pay a flat annual tax of US$250 to the Panamanian Government ( Public Registry) in concept of corporate franchise taxes since the date that the entity was incorporated. If the 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 for the entity, which are generally required by financial institutions from time to time, as part of their due diligence procedures/policies. According to Panamanian Law, the government corporate franchise tax payment deadlines are based on the Incorporation date, as follows; Incorporation Date Tax Payment Deadline: 1
January to 30 June 30 June
If the flat annual government corporate franchise tax ("tasa unica") 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 flat annual corporate franchise tax ("tasa unica") is not paid after the second "deadline" period, the entity will be charged a second late penalty of US$250.00. For every additional "deadline" period missed thereafter, a US$250 late fee will be incurred. MAIL FORWARDING INSTRUCTIONS Mail forwarding services provides you with a post office box, and a physical address in Panama where your corporation and/or foundation may receive post mail correspondence or courier packages. As the mail and/or packages are received, they are forwarded to you as per your instructions. The addresses provided below are the addresses that you may use for your corporation and/or foundation to receive post mail and couriers. If you have subscribed to the Mail Forwarding Service, then you paid for the first year of service. To renew your Mail Forwarding service, there is an annual fee of $300.00. POSTAL ADDRESS FOR SENDING POST MAIL: (Name
of Your Entity) PHYSICAL ADDRESS FOR SENDING COURIER PACKAGES: (Name
of Your Entity) Please note that we forward mail correspondence (letters and small envelopes) by regular post mail at no cost to you, however, for boxes or courier packages, we bill you for the cost of forwarding these types of packages.
We highly recommend that you pay by Wire Transfer or Western Union for fastest delivery. The instructions for these payment options instructions listed below: For Payment by Wire Transfer: (Please add $15.00 to the total of your service for the wire transfer charge) Intermediary
Bank: HSBC Bank, New York, NY, USA After
sending the wire transfer, please confirm our staff by email at
(renewal@pos-inc.com )
with the following information: Western Union: For paying by Western Union please submit your transfer to the following instructions: Location:
Panama City, Republic of Panama After
sending the transfer(s) please email us with the following information:
Please note: we do not request payment confirmation from our local Western Union agent until we receive the transfer information requested above so it is important to forward this information right away. CHECK PAYMENTS: Check payments are accepted by certified or official bank checks in USD, or International Money Orders payable to Online Products Inc., however, we do not recommend check payments for annual fee renewals because they can take up to 6 weeks to clear and we do not begin processing until payment has cleared (delays in payment processing times can incur in late penalty fees of Corporate Franchise Taxes as noted above). If you require a different form of payment, please contact us at renewals@pos-inc.com For
questions or information regarding any please email: info@panama-foundation.com
, or call our offices at ++(507)236.8303 Order
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