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.
USES OF PIF
- Family support
- Tax purposes
- Protection and management of assets
- Educational purposes
- Testamentary purposes
- Life annuity purposes
- Charitable purposes
- To receive and manage capital and titles
- For the purpose of serving as guarantee or collateral
- For the management of insurance
Popularly know as a Panama Foundation they can also be used for Estate Planning where the Founder transfers title to current assets and has the Panama Foundation acquire Panama real estate, Panama assets and open Panama bank accounts and Panama investment accounts
ADVANTAGES
- It is a legal instrument to protect your assets
- They provide a fiduciary structure for the orderly transfer and disposition of assets to beneficiaries upon the death of the Founder, keeping control of the assets during lifetime
- They may be established to have effects from the date of their constitution or after the death of the Founder
- According to Law 25 of 1995, inheritance laws that apply in the domicile of the Founder or the Beneficiaries, shall not be effective against the Foundations assets nor may these laws affect the validity or performance of the Foundations objectives
- Foundations are established to carry the specifics goals set out in the Foundation Charter and may additionally undertake sporadic commercial activities, exercise rights pertaining to their holdings, own property, contract obligations and take part in administrative or judicial proceedings
- A Private Interest Foundation should be established with a patrimony destined to fulfill its objectives, which shall be no less than US$10,000.00. Said patrimony may be increased by additional contributions of the Founder or third parties and does not have to paid in part or in full before the incorporation
- The assets of the Foundation become legally independent and do not form a part of the private estate of the Founder. Such assets are not sizeable and may not be subject to any precautory action or measure, unless such action or measure pertains to obligations incurred or damages arising from the fulfillment of the Foundations objectives; Notwithstanding the creditors of the Founder or of a third party shall have the right to contest the contribution or transfer of assets to a foundation when such transfer constitutes an act in fraud of the creditors. The rights and actions of such creditors shall lapse at the expiration of three (3) years, counted from the date of the contribution or transfer of the assets to the foundation was done.
According to article 27 of Law 25 of 1995, Private Interest Foundations are exempt from payment of any taxes, contributions, duties, liens or assessments of any kind arising from the acts of constitution, amendment or extinction of the same, as well as acts of transfer or encumbrance of the Foundations assets and the income arising thereof, when related to assets localized abroad; Money deposited by natural or juridical persons whose income does not derive from a Panamanian source is not taxable in Panama for any reason; Shares or securities of any kind issued by corporations which income is not derived from a Panama source, or which are not taxable for any reason, even when such shares or securities are deposited in the Republic of Panama.
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 Panama 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 Panama assets such as corporations, trusts, bank accounts, investment accounts, real estate, or any other type of asset around the world.
INFORMATION OF PUBLIC AND PRIVATE KNOWLEDGE
The only information made public are the names of the Founder, the member (s) of the Foundation Council and the name of the Protector, this last if it is so established on the Foundation Charter, as the Protector can be appointed by means of a private and confidential document.
The Foundation Regulations are for internal purposes of the Foundation and are not a matter of public records. Information regarding names of beneficiaries and of the protector and method for distribution of assets can be contained within the Regulations, thus will not be publicly disclosed.
CONFIDENTIALITY
The private foundation legislation requests that the resident agent and any other persons or institutions that, because of their functions, obtain information related to the activities, transactions or operations of the private foundation, be obligated to keep strict discretion, even after the foundation has been extinct.
PRIVATE FOUNDATIONS vs TRUST
Private Foundations and Trusts have clear differences:
The big difference between a trust and a foundation is the foundation is a separate judicial person. The term judicial person means an unnatural person
PIF’s are based on Civil Law and they are constituted by means of a public legal document and filed for registration, it is in fact, an existing legal entity, whereas a Trust is based on Common Law and are established by means of a private contract that does need to be filed with any government agency, it is not an existing legal entity, it is in fact a legal contract.
Another difference is that the Foundation Charter does not need to specify the rights and obligations of every party involved that can be done by means of a private and confidential document, while a Trust deed has to be very specific and clear regarding the rights and obligations of the Trustee