Studio Panama Italia offers a wide range of private interest foundations, including Private Interest Foundations in Panama. Panama, in addition to its tax residency and residency permit, is known for its private foundations, better known as Panama Foundations. Private interest foundations in Panama, also known as PIFs (Private Interest Foundations), are a type of entity that is a cross between a trust and a Panamanian corporation, but is neither. A Panamanian private interest foundation is different from any other legal entity known under Anglo-Saxon or Roman law because it is not the legal embodiment of a person or group of persons (as with a corporation), but is a legal entity that has no owners (shareholders, participants, or partners) and traditionally has a specific purpose for the benefit of a general group of individuals, generally the families and interests of private citizens.

Private Interest Foundations in Panama: Origins

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

Historically, wealthy families in Europe have established family foundations in the Principality of Liechtenstein (a neutral jurisdiction for purposes of war, etc.) for estate planning purposes, to ensure the safe transition of assets to family beneficiaries. Today, Liechtenstein foundations can cost up to $25,000 euros/dollars to incorporate and up to $10,000 euros/dollars per year to maintain.

Establishment of a Private Interest Foundation in Panama

Panamanian Private Interest Foundations (PIFs) were established in Panama by Law 25 of June 12, 1995 , and have since become a major legal instrument for both holding and protecting assets.

Private interest foundations in Panama cannot engage in commercial activities, although they may own investments such as real estate, company shares, or bank accounts. Private interest foundations must be maintained in good standing annually, as is the case with any corporation.

A person (natural or legal) called the Founder, “creates” a legal entity, to transfer assets (real estate, shares, accounts, crypto, intellectual property, etc.) into it, so that in turn, this legal entity manages such assets with “advice”, for the benefit of certain beneficiaries, appointed by a private deed called the “statute”.

This entire structure is established in a public deed called the "Foundation Charter," along with a private deed called the "Bylaws or Bylaws." Furthermore, the person establishing the private foundation (founder) can simultaneously be a board member and a beneficiary, allowing for different types of asset protection or inheritance structures with a private interest foundation in Panama.

Additionally, a "protector" (professional, trustee, lawyer, or similar) can be appointed to execute the statute of beneficiaries. After proper training, the client can begin the process of transferring assets or opening a bank account on behalf of their Panamanian private foundation.

Country code: PA

Legal basis: Civil law

Legal framework: Private Interest Foundations Act, 1995

Regulatory Board: Public Registry of the Panamanian Government

Entity: Private Interest Foundation

Responsibilities: The assets and resources of a Private Interest Foundation in Panama constitute a patrimony independent of that of the Founders, the members of the Foundation Council, the Protector and the Beneficiaries.

Assets: The minimum contribution to a Panamanian Private Interest Foundation cannot be less than US$10,000, in assets or cash, and can be denominated in any legal tender. The foundation can be established without assets, provided there is a commitment to transfer the assets after the foundation's incorporation.

Founder: The founder of the Panama Private Interest Foundation is the person who presents the articles and registers the foundation in the Panamanian Public Registry. The founder cannot influence the foundation's management.

Foundation Board: Similar to a board of directors, a Panamanian Private Interest Foundation requires three board members: President, Secretary, and Treasurer. Board members of a Panamanian foundation may be natural persons or legal entities. If a legal entity is established, a single board member may suffice.

Board members are each listed in the public register with their names, addresses, and identification. Appointed board members are permitted.

Protector: The protector is the person who ultimately controls the Private Foundation in Panama and all its assets. He or she is appointed by the Foundation's Board of Directors, which can be done privately through a Private Protectorate Document, so his or her details are not disclosed to the public. Once appointed, the Protector has the power to remove or replace board members at his or her discretion. The Panama Foundation may decide not to use a protector. Candidates are available.

Beneficiaries: The beneficiaries of a private foundation in Panama are appointed by the protector through the foundation's Articles of Association. The privacy and confidentiality of the beneficiaries are guaranteed because the articles of association are private. A Panamanian foundation can designate the protector as the sole beneficiary until death, after which the foundation can continue to benefit other beneficiaries.

Beneficiaries' right to information: Beneficiaries' rights are established by the bylaws of private interest foundations in Panama or by resolutions of the board of trustees in Panama. Furthermore, any beneficiary of private interest foundations in Panama who suffers a violation of their rights by the protector, the board of trustees, or another supervisory body may directly appeal to the competent court in the foundation's domicile.

Letter of Intent: The Letter of Intent is a letter written by the Protector, stating how the assets will be managed and distributed, and whether the Panamanian private interest foundation will continue to exist or be dissolved upon the Protector's death or incapacity. The Letter of Intent or Auspices may be kept privately or registered publicly and may be amended at any time at the discretion of the Protector of Panamanian private interest foundations.

Foundation Articles of Association: Additionally, a Private Foundation in Panama can establish Articles of Association, which have the same functions as a Letter of Intent, if the interested parties wish to have a more formal, written, and signed by a proxy foundation. This is not mandatory, as a letter of intent and the Articles of Association are legally sufficient.

Registered Agent: Panamanian foundations must have a Panamanian registered office address and appoint a Panamanian agent, who must be an attorney or law firm and must countersign the Panamanian foundation's articles of incorporation prior to registration in the public registry.

General Assembly: Annual general assemblies of members of the Board of Private Interest Foundations in Panama are not mandatory. However, if meetings are held, they may be held anywhere in the world and by any means. Resolutions adopted are valid regardless of whether they are signed on different dates or in different jurisdictions.

Redomiciliation: The redomiciliation of private interest foundations in Panama from other jurisdictions to Panama is permitted, as well as the migration of Panamanian foundations to other countries.

Mergers: It is not possible for a Panamanian foundation to merge with other entities.

Charitable/Philanthropic Purposes : Allowed.

Electronic signature: allowed.

Compliance: Since 2017, Panamanian foundations have been required to maintain accounting records and underlying documentation, which must be available for five years. Records may be kept at the office of the resident agent in Panama or at any other location determined by the board members. Foundations are not required to file accounts, annual returns, or tax returns, provided they do not hold assets or conduct activities in Panama. For more information on foundations, please see our FAQs.

For more information on private interest foundations in Panama, read our section on asset protection.

The official gazette of private interest foundations in Panama