Private interest foundations Panama
The Panama Private Interest Foundation is an offshore private foundation that has been designed by the government of the country to protect offshore investments. Unlike an offshore company, the private foundation cannot engage in any commercial business activity, but it may own investments such as stock, real estate, bonds, etc. A private interest foundation does not refer to any one person, but it is aimed at benefiting a group of people rather than one individual.
PPIFs is used as the foundation for philanthropic or estate planning purposes. It is incredibly customisable and flexible in its nature. It can have a ‘purpose’ built into institutions such as churches, schools, or charities. Panama private interest foundations are usually implemented to take over foreign companies, avoiding certain taxation and CFC rules in the investor’s current country, or to conduct business activities anonymously (as stated above, the foundation does not belong to a specific owner).
Benefits of a Panama Private Interest Foundation
A PPIF in Panama is affordable, anonymous, and useful to hold corporations, shares, and bonds. It protects assets in the sense that it has no owners – the assets of the foundation cannot be claimed if the founder or shareholders have unpaid debt. According to Panama law, PPIF assets cannot be frozen if it has been in the foundation for more than 3 years. It can be used to collect royalties or assist family members of the shareholders. Tax-free income can be derived outside of Panama and the local bank is also tax exempt. No approval from any public authority is required and the foundation comes into existence only through registration in the Public Registry.
Why choose Panama private interest foundation?
Panama is 100% tax-free heaven. There are no tax reporting requirements, no income tax, no capital gains tax, and no sales tax. Investors do not have to pay estate tax, gift tax, property tax, stamp tax, or inheritance tax.
It is the second most popular jurisdiction in the world for PPIF and it does not allow piercing of the corporate veil. This means your business operations are 100% private. Members of the foundation need not be present in Panama which makes it very convenient and it does not require a business license to operate within the country.
Requirements of a Panama private interest foundation
Every foundation must have a board of directors whose names and addresses are registered in the public registry. Members can be individuals, for which there must be at least 3 members, or an institution, for which there may only be 1. It is recommended that registered agents keep records of the foundation although it is not mandatory. The foundation should also remain in good standing for every year. The foundation must be able to provide a legal address for the foundation to be registered.