PRIVATE INTEREST FOUNDATIONS
Panamanian Private Interest Foundations are sort of a combination of a trust, a will, and a corporation.
We offer personalized advisory to our clients during the process of incorporation of a Private Interest Foundation (hereinafter PIF).
Some of the benefits of a Private Interest Foundation are:
- Assets Protection
- It can serve as a Will or testament, avoiding succession procedures.
Our services in this area include:
- Private Interest Foundation Charter registered in the Public Registry
- Foundation By Laws
- “Due Diligence” of the properties to be donated to the PIF
- Drafting the donation contracts between the founder and the PIF
ABOUT THE PRIVATE INTEREST FOUNDATIONS
The Private Interest Foundation (PIF) is an entity to which his founder provide with a patrimony destined to the accomplishment of the objectives indicated in the constitution document, denominated Original Act. The Panamanian PIF is inspired by the familiar foundations of the Principality of Liechtenstein, but is different of these because the Panamanian law does not distinguish between the familiar foundation and the mixed foundation ( one whose beneficiaries can include other persons or organizations, besides the members of a family ).
According to our Law, any natural or juridical person (individual and corporation) can be designated like beneficiary of the foundation, whatever the nationality or the country of registry.
PIF can not engage in commercial activities like a corporation, nevertheless, they may carry out commercial activities as long as the profits of those activities are used for the purpose for which PIF exists.
The designation of the beneficiaries of a FIP does not have restriction, and they can be the founders or persons who contribute to their patrimony. These beneficiaries could solely be designated in the Foundation By -Laws. This documents is a separated private document of the Original Act, so that it does not require to be registered in the Public Registry, which assures the reserve on the identity the beneficiaries.
From the corporative point of view, the interest to create a FIP consists to fulfill the similar role to the “ holding” corporations, in other words, the tenency of the shares or assets of other corporations, without operating a commercial or industrial business.
The FIP can be, then, a complement to the activity of the corporations. The shares of a corporation or their dividends can be transferred to the foundation and it will be able to distribute them to the beneficiaries, according to the established instruction in the Original Act.
The administration of the FIP corresponds to “Council of Foundation” (Consejo de Fundación), with analogous functions to those of the Board of Directors of a corporation. Our Foundations of Private Interest´s Law allows that the Council of Foundation, entity in charge of the administration of the FIP, to be constituted by a single member in case is a juridical person, for example a Bank. The Original Act or the regulations of the FIP will be able in addition to anticipate the constitution of control organs, which could be constituted by natural or juridical persons (individuals and corporations), such as auditors, lawyers or other similar.
Between the most important characteristics of the Foundations of Private Interest we can emphasize the following:
PIF are rule by Act of Foundation and its Foundation By-Law.
The dispositions of the Civil Code are not applicable to juridical persons.
The Foundation Board and Supervisory Organs are forced to maintain absolute confidentiality at all times.
The PIF has other characteristics that are similar to the Trust: The Foundation is the best legal entity to protect assets against excessive taxation, creditor, claims or family disputes. It is formed to maintain the confidentiality of the assets and to obtain fiscal advantages ( it governs the territorial concept.).
The Foundations´s assets are considered as separated assets from the founder of the Foundations and they can not seized for his own personal responsibility or duty.
Besides, the incorporation of a FIP involves minimum formalities of constitution and must pay only an annual rate of US$250.00 the first year, and US$300.00 the subsequent years to maintain the use (unless it realizes some activity that produces an income within Panamanian source).
Finally, by virtue of its own legal personality of the FIP, the members or member of the Council of Foundation are not the holders of the property right on the assets of the foundation.
Between the most important benefits of the Foundations, we have:
An annual payment of US$300.00 to maintain its use;
They are exempt from payment of any taxes, contribution, duties, liens or assessments of any kind arising from the act of constitution, amendment or extinction of the same.
They are exempt from payment of any taxes, the acts of transference, transmission or lien of the assets of the foundation and income arising of this assets goods or any other act over them, as long as:
Assets are located abroad.
Money deposited by natural or juridical person whose income is not derive from a Panamaniansource is not taxable in Panama for any reason.
Shares or securities of any kind issued by corporations which income is not derived from a Panamanian source or which is not taxable for any reason, even when such shares or securities are deposited in the Republic.
The transfer of unmovable property, titles, certificates of deposits, assets, fund, securities or shares carried out by reason of the fulfillment of the objectives of the Foundation or the termination of the same, in favor of relatives within the first degree of consanguinity or the spouse of the Founder.