Panama Private Foundation Formation and Fees
Panama private interest foundations have a legal basis and formation rules covering their contributed assets, beneficiaries and annual fees.
Legal basis and structure
Panama private interest foundations are governed by Law 25 of June 12, 1995. The structure is a legal entity with purposes and governance set out in its founding documents. It is a civil law structure distinct from both a commercial corporation and an Anglo-American trust.[1][2]
The foundation is governed by its charter, its regulations, Law 25 and other applicable legal provisions. It may be created by one or more natural or legal persons, directly or through third parties. The charter establishes the foundation, while regulations may provide internal operating rules.[3]
The initial patrimony must be at least B/.10,000.00, expressed in any legal currency. There is no maximum, and the founder or another person may increase the patrimony later.[3][4]
The charter is the foundation's formation document. It includes the foundation's name, registered address, purposes, initial assets, duration, Foundation Council and resident agent, and it is registered with Panama's Public Registry. The charter is distinct from the regulations, which establish internal rules.[2]
The resident agent is a required component of the foundation's structure. Panamanian law requires every private foundation to have one and requires the agent to meet due diligence standards. The resident agent is named in the charter and is a Panama domiciled lawyer or law firm that endorses the charter before registration.[3][4]
Law 25 permits beneficiaries to be designated in the charter or in a private regulation that is not registered. It also states that the founder may be a beneficiary. The regulations can identify beneficiaries, set benefit conditions and define management and oversight arrangements.[2][3]
The foundation owns contributed assets, while benefits and rights depend on the foundation's rules and applicable law. A foundation is classified for U.S. tax purposes from its documents, and a U.S. person who funds or benefits from one has separate reporting questions; see Panama foundation vs trust: U.S. classification and Panama: U.S. reporting and beneficial ownership.
The annual fee is equivalent to the amount paid by stock corporations under articles 318 and 318-A of Panama's Fiscal Code. It is commonly given as USD 300 a year, although some providers cite USD 400 based on updates to the code. Payment is due at registration and in later years.[3]
The foundation's estate is separate from the founder's personal assets. Assets contributed to the foundation become part of the legal entity. The foundation's rules govern management and the conditions for benefits, and a beneficiary does not directly own the assets.[2][4]
Questions and answers
What law governs a Panama private interest foundation?
A Panama private foundation is governed by Law 25 of June 12, 1995, and also by its charter, regulations and other applicable legal provisions.[2][3]
What is the minimum initial patrimony?
The minimum is B/.10,000.00, expressed in any legal currency. The founder or another person may increase the patrimony later.[3]
Does the foundation need a resident agent?
Yes. Panamanian law requires a resident agent, which must be a lawyer or law firm domiciled in Panama. The agent endorses the charter before registration.[3][4]
How can governing rules designate beneficiaries?
Law 25 permits beneficiaries to be named in the charter or in a private, unregistered regulation. It also says the founder may be a beneficiary.[3]
Who owns assets contributed to the foundation?
Contributed assets belong to the foundation and form an estate separate from the founder's personal assets. Beneficiaries' benefits and rights depend on the foundation's rules and applicable law.[2]
What is the annual fee for a Panama private foundation?
The annual fee is equivalent to the fee paid by stock corporations under articles 318 and 318-A of Panama's Fiscal Code.
Related pages
Sources and data notes
- aglegal.com, Private Interest Foundation Panama, AG Legal. https://aglegal.com/private-interest-foundation-panama/. Retrieved .
- grimaldoprestan.com, Private Interest Foundations in Panama | Family Wealth. https://grimaldoprestan.com/en/private-interest-foundations-in-panama-family-wealth-and-succession/. Retrieved .
- rglawfirmpa.com, Ley 25 de 1995, Fundaciones de Interés Privado. https://www.rglawfirmpa.com/ley-25-de-1995-fundaciones-de-interes-privado-panama. Retrieved .
- The World Law Group, news item on Panama private foundations and succession. theworldlawgroup.com, news item. Retrieved .
Dates in this block record when each source was read for this page.