In general, Panama Private Interest Foundations are used by people who wish to control and maintain ownership of foreign corporations, however, they do not wish to own their corporations themselves directly, due to the Controlled Foreign Corporation (CFC) rules in their home countries. Several highly taxed countries such as the UK, Canada, USA, Australia, New Zealand, France, Italy, Spain, etc. have CFC rules which require that their citizens submit declarations (reports) to the appropriate tax authorities, in which they declare that they are the shareholders of such foreign corporations.
Instead of holding the corporations' shares in their personal name or in bearer form, they establish a Private Interest Foundation in Panama that holds or owns the shares of their foreign corporation(s), thus avoiding the CFC reporting rules. Hence, the advantage of using the Foundation as a shareholder for their corporation is to remove ownership from one's personal name (or through a Bearer Share arrangement), and transfer ownership to the name of a foreign entity which does not have owners, rather has privately appointed beneficiaries, which are anonymous. In this way, there is no question as to who owns the company, since the company's shares are issued to the Foundation's name.
Another advantage of utilizing the Foundation as a shareholder applies in the following scenario: In many cases, when opening corporate bank accounts or investment accounts, the financial institutions require that you reveal the beneficial owners of the corporation. Through the Foundation ownership strategy, one can state that the Foundation is the owner of the corporation. Again, the objective is to remove ownership from their personal name, to the name of a foreign entity whose ownership is anonymous.
The Panama Foundation provides additional advantages other than just ownership. For example, the Panama Foundation can be useful in transferring funds offshore or receiving funds from offshore. In some cases, people use Panama Foundations as vehicles for these purposes. Some people donate their funds to their Panama Foundations and later use the Foundation to give educational or special grants to their children, grandchildren, or any one else they choose. The advantage in this case, is to avoid fiscal regulations surrounding donations, where some governments impose "gift taxes" and exhaustive reporting requirements.
In general, Private Interest Foundations may not engage in habitual profit-making commercial activities as a corporation can. Nevertheless, they may carry out commercial activities from time to time, as long as the profits of those activities are used for the objectives of the foundation. For example, a Private Interest Foundation may engage in banking or investment activities, such as investing in bank time deposits (Certificates of Deposit - CD's), stocks, bonds, mutual funds, options, money markets, etc. so long as the proceeds from these investment activities are for the benefit of the beneficiaries of the Foundation.
- Personal Information: Send us and e-mail with your personal contact details.
- Selecting the Name(s): you should indicate three name choices for each Foundation. Panama Foundations names can be in any language and must include the word "Foundation" within the name (in any language). Once you have submitted the information by e-mail, including the name(s) for your Foundation(s), we will check to see if the names you selected are available in the Panamanian Public Registry. We can have this done within a few hours. The first available name selections will be incorporated as soon as we have received payment.
- Foundation Council (Directors): You should indicate who you want to appoint as council members (directors) of your Foundation(s). The council members can be either individuals or entities. If the council members are individuals, the law requires 3 council members (President, Secretary and Treasurer). If the council members are entities, the law only requires one council member. If our client is appointed as council member on the Foundation, then his/her name is publicly known as council member since the council members names and identifications must be presented in the public registry when the Foundation is formed. Generally, the only documentation on public record is the Foundation Charter (or articles) of incorporation and the names and addresses of the council members and Registered Agent. You must send us a photocopy of the council members passports.
- Beneficiaries: The Beneficiaries of the Foundation need not to be known by us when registering the Foundation. When you receive the Foundation documents, you will appoint the Protector, by signing the Private Protectorate Document. The Protector will need to write a Letter of Wishes, indicating who the beneficiaries of the Foundation are.
- Payment: Payment can be made by Bank Wire Transfer, For fastest processing, we highly recommend paying by Bank Wire Transfer. Checks take two weeks to clear, and we do not begin processing until payment has cleared.
- Time Frame: A new Foundation can be established within 3 to 5 business days.
- Convenience: It is not necessary to be present in Panama, to establish the foundation