PANAMA Offshore Foundation formation

The Panama Private Interest Foundation (PPIF) is a type of Private Foundation considered the most secure asset protection tool in the world, regulated by The Legislative Assembly in Panama approved Law No. 25 of June 12, 1995 and constructed on the Panamanian Trust Law (No. 1 of 1994) as well as the Liechtenstein Family Foundation Law of the Principality of Liechtenstein in Europe.

Panama Foundations have no owners under Panama Law - the beneficiaries and the protector, which are the effective controllers of the company, do not have to be publicly register anywhere.
The Panama Foundation structure is Europe's equivalent of a Trust and has been used principally as an estate and succession planning tool by wealthy families for hundreds of years.
The offshore foundation is a legal entity and may be established by one or more natural persons (the Founder), either by themselves or through third parties, for the benefit of a group or class of beneficiaries which is managed by a Councilor or Board of Councilors.

Components of an offshore Foundation:

Founder - Is the person or entity that establishes the Foundation in the Public Registry of Panama. A nominee may fulfill the role of Founder since the assets of a Foundation comprise a separate and independent estate from that of the Founder. The Founder has no control of any sort over the Foundation and its affairs, and is only recognized as the individual who presented for filing the Foundation articles in the public registry when the foundation was originally registered.

Council - is similar to the board of directors of a corporation. Each member of the council is recorded in the public registry with their names and identification as council members of the Foundation. Nominee Foundation Council may be appointed, therefore they won't know your identity (you will receive an letter of resignation enabling you to replace the council at any time).Nominee council members have no control over the Foundation assets and have no access to the bank account of the Foundation, since they are not bank account signatories.

- Protector - Is the person or entity who has real control over the Foundation and all of the foundation assets and is appointed by the Foundation Council at the time of creation. The Protector appointment can be kept private through a notarized Private Protectorate Document signed by the nominee foundation council members and is not registered or recorded anywhere thus the position of protector is quite private or just about anonymous, not to be found in any government database or registry. The protector can maintain complete control over the foundation and its assets while maintaining serious privacy.

- Beneficiaries - are appointed by the Protector through either a simple private written set of instructions which will keep the beneficiaries private out of any registry or database. Also the protector may be the sole beneficiary of the foundation until death, at which time the foundation continues but its purpose alters for the benefit of the other designated beneficiaries.

- Letter of Instructions - is a simple letter which can be changed at any time after the Foundation is formed, written by the Protector which specifies exactly how the Foundation assets should be handled or distributed upon a generating event. The Letter should also mention whether the Foundation should continue existing, appoint a new Protector if is the case, if the Foundation should be dissolved and all other details. The letter must be held privately with no filing requirements.

Compared with an offshore company, the private offshore foundation cannot engage directly in a commercial business activity, although it can own bank accounts, investments such as real estate, shares, bonds etc. and also corporations. Even if an offshore foundation cannot directly engage in business, it can own companies which conduct business. This is the main reason we recommend using a Panama Foundation to hold another company, leaving you free to carry-out tax free transactions and an extra layer of privacy.

Panama has one of the strongest bank secrecy laws in the world - bank secrecy can only be broken for serious offences which are crimes in Panama and the country seeking information, such as money-laundering, drugs and terrorism. Revealing confidential information will result in a fine of imprisonment.
Also all persons involved in any activities, transactions or operations related to the Foundation activity are required to maintain full secrecy and confidentiality since the penalty for breach of this obligation is a jail term of six months and a US$50,000 fine, with the possibility of an additional civil penalty.

Summary of Panama Foundation Benefits:

- Assets protection from financial enemies and potential financial enemies.
- According to Panama law, the assets of a Private Interest Foundation are not subject to sequestration or embargoes, therefore the assets cannot be frozen as a protective measure before a full trial is gone through.
- The foundation can have instruction to dispose of assets in a certain way in the event of encountering serious legal or other difficulties like being sued, forced into bankruptcy, kidnapped and held for ransom or other way you are incapacitated or your ability to function freely is inhibited in whole or in part. There might be secret instructions for a specific person to deal with assets in such an event as the founder sees fit, which can appoint a temporary protector in the event you are under such duress with specific instructions as to how he should proceed with the foundation and its assets.
- Foundations can be used also to provide financial benefit of family members according to your explicit instruction. The Foundation can protect closely held business, providing continuity into second and third generations by preventing property -splitting; to manage payments of income or distribution of assets to family members or to provide for their education, housing or maintenance.
- There is no need for special business license
- You can use the Panama Foundation as a last will and testament and use it to guard against disputes amongst heirs
- Income is tax free under Panama law
- Royalties, copyrights, trademarks can be assigned to a offshore foundation