The Panama foundation is a type of private foundation specifically designed as an asset protection tool. Introduced by the Panamanian Government in 1995 (through the Private Interest Foundation Law), it is based on the principles of Swiss, Luxembourg and Liechtenstein family foundations.

The most obvious advantage of the Panamanian private foundation is that it is a distinct legal entity, independently capable of exerting its rights, executing agreements, acquiring property, etc.

On the other hand, the difference between an offshore limited liability company and a private foundation is that the latter does not engage in commercial activity and cannot be used for trading purposes. Nor is it to be confused with a corporation, which has owners and members.

However, a Panamanian private foundation can participate in investment activities: real estate, holding shares, bonds, patents, interests, stocks, etc.

Usually, a Panamanian private foundation is established for a specific purpose, according to which an individual or a group will benefit from the foundation. The Panama charitable public foundation is used for charitable purposes, whereas a Panama private interest foundation will most likely be set up in order to preserve and safeguard the inheritance of assets by family members or other individuals.


Main advantages of the Panamanian private foundation
Incorporating a private foundation in Panama offers the following benefits to its owners.

Confidential: names and addresses of the beneficiaries are not available to the public
Tax exempt: no taxation in Panama and no taxation on worldwide income
Distinct legal personality
Simple structure: the founder and the beneficiary may be the same person; no requirement to appoint officers or directors
Out of reach of creditors
No financial statements or audit obligations