The Panamanian Foundation

Overview Using Panamanian Foundations Key Elements of a Private Foundation The Charter Related Resources What are the Costs? Other Services


The Republic of Panama drew its inspiration from the Liechtenstein Law and adapted that European model to create a more flexible and modern “Private Foundation”, that has evident advantages for international asset planning and is qualified to conduct non-habitual “commercial transactions”.

An interesting feature of the Panama Law on “Private Foundations” is that, despite its inspiration by Latin Law, it includes certain interesting aspects that are widely used in “Anglo-Saxon Law”, as for example the adoption of a “protector” or “supervisory body”.

A Private Foundation (“Foundation”) is created when one or more natural persons or legal entities (“Founder (s)”) formalise a document known as a “Foundation Charter”, which is registered at the Public Registry of Panama, through which the parties undertake to make a donation (“Foundation Assets”) of not less than the equivalent of US$10,000 (which may be subsequently increased through further donations) to be managed by a “Foundation Council” under the supervision of “protectors”, if appointed, for the benefit of one or more “beneficiaries”.

The obligation to contribute further donations, whether in money or in kind is not subject to a limited period of time and there is no legal requirement of disclosure.

Once registered at the Public Registry in the Republic of Panama, the Foundation Charter creates a legal entity.

A Private Foundation is the combination of a corporation and a trust. In general, a Foundation has similarities with a corporation in as far as it is registered at the Public Registry, the assets of this new legal entity are separate from those of its creators, it is constituted to maintain confidentiality on the ownership of assets and in order to obtain fiscal benefits, and it has similar administrative bodies. It differs from a corporation in that the Foundation has no owners, as it does not issue share certificates nor any other participation title, and a Foundation may be created as a testamentary instrument and may not have profit aims.

Likewise, a Foundation has similarities with a trust: It is a juridical institution that requires specific formalities; some of the Founder’s assets are transferred, contributed or “donated” to the Foundation; a Foundation may be revocable; it may be created inter-vivos or mortis-causa by means of testamentary provisions; it is usually created with the purpose of managing, preserving, administering or investing assets for the benefit of the donor’s close relatives, as well as to obtain confidentiality and fiscal benefits. It differs from a trust in as far as the Foundation is the owner of its assets since it possesses its own legal personality and there is no “trustee” but rather the figure of a “Foundation Council” which combines the functions of the “Board of Directors” (of a corporation) and the functions of a “trustee” (of a trust); a Foundation is registered at the Public Registry and is subject to an annual fee that is identical to that of corporations in Panama (US$400) . It is important that these differences be clarified in order to better understand the features of a Panamanian Private Foundation, for which we shall describe this in more detail in Section F.

The Panamanian Law No. 25 of 12th June 1995, which governs Private Foundations, defines how Foundations are established and how they operate. The provisions in this law are regulated through Executive Decree No. 417 of 8th August 1995, which created the Private Foundation Section of the Public Registry and regulated the registration of the constitution, modifications and revocation of such Foundations.

A Private Foundation may, at the client’s option, issue Regulations that need not be registered at the Public Registry, and therefore absolute confidentiality is always maintained. These Regulations contain, among other features, the features, the designations of beneficiaries and the manner in which the Foundation Assets are to be distributed.

Back to top


Panamanian Private Foundations are mainly used for the following:

  • To own family businesses and thus avoid inheritance taxes
  • To guarantee payment of money or individual asset distribution to members of one or more families for their subsistence, education, clothing and other living expenses, or as a mechanism by which their children/grandchildren may partake in their parents/grandparents’ earnings. In Europe, private foundations for the aforementioned purposes are known as “Family Foundations”
  • To make scientific, humanitarian, philanthropic, religious or charitable donations or to manage funds reserved for these purposes
  • To protect disadvantaged persons, at a risk
  • For the benefit of family members, other persons or institutions. Multiple purpose private foundations are known in Europe as a “Mixed Foundation”
  • To act as the administrator of employee benefit schemes and employee pension plans
  • As a substitute for a will, thus avoiding complicated inheritance procedures, subsequently explained more fully in detail
  • As a substitute for marriage or pre-nuptial agreements
  • To own shares, interests and stocks of private companies
  • As a vehicle for owning patents and intellectual property and for receiving royalties and other forms of associated income
  • As a vehicle for investing in time deposit accounts, stocks, bonds or other securities
  • As a vehicle for owning real estate or valuable art work
  • To avoid forced heirship rules
  • To avoid political or economic instability
  • For any asset protection purpose
Back to top


A Private Foundation consists of one or more “founders” who undertake to contribute or donate an amount not less than US$10,000, managed by a “ Foundation Council” and a “Protector” if appointed, (known in law as “supervisory bodies”) and beneficiaries.

1. The Founder

One or more persons, whether natural persons or bodies corporate, may be the Founders. The Law prescribes that the assets may be donated by declaration so to keep the founders name confidential.

Founders have rights and obligations where the Foundation Charter grants the Founder full power, the Founder shall have the right and power to adopt the Foundation Regulations, amend them, freely appoint and remove the Foundation Council, the Protector and the Beneficiaries, act as adviser, protector or beneficiary, revoke the creation of the Foundation or any transfer made to it, receive and demand Statements of Account and redomicile the foundation and/or dissolve it.

After the registration of the Foundation, the Founder shall acquire the obligation of the contributions he has undertaken.

The Foundation’s assets constitute an estate separate from the Founder’s personal/corporate assets.

2. The Foundation Council

A Foundation is managed by a Foundation Council, which is charged with the popularity of maintaining the Foundation’s aims and objectives.

The Foundation council should be a body corporate otherwise the number of members comprising it shall not be less than three.

The Foundation Council has rights and obligations in respect of the Foundation. In general, the Foundation Council is granted full administrative powers (together with the required authorisation from the “Protector”, if appointed, and has the right and power to adopt the Foundation Regulations, to amend same, to appoint and remove its members, to freely appoint and remove the Beneficiaries, to contribute assets of any nature to the Foundation, to dispose of assets, to enter into any acts or contracts in the name and on behalf of the Foundation, to grant special or general powers of attorney, to redomicile the Foundation and to dissolve it.

The Foundation Council has the obligation to act with the diligence and to obtain authorisation from the Protector (if one is appointed) and to render account of its administration to the Founder and to the beneficiaries.

3. The Protector

The Law on Foundations refers to “supervisory bodies” that are made up of natural persons or bodies corporate. Such bodies generally consist of one person referred to as the “Protector”.

In practice, the Protector is usually the client or someone that he/she trusts. The responsibilities of the Protector are specified in the Foundation Charter. Which include, but are not limited to, the supervision of the Foundation Council.

4. The Beneficiaries

The Foundation’s aims and objectives are generally for the benefit of the foundation’s “Beneficiary” or “Beneficiaries”. Such Beneficiaries have the right to receive the earnings or other interest in the Foundation Assets, and to receive the Foundation Assets as set down in the Foundation Charter.

The beneficiaries may be natural persons, bodies corporate institutions or charities.

The beneficiaries are not the Foundation’s owners or creditors.

5. A Foundation’s assets constitute an independent estate

The contributions made to the Foundation and it’s earning may not be attached or be the object of any precautionary action or measure, save for obligations incurred or for damages caused upon achievement of the Foundation’s aims and objectives, or for the beneficiaries legitimate rights.

The Foundation’s assets may not be used to answer for the Founders obligations nor for those of the Beneficiaries, nor for those of any person, whether or not involved with the Foundation.

Foundation heirs shall have no right to revoke the creation of or the transfers made to the Foundation.

6. A Foundation is protected against the Founder’s creditors

If a Founder’s judgement creditor attacks the assets of the Foundation the law prescribes a 3 year law of limitation.

7. A Private Foundation is created as a Body Corporate

Panama grants corporate existence to a Foundation. Consequently, a Foundation may acquire and own property of all kinds, incur obligations and be a party in judicial proceedings.

8. A Private Foundation may not have profit making objectives

A Foundation may not by law engage directly in business but may carry out business activities in a non habitual manner. Thus, a Foundation may derive earnings from the sale of real property, it may have cash deposits, it may lend money and it may invest in shares of private companies, public companies, bonds etc., but it may not trade.

9. Foundations may be revocable

The Founder may revoke the creation of a Foundation or the transfer made to a Foundation in any of the following circumstances:

  • Where the Foundation has been created to enter into effect after the Founder’s death
  • Where the Foundation Charter has not been registered at the Public Registry
  • Where the Foundation Charter is revocable
  • Where there is just cause for the revocation of donations in accordance with relevant provisions of the Civil Code of the Republic of Panama

10. A Foundation is exempt from all taxes

Provided that the contributions received by a Foundation and the income from such contributions originate outside that fiscal territory of the Republic of Panama, a Foundation shall pay no taxes, save for a US$300 Annual Franchise Tax.

11. Foundations may be redomiciled to and from Panama

If the Foundation Charter does not forbid it, the Foundation’s governing body may continue the existence of such foundation, created under the laws of another jurisdiction of Panama. For this, it is only required that a “Certificate of Continuation” containing the following information be registered:

  • The name of the Foundation and the date of constitution
  • The registration or filing of data from the country of origin
  • An express declaration of the Foundation Council’s wish to continue such Foundation in Panama
  • The new Foundation Charter or a transcription of the original Charter
  • A minute of the Foundation Council granting power to transfer/redomicile to Panama
Back to top


The Foundation Charter shall contain: the name of the Foundation’s Initial Assets; the appointment and addresses of the Foundation Council members; the Foundation’s domicile; how Beneficiaries are to be designated; the rules for amending the Foundation Charter; the Foundation’s duration; the assignment of the assets and how the Foundation is to be dissolved and liquidated; and any other lawful clause as the client may deem appropriate.

The Foundation Regulations contain: the make up of the Foundation Assets, the powers of the Foundation Council; the form of administration; the Beneficiaries of the Foundation; the benefits corresponding to each Beneficiary; the rules on the distribution of benefits; the rules on the rendering of accounts; the class of the Beneficiaries and how they may be varied, substituted, removed or added; the rules of remunerations; the appointment of the Protector and his powers; how the Foundation Assets may be liquidated; and other areas requiring regulations.

Back to top


Information Downloads

The Panama Foundation

Regulations of the Foundation

Back to top


Set Up Fees
Basic Establishment Fee US$1,025
Annual Fees
Annual Fee: Provision of a Secretary and a Foundation Council Officer US$1,975
Annual compliance Fee: to cover KYC and Corporate Governance Procedures US$625
Annual Government Licence Fee US$400
Disbursements and other recoverables US$125
Indicative First Years Fees US$4,150
Indicative Subsequent Years Fees US$3,125

Notes About this Quotation

  • When a Foundation is transferred to a new administrator we levy a fee that is based on time, the minimum fee being $1000.
  • This quotation excludes any VAT or sales taxes which may be payable.
  • All fees are due on presentation of invoice. No refunds are given after purchase. OCRA Worldwide reserves the right to amend its fee structure.
  • Prospective clients are advised to refer to our Terms of Business.

Back to top


Foundation Council Fee

We levy an annual fixed responsibility fee for the provision of foundation council officers. This fee will be dependent on the responsibility and complexity of the foundation, the foundation assets and its activities. This fee, which is subject to a minimum of $1,800 is an annual fee for accepting an appointment and does not include administration work or time.



When we undertake administrative, compliance or management work on behalf of client entities, we render fees based on:

  • One-off recurring package fees for administration and management
  • Activity/Time Charge Fees
  • Transactional Fees


Back to top
Legal Warnings | Privacy Policy | Feedback     OCRA Worldwide 1995 -
Disclaimer: Whilst every effort has been made to ensure that the details contained herein are correct and up-to-date, it does not constitute legal or other
professional advice. OCRA Worldwide does not accept any responsibility, legal or otherwise, for any errors or omission.