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The
Private Interests Foundations
The Private
Interest Foundation is a juridical person, which is equiped by its
Founder with determinated assets which constitute a separate
patrimony of the Foundation, after their transference. These
properties are managed by a Foundation Council, which is named by the
Founder with the purpose to accomplish the objectives of the Foundation.
A Private
Interest Foundation, as juridical person with its own patrimony, has
the capacity to execute rights and acquire obligations. The Private
Interest Foundation do not have shareholders or members. It is
created by a declaration of the Founder and generally has as purpose
the preservations of an established patrimony for benefit of the
Founder or third determinated persons.
The Private
Interest Foundations are instruments for the planning of family
successions, may act as shareholders of assets and help to preserve
the patrimony for beneficiaries generations.
Panama has a
long reputation for providing offshore services to the international
community. In an effort to provide additional opportunities in this
area, Law
No. 25 of 1995 was enacted. Said Law contains the procedures
and requisites for the creation of Private Interest Foundations in
the Republic of Panama.
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ADVANTAGES
OF THE
PRIVATE INTEREST FOUNDATION |
Private
Interest Foundations may be used as a tax and estate planning device
with the following advantages:
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They provide a fiduciary structure for the orderly transfer and
disposition of assets to beneficiaries upon the death of the Founder,
keeping control of assets during lifetime.
u
They may be established to have effects from the date of their
constitution or after the death of the Founder.
u
According to Law No. 25, inheritance laws that apply in the domicile
of the Founder or the Beneficiaries, shall not be effective against
the Foundation's assets nor may these laws affect the validity or
performance of the Foundation´s objectives.
u
Foundations are established to carry the specifics set out in the
Foundation Charter and may additionally undertake sporadic commercial
activities, exercise rights pertaining to their holdings, own
property, contract obligations and take part in administrative or
judicial proceedings.
u
A Private Interest Foundation should be established with a patrimony
destined to fulfill its objectives, which shall be no less than
US$10,000.00. Said patrimony may be increased by additional
contributions of the founder or third parties.
u
The assets of the Foundation become legally independent and do not
form a part of the private estate of the Founder. Such assets are not
sizeable and may not be subject to any precautionary action or
measure, unless such action or measure pertains to obligations
incurred or damages arising from the fulfillment of the Foundation's objectives.
Notwithstanding
the creditors of the founder or of a third party shall have the
right to contest the contribution or transfer of assets to a
foundation when such transfer constitutes an act in fraud of the
creditors. The rights and actions of such creditors shall lapse at
the expiration of three (3) years, counted from the date of the
contribution or transfer of the assets to the foundation.
u
According to article 27 of Law
No. 25 of 1995, Private Interest Foundations are exempt from
payment of any taxes, contributions, duties, liens or assessments of
any kind arising from the acts of constitution, amendment or
extinction of the same, as well as acts of transfer or encumbrance of
the Foundation's assets and the income arising thereof, when related to:
- Assets
located abroad.
- Money
deposited by natural or juridical persons whose income does not
derive from a Panamanian source or is not taxable in Panama for any reason.
- Shares or
securities of any kind issued by corporations which income is not
derived from a Panamanian source, or which are not taxable for any
reason, even when such shares or securities are deposited in the
Republic of Panama.
The transfer
of immovable property, titles, certificates of deposit, assets,
funds, securities or shares carried out by reason of the fulfillment
of the objectives of the foundation or the termination of the same,
in favor of relatives within the first degree of consanguinity or the
spouse of the founder shall also be exempted from all taxes.
Next -> Requirements
for the formation of a Private
Interest
Foundation in Panama
This
information has been provided by Patton,
Moreno & Asvat
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