Private Interest Foundations in Panama

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The Private Interest Foundation Law of Panama is based on the Panamanian Trust Law (No. 1 of 1994) as well as the Liechtenstein Family Foundation Law of the Principality of Liechtenstein in Europe. The Legislative Assembly in Panama approved Law No. 25 of June 12, 1995, whereby private interest foundations are regulated. Below we summarise its relevant aspects.


The foundation may be constituted by one or more natural or juridical persons, either by themselves or through third parties. The endowment of a foundation capital is required, exclusively destined to the purposes expressly provided in the foundation instrument. The foundation capital may be increased by the founder or by the Board of Governors of the Foundation.
Constitution may be obtained through the following methods;
a) private instrument subscribed by the founder, whose signature must be authenticated by a Notary Public;
b) before the Notary Public of the place of constitution. In case the foundation is to be formed to have effect after the founder´s death, testamentary grant formalities are not required. The foundation instrument must contain:

1 ) Name of the foundation. Which must not be identical or similar to any other existing foundation in Panama. The word “foundation” must be included in the name.
2 ) Foundation Capital. No less than US$10,000.00
3 ) Names and addresses of the foundation board members to which the founder may belong;
4 ) Domicile of the foundation;
5 ) Name and domicile of the foundation´s resident agent (lawyer or law firm) who must authorise the foundation instrument before its registration at the Public Registry Office;
6 ) Purposes of the foundation;
7 ) Procedures to appoint the foundation´s beneficiaries, amount which the founder may be included;
8 ) Reserve of the right to modify the foundation instrument when deemed convenient;
9 ) Duration of the foundation;
10 ) Destiny of the foundation assets and liquidation procedure upon dissolution, and;
11 ) Any other lawful clauses the founder deems convenient.


Private interest foundations must seek Non-Profitable Purposes. Nevertheless, commercial activities may be carried out and capital stock rights may be enforced by the foundation as long as the outcome of such activities is destined to the foundation´s purposes.


All foundations are subject to payment of registration fees and annual franchise tax equivalent to those charged to Panamanian corporations. All acts of constitution, modification, extinction, transfers or encumbrance regarding the foundation assets and foundation assets related income, are exempt of any kind of taxes, duties, charges or fees, if such assets meet the following requirements:

1) Assets located abroad,
2) money deposited by natural or juridical persons whose rent is not of Panamanian source or not taxable in Panama,
3) stocks or any kind of securities, issued by corporations whose rent is not of Panamanian source or not taxable by any cause, even though those stocks or securities are deposited in Panama.


Registration of the foundation instrument before the Public Registry Office shall invest legal capacity to the foundation, regardless of any other legal or administrative authorisation. Said registration will also be of public record against third parties.

Foundation Capital

Once the foundation is registered, the founder or third parties are obliged to the endowment of assets (either current or future), must formalise its transfer. An important characteristic of the foundation capital is that it constitutes an independent property from the founder´s personal property. Therefore foundation capital may not be attached or garnished, except for damages or obligations incurred as result of the foundation purposes. In any case, foundation capital will compensate personal obligations of the founder or the beneficiaries.


Private Interest Foundations and transfers to the foundation are irrevocable.

Foundation Board

This Board must have a minimum of three (3) members, in the case of natural or juridical persons. Its main function is to fulfill the foundation purposes.

Supervisory Organs

Besides the foundation board, the foundation instrument may provide for the appointment of supervisory organs ( custodians, auditors, or any other similar) appointed by the founder or majority of founders


Specific causes are established in the Law, but in general they may be perpetual.

Foreign Foundations

Foreign foundations may be registered in Panama and continue its legal existence as private interest foundations in the Republic of Panama. Likewise, private interest foundations constituted according to Panamanian Law and its assets, are entitled to be transferred to another jurisdiction.

Banking Screcy

All members of the Foundation Board and Supervisory Organs as well as private of public officers that are aware of the foundation activities or operations must provide reserve and confidentiality at all times, and are subject to criminal and civil responsibility.


The foundation instrument may express that all controversy will be settled by arbitration. In lack of this provision, general Procedural law would be applicable.

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