Private Interest Foundation in Panama

Private Foundation · Formation from $350

Last verified: June 13, 2026

Corporate Tax

25.0%

State Tax

0.0%

Formation Cost

$350

Annual Fee

$400

Comparison Scores

Privacy, remote setup, banking, and tax efficiency

Privacy10/10

Remote Setup10/10

Banking7/10

Tax Efficiency10/10

Overall Score9/10

Calculate full formation cost

Break down one-time filing fees and recurring costs for any supported entity type.

Who Should Choose This?

Profiles that typically benefit from this entity

High-net-worth individuals seeking robust asset protection from future litigation or creditors.
Families looking for a seamless, tax-free estate planning and wealth transfer vehicle.
Crypto investors wanting a secure, ownerless entity to hold digital assets and hardware wallets.
Entrepreneurs needing a top-tier holding entity to own shares in offshore IBCs or LLCs.

Who Should Avoid This?

Scenarios where another structure may be better

Founders looking to run an active e-commerce, consulting, or trading business.
Startups seeking to raise venture capital or issue equity to investors.
Individuals with a small budget, as setup and maintenance costs are higher than a standard LLC.

Advantages

+Complete asset protection as the foundation is an 'ownerless' legal entity completely separate from the founder's personal assets.
+Zero taxes on foreign-sourced income, capital gains, and inheritance under Panama's territorial tax system.
+Exceptional privacy since the beneficiaries and the Protector are named in private by-laws, which are not filed in the public registry.
+Avoids complex, public, and costly probate processes, making it an ideal vehicle for estate planning and wealth transfer.
+No requirement to file annual financial statements or tax returns for assets and income generated outside of Panama.

Disadvantages

-Cannot engage in active, regular commercial or trading activities (strictly designed for holding and asset management).
-Requires a minimum initial stated patrimony of $10,000 (though it does not need to be deposited immediately).
-Requires a Foundation Council of at least three individuals or one corporate entity, which increases annual maintenance costs.
-Opening a corporate bank account can be rigorous due to strict international anti-money laundering (AML) and KYC compliance.

Formation Steps

Define the foundation's purpose and commit to the minimum initial stated patrimony of $10,000.

Select a unique name for the entity that ends with the word 'Foundation' (or 'Fundación').

Appoint the Foundation Council (minimum three individuals or one corporate entity) and an optional but recommended Protector.

Draft the Foundation Charter (Acta Fundacional) with the assistance of a Panamanian lawyer or registered agent.

Notarize the Foundation Charter before a Panamanian Notary Public to formalize the legal structure.

Draft the Private Regulations (By-laws) to confidentially designate the beneficiaries and establish asset distribution rules.

Cost Breakdown

Detailed breakdown of formation and ongoing costs

Item	Type	Amount
Government Registration Fee	One-time	$100
Annual Franchise Tax (Tasa Única)	Annual	$400
Registered Agent & Legal Fees	Annual	$1,000
Nominee Foundation Council	Annual	$600
Drafting of Private By-laws	One-time	$300
First year total		$2,400
Annual ongoing		$2,000

Real-World Examples

Typical use cases for this entity type

A European family transfers their global real estate portfolio into a Panama Foundation to avoid inheritance taxes and ensure smooth succession to their children.
A tech entrepreneur uses a Panama Foundation as a holding entity to own 100% of the shares of their operating LLCs in Nevis and Wyoming, adding a layer of privacy and asset protection.
A crypto investor places their cold wallets and digital assets into a Panama Foundation, appointing themselves as the Protector to maintain control while legally separating the assets from their personal name.

Common Mistakes

Pitfalls to avoid during setup and operations

Using the foundation to conduct active commercial trade, which violates Panamanian foundation law.
Failing to appoint a 'Protector', leaving too much control in the hands of the nominee Foundation Council.
Forgetting to pay the $400 Annual Franchise Tax, leading to late fees and loss of good standing.
Registering beneficiaries in the public Foundation Charter instead of the private By-laws, destroying privacy.
Assuming the foundation automatically exempts the founder from personal tax reporting in their home country (e.g., US FATCA rules).

Other entity types

Other formation options in Panama

Corporation (Sociedad Anónima)

Primary

Tax: 25.0%
Formation: $300

Sociedad de Responsabilidad Limitada (SRL)

Tax: 25.0%
Formation: $250

Individual Limited Liability Company (EIRL)

Tax: 25.0%
Formation: $360

Branch of a Foreign Company

Tax: 25.0%
Formation: $250

Limited Partnership (Sociedad en Comandita Simple)

Tax: 25.0%
Formation: $350

Partnership Limited by Shares

Tax: 25.0%
Formation: $60

General Partnership (Sociedad Colectiva)

Tax: 25.0%
Formation: $350

Civil Partnership (Sociedad Civil)

Tax: 25.0%
Formation: $50

Compare with Other Countries

Country / Type	Tax	Formation	Annual
🇵🇦 Private Interest Foundation(Private Foundation)	25.0%	$350	$400

🇵🇦 vs 🇺🇸 United States 🇵🇦 vs 🇪🇪 Estonia 🇵🇦 vs 🇬🇧 United Kingdom 🇵🇦 vs 🇮🇪 Ireland All comparisons →

FAQ

Can a Panama Private Foundation conduct business?

No, it cannot engage in regular commercial activities. It can only hold assets, bank accounts, real estate, or shares of other companies that do business.

Who controls the foundation's assets?

The Foundation Council manages the assets, but a 'Protector' (often the founder) can be appointed to oversee and veto the Council's decisions.

Are the beneficiaries publicly known?

No. Beneficiaries are listed in the Private Regulations (By-laws), which are kept strictly confidential and not filed in the Public Registry.

Do I need to pay the $10,000 initial capital immediately?

No, the $10,000 patrimony must be stated in the charter, but there is no legal deadline to actually deposit or transfer the funds.

What is the annual tax for a Panama Foundation?

The only government tax for a foundation holding foreign assets is the Annual Franchise Tax (Tasa Única) of $400.

Can I set up the foundation remotely?

Yes, the entire process can be completed remotely through a Panamanian registered agent using a Power of Attorney.

What is the difference between a trust and a Panama Foundation?

A trust is a legal agreement, whereas a Panama Foundation is a separate legal entity with its own corporate personality, making it easier to open bank accounts and hold assets.

Can a foreigner be the founder and protector?

Yes, there are no nationality or residency restrictions for the Founder, Protector, Foundation Council members, or Beneficiaries.

Detailed Tax Rates

Corporate Income Tax

From	To	Rate

Panama applies a territorial tax system. Private Interest Foundations pay 0% corporate tax on foreign-sourced income and assets. A 25% rate only applies to income generated within Panamanian territory.

Personal Income Tax (Top rate: 25.0%)

From	To	Rate
$0	$11,000	0.0%
$11,000	$50,000	15.0%
$50,000	No limit	25.0%

Personal income tax is strictly territorial. Foreign-sourced income is 100% exempt from taxation, regardless of the individual's residency status.

Capital Gains Tax

10.0%

Capital gains are generally taxed at a flat rate of 10%. For real estate transfers, a 3% advance withholding tax applies, which can be credited against the final 10% tax liability.

VAT / GST

7.0%

Registration Threshold: USD36,000

Non-resident companies selling digital services directly to consumers in Panama are generally exempt from ITBMS (VAT). A reverse charge mechanism applies to certain B2B transactions.

Withholding Tax

Dividends10.0%

Royalties12.5%

Interest12.5%

Dividends are taxed at 10% (reduced to 5% if from foreign-source income). Royalties and interest face an effective 12.5% rate. Panama's double tax treaties can reduce these rates to 0-5%.

Payroll & Social Security

Employer13.3%

Employee9.8%

Employers contribute 13.25% for social security (increasing to 14.25% in 2027) plus a 1.5% educational tax. Employees pay 9.75% for social security and 1.25% for educational tax.

Other Taxes

Annual Franchise Tax (Tasa Única)

A flat annual fee of $400 is required for Private Interest Foundations to maintain their good standing in the Public Registry.

Notice of Operations Tax (Aviso de Operación)

An annual tax of 2% on the entity's net worth (minimum $100, maximum $60,000) applies only if the foundation engages in commercial activities within Panama.

Incentives & Support

Territorial Tax System Exemption

100% tax exemption on all income, capital gains, and dividends generated outside of Panama.

0% corporate and personal income tax on offshore activities.

Eligibility: Assets and income must be strictly foreign-sourced (offshore).

Estate and Inheritance Tax Exemption

Assets held within the foundation are not subject to probate or inheritance taxes upon the founder's death.

Seamless, tax-free wealth transfer to beneficiaries.

Eligibility: Automatic for all Private Interest Foundations.

Formation Requirements

Minimum Capital

USD 10,000

The $10,000 minimum stated patrimony must be declared in the Foundation Charter, but it does not need to be paid up or deposited immediately.

Local Director

Not Required

A Foundation Council is required (minimum 3 individuals or 1 corporate entity), but members can be of any nationality and reside anywhere.

Registered Office

Required

Virtual office allowed. $300 - $500 per year

Notarization Required

Yes

Power of Attorney (Remote)

Required

Required if the founder is not physically present in Panama to sign the Foundation Charter before a Panamanian Notary Public.

Timeline

Standard: 3-5 business days days

Expedited: 1-2 business days days ($150)

Required Documents

1Notarized passport copy of the Founder and Council MembersApostille needed
2Proof of residential address (e.g., recent utility bill)
3Bank reference letter
4Professional reference letter (from a lawyer or accountant)
5Power of Attorney (if forming remotely)Apostille needed

Compliance & Reporting

Annual Filings

Annual Franchise Tax (Tasa Única)

Penalty: $50 initial late fee, followed by $300 for subsequent missed periods, and loss of good standing.

July 15 (if formed Jan-Jun) or Jan 15 (if formed Jul-Dec)

Accounting Records / Sworn Declaration (Law 254)

Penalty: Fines ranging from $5,000 to $1,000,000 and suspension of corporate rights in the Public Registry.

April 30

Audit Requirement

Not Required

Not required for offshore holding foundations.

Accounting Standard

IFRS or US GAAP

Tax Return Deadline

Not required if 100% of income is foreign-sourced. March 31 if local Panamanian income exists.

VAT Filing Frequency

N/A

Data Protection

Governed by Law 81 of 2019. Beneficiaries are kept strictly confidential in private by-laws and are not disclosed in the Public Registry.

Banking & Payments

Towerbank

A traditional Panamanian bank known for being crypto-friendly and accommodating to Private Interest Foundations.

Credicorp Bank

Well-established local bank with experience handling offshore structures and foundation accounts.

Banesco Panama

Offers robust corporate banking services, though physical presence or a local lawyer is usually required for account opening.

Payoneer

Remote-friendly

A remote-friendly fintech option for receiving international B2B payments, though less suited for pure holding assets.

Payment Gateways

PayPal, 2Checkout, PagueloFacil, Nuvei

Currency

USD

Multi-Currency: Supported

Account Opening

Opening a bank account for a Panama Foundation is rigorous due to strict international AML and KYC regulations. Non-resident founders typically need to hire a local lawyer to facilitate introductions and must provide extensive documentation, including proof of source of funds and a bank reference letter.

Practical Information

Timezone

UTC-5

Business Language

Spanish (Official) and English

Legal System

Civil law

Ease of Doing Business

#86

IP Protection

Panama offers a robust intellectual property framework and is a member of WIPO and the Paris Convention. Trademarks and patents can be registered locally through the Directorate General of the Industrial Property Registry (DIGERPI).

Double Tax Treaties

17 countries

Notable treaties: United Kingdom, Spain, Netherlands, Singapore, United Arab Emirates

Visa & Residency Options

Qualified Investor Visa (Golden Visa)

Grants permanent residency in about 30 days for a minimum real estate investment of $300,000 (scheduled to increase to $500,000 in October 2026). Leads to citizenship eligibility after 5 years.

Friendly Nations Visa

Available to citizens of 50+ designated countries. Requires a $200,000 real estate investment or fixed-term bank deposit, granting a 2-year provisional residency before permanent status.