Panama Private Interest Foundation | Liberty Mundo

Latin America · Civil Law · FoundationPanama Private Interest Foundation

The civil-law equivalent of a common-law trust.

Panama’s Private Interest Foundation (Fundación de Interés Privado, Law 25 of 1995) gives civil-law jurisdictions and Latin-American clients a sophisticated alternative to common-law trusts — same protection, same flexibility, same privacy, but in a familiar legal-tradition wrapper.

Book a strategy call →Compare jurisdictions

1995Law 25 in force

3 yearsFraud SOL

0%Foreign-source tax

NonePublic beneficiary register

Why Panama

What makes Panama the right pick.

Latin America’s most-used civil-law asset-protection wrapper, with 30 years of practice and a strong charging-order framework.

Civil-law foundation, not a trust

Panama Foundations are a separate legal person that owns its own assets. The founder’s role ends at endowment; thereafter the Foundation Council manages assets per the by-laws. No trustee/trust relationship to construct — cleaner for civil-law tax authorities.

Three-year fraudulent-transfer SOL

Law 25 establishes a 3-year statute of limitations on creditor challenges to founder transfers. Longer than Cook Islands but shorter than Liechtenstein.

0% Panamanian tax on foreign-source income

Panama operates a strict territorial tax system. Foundations are not taxed on foreign-source income at any level — dividends, interest, capital gains, real-estate rents, business income from outside Panama.

No public register of founders or beneficiaries

The Public Registry of Foundations records only the foundation name, founder name, and council members. Beneficiary identity is private and held only by the foundation council and the protector.

Founder can be a beneficiary

Law 25 explicitly permits the founder to be a beneficiary. Combined with the protector role, this gives substantial structural flexibility for control and succession.

Forced-heirship override

Law 25 explicitly states that Panama Foundation property is not subject to foreign forced-heirship rules. A foundation founded by a French, Spanish, or Latin-American national bypasses civil-code reserved-share rules.

Use cases

When Panama is the right choice.

The fact patterns where this jurisdiction outperforms alternatives.

Latin-American HNW family wealth

Mexican, Colombian, Argentine, Brazilian, and Chilean families routinely use Panama foundations for multi-generational wealth holding outside their home tax authorities and forced-heirship rules.

Civil-law European succession planning

Spanish, Italian, French, and German clients prefer Panama foundations over common-law trusts for the cleaner legal-tradition fit and the explicit forced-heirship override.

Banking-secrecy-oriented holding

While CRS-compliant, Panama foundations remain materially less transparent than US LLCs or UK companies — useful for clients who value the structural opacity of a private legal person.

Real-estate holding across Latin America

Panama foundations are the standard wrapper for Latin-American family real-estate portfolios spanning multiple jurisdictions, with the foundation as central holder and local SPVs as title-holders.

Setup

From US$5,500

Charter and by-laws drafting, Public Registry filing, council selection

Annual administration

US$2,500 / year

Council fees, annual return, registered agent

Timeline

2-3 weeks to fully operational

From kickoff to fully-funded structure

Frequently asked questions

What clients ask before settling.

Pragmatic answers on the Panama framework specifically.

How is a foundation different from a trust?

A foundation is a separate legal person that owns its own assets and acts through a Foundation Council. A trust is a relationship where the trustee holds legal title for the beneficiaries’ benefit. The legal mechanics differ, but the practical outcomes — asset protection, succession, privacy — are equivalent for most purposes.

Can I keep control as the founder?

Yes, through carefully-drafted by-laws and by appointing yourself as the protector (which Law 25 permits). The protector can override council decisions, replace council members, and direct distributions. The founder ceases to be the legal owner but can retain meaningful practical control.

What about US tax treatment?

Panama foundations are typically classified as foreign trusts for US tax purposes under IRC Treasury Reg § 301.7701. US-person founders face grantor-trust treatment under §§ 671-679 with full income reporting. Tax shelter is not available; asset protection and succession benefits remain intact.

Is Panama still a ‘safe’ jurisdiction post-Pandora Papers?

Yes. The 2016 Panama Papers and 2021 Pandora Papers leaks did not result in any structural change to Law 25 or to the foundation framework. Panama tightened CDD/AML standards in 2019-2021 but the underlying asset-protection law is unchanged.

Can foundations hold cryptocurrency?

Yes. Panama recognises digital assets as eligible foundation property. Crypto custody is typically arranged through licensed institutional custodians (Anchorage, BitGo Trust, Fireblocks) with the foundation as legal owner.

Ready to set up your Panama structure?

Book a strategy call and we’ll quote a complete formation-and-administration package within twenty-four hours.

Book a strategy call →

Use This Secret Tool to Protect Your Wealth from Legal Predators

A Panama Foundation can be a useful part of your asset protection strategy. It is a separate legal entity, somewhat similar to a trust. It does not have shareholders or directors.

A Panama Foundation is established by a declaration of the Founder. The Founder can be an individual or a company. The purpose of the Foundation is to preserve assets for the Founder or the Beneficiaries.

Assets transferred to the Foundation can’t be claimed by any other party after 3 years, so assets owned by the foundation will be immune from seizure by creditors, ex-spouses, lawsuits, bankruptcy trustees, etc.

Panama Foundations are exempt from tax in Panama. Therefore any investment gains made on the foundation’s assets will be tax-free worldwide.

No annual reporting is necessary. You’ll simply pay a small annual fee to the Panama government.

Panama Foundations are inexpensive to establish and maintain. In some jurisdictions, you can spend 10s of thousands of dollars establishing a trust or foundation. In Panama, you can establish a foundation for a couple of thousand.

Any Individual or Legal Entity Can be a Beneficiary

Beneficiaries of the Foundation could be family members, any other legal entity, such as a company, or even yourself. The beneficiaries are never public and are only held on record by your Panamanian lawyer. Only the name and the officers of the foundation can be found in public at the Panama national registry.

The Foundation has a council of at least 3 members. You can also appoint a Protector to oversee the council if you wish. You can choose your own council members or appoint local nominees for a greater degree of privacy.

Normal uses of a Panama Foundation are to hold shares and investments to benefit the Foundation. Your Panama foundation could own the shares in an operating company that you want to protect from creditors. If you think you may have future liabilities from a divorce, for example, this will protect the asset as you will no longer own it. You will not have to disclose any assets owned by the Foundation to anybody as you legally are not the owner of those assets.

Avoid Forced Heirship Rules

Panama Foundations are also used to avoid forced heirship rules that some countries have. If you want to exclude a spouse or other family member from inheriting some of your wealth you can place it in a Panama Foundation and choose the beneficiary that you want that wealth to go to.

Your Panama Foundation can also own real estate overseas which offers another layer of protection for this kind of asset.

The initial capital of a Panama Foundation is at least $10,000. This doesn’t have to be in cash. It can be paid by transferring assets to the Foundation.

Panama Foundations can be set up quickly and efficiently. Normally it’s possible to set up a new foundation in a few days.

An Excellent Asset Protection Tool

Panama Foundations are an excellent tool for asset protection. It’s a far superior option to trusts and foundations from some of the English-speaking jurisdictions as it offers another level of protection that’s much more difficult for any financial enemies to penetrate. There are strong secrecy rules in Panama. They will not disclose information about foundations to any foreign country. Under existing Mutual Legal Assistance Treaties they can only disclose information about Foundations if they’re connected to drug trafficking.

Our Special Report – Bullet Proof Asset Protection details multiple asset protection strategies. It goes into depth on different asset protection structures and jurisdictions. You will discover how to make your assets untouchable and build an impenetrable fortress around your assets. The protection will be so strong that not even the most well-funded adversary or government will ever be able to penetrate it. Click here to buy your copy now.