Panama, despite its small territorial size, offers foreign businesses the best offshore business structures. Panama-based companies and Foundations reliably protect assets and enjoy tax advantages when conducting international business.
Panama business structures
The Republic of Panama has a strategic location on the American continent as well as the Panama Canal. This short sea route gives international business in Europe and Asia access to the Americas and other global markets.
Panama Business Structure # 1 – Corporation
One of the most widespread and popular business structures in Panama is the Panamanian corporation. In Spanish, it has the name Sociedad Anonima (SA), which translates as “Anonymous Company”.
The key characteristic of this structure is that it is a limited liability company. This means that the shareholders of the corporation are liable to the state or creditors for any assets invested in the corporation.
In the event of any legal claims to personal bank accounts or personal assets of a shareholder (owner of the company), the corporation is not responsible for them, since it has nothing to do with them.
Panama Business Structure # 2: Limited Liability Company (LLC)
The Limited Liability Company in Panama sounds like Sociedad de Responsabilidad Limitada (SRL) in Spanish, and Limited Liability Company (LLC) in English. This business may operate similarly to a corporation, but is structurally a combination of a Panamanian corporation and partnership.
Such a company can engage in activities both domestically and internationally. LLC can be incorporated in Panama within 5-14 days. An additional time period is required to open a bank account.
The founders of the LLC bear limited liability, that is, each of the shareholders (partners) is responsible for the assets or debentures of the LLC with its size of participation interest in the company. Resolutions in LLC are approved at the Meeting of Shareholders, by voting of partners who have the majority of the authorized capital of the company.
Business structure # 3 – Panama Private Foundation
The Private Foundation (Fundacion de Interes Privado in Spanish) is one of the most attractive businesses in Panama.
This structure will be interesting for foreign investors or companies that want to have high confidentiality and want to better protect their international assets, especially in combination with a foreign company, for example, from Nevis.
The Panama Foundation has the status of a legal entity, while in fact, it does not have an owner, but only beneficiaries in the person of beneficiaries or heirs.
Panamanian law does not permit the Fund to engage in commercial activities in the classical sense (article 3 of Law 25 of 1995).
If income is received by the Foundation due to activities outside Panama, the structure does not pay any income, except an annual franchise payment of 400 USD.
If the investment comes from Panama, then the Fund must pay taxes, according to national legislation, and a corresponding license may also be required.
In the event of political turmoil or any other force majeure in Panama, the law allows a Private Foundation to be redomiciled to another jurisdiction if the new jurisdiction recognizes the Foundation’s legal structure.
Conclusion
It must be said that the registration of one of the above Panamanian business structures gives the founder and his family the right to obtain a residence permit, permanent residence, in Panama, after five years of residence in the country, begin the naturalization procedure, and obtain citizenship.
