PANAMA FOUNDATION AND IBC

Panama Foundation & IBC (International Business Company) Combination Options

If your primary goal is not just asset protection and complete privacy but, depending on your country of residence, eliminating all reporting requirements on the corporation with the possibility of tax deferral opportunities, a corporation combined with a Panama Foundation is ideal. A Foundation is put in place that acts as a Shareholder of the Company. Ownership thereby is divested to another legal entity.

If both the corporation and the foundation that owns it are both based in Panama as well as all of its banking and investment accounts, there is the extra advantage of them being free from any threat of sequestration regardless of the allegations. This means a foundation and all of its assets are totally inviolate from any type of lawsuit, civil or criminal

The shareholder Foundation can also be set up, just to be on the safe side, with a charitable beneficiary so that even in the unlikely event that you are forced to prove in your home country, that you are not the main beneficiary, it confirms that the assets are held for the benefit of a charity. Nobody ever questions legitimate charities as a beneficiary of a Foundation.

Very High Privacy

The privacy benefits offered through an company / foundation combination are similar to the ones presented in the Panama corporation, Belize IBC or Nevis IBC pages. In addition:

• There is not only strict confidentiality of beneficial ownership but the privacy of your affairs no longer only have to hinge on confidentiality, since you are not a beneficiary in any way of your assets.
• No annual reports of financial returns need to be filed since you have surrendered ownership of your assets to a foundation.
• The foundation is located in Panama which means all its assets, which include the corporation, cannot be seized or frozen for any reason whatsoever – even in the event of an action considered criminal in Panama. Even if that were not the case, long before that could have been determined the corporation could have been re-domiciled to another jurisdiction frustrating any would be suitor or creditor.
• As before, the principal office and records may be located anywhere in the world.
• Possibility of transferring corporate income to the foundation and then the foundation provide tax-free foreign source gifts to family and friends. In most countries foreign gifts are not taxable and mostly non-reportable (check with your local counsel).

Excellent Asset Protection

The asset protection benefits offered through this option would be the same as the benefit of owning an offshore corporation. However, the question of beneficial ownership is resolved in a very satisfactory way so that the Foundation replaces you as the legal owner. It would be very difficult for a court of law to prove that the Foundation is nothing but an alter-ego of yourself, since the Foundation exists completely separately and independently from you and has a “life” of its own which is determined by the appointed Council Members, which of course you can influence but do not legally control. Also the Foundation was born out of Panamanian Civil Law, and such laws cannot be simply overturned or set aside – unlike with Common Law trusts that do not owe their existence to civil (statute) law.

Excellent Tax Advantages

A corporation / foundation combination provides you with a way to safely avoid any taxation issues until you need to take income or capital gains (as appropriate). This is because most countries look to the ownership question to determine if their taxpayer is liable for any tax on an offshore corporation. If that taxpayer clearly does not have a legal ownership in the company most countries’ tax rules clearly state that no tax is payable on the unrealized (i.e. un-repatriated) earnings of that company. However, U.S. persons should understand that if any portion of income being earned by the corporation is derived from passive earned (investment) income, then the interpretation of the IRS, is that that income would be taxable when earned as opposed to when repatriated. Luckily most other countries’ tax agencies do not take such a hard line stance.