The Panama private interest foundation
A Panama private interest foundation is created by one or more individuals or companies, called founders, under Law 25 of 1995.
It needs an initial endowment of at least the equivalent of ten thousand balboas, a foundation council of at least three members and a resident agent who is a lawyer. It cannot pursue profit, but it can own shares of companies that do business. Its assets are separate from the founder’s and do not answer for the personal debts of the founder or the beneficiaries.
Who is who
- Founder: one or more individuals or companies, acting directly or through third parties. The founder can also be a beneficiary and sit on the council.
- Foundation council: required, with at least three members unless the member is a company. It manages the assets, carries out the purposes and reports to the beneficiaries.
- Protector: optional. The charter can create supervisory bodies such as auditors or protectors, with powers like demanding accounts, replacing council members or adding beneficiaries.
- Resident agent: a lawyer or law firm, who countersigns the charter before it is recorded.
Source: Law 25 of 1995, articles 1, 5, 17, 18, 21 and 24
Minimum assets
The initial endowment can be stated in any legal currency, but it can never be less than the equivalent of ten thousand balboas. The foundation becomes a legal person when it is recorded at the Public Registry.
Source: Law 25 of 1995, articles 5 and 9
What a foundation can and cannot do
A foundation cannot pursue profit, and it can carry out commercial acts only on a non-habitual basis, using the proceeds for its purposes. It can own assets of any kind and exercise the rights of the shares of companies it owns. In practice, a foundation can own a corporation that runs a business: the company trades, and the foundation holds the shares.
Source: Law 25 of 1995, articles 3, 9, 16 and 27
Protection from creditors, and its limit
The foundation’s assets are separate from the founder’s and cannot be seized or attached, except for the foundation’s own obligations, damage caused in carrying out its purposes, or the legitimate rights of its beneficiaries. They never answer for the personal debts of the founder or the beneficiaries. The council can pledge or mortgage them unless the charter forbids it.
The protection is not absolute. Creditors of the founder can challenge contributions made in fraud of creditors within three years of the transfer. The inheritance rules of the founder’s or beneficiaries’ home country cannot be raised against the foundation.
Source: Law 25 of 1995, articles 11, 14 and 15
Fees
A foundation pays the same registration fee and annual franchise tax as a corporation.
Source: Law 25 of 1995, article 8; Tax Code, articles 318 and 318-A
Questions people ask
Can the founder be a beneficiary?
Yes. The law allows the founder to be one of the beneficiaries.
Is a protector required?
No. It is optional and has only the powers the charter or the regulations give it.
Can a foundation own a Panamanian corporation?
Yes. It can hold shares and exercise their rights, while the corporation carries on the business.
Can creditors of the founder take the foundation’s assets?
Not for the founder’s personal debts, but they can challenge a transfer made in fraud of creditors within three years.
What the law does not say
- How a foundation is taxed on income from abroad and from Panama.
- The texts of the later laws that amended articles 5, 11 and 27, which we know only from notes in the consolidated text.
- Whether the foundation must name its beneficial owner and how.
Official sources
Last verified: October 28, 2026
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