"Should this go in a company or a foundation?" is one of the first questions we get from families structuring wealth in Panama. The answer usually comes down to understanding what a Private Interest Foundation actually is, and what it isn't.
This guide explains how the structure works, what it protects, where it fits alongside a corporation and what compliance looks like in 2026.
A Private Interest Foundation is a legal entity created under Law 25 of 1995. It isn't a corporation and it isn't a trust, although it borrows features from both. It has no shareholders and no owners. Instead, it holds assets in its own name for the benefit of the beneficiaries chosen by the founder, and it's managed according to the rules the founder sets.
A foundation can't pursue profit as its purpose. It can, however, carry out commercial activities on a non-habitual basis and hold shares in companies that do run a business. That's why a common structure pairs a foundation, as the owner, with one or more operating companies. If you're setting up that company from abroad, our guide on how to establish a company in Panama as a non-resident covers the steps.
The initial patrimony can't be less than the equivalent of B/.10,000, in any currency.
The core mechanism is asset separation. Once assets are transferred to the foundation, they form a separate patrimony from the founder's personal assets. Under Law 25, those assets can't be seized or attached for the personal obligations of the founder or the beneficiaries. The exceptions are obligations incurred, or damages caused, in carrying out the foundation's own purposes, and the legitimate rights of its beneficiaries.
That protection has limits. It works best when the foundation is set up in advance, with legitimate assets and a real planning purpose. A transfer made to escape existing creditors can be challenged, so a foundation isn't a tool to avoid debts that already exist.
Because the assets belong to the foundation and not to the founder, they don't form part of the founder's personal estate. The founder can set in the regulations who receives the assets or income, in what proportion and when: for example, staged distributions to children, support for a spouse or conditions tied to age or education.
This lets families plan the transfer of wealth to the next generation privately and in an orderly way. Because each family's situation and each country's inheritance rules are different, the structure should be reviewed with advisors in the countries where the family and the assets are located.
In practice, the two often work together: the foundation owns the shares of the corporation, and the corporation runs the business. The foundation provides the protection and succession rules, and the corporation provides the operating flexibility. For more on how Panamanian corporations are used to hold and grow wealth, see our guide to building wealth with Panama corporations.
Panama applies a territorial tax system, so income from foreign sources generally isn't taxed in Panama. A foundation that holds assets or investments outside Panama usually doesn't pay local income tax on that income. Foundations do pay an annual registration fee (tasa única) to the Dirección General de Ingresos (DGI), similar to corporations, plus the resident agent's fees. Our Panama tax calendar lists the annual deadlines, and our legal and accounting team can keep the structure up to date.
Privacy remains one of the foundation's advantages, but it doesn't mean the structure is invisible to the authorities. Three rules matter most today:
A Private Interest Foundation fits well for families with meaningful assets who want a private, orderly way to pass wealth to the next generation, and for founders who want their business ownership protected from personal risks. It fits less well as a vehicle for running an active trading business, or for someone whose main goal is simply to set up a company quickly and cheaply.
Many families who set up a foundation are also planning to live in Panama. If that's your case, our guide to Panama's new Qualified Investor rules explains the fastest route to permanent residency through investment, and our Friendly Nations Visa guide covers the alternative for eligible nationalities.
JJ Associates designs and sets up Private Interest Foundations and the corporate structures around them, from drafting the charter and regulations to acting as resident agent and keeping the structure compliant year after year.
Schedule a consultation and our team will understand your specific situation and map out the right path forward.
No one. The foundation has no shareholders or owners. It holds assets in its own name for the benefit of its beneficiaries.
The initial patrimony can't be less than the equivalent of B/.10,000.
Not as its main activity. It can carry out commercial activities on a non-habitual basis and own shares in companies that run a business.
Its assets form a separate patrimony and can't be seized for the founder's or beneficiaries' personal obligations, with limited exceptions. Transfers made to avoid existing creditors can be challenged.
Yes. Since Law 129 of 2020, foundations must report their beneficial owners to Panama's private registry, which is accessible to the authorities.
Sources: Law 25 of 1995 on Private Interest Foundations (text of the law), Kraemer & Kraemer, Fábrega Molino; Law 129 of 2020 on the Beneficial Owner Registry; Executive Decree 25 of 2026 on FATCA and CRS. This article is for general information and is not legal advice.
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