High-net-worth individuals (HNWIs) choose Panama foundations for holding offshore assets primarily because of their robust asset protection, confidentiality, and flexibility in estate planning.
These civil law entities offer a strategic alternative to traditional trusts, particularly for those seeking long-term control over international assets without the complexities of common law structures.
In this article, we explore:
- Is Panama a tax haven country?
- Why do people keep money in Panama?
- Where is the best location in Panama for holding assets?
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The information in this article is for general guidance only. It does not constitute financial, legal, or tax advice, and is not a recommendation or solicitation to invest. Some facts may have changed since the time of writing.
Is Panama an Offshore Tax Haven?
Yes, Panama is considered one of the most strategic offshore tax havens globally.
Key factors that contribute to its reputation include:
- Territorial Tax System: Panama taxes only income earned within its borders. This means any income generated from foreign sources remains completely untaxed by Panamanian authorities, making it ideal for offshore asset holding and international investments.
- Banking Privacy: Although Panama has aligned itself with global transparency standards (such as FATCA and CRS) in recent years, it continues to offer a secure and private banking environment. Financial information is not publicly accessible, and legal barriers still exist to prevent unwarranted disclosure.
- No Currency Restrictions: Panama uses the US dollar as legal tender, eliminating foreign exchange risk and allowing for seamless international transactions. This currency stability adds another layer of convenience and predictability for offshore investors.
- Flexible Corporate and Legal Structures: Panama offers entities such as foundations and offshore companies that are easy to set up, require minimal maintenance, and do not impose burdensome reporting requirements locally.
However, while Panama offers significant tax advantages, it’s important for HNWIs to ensure full compliance with tax obligations in their home jurisdictions.
Why Panama Foundations Are Ideal for Holding Offshore Assets
Key reasons HNWIs prefer Panama foundations include:
- Asset Segregation: Assets placed in a foundation are legally separated from personal estates.
- No Beneficial Ownership Disclosure: Foundations can preserve privacy by not listing beneficiaries publicly.
- Customizable Succession Planning: Founders can dictate how assets are distributed through a foundation charter.
- No Income Tax on Offshore Assets: As with offshore companies, foundations benefit from Panama’s territorial tax system.
- Use in Conjunction with IBCs: Panama foundations often own offshore companies, offering an additional layer of protection and flexibility.
Panama foundations differ from offshore companies in that they are not owned by shareholders but are independent legal entities.
This makes them especially suitable for holding and managing wealth across generations.
Additional Considerations for HNWIs
While Panama offers a robust offshore framework, it’s essential for HNWIs to consider:
- International Tax Reporting: Compliance with FATCA, CRS, and other international transparency initiatives.
- Local Legal Advice: Working with a Panamanian lawyer ensures correct formation, registration, and maintenance.
- Asset Type: Foundations are ideal for passive holdings, such as investments or intellectual property, rather than active business operations.
Best Location for Holding Assets in Panama
The best location for holding offshore assets in Panama is Panama City.
As the nation’s capital and financial epicenter, Panama City provides the most efficient and secure environment for establishing and managing asset-holding structures such as Panama Foundations.
Key advantages include:
- Proximity to Financial and Legal Services: The majority of Panama’s top law firms, international banks, and fiduciary service providers are based in Panama City, streamlining the administration of offshore assets.
- Strong Infrastructure: Panama City hosts all key government agencies, notarial services, and registries required for setting up and maintaining foundations or companies.
- Global Connectivity: Its international airport and well-established telecommunications network make Panama City a convenient base for global HNWIs managing cross-border wealth.
- Enhanced Reputation: Entities and foundations registered in Panama City benefit from the city’s status as a recognized financial hub in Latin America, enhancing credibility with foreign financial institutions and partners.
Whether you’re looking to hold real estate, investment portfolios, or intellectual property, Panama City remains the most strategic location in the country for safeguarding offshore assets.
Conclusion
For HNWIs seeking asset protection, tax efficiency, and generational wealth planning, Panama foundations paired with Panama offshore companies offer a compelling solution.
With legal flexibility, strong privacy protections, and a pro-business environment, Panama remains a leading jurisdiction for offshore asset structuring.
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Adam is an internationally recognised author on financial matters with over 830million answer views on Quora, a widely sold book on Amazon, and a contributor on Forbes.
