Private Foundations.pdf - Mossack Fonseca & Co.

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Beneficiaries, nor for those of the Foundation Council members, nor for those of any person, whether
or not involved with the Foundation.
3. A Foundation protects the Founder’s hereditary wishes.
The Founder’s heirs shall have no right to revoke the creation of or the transfers made to the
Foundation, nor may they object to the Foundation on the grounds of provisions that originate in
forced heirship laws of the Founder’s domicile or of the Beneficiaries’ domicile.
4. A Foundation is protected against the Founder’s creditors.
The Founder’s creditors may dispute the contributions or transfers made to the Foundation, but only
where both of the following two (2) circumstances occur: (i) The contribution constitutes an act of
fraud against creditors and this fact is proven in a lawsuit; (ii) Three (3) years have not elapsed
since the contribution or transfer.
5. A Private Foundation is created as a body corporate.
The registration of its Foundation Charter at the Public Registry of Panama grants corporate
existence to a Foundation without need for any other legal or administrative endorsement. The
registration also constitutes a form of publicity vis-à-vis third parties. Consequently, a Foundation
may acquire and own property of all kinds, incur obligations and be a party in administrative and
judicial proceedings of all kinds.
6. A Private Foundation may not have profit making aims.
Although a Foundation may not by virtue of the law engage in business, it may carry out business
activities in a non habitual manner, that is, it may carry out activities for which there is no need to set
up a corporate structure and obtain a business or industrial license. Thus, a Foundation may derive
earnings from the sporadic sale of real property, it may have cash deposits, it may lend money in a
non habitual manner, and it may invest in titles such as bonds, participation and shares, provided the
earnings arising from them are applied solely towards the Foundation’s aims.
7. Foundations may be revocable.
The Founder may revoke the creation of a Foundation or the transfers made to a Foundation in any of
the following circumstances: (1) Where the Foundation has been created to enter into effect after the
Founder’s death; (2) Where the Foundation Charter has not been registered at the Public Registry;
(3) Where the Foundation Charter is revocable; and (4) Where there is just cause for the revocation
of donations in accordance with the relevant provisions of the Civil Code of the Republic of Panama.
8. A Foundation is exempt from all taxes.
Provided that the contributions received by a Foundation and the income from such contributions
originate outside the fiscal territory of the Republic of Panama, a Foundation shall pay no taxes,
assessments, levies, rates or fees of any kind or denomination, save for a US$300.00 Annual
Franchise Tax.
In addition, any investment in titles and bank deposits, even if made within the Panamanian fiscal
territory, shall not pay any taxes whatsoever.
YA/Pub./10.2007