A trust is a preferred vehicle for asset protection based on a fiduciary relationship between the owner of the assets and the other party entrusted by the owner to hold the said assets. The function of the trust is to secure the property or assets as well as allow for their distribution as the owner intended it.
Investors who set up a trust in Panama benefit from a number of advantages, among which complete foreign ownership, a lack of taxes as well as easy and fast incorporation.
Trust formation in Panama
is based on a simple process and the documents can be drawn up in English with the help of our Panama company formation agents
. Investors can reach out to our specialists if they need more information, apart from the general guidelines presented in this article.
The main advantages of a trust in Panama
Panama is one of the top offshore locations in the world, with many foreign investors looking to establish their financial planning and asset protection vehicles here.
The advantages for investors who set up a trust in Panama are the following:
Ownership: a Panamanian trust is fully foreign-owned and there are no requirements for any local control or management.
Foreign-based: this means that a foreigner can set up a trust that has the assets based in other countries and also the beneficiaries live in other countries.
Privacy: the trust is not registered with the Government or any agency, and this allows for complete privacy.
Tax: there is no tax applicable in Panama for trusts, however, there are requirements for foreign taxpayers to disclose all of their income, depending on their country of origin.
Asset protection: the trust is a suitable vehicle that allows for complete protection against possible creditors.
Estate planning: a common use for the trust in Panama as it can be set up with no expiry date.
Easy formation: opening a trust in Panama is a simple procedure that can be accomplished in one day.
The fact that the trust documents can be drawn up in English is another important advantage for many foreign investors, especially those from the United States. Our team of Panama incorporation specialists
can help entrepreneurs or individuals who are interested in din drawing up the mandatory documents for a trust in the country.
The local laws allow a trust to be flexible and efficient for foreign entrepreneurs and foreign individuals who wish to use them for asset planning in an offshore manner (meaning that they are interested in setting up the trust outside of their country of residence).
Investors can contact our agents specialized in Panama offshore company formation
for complete assistance regarding the formation of trust as well as other vehicles such as foundations. We help our clients find the most suitable solutions for their needs and our team will present all of the available options for asset planning and structuring.
Additional information about trusts
A trust is based on a document called the trust deed which will create a fiduciary relationship between two parties: the one that entrusts the protection of the assets and the one that undertakes to secure this protection to the best interest of the beneficiaries. Below, our Panama incorporation agents list the main elements of the trust and outline the requirements for its setup:
• the settlor: the individual who entrusts the assets or property to another party, as he sees fit.
• the trustee: the party that engages to protect the assets and distribute them accordingly.
• the beneficiaries: the party or parties who will receive the assets in the trust, as directed by the settlor.
• the trust deed: the document that includes information about the appointment of the parties, the assets, the duration, the powers, duties or limitations of the trustee.
In Panama, a trust can be created to fulfill any lawful purpose. After the trust deed is drawn up, both the settlor and the trustee must sign it and the document is to be authenticated in front of a notary.
Panama is a country that is attractive for investors who wish to set up a trust or a foundation and also for those who are interested in offshore company formation. The reduced tax rates and the favorable business climate attract foreign direct investments. The following statistics are available:
- foreign direct investment inward flow in 2016: 4,866 million USD;
- foreign direct investment inward flow in 2017: 4,569 million USD;
- foreign direct investment inward flow in 2018: 5,549 million USD.
Investors who are interested in opening a trust, as well as Panama incorporation
for offshore legal entities, can contact us