Foundations first came about during the Roman Empire to serve the needs of a wide cross section of society. Today foundations are used to protect the interests of private individuals and families. Liechtenstein was one of the first countries to create laws for the formation of foundations in 1926. In June of 1995 the Republic of Panama in Central America passed the relevant legislation modeled after that of Liechtenstein which permitted the incorporation of Panama Offshore Foundations.

Panama Private Interest Foundations can be set by individuals as a means of asset protection. Assets in a foundation are not held or registered in the name of the owners or beneficiaries of a foundation but rather in the name of a Panama Foundation. A Panama Foundation can also own Panama Corporation. Although foundations in Panama cannot legally engage in commercial activities the legislation which regulates foundations allows them to own stock, shares, bonds in other companies as long as it is for the interest of the owners and the beneficiaries.

Panama Foundations pay no taxes as long as its capital originates from outside of Panama however a Panamanian Foundation is subjected to be taxed if it owns property in the Republic of Panama. An offshore foundation incorporated in Panama has an obligation to pay a yearly fee to the Government of the Republic of Panama.

A Panama Foundation has many rights and powers. For example a Panamanian Foundation can purchase and own real estate in or outside of Panama, establish bank accounts and can carry out charity work.

In order to establish a Panama Foundation a council, founder, protector and beneficiaries must be stated in the foundation charter. The founder is the person who registers the foundation at the registry. This service is normally provided by the registered agent working on behalf of the foundation. The council acts like the board of directors of the foundation. Nominee council members can be provided by agents. The protector has control over the assets of the Panamanian Foundation. The beneficiaries are the persons who ultimately inherit the assets of the Panama Foundation in accordance with the stipulations of the Panama Foundation charter.

The laws of Panama allow for one or more persons to create a foundation. A Panamanian Foundation is governed by a Foundation Charter which must include the following information:

• The name of the Panama foundation
• The startup capital of US$10,000
• The names and addresses of the members of the foundation
• Address of the foundation
• Name and address of the registered agent in Panama
• The purpose of the foundation
• Appoint beneficiaries
• The right to amend the charter
• The prolonged life of the foundation
• How the assets are to be distributed and the method of liquidation
• The by-laws of the foundationSetting up a Panama Foundation is a very good means of protecting the owners. Nominee services are provided which ensures anonymity. A Panama Foundations is not required to make available its financial status to any individual or government official outside of the foundation. The assets of a foundation cannot be seized in any legal battles.A Panamanian Foundation is a sound asset protection vehicle and though limited in its function in that it cannot actively conduct commercial transaction, it can (by combining a Panama corporation under the foundation) be able to conduct active commerce through the Panama company/Panama corporation.