Offshore Services in Panama

Executive Summary

Panama remains a leading choice for offshore services due to its strong privacy laws, tax-neutral framework, and strategic global location. This summary highlights the core advantages, compliance requirements, and service options for establishing Panamanian offshore entities—emphasizing asset protection, tax efficiency, and operational flexibility for international clients.

Core Offshore Services

1. International Business Companies (IBCs)

  • Asset Protection: Under Law 32 of 1927, shareholders enjoy limited liability, insulating personal assets from corporate creditors.

  • Tax Exemptions: Income earned outside Panama is exempt from local taxes, making it ideal for holding companies and royalty management.

  • Privacy: Shareholder and director details are not publicly disclosed, and although bearer shares are legal, many opt for registered shares to meet OECD guidelines.

2. Private Interest Foundations (PIFs)

  • Estate Planning: Perpetual existence and beneficiary confidentiality allow seamless intergenerational transfers, bypassing probate.

  • Charitable Purpose: Foundation charters can include philanthropic goals, generally enjoying local tax exemptions.

  • Asset Segregation: Valuable assets (e.g., IP rights, real estate) remain shielded from operational liabilities.

3. Limited Liability Companies (LLCs)

  • Flexible Management: Custom operating agreements let members define profit-sharing, voting rights, and dissolution terms.

  • Pass-Through Taxation: Profits are typically taxed at the member level, helping avoid double taxation.

Compliance & Regulatory Framework

1. Annual Maintenance

  • Franchise Tax: USD 300 per year for IBCs and USD 250 for LLCs to stay in good standing.

  • Registered Agent: Required for legal notices and record retention, as per Law 32.

2. Anti-Money Laundering (AML)

  • UBO Disclosure: Ultimate Beneficial Owner data must be filed with resident agents, stored for six years post-dissolution.

  • FATCA/CRS: Reporting for U.S. and EU tax residents, using encrypted registries.

3. Tax Optimization Strategies

  • Territorial System: No taxes on foreign-sourced income, dividends, or capital gains.

  • Double Taxation Treaties: Panama has treaties with several countries to mitigate withholding taxes.

Banking & Financial Integration

1. Corporate Accounts

  • Multi-Currency Support: USD, EUR, and crypto solutions available through Panamanian banks.

  • Trade Finance: Access to letters of credit and supply chain financing for cross-border operations.

2. Payment Processing

  • E-Commerce Compliance: Licenses for international merchants under Panama’s “operations notice” system.

Ancillary Support Services

1. Immigration & Residency

  • Friendly Nations Visa: Streamlined residency for eligible investors.

  • Work Permits: Legal authorization for hiring foreign staff in Panama.

2. Real Estate & Maritime

  • Property Acquisition: Title searches and offshore holding strategies for tax efficiency.

  • Ship Registration: Flag vessels under Panama’s world-leading maritime registry.

3. Intellectual Property

  • Trademark Registration: Protection for brands operating in the Colón Free Zone or domestic markets.

Legal Considerations

1. Key Statutes

  • Law 32 (1927): Governs corporate entities, requiring three directors and a resident agent.

  • Law 129 (2020): Imposes UBO disclosures to counter financial crime.

2. Restrictions

  • Local Operations: Entities conducting business in Panama must comply with municipal licensing and taxes.

  • Reserved Sectors: Certain professions (e.g., retail, law, medicine) remain restricted to Panamanian citizens.

Strategic Advantages

  • Asset Protection: Clear legal separation between personal and corporate assets.

  • Tax Neutrality: No corporate or capital gains taxes on foreign income.

  • Global Credibility: Panama’s increasingly OECD-compliant framework facilitates banking and global partnerships.

Conclusion

Panama’s offshore services strike the right balance between privacy, compliance, and fiscal efficiency. By utilizing IBCs, Private Interest Foundations, or LLCs, clients gain access to a stable legal environment with extensive international reach. For ventures prioritizing asset security and cross-border growth, Panama remains a top-tier solution in the offshore landscape.