Corporate Structures

Mundo’s favorite combinations for a Panama business: Foundation + Company

3/19/2024 8:00:00 AM
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Home to the Panama Canal, this is one of the few countries in Latin America with a dollarized economy and a wide range of residency options. If you want to open a business in Panama, you wouldn't be wrong as this country can help you consolidate your place in the region or access new asset protection and management tools. Today we explore two of these: the company and the foundation as ideal vehicles for expat businesses in Panama.

Business opportunities: Panama company

Establishing your entity in Panama brings many advantages including the opportunity to register in the free zone. Here your business can access valuable benefits such as tax relief. A free zone Panama business, for instance, pays half the taxes as regular companies. While the former pays only 1% on their annual equity, the latter pays 2%.

If you open a company in Panama, you can access residency through the Friendly Nations Visa. The procedure consists of establishing a corporation and hiring oneself 100% legally including social security payments, salary, and other requirements stipulated by Panama corporation law.

This consists of an excellent solution for those trying to get residency at a relatively low cost. What the person pays for incorporation, corporate and immigration fees, renewal, and monthly expenses adds up to nearly 23,000 dollars within two years. After this period the applicant can change his or her status to a permanent residency and close the company or keep it running to maintain the Panama business. This would be the perfect residency option if it weren't for one big downside: it's only available for citizens of certain countries. The Friendly Nations Visa is aimed at providing an easy residency path for individuals coming from a list of given countries (approximately 50) who are considered to maintain good relationships with the Republic of Panama.

The program has different approaches and has undergone several changes until it became what it is today. In the beginning, it granted permanent residency immediately and the self-hiring step was not mandatory. Although now with minor changes, the Friendly Nations Visa is still the best option for those who qualify. It also includes a real estate possibility and it can be accessed through a legal work contract.

Benefits of having an expat business in Panama

With features like territorial taxation, dollarized and strong economy, low costs of living, a vibrant environment, and pro-business initiatives, Panama constitutes an excellent corporate hub. Both locals and expats can benefit from these advantages.

Panama is known for many things and one of them is that it only taxes local income. Thus, it constitutes one of the few countries in the world to have territorial taxation, a system that's quite coveted in the business world. If one understands how this really works beyond myths and misconceptions, a properly established territorial tax residency can make a difference in a financial plan.

If you open a business in Panama, you'll also access a solid banking system that supports foreigners through advanced instruments like online banking for remote control.

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Business opportunities in Panama: the foundation

Nothing is ever 100% fulfilled in the business world. Even after achieving one's goals, the ghost of creditors, claimants, and other liabilities lurks. Fortunately, there are structures that help protect a person’s or business’s assets and Panama is home to one of these jewels.

We're talking about the Panama Foundation which is based on the same principles as a trust only with a different structure. A person who wants to protect certain assets can create a foundation and transfer them to this entity. Then, the board will be in charge of looking after these assets and making sure that they are distributed or maintained according to the founder's wishes.

In previous articles, we’ve compared the Panama foundation with its Liechtenstein counterpart to learn that the former has lower costs while offering the same benefits. Surely if you're interested in business opportunities in Panama you may want to cover your asset protection needs in this jurisdiction as well.

Disclaimer: This article does not intend to provide legal or professional advice but a mere overview of what it's like to open a business in Panama and what other tools are available here.

At Mundo, we always stress the importance of consulting with a certified professional before making any meaningful financial or migration decisions.

Mundo helps you access the best business opportunities in Panama

We are a publication that aims to help international businesspeople find the right solutions for their cases. The corporate and business world is facing increased complications due to the characteristics of the modern system and the necessity to apply stricter international regulations. However, this should not be a deal breaker for those who are interested in Panama corporation law or want to start a business in a new jurisdiction. Challenges are there to inspire us and push us toward our growth. Fortunately, this is exactly what Mundo helps you do.

With our solid team, located in different jurisdictions we were able to build a strong network to help the international investor. We are proud of the connections we have built with Panama lawyers, agents, realtors, developers, financial advisors, and other professionals. This is why we can help you understand the secrets of expat businesses in Panama and assist you in fulfilling your objectives. Contact us now and find out what we can help you build.

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