As investors seek strategies and tools to streamline their tax planning and asset protection, entities like Private Interest Foundations (PIF) have become increasingly attractive. A PIF is a distinct legal entity which possesses characteristics and features of Trusts and companies.
As a distinct legal entity, a Private Interest Foundation has the ability to hold property, sue and be sued in its own name. Its use in contemporary times is predominantly in the protection of family wealth as well as a means of minimizing taxation. While it is created pursuant to the relevant law in the jurisdiction, its operations are carried out in accordance with its Charter and Regulations. Furthermore, it is generally permitted only to hold assets but within some limits(depending on the jurisdiction), it possesses the power to conduct some profit-oriented commercial activities.
Management of Private Interest Foundations
Operational management of the PIF is conducted by a Council or Councillor although it is created by a Founder who may be vested with the powers to remove or appoint Councillors, remove or change beneficiaries or even to remove or appoint Protectors. The beneficiaries are entitled to the income and assets of the PIF.
Difference Between Trusts and Foundations
Foundations differ from Trusts mainly in the ownership of its assets; in the former, the assets are owned by the Foundations while the assets of a Trust are in effect, owned by the beneficiaries.
Panama is one of the jurisdictions with the most robust and vibrant laws governing Private Interest Foundations thus it remains a destination of choice for individuals seeking to take advantage of its tax-free PIFs and reap benefits that include but not limited to the following:
Limited or non-existent requirements for record-keeping and financial filings such as book-keeping and annual returns filing.