Family office in PanamaOverview
Panama's appeal to family offices rests on its private wealth vehicles rather than a tailored family office licence. The private interest foundation, introduced by Law 25 of 1995, is a separate legal person with no shareholders. It holds assets for beneficiaries named in its charter or regulations and is run by a foundation council, often with a protector. It is registered in the Private Foundations section of the Public Registry. Under Law 25, foundation assets form a separate estate that the personal creditors of the founder or beneficiaries cannot seize, and inheritance rules of the founder's domicile have no effect on the foundation. A creditor may challenge a fraudulent transfer, but only within three years of it. For Latin American families with forced-heirship exposure in their home countries, these features explain why the foundation often sits at the top of the structure. Any foreign-law challenge still needs advice in each relevant country.
Trusts are governed by Law 1 of 1984. Law 21 of 10 May 2017 gives the Superintendency of Banks exclusive competence to regulate and supervise licensed trustees and the trust business. In practice, a Panamanian trust for a family is usually administered by a licensed trust company. Companies are formed under Law 32 of 1927 and serve as holding companies, investment companies and the family's own management company. Multi-family offices that give investment advice to third parties for compensation fall within the Securities Market Superintendency's licensing perimeter. Advice confined to one family's own assets is not the subject of a dedicated regime. Panamanian counsel should still confirm the exact activities against the securities and trust rules before the office starts work.
The tax landscape changed in 2026. Panama keeps its territorial principle: income from sources outside Panama is generally not subject to Panamanian income tax. However, Law 526 of 28 May 2026, which applies from fiscal year 2027, requires entities that belong to a multinational group and earn foreign-source passive income to show economic substance in Panama. A multinational group means two or more entities linked by ownership or control and resident in different jurisdictions. Passive income includes dividends, interest, royalties, capital gains and rental income. The entity needs adequate qualified staff and premises in Panama, strategic decisions taken there, and genuine operating costs. Pure equity-holding entities and passive real estate entities need only meet the staff and premises test. Entities that fail pay a single 15% rate on the net passive income, with credit for foreign tax paid on that income. Partly on the strength of this reform, the Council of the EU removed Panama from its list of non-cooperative tax jurisdictions on 9 October 2026.
For a family office, Panama now fits best as an operating hub with real presence. A small team in Panama City can administer the foundation, keep the books, manage banking relationships and hold investment committee meetings for families in Latin America and the Caribbean. Panama is less suitable as a letterbox. Many families pair a Panamanian foundation or management company with custody in Switzerland or the United States, a separate US structure for US-situs assets, and residence for key family members through Panama's Qualified Investor programme. Panama's dollarised economy and international banking centre support this. So do its exits from the FATF grey list in 2023 and from the EU list in 2026.
Key benefits
- Private interest foundation with separate-estate protection and a three-year limit on fraudulent-transfer challenges (Law 25 of 1995)
- Foundation charter can override forced-heirship rules of the founder's domicile under Panamanian law, which supports orderly succession
- Territorial income tax system, with foreign-source income generally outside Panamanian tax where substance rules are met
- No dedicated licence needed for a family office that serves only its own family, which keeps set-up lean
- US dollar economy and an established international banking, trust and legal profession
- Removed from the FATF grey list (2023) and the EU non-cooperative list (October 2026), which reduces counterparty friction
- Permanent residence for family principals through the Qualified Investor programme
Requirements
- Appoint a Panamanian resident agent (a Panamanian lawyer or law firm) for every foundation and company; the agent carries out due diligence and files beneficial ownership data
- Foundation charter must set out the name, initial assets of at least the equivalent of US$10,000, council, domicile, resident agent, purposes, beneficiary designation and the rules on liquidation; it must be notarised in Panama and registered at the Public Registry
- Foundation council of at least three members, or a single corporate council member; an optional protector or supervisory body with powers defined in the regulations
- Professional trust business requires a Superintendency of Banks trust licence under Law 21 of 2017; investment advice to third parties for compensation requires a Securities Market Superintendency licence
- Beneficial ownership information is filed by the resident agent in the private, single beneficial ownership register created by Law 129 of 2020; fines run from B/.1,000 to B/.5,000 per entity, plus daily progressive penalties
- AML/CFT compliance under Law 23 of 2015: source-of-wealth and source-of-funds evidence for founders and contributors, with ongoing updates to the resident agent and banks
- Accounting records and supporting documents for every entity, kept as Panamanian law requires and made available through the resident agent
- From fiscal year 2027, multinational group entities earning foreign-source passive income must report it in their annual return and evidence substance under Law 526, or pay 15% on the net amount
- CRS and FATCA due diligence and reporting by Panamanian financial institutions; Panama exchanges financial account information under the CRS
- Annual government fees and registry upkeep for each foundation and company to remain in good standing
Structure designs
Private interest foundation as family apex
US$10,000 initial foundation assets
The foundation owns the family's holding companies and states the beneficiary and distribution rules. It suits families seeking an ownerless succession vehicle that protects against forced heirship, with a protector and family members represented on or alongside the council.
Foundation plus Panamanian management company
A sociedad anónima employs the family office staff, leases premises and provides accounting, reporting and investment committee support to the family's entities. It suits families that want real Panamanian substance for Law 526 purposes and a single employer for local professionals.
Holding company group under the foundation
Separate companies hold listed portfolios, private equity, real estate and operating businesses. A pure equity-holding entity only needs adequate staff and premises in Panama, not the full substance test, so asset-class separation helps manage both risk and the 2027 substance analysis.
Trust with a licensed Panamanian trustee
A trust under Law 1 of 1984, administered by an SBP-licensed trust company, suits families from common-law backgrounds, collateral or escrow arrangements, and settlors who prefer a trustee model to a foundation council.
Panama hub with foreign custody and US structures
Panamanian governance and administration, with bank custody in Switzerland or the United States and a separate US vehicle for US-situs assets. It suits Latin American families with diversified international portfolios who must manage US estate tax exposure.
Licensed multi-family office
Where the office will advise unrelated families or charge third parties, it needs an SMV investment adviser licence, and an SBP trust licence if it will act as trustee. It suits founders who want to offer their platform to other families on a regulated basis.
Step-by-step process
- 1
Family and tax mapping
Identify the family members' tax residences, citizenships, forced-heirship rules and US connections, and the assets by class and location. Decide what the Panamanian structure will own and what stays elsewhere.
- 2
Governance design
Draft the family constitution and the foundation's regulations: beneficiary classes, distribution policy, protector powers, investment committee composition, and how the next generation joins governance.
- 3
Vehicle formation
Engage the resident agent, complete KYC, notarise and register the foundation charter and company articles at the Public Registry, and appoint council members, directors and officers.
- 4
Substance build-out
Where Law 526 may apply, set up the management company with qualified staff, premises, a Panamanian decision-making calendar and documented operating costs before fiscal year 2027 begins.
- 5
Banking and custody
Open operating accounts in Panama and custody accounts with international banks, supported by source-of-wealth files, organisational charts and the foundation's regulations.
- 6
Asset transfers and immigration
Transfer holdings into the structure with tax advice in each origin country, and file Qualified Investor or other residence applications for principals and key staff where relevant.
- 7
Ongoing compliance
Keep beneficial ownership filings, accounting records, annual fees, CRS/FATCA classifications and the annual Law 526 substance evidence up to date, and review governance yearly.
Typical documents
- Passports and proof of address for the founder, council members, protector and beneficiaries
- Source-of-wealth narrative with supporting evidence (company sale agreements, dividend history, audited accounts, inheritance documents)
- Bank reference letters and, where required, professional reference letters
- Draft foundation charter and regulations, notarised in Panama, with certified Spanish translations of any non-Spanish text
- Articles of incorporation, share registers and director appointments for the holding and management companies
- Family constitution and investment policy statement
- Organisational chart showing ownership and control up to the ultimate beneficial owners
- Tax residence certificates and CRS/FATCA self-certification forms
- Employment contracts, lease and board minutes evidencing Panamanian substance
- Residence application documents (police clearances, health certificates, proof of investment) for family members relocating
How Legal Wealth helps
Legal Wealth works with Panamanian counsel, resident agents and licensed trustees to design and implement a family office structure that suits the family's own aims, not a standard package. We map the family's tax and succession position, draft governance documents with the family, coordinate foundation and company formation, and prepare the Law 526 substance plan and the banking files. Where principals intend to relocate, we align the structure with Panama's residence options. Every step is handled discreetly and on a compliance-first basis, with clear documentation for banks and tax authorities. Enquiries: info@legalwealthglobal.com.
Enquire with Legal WealthFrequently asked questions
Does a single-family office need a licence in Panama?
Panama has no licensing regime written specifically for single-family offices. An office that manages only its own family's assets through foundations and companies generally works through those vehicles and their resident agent. Giving investment advice to third parties for compensation brings the office within the SMV's licensing perimeter, and carrying on trust business needs an SBP licence. Confirm the exact activities with Panamanian counsel.
How does Law 526 of 2026 affect a family structure?
From fiscal year 2027, a Panamanian entity that belongs to a multinational group (entities linked by ownership or control in different jurisdictions) and earns foreign-source passive income must show substance in Panama, or pay 15% on that net income. A family structure with entities in several countries can fall within this definition, so the analysis should be done for each entity. Pure holding and passive real estate entities face a lighter test.
Is a Panamanian foundation taxed?
Under Article 27 of Law 25, formation, amendment and dissolution are exempt from tax. Assets located abroad, deposits and certain securities are exempt from transfer and income taxes, and so are distributions to the founder's spouse and first-degree relatives in line with the foundation's purpose. Annual registry fees still apply. The family's home-country tax rules often decide the overall outcome.
Is the beneficial ownership register public?
No. Law 129 of 2020 created a private, single register to which resident agents upload beneficial ownership data. It is designed to be accessible to competent authorities rather than the public. Banks and counterparties will still require full disclosure during onboarding.
Can family members obtain residence in Panama?
Yes. The Qualified Investor route under Executive Decree 17 of 2026 grants permanent residence for a qualifying investment, starting at US$300,000 in new property, with routes for securities and fixed-term deposits. Family office staff can also be hired locally subject to Panamanian work-permit rules.
How does Panama combine with US planning?
Many Latin American families hold non-US assets through a Panamanian foundation and use separate US structures for US real estate or securities. Non-resident aliens' US-situs assets have only a very small US estate tax exemption. If any family member is or may become a US person, US grantor-trust and reporting rules must be built into the design from the start.
Last reviewed: 2026-10. Requirements, fees and timelines change. Information is general, reviewed on the date shown, and is not legal or tax advice.
Sources
- Panama Law 25 of 1995 on Private Interest Foundations (reference text)
- Superintendency of Banks of Panama – Trust Rule 2-2017 under Law 21 of 2017
- EEAS – Panama removed from EU list of non-cooperative jurisdictions for tax purposes
- KPMG – Panamá promulga la Ley núm. 526
- Pérez-Llorca – Requisitos de sustancia económica en Panamá
- Kraemer & Kraemer – Law 129 of 2020, single system of beneficial ownership
