Private Interest Foundation in Panama: 2026 Guide for Brazilians

The private interest foundation in Panama is an entity without shareholders, created by Law 25 of 1995, with minimum initial assets of US$ 10 thousand. It organizes succession well but does not defer tax: Panama is on the Federal Revenue Service's favorable-tax list, and a foundation controlled by the founder has its profit taxed in Brazil every year.

This guide shows what Panamanian law guarantees, what it does not guarantee and how the foundation is reported in Brazil after Law No. 14,754/2023 (Lei 14.754/2023).

What is a private interest foundation in Panama?

It is a legal entity under Panamanian law, without shareholders or quotas, created by a foundation charter registered in the Public Registry. The founder transfers assets to it, and the foundation manages them for the purposes written in the charter, which are normally to support a family and pass wealth on to it. The law prohibits profit purposes but allows occasional commercial activity to fulfill those purposes.

The elements that Law 25/1995 requires or allows:

Panamanian foundation or trust: what is the difference?

The foundation owns its own assets and has legal personality. In a trust, the assets pass to a trustee, who manages them on behalf of the beneficiaries, without the trust being a legal entity. For those coming from Brazilian civil law, the foundation is usually easier to understand, because it works as an entity with bodies and bylaws.

The comparison with other protection structures is in the offshore asset protection guide.

Does the foundation protect assets from creditors?

It protects against the founder's future personal creditors, not against those who already exist. Art. 11 of Law 25/1995 separates the foundation's assets from the founder's assets. Art. 15 allows creditors to challenge a transfer made in fraud of them, within three years counted from the transfer.

Two practical consequences:

• •Three-year deadline. A transfer made with an existing creditor can be challenged in Panama during that period. After that, the right lapses under Panamanian law.
• •The Brazilian judge can still reach the founder. If the transfer is made while an enforcement action is pending in Brazil, it is ineffective against the creditor, under art. 792 of the Code of Civil Procedure. Panamanian law does not prevent the judge from acting on the person and the assets that remained in the country.

The limits of asset protection in Brazil, with the rules on fraud against creditors and fraud against enforcement, are in protecting assets from creditors.

How is the Panamanian foundation taxed in Brazil?

It depends on who controls the foundation. Panama is on the list of favorable-tax countries in art. 1 of RFB Normative Instruction 1,037/2010 (Instrução Normativa RFB 1.037/2010). Law 14,754/2023 expressly includes foundations among the entities that can be controlled abroad (art. 5, § 1º).

In practice, most family foundations give the founder reserved rights: replacing the council, changing beneficiaries, revoking. With those rights, the founder controls the entity, and the foundation falls under the annual rule. The Panamanian foundation does not defer the income tax of those who live in Brazil.

ITCMD, the state inheritance and gift tax, also continues to apply. Constitutional Amendment 132/2023 assigns the tax on the deceased's assets, even those located abroad, to the state where the deceased was domiciled (art. 16, III). The tax design of each case is part of tax planning.

What must be reported in Brazil?

The foundation goes on the income tax return every year, with the profits or the assets attributed to the founder. If assets abroad total US$ 1 million or more on December 31, it also goes on the Brazilian Capital Abroad (CBE) declaration to the Central Bank. The controlled foundation also needs an annual balance sheet under Brazilian accounting standards.

The confidentiality in art. 35 of Law 25/1995 applies to the public, not to authorities. The law itself excepts information that must be disclosed to authorities, and Panama takes part in the OECD's automatic exchange of financial information. Confidentiality does not replace reporting.

How much does it cost and how is it set up?

The only figure fixed by law is the minimum initial assets of US$ 10 thousand. Opening fees, the resident agent, council members and the Public Registry's annual fees vary by provider and must be quoted case by case. On top of them come the costs on the Brazilian side: accounting for the controlled entity under Brazilian standards, filings and advisory.

Usual steps:

1. •Diagnosis: succession goal, beneficiaries and the tax treatment the structure will have in Brazil.
2. •Drafting of the foundation charter and the regulations, with purposes, beneficiaries and distribution rules.
3. •Choice of the foundation council, with at least three members or a legal entity, and of the protector, if any.
4. •Registration of the foundation charter in Panama's Public Registry, through a resident agent.
5. •Transfer of the assets and opening of a bank account in the foundation's name.
6. •Inclusion on the income tax return and, if the threshold is reached, on the CBE.

The page on the jurisdiction of Panama summarizes the local environment, and the succession planning service covers the design of the structure.

Does the foundation avoid probate?

It avoids probate of the assets held in it, because the foundation continues to exist and the regulations say who receives them. Assets that remained in the founder's name go through normal probate. Brazilian taxation, on the other hand, does not disappear: the transfer to beneficiaries may generate ITCMD, and as long as the founder controls the foundation, the profit is taxed to the founder every year. Ways to organize succession of assets abroad are in offshore and succession without probate.

Conclusion

The Panamanian private interest foundation is a good governance and succession tool: it has legal personality, a separate estate and clear rules in Law 25/1995. It is not a tax-saving tool for those who live in Brazil. Panama is on the favorable-tax list, and a foundation controlled by the founder has its profit taxed every year. Use it when the goal is to organize the passing of assets, with Brazilian reporting planned from the start. To assess your case, schedule a consultation.