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1. Sociedad Anónima (S.A.) – Corporation

• Legal basis: Established under Law 32 of 1927; highly flexible and widely recognized internationally.

• Structure: Requires at least three directors (publicly registered) and at least one shareholder (shareholder’s identity is private). Shares can be nominative or bearer (but bearer shares must be held by an authorized custodian under current law).

• Capital: No minimum paid-in capital; most companies register an authorized capital of USD 10,000 for fee purposes.

• Use in Real Estate:
  – Frequently used to hold titled property to separate it from personal assets.
  – Facilitates joint ventures when several partners are involved.
  – Recognized by banks, making it easier to open accounts or obtain financing.

• Advantages: Flexibility, international recognition, strong asset protection.

• Considerations: Directors’ names are public; annual franchise tax (tasa única) and accounting records are required.

 

2. Sociedad de Responsabilidad Limitada (S.R.L.) – Limited Liability Company (LLC)

• Structure: Between 2 and 50 members; managed by one or more managers.

• Capital: No minimum requirement. Ownership is in “quotas” rather than shares.

• Transparency: Names of members and managers are public at the registry.

• Use in Real Estate:
  – Attractive for small partnerships or family investments where transparency is not an issue.
  – Simple management for long-term holding of a single property.

• Advantages: Straightforward structure, less bureaucracy than corporations.

• Considerations: Less commonly used by foreign buyers compared to S.A.; not as internationally recognized.

 

3. Fundación de Interés Privado (PIF) – Private Interest Foundation

• Legal basis: Governed by Law 25 of 1995.

• Structure: Has no shareholders; instead, it has a founder, a council (minimum three members), and beneficiaries (kept private).

• Purpose: Designed for estate planning, asset holding, and protecting property across generations.

• Use in Real Estate:
  – Ideal for families who want to pass property to heirs without going through probate.
  – Protects assets from future disputes or creditor claims.

• Advantages: Separate patrimony recognized by law; strong confidentiality; no inheritance or gift taxes in Panama.

• Considerations: Cannot engage in commercial trading; requires an annual franchise tax and registered agent. ​

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4. Fideicomiso – Trust

• Legal basis: Law 1 of 1984.

• Structure: A settlor transfers assets to a trustee (usually a licensed bank or trust company), who manages them for designated beneficiaries.

• Use in Real Estate:
  – Often used in development projects to hold purchase funds in escrow until construction is completed.
  – Useful for succession planning or when multiple investors need a neutral structure.
  – Provides security for buyers and developers alike.

• Advantages: Highly flexible; can be structured for investment, escrow, or succession; trusts are tax-neutral.

• Considerations: Trustee fees apply; requires a trustworthy bank or fiduciary.

 

5. Branch of a Foreign Company

• Structure: A foreign company may register a branch in Panama to operate.

• Use in Real Estate:
  – Generally chosen by multinational groups, hotel chains, or corporate developers investing in Panama.

• Advantages: Ability to operate under the same umbrella as the parent company; access to incentive regimes.

• Considerations: More complex compliance and higher administrative costs; less common for individual buyers.

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Which entity suits you best?

• One property, family use: Foundation (PIF) for estate planning.

• Investment, rentals, or development: Corporation (S.A.).

• Small family or partnership venture: LLC (S.R.L.).

• Large projects, multiple buyers, financing needs: Trust (Fideicomiso).

• Multinational group expansion: Branch of a foreign company.