Here you will learn how register a panama company, can help your international strategy in legally reducing your tax rate and protect your assets.
Keep in mind, an offshore company should be a part of your strategy, along with where you live (country of residence) and where you operate.
What is an offshore company
An offshore company is a legal entity in a diferent country than where you conduct your business.
If you live in Ecuador and you register a Panama Company to conduct business there, that is an offshore company.
International companies of huge size with complex structures incorporate offshore to save taxes, for example, Amazon, Google, Apple among others.
It is the same for entrepeneurs, consultants, ecommerce stores and traders.
If you register a panama company (offshore) you can take control of your business and lessen your tax burden with a much simpler structure than those huge companies mentioned above.
Register a Panama Company: How to pay less tax
Shifting the Tax burden that is imposed on your company is of great importance to grow and scale your company.
Every country has it´s own tax laws and may offer many benefits not available in your home country.
You can take advantage of a country tax system by registering a company and lowering your tax rate.
It is all legal.
As long as you follow the rules of where you live and where you incorporate.
There are three main tax systems:
- Citizenship based taxation (United States of America)
- Residential based taxation (most of Europe, Most of Latin America and Asia)
- Territorial based taxation (some countries in asia, the caribbean and Panama)
The reason Panama works in international strategies is because it´s has a territorial based taxation.
This means, that business and income that are conducted outside of Panama will not be taxed.
After you register a panama company, you do have legal responsibilities to comply such as:
- File accounting reports,
- Be clear and declare beneficiaries of the company
- Report back home the existense of your company (CFC reporting if it´s require in your country)
By being compliant you will legally reduce your tax burden, by not paying corporate tax because your company is registered in a country (Panama) that does not tax activities and income produced outside of the country.
Register a Panama Company: Asset Protection
You need to protect your assets.
The simple way to do it is with an offshore company.
By having real estate in a company, your bank accounts in a company and your business in a company you protect each asset from personal liability and business liability.
Incorporating offshore give you an extra layer of protection.
If a disatisfied client from the UK wishes to present a law suit, your bank account in Panama is pretty far away and protected by Panama Laws.
Types of Panama Companies
There are three main types of panama companies and which one to choose dependes on your particular needs.
International Business Company (Sociedad Anonima)
This company functions with shareholder and provides to it´s owners the most privacy.
It is the main form of company used in Panama for conducting business inside the country.
Some charateristics are:
- The shareholders can be several people, a company or a trust.
- Must have three directors
- Is very flexible in it´s structure
- Great for asset protection
It is great for asset protection, but not so much for conducting international business because of new banking regulations in the last couple of years.
Addiontal details about an IBS can be found here.
For conducting business in other countries we recomend the Limited Liability Company.
Limited Liability Company
This type of company requires the partners to be included in the articles of incorporation, which gives this entity great transparency, a must in a lot of countries.
The importance of this is for opening bank accounts in countries outside of Panama.
Addiontal data of this type of Panama company can be found in this link.
If you are looking to manage your personal and family assets, while keeping a great level of privacy, then a Private Interest Foundation it´s for you.
Private Interest Foundation.
A legal entity that allows for strong asset management and protection, it´s it sole purpose.
You can have beneficiaries in a private document and even manage the transfer of assets with some tax benefits inside Panama, as long as the beneficiaries are related to the Founder. (spouse and children).
This are some of the entities within a Private Interest Foundation:
- The Founder, who registers the foundation a transfer the fist assets
- Board of council members, must be at leat 3 or 1 company and they manage the Foundation
- Protector, it´s optional, the main function is to sanction an approve certain directives, such as the transfer of assets out of the foundation.
- Beneficiaries, similar to a trust, they are who benefits from the assets.
Learn more about Private Interest Foundation here.
Type of Business that benefits from Registering an Offshore Company
Not all lines of business will get tax benefits from registering an offshore company.
For instance, a civil court lawyer, that litigates in Florida, goes to court, have clients in the US… will have no great use for an offshore company.
Some business that can greatly benefit from incorporating offshore are:
Location independent business are an excellent fit because they can operate anywere in the world.
If you travel while you operate, register a Panama company with a residency tax certificate in a country with a territorial tax system to greatly reduce your tax rate.
Forex/ Day Trading
Panama banks welcome this type of business, so it´s a pefect hub for securing and protecting your money, while saving on taxes.
Most banks have english speaking banking officers so it´s easy to work.
Trademark and Patent Holding
Intellectual property is of great importance in todays technological day and age.
You can protect your intellectual assets offshore and add an extra layer of protection in case of litigation.
A Panama International Business corporation (sociedad anónima) offers great privacy for this type of asset.
How to Register a Panama Company
Here is the general outline of how to register a panama company:
- The company needs a name that must be available at the Panama Public Registry
- Select 3 persons that will be the directors or council members. (in a limited liability company you only need 2)
- Be clear on who will be the final beneficiaries of the company.
- The process can be done remotely with a lawyer or a law firm.
- The lawyer will take the document to a public notary and then to the Public Registry.
This process at most should take less than 2 or 3 business days.
Register a Panama Company, some additional information:
The business companies pay an annual company tax of $ 300.00 and the private interest foundation pays an annuality of $ 400.00
By law, this legal entities requiere a resident agent that must be a lawyer or law firm, who does not have any faculty in the direction of the business.
Disolve a Panama Company
When the company have served it´s purpose and you no longer need it, you can disolve said company.
If you have several companies for asset protection, you can also make a merger and acquisition, in order to concentrate your assets under one company, effectivly disolving the others.
There are also cases when you have various companies and want to transfer assets from one to another.
In this scenario you can split your assets, partially or totally from one company to the other and save money on capital gains tax.
Final Considerations of Register a Panama Company
When you set up an offshore company, you can reduce your taxes, protect your assets, open your business to new markets and grow your capital.
If you want more information on how to take the next steps contact us.
We will gladly answer your questions and help you out.
First consult is on the house.