The merger by absorption of companies in Panama is one of the strategies to consolidate companies.

The company owners intend with the merger by absorption of the companies in Panama to mainly lower the payment of the annual taxes as well as to reduce the general expenses. It is important to consult with a specialized lawyer and accountant beforehand to prevent the operation from generating taxes.

The process of mergers by absorption of companies in Panama does not give rise to a new company, but instead one assumes the patrimony of the one that ceased to exist. In the process, the absorbed company is dissolved. This operation is generally carried out between companies of the same group and can involve over two of them.

As a result, the consolidated company will have to respect the obligations previously held by the absorbed company. In other words, in the event of existing debts and obligations, it will now be the responsibility of the absorbing company to assume these liabilities.

At the same time, if any of the merging companies were involved in any judicial or administrative proceedings, the consolidated company will be liable

3 types of mergers by absorption

1. The horizontal merger, in which two or more companies are in the same branch.

2. The vertical merger occurs when one of the two companies is a customer of the other within a branch in which it is a supplier.

3. The third type is a conglomerate merger. This occurs when the companies are not competitors and do not maintain any type of commercial relationship with each other.

Today, the mergers by absorption of companies in Panama is in great demand to reduce costs of annual fees, resident agents and accounting.

A corporation used to be formed for each activity or property. But nowadays, it may be more convenient to group these companies together.

The whole process must be carefully analyzed, both from a tax point of view, if the merger generates any type of tax, or considering the level of convenience. An ill-conceived merger can cause serious economic and credibility damage to the owners of these companies.

Therefore, we highly advise you to always consult an expert before proceeding with a merger by absorption of companies in Panama.

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