Everything You Need to Know About 62 Panama’s Banks
23/07/2024
What to do to register your corporation in Panama, who will handle it, where, when, and why they are considered some of the most advantageous in the world
Table of Content
Corporation in Panama, often referred to as offshore companies, anonymous companies, or Panamanian companies, are legal entities established in Panama. These companies offer several benefits in terms of ease of registration, privacy, and tax advantages, and are used by individuals and businesses for various legal purposes.
What should I do to establish a corporation in Panama?
There is no need to travel; you simply need to fill out a service request form, complete a KYC (Know Your Customer) in all fields, submit it, and make the payment.
During the online KYC process, you will be asked to provide:
- A valid passport or identity card.
- Proof of address, such as a utility bill in your name, a rental contract in your name, or an affidavit from the person you live with, who must provide their ID and proof of address in their name.
- A passport-style photograph and a photograph of you holding your passport next to your face.
- Personal information that will not be disclosed but is required by law, such as your financial situation, marital status, address, phone number, email, and personal and professional references. This information must be accurate and updated annually, as the lawyer must be able to contact you quickly for any communication or procedure.
- At least three proposed names for the corporation. Try to add an extra word to the names you choose to avoid duplicates. Names with the same phonetics or similar names are also considered duplicates. Keep in mind that around 1,500 companies are registered in Panama each month. From January to May 2024, 7,416 companies, both anonymous and standard, were registered.
- You will need to designate three directors, who can be of any nationality. If you wish to maintain privacy, you can request nominee directors (stand-ins) for a fee of 100 euros each.
- The shareholder is anonymous, although the Resident Agent (us) must register them on an electronic list that is not public.
The Panamanian Companies are registered within a few days, although additional time is required for the issuance of shares and any Hague Apostilles needed to validate the documents abroad.
Additionally, you will need the assignment of the RUC and NIT, which are the tax identification numbers, and access to the system of the MEF (Ministry of Economy and Finance).
How much does a corporation in Panama cost?
- 100 EUR for each Hague Apostille, required to validate a document abroad.
- 250 EUR for a notarized and apostilled Power of Attorney.
- 25 EUR per page for translations into Italian or English.
- Approximately 100 EUR for DHL shipping services, depending on the destination where the documents need to be sent.
- 350 EUR per year for hosting a SIM card to receive calls and SMS from anywhere in the world.
- 180 EUR per year for a VoIP landline with a Panamanian number, which you can answer from anywhere in the world.
- 350 EUR for the registration and safekeeping of bearer shares (note that opening a bank account for your Panamanian corporation with bearer shares is nearly impossible).
Prices are quoted in EUR because most of our clients are European, but you can pay the indicated amount in USD, COP, VES, USDT, BTC, etc.
Annual renewal costs 650 EUR, which includes the flat tax payment, the Resident Agent, compliance, and the corporate address. Optional services mentioned above will be added according to the indicated prices.
Who will register my Corporation in Panama?
The Resident Agent (us) is the lawyer or legal firm authorized in Panama to represent you before Panamanian authorities. Therefore, there is no need for you to travel or sign anything. The agent drafts the articles of incorporation and submits them to the notary, who converts them into a public deed.
Afterward, the notary returns the document to the agent, who must pay the first year’s flat tax and submit it to the Public Registry, where your corporation will be registered in Panama. Generally, the corporation is registered and returned to the agent within 4 to 5 days, who will issue the shares, complete the registration, and if necessary (we do this as a standard), apply for the Hague Apostille at the Ministry of Foreign Affairs.
Once everything is ready, we will send you a PDF copy first and then ship the documents via DHL, or you can pick them up at the legal firm. If you’re in a hurry, you can pay an urgent fee at the Public Registry, and the corporation will be registered within 24 hours. The other processes cannot be sped up much, so it’s advisable to consult with your lawyer to determine if expediting the process is worth it.
Where can the corporation operate?
In Panama and around the world. If you have specific needs, it’s advisable to consult with a lawyer beforehand to avoid financial losses. Do not trust self-proclaimed gurus or last-minute so-called experts: the corporation can only be incorporated through a licensed lawyer in Panama.
Therefore, if you’re paying a professional, why talk to a salesperson? We are licensed lawyers, registered custodians of bearer shares, and duly authorized Resident Agents.
When can I start operating my corporation in Panama?
Immediately after its registration! You will receive the registration number and tax code, which will allow you to issue invoices and receive payments in your name or in cryptocurrencies.
When can I start operating my corporation in Panama?
Immediately after its registration! You will receive the registration number and tax code, which will allow you to issue invoices and receive payments in your name or in cryptocurrencies.
As for the bank account, it is necessary to assess your needs to determine how to operate your corporation in Panama and which banking or non-banking systems are most suitable for you.
Why is a corporation in Panama advantageous?
One of the main advantages of Panamanian companies is the high level of anonymity they offer to their owners. The names of the ultimate beneficiaries (i.e., the true owners of the corporation) are not publicly registered, thus ensuring privacy.
The legal firm can offer you nominee directors, a corporate address, phones, SMS, and everything you need for your presence in Panama and virtually.
Panama adopts a territorial tax system, meaning that income generated outside the country is not subject to taxes, making it an attractive option for those with international businesses. This way, you can work and receive income without being subject to taxes.
Incorporating a corporation in Panama is relatively simple and quick, as previously mentioned. The owners do not need to be residents of Panama or be physically present in the country. Additionally, there is no specific minimum capital required to incorporate the corporation, which simplifies the process.
Panamanian companies are not required to submit mandatory financial statements or audits to the authorities. Only a simple accounting or income tax return (not obligatory) or a sworn declaration of inactivity must be sent to the Resident Agent.
Panamanian companies, or offshore companies, are mainly used for legal tax planning, import-export, asset management, and providing online services. Multinational companies or individuals with significant wealth can take advantage of Panama’s tax benefits to reduce their global tax burden.
Entrepreneurs or individuals seeking to protect their assets from legal risks (such as lawsuits or claims from creditors, partners, or spouses) can use Panamanian companies to separate their personal assets from business assets.
Panama is an international trading hub, so a corporation established there can serve as a vehicle for global business operations. Many companies use companies in Panama to facilitate import/export or to manage international commercial activities.
Additionally, Panamanian companies are used for real estate purchases, as the offshore structure can offer legal and tax advantages. In the digital realm, offshore companies are often employed to manage intellectual property, domain names, or online platforms, especially when looking to avoid high tax burdens in other countries.
Why are Panamanian companies criticized, and what are their limitations?
Despite their numerous legal and tax benefits, companies in Panama have occasionally been associated with illicit practices such as tax evasion and money laundering, especially after the Panama Papers scandal in 2016. This can negatively affect the reputation of those who use them. However, the recovery has been swift, and today, experts consider Panamanian companies among the best in terms of value for money.
Among the limitations, some international banks may refuse to open accounts for Panamanian companies, as is the case with companies from other countries, due to reputational risks. This can complicate the management of cash flows. In such cases, the assistance of a lawyer is essential to successfully open a bank account for your Panamanian corporation.
In summary, Panamanian companies offer significant advantages in terms of privacy and tax optimization, but they must be used carefully and in accordance with legal and tax regulations to avoid judicial and reputational issues.
Other types of companies in Panama and their uses
General Partnership
A general partnership is a collaboration between two or more individuals or entities that join forces with a common goal. Typically, these partnerships are formed by professionals in the same industry.
Partners share risks, profits, and responsibilities. Unlike more complex companies, such as stock companies, this type is less regulated and more flexible. It is formed through an agreement that is registered with the Public Registry.
Participants share common goals and interests, working together to achieve a commercial or social objective. In most cases, this type of partnership is not recommended, as it does not have separate legal personality. Consequently, partners are personally liable for the debts. Additionally, it offers no privacy and is not accepted by the National Migration Service for visa purposes.
Limited Liability Company (S. de R.L. Panamanian companies)
A Sociedad de Responsabilidad Limitada (S. de R.L.) is a common legal structure in many Spanish-speaking countries, such as Panama, Mexico, and Spain, and is similar to the Italian S.r.l. or the U.S. LLC.
This type of company limits the liability of its partners to the capital contributed. This means that in the event of debt or bankruptcy, the personal assets of the partners are protected and cannot be used to cover the company’s obligations.
A Limited Liability Company typically consists of a limited number of partners and may be managed by one or more managers, while strategic decisions are made by the assembly of partners, ensuring active participation in important company decisions.
However, it is generally not recommended because it has the same requirements as a corporation, does not offer privacy, and, for example, is not accepted for obtaining migration visas.
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