Panama: Types of Company
Panamanian trust law was updated with Law No 1 of 1984. Panamanian trusts (Fideicomiso) must be expressed in writing, so cannot be constructive. Trusts can be stated to be revocable but otherwise are irrevocable. The settlor, trustees and beneficiaries need not be Panamanian nationals or resident in Panama. A Panamanian lawyer must act as an agent for the trust. Trusts may be settled in respect of existing or future property; additional property may be included after the settlement either by the settlor or a third party.
There are no registration or minimum capital requirements, or fees, and trust documents can be in English or Spanish. Unlike foundations (see above), trusts are not protected by specific provisions against foreign inheritance laws, judgements or creditors. However, purpose trusts are allowed for.
If a trust earns a taxable income in Panama, then tax is levied directly on the trust and not on the trustee. See Offshore Legal and Tax Regimes for further details.
The National Banking Commission of Panama regulates the transactions of entities acting as trustees; see Offshore Business Sectors for further details. The Banking Commission does not have the authority to investigate the terms of particular trusts or the relevant parties, except where complaints are raised by beneficiaries.
At the end of 2000, Panama enacted two laws addressing money laundering and issued Executive Decrees to effect accompanying administrative changes. As a result of these new laws, all financial institutions in Panama now come under the scrutiny of the bank superintendency, including trusts, whereas previously only banks were legally bound to report financial transactions over US$10,000 and other suspicious activities.