UK
US
Private interest foundation review
Law 25 of 1995 provides for a Panama private-interest foundation with assets dedicated to its stated purposes and governance through its founding documents and council. The law restricts ordinary profit-seeking activity while allowing certain non-habitual commercial activity and the exercise of rights attached to company holdings. It is not a general trading-company substitute.
Review the founder, council, beneficiaries and retained powers before considering a tax outcome. Panama's territorial income rules and each connected country's classification are separate questions. A foundation should solve a defined ownership or succession problem, with its legal administration and reporting understood.
Country facts to keep in view
- Personal income tax
- 0–25% on Panama-source incomeTerritorial taxation; genuine foreign-source income is generally outside individual income tax.
- Company tax
- 25% standard rateTerritorial rules and special regimes apply. Certain multinational foreign passive income now has substance conditions.
- Dividend tax
- Usually 10% domestic / 5% certain foreign profitsThese are distributions by qualifying Panama entities. Genuine foreign-company dividends require a separate source analysis.
A situation worth reviewing
A family considering a foundation for inheritance arrangements should compare it with existing wills and direct ownership. The useful question is whether the governance benefit remains after legal administration, beneficiary-country tax and reporting are accounted for.
For UK assets and UK connections
For a British-connected family, identify who contributes assets, retains powers and may benefit. A Panamanian label does not decide UK tax classification. Include continuing UK residence connections, the location of assets and a possible return to Britain. Compare the proposal with existing wills and direct ownership before transferring property.
For US persons
US classification must be settled before an American establishes or funds a foundation. A foreign trust or other entity can create income, transfer and information-reporting consequences. The IRS discusses Forms 3520 and 3520-A where applicable, alongside other possible reporting. Do not treat a Panama exemption as an exemption for a US founder or beneficiary.
Before changing an arrangement
Ask for a written explanation of the succession purpose, decision-making powers, beneficiary rights, implementation costs and ongoing obligations. Obtain coordinated advice for the founder and beneficiaries' countries. No foundation is selected automatically by our tools, and no saving is assumed before its legal and tax treatment is established.
YOUR EXISTING ASSETS
How could your accounts fit?
Open the accounts you hold. These are starting points for a review, with the conditions and evidence attached to each finding.
UK accounts
UK ISA! Review / opportunity
Keep ISA relief and check income source
An ISA can retain UK relief abroad. Panama separately classifies the source of its returns.
Foreign-source receipts may fall outside Panamanian taxable income, but the ISA name does not determine source. UK nonresident contribution restrictions still apply.
Worth exploring: Check the existing ISA before adding another wrapper.
Ask a planner: Would my existing ISA holdings already work locally?
Sources & conditions
Checked 2026-10-19. Conditions apply; no personal eligibility decision.
General investment account! Review / opportunity
A foreign portfolio may already be sufficient
The local source rules matter more than the foreign broker address or a new wrapper.
Keep records separating income, disposal proceeds and capital. Check issuer, assets and activities before treating returns as foreign-source, alongside any continuing UK liabilities.
Worth exploring: Compare retaining the portfolio with the cost of any added structure.
Ask a planner: Which returns are genuinely foreign-source?
Sources & conditions
Checked 2026-10-19. Conditions apply; no personal eligibility decision.
UK onshore bond! Review / opportunity
Review the UK policy and source of proceeds
A UK policy needs both a Panamanian source review and a UK chargeable-event review.
Policy surrender, partial withdrawals and maturity are different events. A temporary UK absence can bring gains back into UK scope on return; local relief does not settle the UK result.
Worth exploring: Review timing before surrendering a suitable existing policy.
Ask a planner: Could a policy event create UK tax during or after my move?
Sources & conditions
Checked 2026-10-19. Conditions apply; no personal eligibility decision.
Offshore investment bond! Review / opportunity
An offshore label is not a source determination
Confirm who issues the policy and what the payment represents before assigning local treatment.
A foreign-source result may make a new wrapper unnecessary. Review policy cost, withdrawal history and UK temporary non-residence rules before a surrender or replacement.
Worth exploring: Compare keeping the policy with a simpler foreign portfolio.
Ask a planner: Would the current contract add value after costs?
Sources & conditions
Checked 2026-10-19. Conditions apply; no personal eligibility decision.
UK operating business! High priority
Working in Panama is a separate source question
A UK company and overseas clients do not automatically make work performed in Panama foreign-source.
Review local activity, company management, payroll and permanent establishment under the treaty. Dividends and service income must not be combined into one assumed exemption.
Worth exploring: Review operating arrangements before adding a holding company.
Ask a planner: Where are the services performed and company decisions made?
Sources & conditions
Checked 2026-10-19. Conditions apply; no personal eligibility decision.
US accounts
US brokerage account! Review / opportunity
Foreign-source treatment does not end US obligations
Panama may exclude genuinely foreign-source income, while a US taxpayer still needs a US investment-tax review.
Review each holding, withholding and basis. Foreign pooled funds can introduce PFIC questions; buying a local or offshore fund is not automatically an improvement.
Worth exploring: Review the current portfolio before adding local wrappers.
Ask a planner: Could the existing holdings remain appropriate in both systems?
Sources & conditions
Checked 2026-10-19. Conditions apply; no personal eligibility decision.
International structures & other assets
International trust! Review / opportunity
Trust terms need a personal review
Settlor, trustee, beneficiary and distribution details determine the review. Adding a relative on the map does not make them a legal beneficiary.
An offshore trust is not an assumed tax shelter. Review its deed, owner and beneficiary tax connections, reporting and succession. No tax or savings calculation is produced.
Worth exploring: Review the existing trust before settling more assets.
Ask a planner: Who owns, controls or benefits from the trust?
Sources & conditions
Checked 2026-10-19. Personal review only.
International pension / QNUPS! Review / opportunity
Confirm recognition of the actual overseas scheme
A foreign pension label or QNUPS status does not establish destination recognition or treaty relief.
Review provider documents, funding, access, contributions and the intended payments. The tool does not calculate tax or suggest a transfer for this account.
Worth exploring: Compare the current arrangement with retaining existing home-country pensions.
Ask a planner: Which provisions recognise the exact scheme and payment?
Sources & conditions
Checked 2026-10-19. Personal review only.
Overseas holding company! Review / opportunity
Company ownership and activity need personal review
Tax residence, entity classification, control and operating activity cannot be inferred from the company jurisdiction.
Review company documents, accounts and where decisions and services occur. A shareholder relationship on this map is not a conclusion about management, tax residence or protection. No automatic savings are shown.
Worth exploring: Review the existing entity before adding a holding structure.
Ask a planner: What purpose does the company serve and where does it operate?
Sources & conditions
Checked 2026-10-19. Personal review only.
Other / overseas asset! Review / opportunity
This account is recorded for your meeting
Foreign contracts and assets outside the supported UK and US accounts stay visible without an automated assessment.
The account value and income can be included in your map totals. Classification, local recognition and any proposed change require its documents and an individual review. No automatic tax or savings are calculated.
Worth exploring: Discuss the current account before treating another wrapper as equivalent.
Ask a planner: Which documents explain the asset, owner and payment terms?
Sources & conditions
Checked 2026-10-19. Personal review only.
BRING THESE QUESTIONS
Make the conversation useful.
- Would a Panama foundation improve succession after all beneficiary-country and reporting consequences?
- Does my pension qualify for Pensionado and what tax or withholding remains in the paying country?
- What would change if I moved again or returned home?
YOUR NEXT STEP
What would this mean for you?
Discuss your Panama plans, existing assets and cross-border tax questions with an International Wealth Planner.
Sources, dates and scope
Published 2026-10-19; editorial review 2026-10-26. The country fact check date is shown beside the facts. General education from an unregulated publisher and introducer. This article does not determine suitability or provide personal financial, tax or legal advice.
Banking regulator: foundation-beneficiary arrangementsDGI: income-tax frameworkEconomic-substance reformPersonal income taxCompany taxDividend taxUK residence and foreign incomeUS citizens and resident aliens abroadIRS Form 8621 and PFIC reportingPanama Digital: Jubilado PensionadoPROPANAMA: remote-worker visaMITRADEL: labour migrationDGI: individual income-tax return instructionsIRS: income-tax treaty listHMRC: UK-Panama conventionIRS: IRA distributionsPanama Judicial Branch: Law 25 of 1995HMRC: ISAs abroadIRS: foreign trustsFCDO: Panama safetyFCDO: Panama healthcareSuperintendency of Banks: Agreement 1-2026DGI: services and requirementsASEP: prepaid subscriber identificationIRS: foreign financial accountsOur editorial standards