The Panama Private Interest Foundation (PPIF) is a type of private foundation

Private foundation

A private foundation is a legal entity set up by an individual, a family or a group of individuals, for a purpose such as philanthropy. The Bill & Melinda Gates Foundation is the largest private foundation in the U.S. with over $38 billion in assets...

 formed under the laws of Panama

Panama

Panama , officially the Republic of Panama , is the southernmost country of Central America. Situated on the isthmus connecting North and South America, it is bordered by Costa Rica to the northwest, Colombia to the southeast, the Caribbean Sea to the north and the Pacific Ocean to the south. The...

. It is based upon the Liechtenstein

Liechtenstein

The Principality of Liechtenstein is a doubly landlocked alpine country in Central Europe, bordered by Switzerland to the west and south and by Austria to the east. Its area is just over , and it has an estimated population of 35,000. Its capital is Vaduz. The biggest town is Schaan...

 "Stiftung" (a family foundation).

Features

Foundations are mainly used for philanthropic

Philanthropy

Philanthropy etymologically means "the love of humanity"—love in the sense of caring for, nourishing, developing, or enhancing; humanity in the sense of "what it is to be human," or "human potential." In modern practical terms, it is "private initiatives for public good, focusing on quality of...

 or estate planning

Estate planning

Estate planning is the process of anticipating and arranging for the disposal of an estate. Estate planning typically attempts to eliminate uncertainties over the administration of a probate and maximize the value of the estate by reducing taxes and other expenses...

 purposes. In terms of the legal structure, a PPIF lies somewhere between an offshore company

Offshore company

The term offshore company is ambiguous. It may refer to either:# A company which is incorporated outside the jurisdiction of its primary operations regardless of whether that jurisdiction is an offshore financial centre i.e...

 and an offshore trust

Offshore trust

An offshore trust is simply a conventional trust that is formed under the laws of an offshore jurisdiction.Generally offshore trusts are similar in nature and effect to their onshore counterparts; they involve a settlor transferring assets on the trustees to manage for the benefit of a person or...

.

Functionally a private foundation differs from an offshore company in that a foundation cannot engage directly in commercial business

Business

A business is an organization engaged in the trade of goods, services, or both to consumers. Businesses are predominant in capitalist economies, where most of them are privately owned and administered to earn profit to increase the wealth of their owners. Businesses may also be not-for-profit...

 activity, although it may own investment

Investment

Investment has different meanings in finance and economics. Finance investment is putting money into something with the expectation of gain, that upon thorough analysis, has a high degree of security for the principal amount, as well as security of return, within an expected period of time...

s such as property

Property

Property is any physical or intangible entity that is owned by a person or jointly by a group of people or a legal entity like a corporation...

, stock

Stock

The capital stock of a business entity represents the original capital paid into or invested in the business by its founders. It serves as a security for the creditors of a business since it cannot be withdrawn to the detriment of the creditors...

s, bonds

Bond (finance)

In finance, a bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest to use and/or to repay the principal at a later date, termed maturity...

 and companies

Company

A company is a form of business organization. It is an association or collection of individual real persons and/or other companies, who each provide some form of capital. This group has a common purpose or focus and an aim of gaining profits. This collection, group or association of persons can be...

.

The foundation has a founder, protector, beneficiary and council members. There are no owners to a Panama Foundation. A "Letter of Wishes" may be written by the protector to specify how the foundation's assets should be handled following the protector's death.

Benefits

• Protects assets - Since the PPIF is not owned by anyone (it has no owners), the assets of the PPIF can't be claimed if the founder, council members, protector or beneficiaries have unpaid debt.
• According to Panama law, the assets of a PPIF are non-freezeable. There are some exceptions, but if the money has been in the foundation for over 3 years, it's certainly non-freezeable.
• Foundations can be used to help family members financially according to the protectors instructions, and forced heirship rules are specifically excluded.
• It can be used to collect royalties.
• Tax free for income derived outside of Panama.