Offshore private foundation: Panama or the Seychelles

Updated 6 October 2026

A foundation owns its assets, has no shareholders, and the founder's death does not stop its management. We compare Panama and the Seychelles on law, fees and tax and register the foundation through a licensed agent.

An offshore private foundation is a separate legal entity to which the founder transfers money, company shares or property so that the foundation manages them for the family under rules written in advance. A foundation has no shareholders or owners: the assets belong to the foundation itself, and decisions are taken by its council. That is why foundations are used to pass wealth to the next generation without splitting shares, to hold family assets in one structure and to set out in advance who receives distributions and when.

Panama and the Seychelles are the most common choices: both have a dedicated foundations law, neither taxes the foundation's foreign assets, and foreign forced heirship rules do not stop the founder's wishes from being carried out. Below: how the two jurisdictions differ, what a foundation costs in government fees, how registration works and where refusals usually come from.

How a foundation differs from a company and a trust

A company has shareholders, and when the owner dies the shares pass by inheritance, through a notary or a court. A foundation has no owner, so the founder's death does not stop its management: the council keeps working under the charter and regulations. In a trust the assets are legally held by the trustee; in a foundation they belong to the foundation as a legal entity. People from civil law countries usually find a foundation easier to grasp: it has a charter, a council and a protector, like a familiar organisation. More on choosing between the two in our article trust or foundation: which to choose.

Panama and the Seychelles: what the law requires

Panama is chosen when long court practice and a form familiar to banks matter: the law is more than 30 years old, and a foundation can hold company shares and receive dividends from them. The Seychelles are cheaper to maintain and more flexible on the council: one council member is enough, and the minimum assets are nominal.

How registration works

1. Task and jurisdiction. We look at which assets go into the foundation, where the founder and beneficiaries live, and whether a bank account is needed and in which country. That decides between Panama, the Seychelles and European foundations.
2. Founder checks. The agent and the bank verify identity, address, source of funds and the purpose of the foundation. We prepare the file so every question is answered in advance.
3. Charter and regulations. The charter is registered and holds the basic provisions. The regulations stay internal: they name the beneficiaries and set the distribution rules, and they are not filed on the public register.
4. Registration. In Panama a notary certifies the founding charter, the resident agent countersigns it, and it is entered in the Public Registry, from which moment the foundation becomes a legal entity (Article 9). In the Seychelles the registered agent files the documents with the Financial Services Authority.
5. Asset transfer and account. We transfer shares and property to the foundation, open the account and appoint a protector if one is needed.
6. Maintenance. Annual fees, agent services, council minutes and replies to bank requests.

Why foundations get refused

• Unclear source of funds. Agents and banks must check where the money comes from under anti-money laundering laws; in Panama this is written into Article 34 of the foundations law.
• No clear purpose. A foundation cannot run an ordinary business for profit: in Panama only occasional commercial activity is allowed, and only if the income goes to the foundation's purposes (Article 3).
• Trying to hide assets from creditors. In Panama the founder's creditors can challenge a transfer to the foundation for 3 years if it was made to defraud them (Article 15).
• Nationality restrictions and sanctions. A bank may refuse an account even to a registered foundation, so we choose the bank before registration.

Taxes in your country of residence

A foundation is tax-free in Panama or the Seychelles, not in the country where the founder and beneficiaries live. Both countries take part in automatic exchange of tax information, so details of the foundation's account will reach the tax office of your country of residence. If the founder keeps control over the foundation, several countries apply controlled foreign company rules. We check this before registration and prepare the filings: see CFC notifications and reporting.

Who an offshore foundation suits and who it does not

A Panama or Seychelles foundation is chosen when an inexpensive independent owner of assets is needed for a family: it registers quickly, needs little capital and is convenient for holding company shares and accounts. It is often used to set in advance who receives the assets after the founder's death, without probate in several countries.

An offshore foundation does not suit families whose assets and lives are tied to the EU: European banks and tax authorities treat such structures more strictly, and a Liechtenstein foundation or a Malta one makes more sense. Nor does it exempt from taxes in the country of residence.

Can a Russian citizen set up a foundation in Panama or the Seychelles

Panama and the Seychelles do not apply EU and UK sanctions, so there is no direct ban on a foundation with a founder from Russia. But the foundation is registered by a licensed local agent and the account opened by a bank, and both check the source of funds and sanctions lists more strictly than usual. So we prepare the source-of-funds documents before filing.

Taxes for Russian tax residents

For a Russian tax resident, an offshore foundation is a foreign organisation. A founder who keeps the right to influence distributions or change beneficiaries may become a controlling person: the tax office is notified of the foundation every year, and its profit may be taxed in Russia under the controlled foreign company rules. Distributions are taxed in the recipient's country of tax residence.

How long it takes

In Panama a foundation is registered within 1-2 business days once the documents are ready, and in the Seychelles quickly too. But before filing the agent checks the founder and source of funds, and we draft the charter and regulations, so the whole process usually takes several weeks. Time for the bank account is set aside separately: it is most often the longest part.

What we do

We compare Panama, the Seychelles and European foundations for your task, draft the charter and regulations, register the foundation through a licensed local agent, help open the account and run the foundation afterwards. In the Seychelles a turnkey registration, covering the government fee, agent and address, costs $2,500 with us, and the charter and regulations cost $1,330 each. We quote Panama after reviewing the documents, as the price depends on the council and the assets. The quote is fixed in writing before work starts. If you need a European jurisdiction, compare the options in our private foundations overview, and for trusts see the offshore trust overview.

What we do

• Offshore private foundation registration

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