What is an Offshore Foundation?
An foundation is a separate legal entity and is commonly created under civil law. A foundation does not have members or shareholders. An offshore foundation is one formed outside of the founder’s country of residence. To start, let’s talk about terms associated with foundations.
The founder is the title of the one who establishes the entity. His or her wishes, in turn, are written in a document we call a “Charter.” Most offshore foundations can have one or more founders. A founder can be a person or a company.
Additionally, the foundation council consists of people who act out the purpose of the entity as indicated in the charter. As such, they distribute and administer assets, sign agreements and make investments on the foundation’s behalf. Counsel members have a fiduciary duty to act in the best interest of the foundation.
A foundation can have a beneficiary or a purpose or both. A beneficiary is a person or class of persons for whom the foundation is created. The purpose, on the other hand, indicates the reason or cause for which one formed the foundation.
Furthermore, there are positions that are optional. Optional positions are guardians or protectors. These are people whose role is to ensure that the counsel acts in compliance with the terms and conditions of the charter.
Foundation vs. Trust
Now, let’s compare a foundation to a trust. To clarify the above, civil law, also known as civilian law, refers to a system of laws originating on the European mainland. Roman law established significant roots in the civil law framework. Trusts, on the other hand, are products of common law.
A trust, or offshore trust, in this context, is a product of common law. Common law has its foundations in England and migrated to countries such as the United States, Canada and Australia. The purpose of a trust is for a trustee to hold assets for the benefit of trust beneficiaries.
What Does an Offshore Foundation Do?
People use offshore foundations for charitable purposes as well as commercial and personal uses. Many people now also use it, in modern times, for asset protection, estate planning and tax savings. In many offshore jurisdictions, a foundation is free from taxes. Naturally, if one is a citizen of or resides in a country that taxes worldwide income that person is well-advised to seek licensed tax advice.
The first foundations were established in Liechtenstein more than one hundred years ago. Since its origination in this Western European country, people have established thousands of foundations in countries around the globe. Because of its European roots many people call them “Anglo Saxon Trusts.”
Private Interest Foundation
A private interest foundation contains the benefits of a company with the asset protection benefits of a trust. The foundation owns the assets. These assets remain tax free within the foundation until the foundation distributes them. Naturally, this is a very general statement which invites licensed tax advice.
Offshore Foundations Comparison Table
Below is a comparison table showing the features and benefits of various common offshore foundations. Meanwhile, if you have questions, you can fill out the consultation form on this page or utilize one of the phone numbers displayed above.
| Foundations Comparison Table | ANGUILLA | BELIZE | NEVIS | PANAMA | |
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| Name of Foundation Law | Anguilla Foundation Act | International Foundations Act | Multiform Foundations Ordinance | Panama Foundation Law | |
| Year law enacted | 2008 | 2010 | 2004 | 1995 | |
| Tax Free Entity? | Yes | Yes | Yes | Yes | |
| Requirements for Tax Free Status
(This refers to local taxation. The tax laws in your jurisdiction may vary.) |
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| Does the foundation have a legal status? | Yes | Yes | Yes | Yes | |
| Foundation Types | Charitable | Yes | Yes | Yes | Yes |
| Non Charitable | Yes | Yes | Yes | Yes | |
| Ordinary (no -purpose) | Yes | Yes | Yes | Yes | |
| Partnership | No | No | Yes | No | |
| Company | No | No | Yes | No | |
| Trust | No | No | Yes | No | |
| Uses of Foundation | Family | Yes | Yes | Yes | Yes |
| Business | Yes | Yes | Yes with the following:
· Prescribed foundation |
A Panama Private interest foundation is not a for-profit entity. Use a corporation for this purpose instead. | |
| Commercial | Yes | Yes | Yes | No | |
| Philanthropic | Yes | Yes | Yes | Yes | |
| Charitable | Yes | Yes | Yes | Yes | |
| Holding | Yes | Yes | Yes | Yes | |
| Revocability (Irrevocable/revocable) | Irrevocable upon registration; founders may revoke. | Irrevocable upon registration unless the charter specifies revocability | Not required for registration, can be revocable or irrevocable. | Irrevocable upon registration unless the charter specifies revocability | |
| Formation Features of the Foundation | |||||
| Founder (the person requisitioning the foundation) | Required | Required — also called the Promoter | Required | In Panama the Founder is a local agent. Agent registers the foundation and has no interest in (ownership of) the foundation. | |
| Minimum # of required founders | 1 | 1 | 1 | 1 | |
| Can founder be a Beneficiary? | Yes | Yes | Yes | No | |
| Foundation Council (executive arm) | Council Required | Council Required | Council Required — is called the Management Board | Council Required | |
| Minimum # of council members | 1 | 1 | 1 | 3 | |
| Corporate members allowed? | Yes | Yes | Yes | Yes | |
| Other Member Requirement | At least 1 member must be a Belize resident ( can be agent) | ||||
| Beneficiary | Types of Beneficiary | Any class of person or persons, and can be identified by name, class, relationship, and can be unborn. | |||
| Can change beneficiaries? | Yes | Yes | Yes | Yes | |
| Limits to the number of beneficiaries? | No | No | No | No | |
| Documentation required for Registration? | Yes — Declaration of Establishment DOE | Yes — Foundation Charter | Yes — memorandum of Establishment (MOE) | Yes — Foundation Articles | |
| Contents of Documentation |
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| Is this a public document | No | No | No | Yes | |
| Registered agent required? | Yes | Yes | Yes | Yes | |
| Registered address required? | Yes | Yes | Yes | Yes | |
| By-Laws required? | Optional | Optional | Required | Required | |
| Secretary required? | Yes, must be an Anguilla Resident or agent. It cannot be sole member | Yes, unless one council member is a Belize resident, can be the agent | Yes, cannot be a sole member | Yes, and are provided by agents | |
| Is there an alternate custodian? | Yes – a Guardian | Yes, a Protector – cannot be a member | Yes – a supervisory board | Yes – a Protector | |
| Allowed duration of foundation | Specified period or Indefinite | Specified period or Indefinite | Specified period or Indefinite | Specified period or Indefinite | |
| Document language | Any with an English translation | Any with an English translation | Any with an English translation | Any language with a Spanish translation | |
| Can one change the foundation? | Yes. Founder can change or revoke the foundation with unanimous agreement from members. Must be provisioned for in the DOE | Yes. Founder can change or revoke the foundation with unanimous agreement from members. Must be provisioned for in the DOE | Yes. Management Board may make changes or amendments to the constitution by resolution of the board, the beneficiaries or the supervisory board | Yes. Can make changes or amendments to the charter. | |
| Initial endowment | US$10,000 | US$10,000 | not specified | US$10,000 | |
| Administrative Features of Foundation | |||||
| Meetings required? | No, unless required in the by-laws | No, unless required in the by-laws | Yes – multiform must hold at least one annual meeting | No, unless required in the by-laws | |
| Accounting or record keeping required? | No | No | Yes (must show sales, purchases, income expenses and receipts) | No | |
| Information is on the register | Name of foundation
Name and address of agent Date of registration Purpose of foundation name of council members |
Name of foundation
Name and address of agent Date of registration Purpose of foundation |
Name of foundation
Name and address of agent Date of registration Purpose of foundation name of council members |
Name of foundation
Name and address of agent Date of registration Purpose of foundation name of council members |
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| Is a Certificate of Registration issued? | Yes | Yes | Yes | Yes | |
| How often are foundation renewals | Annually | Annually | Annually | Annually | |
| Is a Certificate of Good Standing issued? | Yes | Yes | Yes | No | |
| Law protects confidentiality? | Yes | Yes | Yes | Yes | |
| Restrictions? | The foundation may NOT engage in banking trust or insurance financial services UNLESS licensed to do so | The foundation may NOT engage in financial services UNLESS licensed to do so | Only legal activities. | The foundation may not carry out habitual or regular commercial activities | |
If you have questions, please fill out a free consultation form on this page or call one of the numbers above.
