Corporate Law · EN
Panama Company Types Compared: Corporation, LLC and Foundation 2026.
Compare Panama's three most-used structures: the Corporation (Law 32 of 1927), the Limited Liability Company (Law 4 of 2009) and the Private Interest Foundation (Law 25 of 1995). What each is for, requirements, taxes and which one fits your project.
Panama is one of the world's most-used jurisdictions to incorporate, thanks to its territorial taxation (only Panama-source income is taxed), its dollarized economy and its corporate flexibility. But choosing the wrong structure is costly. This guide compares the three most used.
Note: general information current as of the date; confirm your case with a lawyer.
Comparison table
| Corporation (S.A.) | LLC (S.R.L.) | Private Interest Foundation | |
|---|---|---|---|
| Law | Law 32 of 1927 | Law 4 of 2009 | Law 25 of 1995 |
| Used for | Business, holding, holding assets | Business with defined partners | Asset protection and estate planning |
| Ownership | Shareholders (shares) | Membership quotas | No owners or shares |
| Bodies | Board of directors (min. 3: president, secretary, treasurer) | Manager(s) | Foundation council |
| Liability | Limited to contribution | Limited to contribution | Assets separated from the founder |
| Capital / endowment | No minimum (usual authorized US$10,000) | Defined in the articles | Minimum initial endowment US$10,000 |
| Annual franchise tax | US$300 | US$300 | US$350 |
When to use each
- Corporation (S.A.). The classic, most flexible structure: ideal to run a business, act as a holding of other companies, or hold assets (real estate, accounts, vehicles). Shares make it easy for investors to come and go. It is the one foreigners use most.
- LLC (S.R.L.). Designed for businesses with a defined group of partners who want control over who joins. It may be tax-efficient for certain U.S. partners (pass-through treatment) — a point to confirm with your tax advisor.
- Private Interest Foundation. Not for operating a business, but to protect and transmit wealth. The founder contributes assets that leave their personal estate and pass to the foundation, with rules on who receives them and when — a modern alternative to a will and a trust for estate planning and asset protection.
A frequent combination
Many clients use both layers together: a Private Interest Foundation that owns the shares of one or more Corporations. This separates ultimate ownership (the foundation, oriented to succession) from operations (the companies that do business). Structuring it well from the start saves taxes, disputes and paperwork later.
What every structure needs to stay alive
Incorporating is only the beginning. To keep your company or foundation valid and compliant you must handle: the annual franchise tax, the resident agent, accounting records, and reporting the ultimate beneficial owner to the authorities. At iurispa we incorporate your structure and keep it current so it never falls into arrears or dissolution.
Related: Private Interest Foundation in Panama.
Legal basis: Law 32 of 1927 (Corporations), Law 4 of 2009 (LLC), Law 25 of 1995 (Private Interest Foundations). Informational content, not legal or tax advice.
Questions from the source
Questions, answers, and sources preserved from the historical archive. Nucleus has not verified their currency or links.
Which Panama entity should I choose: corporation, LLC or foundation?
It depends on your goal: the corporation (S.A.) is the most versatile for business and investment; the LLC (SRL) suits few partners and certain US tax treatment; and the Private Interest Foundation is for protecting and transmitting wealth, not for operating a business.
What is the difference between a Panama corporation and an LLC?
A corporation issues freely transferable shares under Law 32 of 1927; an LLC (SRL) is based on quotas and a more closed structure, often preferred for closely held or family businesses and for pass-through US tax treatment.