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Structuring your Family Office in Panama
Welcome to the evolution of Mundo
In this new series of articles, we are addressing the steps you need to take in order to protect your wealth and grow your assets. We are calling this new section the “Forever Free Series” which are dedicated to demonstrating the methods and techniques of the world´s stop family offices to preserve their wealth. We would love to hear comments from our readers.
Forever free part I – Structuring your family office in Panama
Many investors and, in fact, their lawyers think that family offices are just for the ultra-rich, however as one of our experts writes in his book “Avoiding death and taxes”, a family office is now an essential insurance policy for the middle class, especially for those who want to grow their wealth.
New release from our expert
Avoiding death and taxes
An innovative view of the financial and business world
The way a family office functions has been addressed in our Forever Free article, however, we will briefly explain that this is a strategy made of legal structuring mechanisms that were created arguably by the Rothschilds and have been named the “Five Flag Theory” or the “Perpetual Traveler theory”. Whatever you call it, essentially it comprises five steps which may be taken at the same time or at different stages of your journey. These are:
Step 1 -Create a trust or foundation to protect your assets and your loved ones´ forever from creditors, claims, confiscation, etc.
Step 2 -Create an operating company that is your registered family office in a low tax jurisdiction to manage all your business and investment affairs. This will be owned by your trust.
Step 3- Create personal and tax residency in at least one place. However, the most residencies you have, the better.
Step 4- Invest in a CBI second passport for added safety.
Step 5- Develop a wealth management strategy and diversify to various jurisdictions.
Step 6- Create holding companies to own assets in multiple jurisdictions.
On this occasion, we analyze why Panama is a great Family Office destination.
Your Panama family office - Ten reasons why
Reason 1: Panama is home to the majority of Latin America´s Family Offices or at least branches, because, simply put, Panama does not tax personal or corporate worldwide income.
Reason 2: Panama is socially, economically, and politically stable. It does not depend on tourism because it has the Canal and the financial services sector accounting for a large part of the GDP. Moreover, Panama has free zones that are amongst the largest in the world and that supply all Latin America with services and goods.
There is great nightlife, restaurants, fishing and a world-class lifestyle so that the wealthy can have one of the world´s top playgrounds.
Reason 3: Panama gives fast residency which can either be acquired via the Friendly Nations visa or via purchase of real estate. Real estate in Panama is undervalued and constitutes a profitable investment option.
Reason 4: Panama does not have its own currency and has no central bank, it is tied to the US dollar so its financial system is stable. Further, Panama does not have socialist or communist leanings, on the contrary, the country is fully dedicated to wealth growth and free capitalism.
Reason 5: You can build your property portfolio in Panama by obtaining developer finance with only 10% down and 6% interest per year. Thus, if you have 300,000, you can leverage 3 million in property or, if you prefer a more conservative strategy, put 30% down and receive only 4% annual interest.
How to create your Panama family office in 5 steps
Step 1: Obtain residency by investing in a Panamanian real estate property or through the Friendly Nations program. You will have a proof of address and be treated as local by the banks. You will also have your local tax number which means you can establish tax residency here and thus all your income will be taxed only in Panama (as long as you don’t live 183 days in another high tax country). You can travel the world, be a digital nomad, deal in crypto, and invest worldwide yet your taxes will be filed in Panama and guess how much tax on worldwide income you will pay? The answer is zero.
Step 2: Create a foundation in Panama which owns your operating company. This, combined with residency, is the core of your family office structure. Panama is very affordable so you will not need that much money to establish the structure.
Step 3: Invest through Panama wealth management. As a resident you will be able to access wealth management in Panama and your income will be reported only to Panama. Your Panamanian wealth manager will be able to show you a range of investment opportunities offering high yield including debt funds (12%), Panamanian bonds, physical gold and silver, distressed Panamanian real estate and preconstruction deals.
Step 4: Use your Panamanian family office to open brokerage accounts, crypto accounts, and for other instruments knowing that the low tax base here will make you money without having it taken by greedy governments like Venezuela, South Africa, and increasingly Europe.
Step 5: You can appoint an investment adviser to your structure to do the hard work of adjusting your investment portfolio while you enjoy your business, your life, or the amazing opportunities for R&R in Panama.
Mundo´s Panama offer
For those who mention this article we are offering the following:
- A Mundo credit card which also acts as your membership (free).
- A crypto wallet (free).
- A Panamanian residency (20% discount).
- A 1-hour free consultation and financial plan by our adviser.
- A free property tour where we will show you the best developments in Panama and offer you either a guaranteed 5-year income property or alternatively the option of financing.
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