The Panama foundation is a type of private foundation specifically designed as an asset protection tool. Introduced by the Panamanian Government in 1995 (through the Private Interest Foundation Law), it is based on the principles of Swiss, Luxembourg and Liechtenstein family foundations. The most obvious advantage of the Panamanian private foundation is that it is a distinct legal entity, independently capable of exerting its rights, executing agreements, acquiring property, etc.

On the other hand, the difference between an offshore limited liability company and a private foundation is that the latter does not engage in commercial activity and cannot be used for trading purposes. Nor is it to be confused with a corporation, which has owners and members. However, a Panamanian private foundation can participate in investment activities: real estate, holding shares, bonds, patents, interests, stocks, etc.