I’m often asked the question what is the difference between a Panama Foundation and a Seychelles Foundation?
In essence the Seychelles model of Offshore Foundation is basically a copy of Panama’s but with a couple of additional (in my view, very attractive) features including:
- The rights of the Founder of a Seychelles Foundation can be assigned. This enables complete privacy because normally the Founder’s name appears in the Charter (which is publicly filed as part of the registration process). However with a Seychelles Foundation you can use a Nominee Founder (who then immediately following registration assigns his rights to you or whoever you might nominate)
- The Seychelles law specifically states that the Foundation is both legal and beneficial owner of any assets it holds. This is (a) a fantastic tax planning feature potentially because traditionally onshore tax authorities have taxed similar entities on the basis that the beneficiaries are the beneficial owners of the entity. It also means (b) when opening bank accounts or incorporating subsidiaries that you can avoid having to declare to the bank etc the names of the beneficiaries of the Foundation (which are usually you/your immediate family).
- The Seychelles law also states that the beneficiaries are owed no fiduciary duty by the Foundation Council (which bolsters the above proposition ie that it is the Foundation which owns the assets/income for tax purposes)
The Seychelles law also provides additional asset protection provisions eg:
- It specifically says that a transfer of property to a Sey Foundation, shall not be void, voidable, liable to be set aside or otherwise defective in any manner by reference to a foreign rule of forced heirship or any other written law of a foreign jurisdiction
- It also says that a transfer of property to a Sey Foundation, shall not be void the founder’s bankruptcy or the liquidation of the founder’s property; or any action, proceedings or other claims against the founder brought by any creditor of the founder. (Refer See sections 71 to 74 of the Seychelles Foundations Act – these asset protection provisions don’t appear in the Panama law)
- A Seychelles Foundation can be capitalised with as little as $1. A Panama Foundation’s minimum authorised capital is $10,000.
AND The Government Incorp and annual license fee in Seychelles is $100 cheaper than in Panama.
Panama still has the better name but we are seeing more and more people choose Seychelles as the place to register their Private Tax Free Offshore Foundation.
With these competitive features it’s not hard to see why.