Changes to Panama foundation taxes

The Panamanian government has increased the government tax for Panama Companies and Private Interest Foundations.

Effective May 9, 2012, all new companies must pay US$300 at the moment of incorporation instead of the usual US$250; the annual government tax after the first year remains unchanged at US$300. The first annual tax for Panama Private Interest Foundations increases $100 to US$350 at the moment of incorporation and every year thereafter will increase to US$400 yearly.

All companies that do not pay its annual maintenance fee for two consecutive years will incur on a penalty of US$300.00 in addition to the current penalty of US$50 for each year of non-payment.

Non-profit associations, Unlimited Liability Companies and unregistered Trusts will continue to be exempt from the flat tax. All entities will continue to be exempt of Panama income tax on transactions sourced outside of Panama and interest earned from bank accounts.

These changes do not affect our rates for Resident Agents and Independent Directors. Other options can also be provided from Belize and other jurisdictions at competitive rates.

For further information regarding these changes please contact us or download here a free brochure with additional information.

About Lombardi Aguilar Group

Lombardi Aguilar Group was created as an alternative for clients worldwide who seek fast, innovative and effective solutions to their legal problems. The firm currently provides services to individual and corporate clients in Panama as well in the Americas, Europe and Asia. Its partners maintain a commitment with professional ethics and social responsibility by participating in the board of directors of groups such as the Panama Bar Association, the German Chamber of Commerce, the American Chamber of Commerce (AMCHAM) of Panama and the Association of Chinese-Panamanian Professionals.

The firm centers its law practice in private client services and asset protection (Private Interest Foundations, Trusts), business structures (Offshore Corporations), tax planning, real estate and e-commerce. It also advices in areas of Law such as Corporate, Commercial, Intellectual Property, Maritime, Tax, and Immigration Law as well as related litigation.

For more information, contact +507 340-6444, e-mail aaguilar (at) laglex.com, or visit: Lombardi Aguilar Group http://www.laglex.com/

See also the updates in Linkedin and Facebook .

Are offshore structures for you?

Private Interest Foundations

The private foundations were born some years ago in Panama , in order to give the offshore users a new approach, a more civil and familiar approach.

They have the same Tax and Registry principles, but with a civil oriented system.

The foundations can sign and negotiate commercial contracts eventually and they are not subject to income tax when the income was produced outside Panamanian territory.

The Panama Private Foundation (hereinafter known as PIF) has its origins in the Law 25 of 1995, which in turn was inspired in the PGR or better known as the “Liechtenstein Persons and Company Act”, which contains one of the first references to the private non profit foundations. In Panama, this and the most recent innovations in the Anglo-Saxon Trust enabled the creation of the Private Foundation utilizing the best features and characteristics of both worlds.

A PIF is a legal entity that can be created by either a natural person or a corporation that later transfers part or all of his/her assets to the Private Foundation so they can be managed and protected in favour of the Beneficiaries.

Among the features of the Panamanian Private Foundations we find:

• Quick registration 24-72 hours;
• They provide a fiduciary structure for the orderly transfer and disposition of assets to beneficiaries upon the death of the Founder, keeping control of the assets during lifetime;
• They may be established to have effects from the date of their constitution or after the death of the Founder; According to Law 25 of 1995, inheritance laws that apply in the domicile of the Founder or the Beneficiaries, shall not be effective against the Foundations assets nor may these laws affect the validity or performance of the Foundations objectives;
• Foundations are established to carry the specifics goals set out in the Foundation Charter and may additionally undertake sporadic commercial activities, exercise rights pertaining to their holdings, own property, contract obligations and take part in administrative or judicial proceedings.
• A Private Interest Foundation should be established with a patrimony destined to fulfill its objectives, which shall be no less than US$10,000.00.
• Said patrimony may be increased by additional contributions of the Founder or third parties and does not have to paid in part or in full before the incorporation;
• The assets of the Foundation become legally independent and do not form a part of the private estate of the Founder. Such assets are not sizeable and may not be subject to any precautory action or measure, unless such action or measure pertains to obligations incurred or damages arising from the fulfillment of the Foundations objectives.

Notwithstanding the creditors of the Founder or of a third party shall have the right to contest the contribution or transfer of assets to a foundation when such transfer constitutes an act in fraud of the creditors. The rights and actions of such creditors shall lapse at the expiration of three (3) years, counted from the date of the contribution or transfer of the assets to the foundation was done.

According to article 27 of Law 25 of 1995, Private Interest Foundations are exempt from payment of any taxes, contributions, duties, liens or assessments of any kind arising from the acts of constitution, amendment or extinction of the same, as well as acts of transfer or encumbrance of the Foundations assets and the income arising thereof, when related to:

• Assets located abroad;
• Money deposited by natural or juridical persons whose income does not derive from a Panamanian source is not taxable in Panama for any reason;
• Shares or securities of any kind issued by corporations which income is not derived from a Panama source, or which are not taxable for any reason, even when such shares or securities are deposited in the Republic of Panama.
• The transfer of unmovable property, titles, certificates of deposits, assets, funds, securities or shares carried out by reason of the fulfillment of the objectives of the foundation or the termination of the same, in favor of relatives within the first degree of consanguinity or the spouse of the Founder shall also be exempted from all Panama taxes.

Among the most important uses of the Panamanian Private Foundations we find:

• Family and family office support
• For Tax purposes
• For the protection and management of assets
• For educational purposes Testamentary purposes
• For life annuity purposes
• For charitable purposes
• To receive and manage capital and titles
• For the purpose of serving as guarantee or collateral
• For the management of insurance.

We must comment that several or all uses mentioned above can be given to a particular PIF, there are no restrictions as to the objects or uses one PIF can be given. For example, one PIF can be created to protect assets, but also with a testamentary use or in any case, with all the above-mentioned uses. However, a PIF cannot engage in commercial or for profit activities as a day-to-day activity.

Panama

Panamanian offshore corporations are an easy vehicle to negotiate and close deals.
The simple and yet formal provisions of the Law, render the users to trust the system. The amendments necessary to close one deal are quickly done by registering them at the Public Registry Office, and since it is a government institution, the certificates and Apostilles are easy to obtain in order to sign a contract in a short period of time.

Directors of the companies do not necessarily have to be shareholders and vice versa. Panamanian companies are not bound to issue shares. Powers of Attorneys may or may not be registered in the Public Registry Office.

For over seventy five (75) years the Panamanian offshore corporations has been recognized worldwide as a suitable offshore vehicle and with the proper legal advice can be utilized in a diversity of structures to conduct international business, asset protection, and estate planning, among others.

Among the most important features of the Panamanian offshore corporations we can mention:

• Quick registration in 24 to 48 hours.
• The Panamanian offshore corporations can be registered notwithstanding the nationality of its directors or shareholders.
• The income produced by a Panamanian offshore corporations outside the territory of the Republic of Panama is exempt of paying Income Tax in Panama.
• The capital of the company does not have to be paid partially or fully at the moment of incorporation.
• There is no obligation to file annual reports, financial statements or sworn income declarations, always that the company does not generate Panamanian sourced income.
• Legal entities of any country can be appointed as directors, officer or shareholder.
• There is no obligation to undertake annual meetings of the Board of Directors or Shareholders.
• The directors and shareholders can meet in person, by Proxy, phone or by any other electronic means.
• Three (3) directors are required, either physical persons or legal entities of any nationality.
• The officers (usually a President, a Secretary and a Treasurer) not necessarily have to be directors and one person can occupy one or more or all offices.
• The officers can be either physical persons or legal entities.
• The shares can be issued in nominative or bearer form.
• In any case, the name of the shareholder is not required to be registered at the Public Registry, so confidentiality is ensured.
• The corporate books can be kept in any part of the world and can be managed by electronic files or program.
• A Panamanian offshore corporations can do transactions and own assets in any part of the world, without having the obligation to maintain assets in the Republic of Panama.
• The Panamanian offshore corporations can undertake any type of legal business activity in any part of the world.
• The use of the Apostille is permitted.

Among the most important uses of the Panamanian offshore corporations we can find:

• As a holding entity for shares, bonds, bank accounts, term deposits, investment projects or any other financial or commercial title.
• Owner of shares in other companies, be them Panamanian or foreign.
• Owner of property, such as apartments, lots, houses or any other asset, be them personal or real estate.
• Manager or promoter of international commercial transactions.
• International lease of aircraft, vehicles, machinery, vessels and others.
• Instrument to receive and deliver loans in cash or commissions for products and services.
• Marketing and promotion of products and services.
• Other financial or commercial activities.

Belize

Belize 's modern and up-to-date offshore legislation provides maximum flexibility in global asset protection and tax and investment planning.

Particular features of the Belize international business companies are:

• Registration is quite fast as you can have your company registered in one (1) hour.
• Conducts its trading and business outside of Belize.
• Tax exempt from, the payment of all forms of local taxation, the payment of stamp duties for transactions in respect of its shares and debt obligations or other securities.
• Absence of exchange control.
• Disclosure of the beneficial owner(s) is not required;
• share register may be inspected only by a shareholder;
• nominee shareholders and bearer shares are permitted;
• assets are protected from confiscation or expropriation orders or similar actions by foreign governments.
• Security and Confidentiality.
• Only the Memorandum and Articles of Association are required for public records;
• the registration and deregistration of Registers of Directors, Members, and Mortgages and Charges is optional.
• No minimum capital is required.
• No audit of accounts is required.
• No filing of annual returns is required.
• Only one shareholder and one director are required, who may be a legal entity.
• No company secretary is required.
• No annual general meeting is required, meetings may be held outside of Belize , and attendants may be present therein by telephone or other electronic means.
• Shares may be issued with or without par value and in any currency.
• Re-domiciliation into and out of Belize is permitted, registration in any foreign language is permitted.

Additional reporting compliance may be required from entities doing business with local clients inside said jurisdictions, as well as from shareholders and/or beneficiaries resident in some jurisdiction. Advice from a tax attorney and accountant in your country of citizenship and residence must be sought before using offshore entities.

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New Panama legislature enacts tax moratorium

The new tax moratorium gives an amnesty on fines on overdue taxes when paid before 2010

The new Panama administration of President Ricardo Martinelli has taken its first major tax initiative by enacting Law 45 of 2009 whereby a moratorium is granted for payment of national taxes collected by Directorate General of Revenue (www.dgi.gob.pa). Under the law, taxpayers are exempt from paying surcharges, interest and fines on unpaid taxes due by June 30, 2009, if they pay at least 30% of said taxes and agree to pay the rest before September 1 within a period of 6 monhts. Tax payment plans signed after September 1 but before December 31 still would qualify for a exemption of fines and 75% discounts on surcharges and/or interest.

Such a tax plan would benefit owners of corporations and private interest foundations formed in Panama who must pay a US$300 annual tax called "Tasa Unica". While Panama corporations and private interest foundations doing business outside of Panama do not have to pay Panama income tax, they still have to pay the US$300 annual tax. Article 318A of the Tax Code also imposes a US$50 fine for every annual tax paid late and a US$300 surcharge after 2 years of delay in payments. Article 3 of the 2001 Supreme Court of Justice Schedule for Legal Services further provides every year for a US$250 Resident Agent Fee and a US$150 nominee director fee.

Lombardi Aguilar & Garcia (www.laglex.com) partner Alvaro Aguilar Alfú finds the moratorium to be useful for investors using Panama entities. "Even if the names of corporate shareholders and private foundation beneficiaries are disclosed to their resident agents under privacy rules, changes in the charter and board of directors must be registered with the public registry. Local laws require that all annual tax payments be up to date when filing said changes, so the moratorium would allow owners of these entities to save on the fines and surcharges which would otherwise have to be paid after 2010," said Aguilar.

The moratorium also covers property taxes due for ownership of real estate at rates of up to 2.1% of the registered value. "Unlike other countries, Panama authorities do not mail or deliver tax statements so property taxes - along with surcharges, fines and interest - may be accumulating without the owner knowing," Aguilar points out. "Many foreign buyers have purchased real estate in Panama, either directly or by purchasing shares of landholding companies or foundations, so this is a good time to ask the local Panama tax office for a statement to pay taxes due without fines and ask counsel in their country of origin about other tax compliance and filing requirements".

About Lombardi Aguilar & Garcia
Lombardi Aguilar & Garcia was created as an alternative for clients worldwide who seek fast, innovative and effective solutions to their legal problems. The firm currently provides services to individual and corporate clients in Panama as well in the Americas, Europe and Asia. Its partners maintain a commitment with professional ethics and social responsibility by participating in the board of directors of groups such as the Panama Bar Association, the German and the American Chambers of Commerce (AMCHAM) of Panama, and the Association of Chinese-Panamanian Professionals (APROCHIPA).

The firm centers its law practice in private client services and asset protection (Private Interest Foundations, Trusts), business structures (Offshore Corporations), tax planning, real estate and e-commerce. It also advices in areas of Law such as Corporate, Commercial, Intellectual Property, Maritime, Tax, and Immigration Law as well as related litigation that may arise.

This release has been prepared for information purposes only. It is not intended to be nor do they constitute legal advice, and cannot be used, for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

For more information, contact +507 340-6444, e-mail aaguilar (at) nysbar.com, or see: Lombardi Aguilar & Garcia http://www.laglex.com/

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See also Property tax exemption for 20 years #3 property tax.

Allied charities join Lucom fight

The Sisters of Mercy, the SOS villages, the San Jose de Malambo Orphanage, Nutrehogar, the Ciudad de Niño and the Fundacion Pro Niños de Darien have joined together to form the Fundacion de Apoyo a los Niños Pobres de Panama. This was done in anticipation that Hilda Piza (viuda de Lucom, and before that de Arias) and her children will lose their challenge to the Wilson Lucom will, which is now pending in the Supreme Court. Lucom, a very wealthy man, left millions to his widow but the large residue of his estate to the poor children of Panama. Piza and especially her children by a previous marriage --- most notably Gilberto Arias of EPASA, the company that owns La Critica and El Panama America --- have challenged the will and, largely through attorney Héctor Infante, have fought vicious legal battles in Panama and the United States. These have concentrated on Richard Lehman, the Florida attorney appointed by Lucom as his will's executor, against whom bogus murder charges were brought, groundless arrest warrants were issued and an arrest order on a warrant that didn't exist was put into INTERPOL's international database. The case has become an emblem of corruption with impunity in the Panamanian legal system. The Supreme Court recently slapped down a detention order that Infante obtained against Lehman and the contest on the will itself is now pending before the court. The creation of the charitable alliance distances Lehman from the controversy, as the Piza / Arias family is basing their challenge on the supposition that he's a crook who's out to loot the fortune. Now it would be the charities rather than Lehman in charge of how the bequest is spent. Sister Lourdes Reiss of the San Jose de Malambo Orphanage heads the new foundation and has expressed confidence to the competitors of the Arias family's newspapers that the Lucom bequest will be upheld in court.

Volume 15, Number 1 January 22, 2009
Full text in http://www.thepanama/ news.com/pn/v_15/issue_01/economy_briefs.html

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The charity is called FUNDACION DE APOYO A LOS NIÑOS POBRES DE PANAMA. Its Foundation Council is formed by:

Orfelinato San Jose de Malambo http://malambo.org/
Asociacion Religiosos Mercedarios http://www.un.org/other/unwg/projects/panama.html
Fundacion Pro-Niños del Darien http://www.darien.org.pa/
Asociacion de Aldeas Infantiles SOS de Panama http://www.aldeasinfantiles-sos.org
Asociacion Nacional Pro Nutricion Infantil http://www.nutrehogar.org
Patronato de la Ciudad del Niño http://www.ciudaddelnino.org/

Liechtenstein foundations become less atractive with secrecy breach

Modern private foundations (Stiftungs) are a
creation of Liechtenstein, a small Principality
nestled between two neutral countries of
Switzerland and Austria. Along with the
Establishement (Anstalt), Liechtenstein provides
structures which are used to hold assets in bank
accounts protected by legal confidentiality.

Early 2008 has shaken the confidence of the
confidentiality in Liechtenstein with the sale by
two bank officials of the names of bank account
holders to taxx authorities of Germany, Spain,
Portugal and - according to Der Spiegel - even
the U.S. http://www.spiegel.de/international/business/0,1518,537640,00.html

Former LGT-Liechtenstein Landesbank bank official
Heinrich Kieber
<http://www.spiegel.de/international/business//international/business/0,1518,535768,00.html>sold
a DVDs to the German Financial Intellegence
agents for close to €5 million ($7.4
million). Spanish investigators were after
Kieber for a 1996 fraudulent real estate deal in
Barcelona, which had earned Kieber 600,000 Swiss
francs ($553,000). He apparently fled to
Argentina before returning to Liechtenstein,
where he began working for LGT Bank in April
2001. More than half of the investors and about
3,100 foundations and establishments on the DVDs
are from abroad. Some are part of organized crime
in the Balkans and in Russia, including both
well-known and relatively unknown companies.

Unlike in Germany, where foundations serve a
specific not-for-profit purpose , the law in
Liechtenstein and Panama allows the founders of a
foundation to benefit themselves and their
dependents. Tax rates for foundations in
Liechtenstein are also very low and are exempt
from property, earned income and profit taxes.
Only an annual capital tax needs to be paid,
which amounts to 0.1 percent of the paid capital
or 1,000 Swiss francs (620 euro/$904), whichever
is greater. For capital valued between 2 million
Swiss francs and 10 million Swiss francs, the tax
rate is 0.075 percent. Capital valued above 10
million Swiss francs is taxed at a rate of 0.05
percent. Liechtenstein foundations are
available for US$3,000, while Panama Foundations
are available for US$950 and not taxed on income
from non-Panama activities (including interest from Panama bank accounts).

German tax authorities have no problem with
interest made in Liechtenstein as long as it is
declared in tax filings. To keep the money hidden
from German financial officials , according to
the DSTG, many people start foundations using a
name that doesn't identify the founder and
entrust the foundation's management to a trustee.
According to DSTG estimates, within
Liechtenstein's 160 sq km, there are roughly
80,000 letterbox companies , many of which share
an official address with many foundations. To
hide even more tracks from the tax investigators,
the foundation's capital can be deposited in a Swiss bank account.

Switzerland and especially Liechtenstein have
very strict bank secrecy . This is supposedly
part of Liechtenstein's "basic attitude and
tradition," as the country's Web site says.
Financial institutions in Liechtenstein strictly
reject all requests for account information even
from German tax investigators.

It remains to be seen how long secrecy
last. Just before the Kieber debacle, the
Liechtenstein government announced
<http://www.liechtenstein.li/en/eliechtenstein_main_sites/portal_fuerstentum_liechtenstein/fl-staat-staat/fl-staat-aussenpolitik/fl-staat-aussenpolitik-aktuell/fl-staat-aussenpolitik-aktuell-presse.htm?&show=15&pmid=94536>amendements
to the foundation law to be circulated for consultations.

RELATED SPIEGEL ONLINE LINKS

*

<http://www.spiegel.de/international/business//fotostrecke/0,5538,29291,00.html>Photo
Gallery: Cloak and Dagger Dealings in the
<http://www.spiegel.de/international/business//fotostrecke/0,5538,29291,00.html>Alps

*

<http://www.spiegel.de/international/business//international/germany/0,1518,537139,00.html>The
World From Berlin: 'The Tax Scandal Has Reached a New Level' (02/22/2008)

*

<http://www.spiegel.de/international/business//international/business/0,1518,536777,00.html>The
Liechtenstein Affair: German Banks Suspected of
Helping Clients Evade Taxes (02/21/2008)

*

<http://www.spiegel.de/international/business//international/europe/0,1518,536299,00.html>The
Mouse That Roared: Liechtenstein Furious at Germany Over Tax Probe (02/19/2008)

*

<http://www.spiegel.de/international/business//international/business/0,1518,535768,00.html>Massive
Tax Evasion Scandal in Germany: The Liechtenstein Connection (02/16/2008)

*

<http://www.spiegel.de/international/europe//international/business/0,1518,535230,00.html>Raid
on Zumwinkel's Home and Office: Authorities
Investigating Deutsche Post CEO for Tax Evasion (02/14/2008)

Liechtenstein bank shares tumble as German
authorities carry out more tax raids

http://www.iht.com/articles/2008/02/18/business/18raidsfw.php .

Liechtenstein agrees to change Foundation law

http://www.liechtenstein.li/en/fl-portal-aktuell?newsid=15879

Austria banks and Panama foundation enhance confidentiality

Austria - in the middle of Europe - provides a degree of banking secrecy which is granted by a Banking Law with the same rank as the Constitution. Unlike other financial centers - like Switzerland - which are more widely known as havens and therefore subject to higher scrutiny, Austria is known as a neutral country, headquarters to several United Nations offices. Bank accounts held by non-Austrians are not subject to Austrian taxes. Account owners can get the best of both worlds by opening Austrian bank accounts under the name of a Panama foundation, trust or corporation. Universal banks have also specialized investment staff to help with the purchase of foreign securities.
Austrian authorities have pledged their continuing support of secrecy, despite multilateral actions such as the OECD black lists and the EU Tax Savings Directive.

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Austria: Bank´s Duty of Confidentiality by Michael Kutschera, Thomas Schirmer and Alexander Kramer Austrian law expressly recognises and protects a bank's duty of confidentiality (sometimes referred to as 'bank secrecy') with respect to information received by or relating to its customers. This duty is primarily governed by s 38(1) to (4) (scope and exceptions) and s 101 (criminal liability) of the Banking Act (BWG) and supplemented by several provisions of a procedural nature such as the Revenues Penal Code and the Criminal Procedure Code.
Section 38(5) of the BWG, a provision of constitutional law, affords special protection to the provisions of s 38(1) to (4) of the BWG by stipulating that an amendment of these provisions requires - similar to an amendment of a provision of constitutional law - a quorum of at least 50% and a majority of two-thirds of the deputies to the National Counsel (Nationalrat, the more powerful of Austria's two Houses of Parliament).1
Since 1 January 1994, the provisions on bank secrecy were partly amended, in particular with regard to money laundering, as Austrian law and banking practice initially permitted the opening of anonymous accounts in certain cases. In order to avoid the abuse of the Austrian banking system for the purpose of money laundering, Austrian banks in 1989 agreed on the wording of a uniform declaration, according to which each bank voluntarily undertook a number of duties to prevent such abuse.2 These duties were expanded by another declaration on additional duties of diligence in 1992, the compliance with which still was voluntary. .... The bank's duty of confidentiality Section 38(1) of the BWG reads: 'The credit institutions, their shareholders, organ members, employees, as well as persons otherwise becoming active for the credit institutions, are prohibited from disclosing or exploiting secrets which were entrusted to, or to which access was made available for, them on the basis of the business relationship with clients or on the basis of s 75 (3)5 hereof exclusively (Bank Secrecy). If, in the conduct of their official activities, organs of public authorities or of the Austrian National Bank, receive information which is subject to the Bank Secrecy, they shall maintain the Bank Secrecy as an official secret from which they may be released only in one of the cases set forth in s 38 (2). The duty of confidentiality applies without limit as to time.' Full text in http://www.mondaq.com/article.asp?articleid=31351

Austrian 1920 Constitution Article 10 [Federal Legislation and Execution] (1) The Federation has powers of legislation and execution in the following matters: 5. the monetary, credit, stock exchange and banking system; the weights and measures, standards, and hallmark system Article 20 [Administration] (3) All functionaries entrusted with administrative duties of Federation, States, and Counties are, except for differing regulations by law, pledged to secrecy about all facts of which they have obtained knowledge exclusively from their official activity and whose concealment is enjoined by the public interest or that of the parties concerned. Official secrecy does not exist for functionaries appointed by a popular representative body if it expressly asks for such information. Full text in http://www.servat.unibe.ch/icl/au00000_.html

Chancellor defends Austrian banking secrecy
Chancellor Alfred Gusenbauer has defended Austrian banking secrecy before the beginning of the EU summit in Brussels on the EU's Lisbon strategy for economic growth and employment. He said that such secrecy was good for Austria as a financial location and gave the country and its people an advantage. He added that Austria was ready to cooperate with other countries on the issue of tax-evasion but that it wouldn't make sense "to sacrifice" a good arrangement like banking secrecy because of that crime, which occurred in all countries. He said that he didn't know if the summit would discuss banking secrecy, which wasn't on its agenda. March 14th, 2008 http://www.austriantimes.at/index.php?c=2&id=4143

Bank secrecy is sacred in Austria
Both SPÖ Chancellor Alfred Gusenbauer and ÖVP Vice Chancellor and Finance Minister Wilhelm Molterer have said that there is no need to change the Austrian bank-secrecy system in the wake of the revelation of widespread tax-evasion in Germany through use of personal foundations in Liechtenstein. Gusenbauer and Molterer claimed that the Austrian system conformed to relevant EU regulations. Molterer added that Austrian law on foundations and taxes differed significantly from Liechtenstein law in those areas and that bank secrecy would not apply in criminal proceedings. The FPÖ and the BZÖ are also opposed to changes in the Austrian bank-secrecy system. FPÖ finance spokesman Lutz Weinzinger declared that "bank secrecy is a core value in Austria and part of the country's business culture" but hastened to add that he was "no friend" of tax-evasion. BZÖ national councillor Veit Schalle added that foreign access to information about Austrian accounts would be an unacceptable assault on Austrian sovereignty and would massively damage the country as a financial location. The Greens are the only party that supports changes. They said that they would consider a parliamentary initiative in that regard if the German scandal spilled over into Austria. Austrian banks are also opposed to any changes in the Austrian system. Austria is on the Organisation for Cooperation and Development (OECD)'s black list for its failure to implement an EU-wide requirement for registration of capital gains. The OECD, the German finance ministry and the NGO ATTAC (Association for the Taxation of Financial Transactions for the Aid of Citizens) have all called for better clarification of tax-evasion in Austria. February 21st, 2008 http://www.austriantimes.at/index.php?c=2&id=3470

US Forms required for foreign trust and other entities

À: JacobsReport[at] yahoogroups.com
De: "Vernon K. Jacobs"
Date: Fri, 08 Feb 2008 16:43:44 -0000
Objet: [JacobsReport] Query re: forms required for foreign trust and other entities

QUESTION: What forms are required when setting up a foreign trust and
which forms are needed after the trust is established? Also what forms
are needed to set up a foreign limited liability or corporation owned
by the trust and which forms have to be filed thereafter? Are there
any special forms required for a Panama Private Interest Foundation?

REPLY: I've noticed that different lawyers seem to require different
forms. The following are the ones that I encourage my clients to file.

Form SS-4 Taxpayer I.D. number (You have to call the IRS at the number
in the instructions.)

Form 56 - Notice Concerning Fiduciary Relationship

On or before March 15th, Form 3520-A must be filed or an extension must
be requested with Form 7004. Until the IRS revises their instructions
or until they create a new form for foreign trusts, it's my opinion
that Form 1041 (summary) and 1040-NR (summary) need to be filed with
the Form 3520-A but some advisors would not file either or both of
these. Form 3520 is due with your income tax return, including any
extensions of time to file.

If you (or your trust) form a foreign LLC or IBC or corporation and
want to treat that entity as a disregarded entity (one owner) or
partnership (multiple owners), you first need to secure a tax ID
number by calling the IRS at the number in the instructions to the
Form SS-4. Then you should file Form 8832 within 75 days of forming
and funding the LLC/IBC/Corp. (Caution: If you form a foreign
corporation and want to treat it as a disregarded entity or foreign
partnership, you need to check the back of the instructions to Form
8832 to be sure the entity is eligible to make the election.)

Then either Form 8858 (single owner) or Form 8865 (multiple owners)
would need to be filed with your U.S. income tax return.

If you or your trust choose to form a foreign corporation, IBC or
limited liability company without making an election to treat the
entity as either a disregarded entity or foreign partnership, then you
would need to file a Form 5471 and Form 926 with your U.S. income tax
return. If the foreign corporation engages in business in the U.S., it
may need to file a Form 1120-F (or an extension on Form 7004) on or
before March 15th. (In some cases, a foreign corporation with U.S.
source income doesn't need to file until June 15th.)

As for a Panama Foundation, the required forms will depend on whether
the foundation resembles a trust or a corporation. For a more detailed
explanation of my views on these foundations see
http://www.offshorepress.com/offshoretax/panama-foundation.html If it
functions as a trust, then the forms for a foreign trust would be
required. If it functions as a corporation, then the forms for a
foreign corporation should be used.

If a tax filing date falls on a weekend or national holiday, then the
actual due date is delayed to the next Monday or the work-day after
the holiday.

Other forms might be required depending on the kind of investments you
make, or the kind of business you operate and whether you live and
work outside the U.S. for a full year, etc., etc. For an extensive
list of forms that may be required for diverse international
transactions see www.offshorepress.com/AICPA/ I originally created
this part of my web site for other CPAs, but it's not restricted in
any way and is open to the public.

Vern

The comments in this memorandum are not intended to constitute an
opinion regarding any specific tax issues because additional tax
issues may exist that could affect the tax treatment of the tax issues
addressed in this memo. This memorandum does not consider or reach a
conclusion with respect to those additional issues and was not written
and cannot be used for the purpose of avoiding penalties under code
section 6662(d). For further details see
http://www.offshorepress.com/vkjcpa/disclosurerules.htm

Panama Attorney Participates in Trusts & Estates Panel

Attorney Alvaro Aguilar participated in a panel discussion on trust & estate laws before members of the New York State Bar Association (NYSBA) International Law and Practice Section.
Panama City, Panama, September 29, 2007 --(PR.com)-- Lombardi, Aguilar & Garcia (http://www.laglex.com/) attorney Alvaro Aguilar spoke at a panel on trust & estate laws before members of the New York State Bar Association (NYSBA) International Law and Practice Section (www.nysba.org/ilp) and Peruvian attorneys attending its Fall meeting.
Attorneys Michael Galligan of Phillips Nizer LLP and Glenn Fox of Alston & Bird served as co-chairs of the panel. Perspective on the applicability of Peru, Argentina and Panama law were provided by Alfredo Vidal of Miranda & Amado, Diego Fissore of G Breuer and Mr Aguilar, respectively.
The panel dealt with a practical case of a US-Latin American couple with residence and investments in two countries. Panama law provides alternatives such as corporations, trusts and charitable foundations for asset protection, probate, estate planning and succession purposes.

About Alvaro Aguilar
Alvaro Aguilar is a partner at Lombardi Aguilar & Garcia and practises in the areas of corporate taxation, real estate and intellectual property matters.
Mr Aguilar has advised multinational and local clients in real estate purchases and development, international mergers and acquisitions, tax planning, real estate investment funds, joint ventures, trusts, foundations, software licensing, e-commerce, and electronic transfer of funds. Recent transactions include the purchase of real estate by a US retailer, purchase by a US finance entity of a stake in a Central American bank, tax arrangements and sale of a property to a Panama-US joint venture and structuring of a property management joint venture for US investors.
He graduated from Universidad Santa Maria law school in Panama and earned his LLM in International Trade & Banking from Washington College of Law in Washington, DC.
About Lombardi Aguilar & Garcia

Lombardi Aguilar & Garcia was created as an alternative for clients worldwide who seek fast, innovative and effective solutions to their legal problems. The firm currently provides services to individual and corporate clients in Panama as well in the Americas, Europe and Asia. Its partners maintain a commitment with professional ethics and social responsibility by participating in the board of directors of groups such as the Panama Bar Association, the German Chamber of Commerce, the American Chamber of Commerce (AMCHAM) of Panama and the Association of Chinese-Panamanian Professionals.
The firm centers its law practice in private client services and asset protection (Private Interest Foundations, Trusts), business structures (Offshore Corporations), tax planning, real estate and e-commerce. It also advices in areas of Law such as Corporate, Commercial, Intellectual Property, Maritime, Tax, and Immigration Law as well as related litigation.

For more information, contact +507 340-6444, e-mail aaguilar (at) nysbar.com, or visit: Lombardi Aguilar & Garcia http://www.laglex.com/

Full text is available in http://www.pr.com/press-release/71854