Will in Panama- Testamentary Probate case

Re: Does a will avoid probate in Panama?

A will still has to go through a testamentary probate case, which is
quite short if the assets are well described and no challenges are
made. A Panama bank will not hand over assets to a heir, or the
Panama Public Registry convey title to a heir, without the judgment
of the judge on said case. Listing correctly all finca numbers,
share certificates of corporations and account numbers, will ensure
that the probate case is short. The will can be executed as a close
will, which is only opened upon death of the deceased.

The only problem is that it blows away any confidentiality for the
heirs upon the opening of the will.

Attorney fees can be reduced if fees are billed by the number of
hours, instead of a percentage. Involving a Panama attorney BEFORE
executing the will will ensure that less hours are involved in
probate.

Another alternative is a testamentary trust, which will become valid
upon the death of the settlor and does not involve a judge. The
trustee does not have to be a lawyer or a licensed trustee.

Panama has no estate tax. Which does not mean that estate taxes from
the decedent's country are not applicable...

Financial Companies -resgistration law

What is a Financial Company under Panamanian Law?

Law N°42 of July 2001, which regulates the operations of financial companies registered in Panama defines them as those engaged in offering loans or financing facilities to the public no matter if that company includes in its name or denomination the word financing company.

This law does not regulates the following: the company that finances operations from its own sales; the lending operations that are regular in banking activities or any other entity regulated by the Superintendence of Banks, the insurance and reinsurance companies, co-operatives, mutualist funds and savings and loans associations.

2. What is the Financial Company Directorate?

According to the Panamanian Law, the Financial Company Directorate of the Ministry of Commerce and Industries will be the entity in charge of supervising and regulating the Financial Companies in Panama. This Directorate is also in charge with the obligation to guard by the appropriate fulfillment of the law.

All companies interested in leading financial companies activities have to register with the Financial Company Directorate that is invested with the authority to perform all the necessary investigations in order to approve or denied a registration. If the application filed with the Financial Company Directorate is complete the registration procedure do not have to take longer than a month to be completed. The exception for the previous statement are those companies that already exists or are about to be incorporated, and are willing to engaged in financial company’s activities although their articles of incorporation do not contemplate these activities. In these cases the Financial Company Directorate will provide a temporary permit for a 90 days term in which the public notary will have to protocolize the modifications to the article of incorporation, follow up by the proper registration at the Public Registry.

3. What do you need if you want to register a Financial Company in Panama?

To register a Financial Company you must fill-out the application provided by the Financial Company Directorate. The application includes the name of the applicant and his/her general information; the name of the company and its registration information; the paid-in and subscribe capital of the company; the number of tax payer registry (RUC), the name and identity document number of its Directives, Legal Representative and Attorney in fact, if applicable. Also the application must include the date in which the company is planning to initiate operations, the address, P.O. Box, phone number and e-mail address of the company.

Documents you should file with your application:

1. Power of attorney,

2. An authenticated copy of the articles of incorporation and its modifications, if applicable,

3. A Public Registry certification that confirms the information provided in the application form,

4. A certification by an authorized public accountant of the paid-in capital of the company that should not be less than USD 500,000.00,

5. A certified check in favor of the Ministry of Commerce and Industries of USD 1,000.00 to cover all the investigation expenses of the application,

6. A Feasibility Study, performed by an accredited economist, of the Economic Objective and Financial Projections of the Company,

7. A copy of the standard contract that will be used on the day to day operations by the company, which must include the following:

7.1. Date and place of the transaction,

7.2. Accurate identification of the parties and general information,

7.3. Terms and the applicable nominal interest rate,

7.4. The number of payments, regularity, quantity, and the date in which the payments must be made effective by the debtor,

7.5. Method to calculate the applicable interests,

7.6. Method to calculate the devolution of interest in case of anticipated cancellation depending on the method of calculation of interests used by the company,

7.7. Amount that the debtor will receive before cancellations and financing,

7.8. Amount of the expenses and commissions charged and retained for the company,

7.9. Amount of the expenses and commissions charged in favor of third parties,

7.10. Amount of the interest,

7.11. Total amount of the obligation,

7.12. Detail of the amounts paid to third parties by authorization or instruction of the debtor,

7.13. Net amount receive by the debtor before cancellations and refinancing,

7.14. Effective interest rate applicable,

7.15. Percentage of surcharge for delay on the payments,

7.16. Expressive acceptance on part of the debtor of the conditions and terms of the contract,

8. A authenticated copy of the identity documents of the directors, dignitaries, legal representative and attorney in fact, if applicable (at this point is important to mention that all the directives of a financial company registered in Panama must be Panamanians), and

9. The criminal and police record of all the directors, dignitaries, legal representatives and attorney in fact, if applicable.

4. About the Description of Objectives and Economic and Financial Projections of the Company

The Description of Objectives and Economic and Financial Projections of the Company must be certified by an economist of its equivalent under the Article IV of Law N°7 of 1981 by which is regulated the profession of the economist in Panama. The study must be a detail description of the following:

Market Demand

A general description of the offer and demand of services provided by financial companies in the area in which the company is planning to practice. This part should provide information that allows the Financial Companies Directorate to evaluate the knowledge of the financial company business in matters such as number of companies, alternative sources of financing, area of the market targeted by the company and general situation at the economic level.

Market Strategy

Including location, orientation or destination for the loans that the company will provide, targeting strategy, characteristics and/or conditions pre-established to select the clientele of the Financial Company.

Organization, Financing Sources and Expenses Structure

The Financial Companies Directorate requires that in this section the applicant states a detail organization scale, financial resources, expenses strategy including all generals, administrative, financial and loans management expenses.

Investment

All the information relating to the initial investment, such as furniture, office equipment rent or purchase of the offices, transportation, organization and initial amount for financing operations.

Financial Analysis (At least a three years projection)

This section must include cash flow, situation balance and income statement

Evaluation

An evaluation with the proper documentation regarding Present Net Value (PNV) andInternal Revenue Rate (IRR)

Determination on the Rentability of the Project

In this study it is important to note the expected results of the productive process of the company and how it is planning to approach the needs of its clients and fulfill them appropriately according to the law and the better practices of the financial company’s business.

5. The registration at the Financial Company Directorate.

Once the Financial Company Directorate has review the application and confirmed that all documentation is in order it would enact a resolution approving the registration of the Financial Company and this authorization will be registered at the Financial Company Registry with the following information:

1. Number of the resolution,
   
2. Date of enactment,
   
3. Name, address and phone numbers of the company and its legal representative,
   
4. Commercial name and exact address of the establishment where the financial company will operate,
   
5. The paid capital that will support the business and the date when the financial company will initiate operations.

In case of changes or modifications on the registration information the legal representative must inform the Financial Company Directorate within the next fifteen days after the date of the change or modification in order for the Directorate to perform the proper habilitation.

Notes

1. Law N°42 of 2001

2. Ministry of Commerce and Industries, Financial Companies Directorate Application Form and Requirements.

Panama Tax Break

Panama´s Tax Breaks and Booming Economy

Influential international auditors, Deloitte Touche Tohmatus, published a report which predicted that the Panamanian economy will experience strong growth in 2008, the highest of all the Latin American countries. In addition, the Panamanian government has reinstated the 20-year tax exemption for foreign property buyers in Panama, which expired last year. Prospective investors in Panama, particularly those looking to escape the failing U.S. economy, will be encouraged by the new economic report which was compiled jointly by Panamanian advisory and financial services company, Indesa, and Deloitte Touche Tohmatus. The report predicts healthy GDP growth for Panama in 2008 with the economy expected to increase by between 7% and 8%. Analysts believe that the dynamic economy, with its range of important private and public investment projects planned for 2008, will help to offset the negative ripples from the U.S. economy. The biggest plus for the Panamanian economy is the massive expansion of the Panama Canal, approved in a referendum in 2006 and due for completion in 2014. The Panama government has decided to restore the property tax exemption on all new construction with building permits issued before December 31st 2009. The decision was made to encourage Panama´s booming property market to continue in the same vein. James Gonzalez, Market Analyst at Obelisk, says, \"Panama is a stable environment and it is perennially popular with retirees from the U.S. who are attracted by the mild climate and low cost of living. Now that the government has reinstated the 20 year tax exemption for foreign buyers, the market will continue to boom.\" Resale properties are also exempt from property tax, with the 20 year exemption starting in the year the property was built. This means real savings for those buying off-plan or resale property or building their own property in Panama and is proof that the government is keen to encourage foreign investment with tax incentives. The Heritage Foundation supports this in its Index of Economic Freedom, noting that Panama\'s investment climate is superior to those of its neighbours, with most sectors open to foreign investment. Panama\'s property market has been booming for around 5 years and this looks set to continue thanks to huge investor interest from the U.S. Rental yields are impressive, especially in Panama City where they reach just over 11% on small units of 190 square metres, according to Global Property Guide. With a favourable investment climate, tax breaks for foreign buyers, a booming economy and property market, Panama has the perfect property investment climate.

ESTATE PLANNING IN PANAMA

Estate Planning in Panama

Since 2006 the Republic of Panama has been experiencing a fast growth in different types of investments. Particularly, in the property market, this “Boom”, driven by the interaction of buyers and sellers in real estate transactions in Panama City, the beaches, islands and mountains has been an important engine for the economy. Some of the main players of this boom are foreign citizens mainly from English speaking countries (US, Canada, UK, Australia, among others). This group consists mostly of retirees and investors either buying a second home or permanently relocating to Panama. Nevertheless, like any legal, economic and migratory phenomenon, these foreign citizens are required to comply with locals the laws and regulations, and consequently estate planning within the Panamanian jurisdiction falls into these categories. Wills in Panama can be common or special. The common Will is classified in open, close and holograph. The special Wills are classified in maritime, military and offshore. If a person needs to write his/her Will according to the Panamanian legislation, he/she must be more than twelve years old without distinction of sex, citizenship and must be in good mental health. Open Wills are the most common category within the Panamanian jurisdiction. The document must be composed with the assistance of an attorney. Formalities required are that the Will be read before the Public Notary, three witnesses and the client. If the client agrees with his/her last will, as it is read before the Public Notary, he/she must sign it before said Notary, the same signature as in the passport, and have his/her right fingerprint stamped besides it. If the client cannot sign the document, one of the witnesses will sign on behalf of the client. The final version of the will must be summarized in a public deed and the original will be recorded in the Public Notary office. The Notary will issue the client an authenticated copy of the will; that will serve as an original for most purposes. Foreigners with a native language other than Spanish, must be assisted by an official translator who will translate the last will to their native tongue, and this translation will become part of the official document, registered in the public deed before the Public Notary. The Notary is civil and criminally liable if he/she does not comply with the formality of the translation of the testament. The interested party (client) is completely free to declare and establish the terms and conditions of his/her testament and how assets, accounts, property, among other things, will be distributed in the event of his/her death. Open Wills could be set up as a legacy, by which it donates particular and specific assets to a specific person; or could be universal, bequeathing all assets to a specific person or institution. The client is free to leave all assets or parts thereof to whomever they choose regardless of kinship, since Panamanian jurisdiction does not obligate citizens or foreigners to leave a specific part of his/her assets to certain members of his/her family (wife, children, others). The corporations and foundations have full capacity to receive all assets from estate, if the transferor has made such provisions in his/her last will or testament. The advantages of an open Will are multiple. It is done before a public authority in charge of the Public Faith. This Notary could issue many authenticated copies of the document with the same value of the original will/testament. This provides not only the interested party, but relatives as well, the advantage of multiple copies and knowledge of the content, which makes transition and paperwork easier for survivors, providing the client wishes to notify and afford them (relatives) with copies. Other Panamanian legal structures are the Trust and Private Foundations, but these will be treated in another article.

New Regulations of the Immigration Law

New Regulations of the Immigration Law

By means of Law Decree No. 3 of February 22nd, 2008 and the executive decree No. 320 of August 8th, 2008, the Panamanian government approved the new immigration law and its regulation that entered into force as of August 26th, 2008. The new legislation modifies existent visa programs and creates new programs in accordance to existent economic and political situation of Panama. The most outstanding changes by new migratory regulations are: - Simplifies migratory categories - Changes in government fees and expenses - Strict penalties for illegal permanence within the country - Creation of new temporally residence visas - The Increase of funds required in order to apply to some visa programs Migratory categories The new rules simplify the categories in non residents, temporally residents and permanent residents. Non Residents Visa Tourist: Visitors are allowed to stay up to 90 days within the Panamanian territory. The stay allowed will depend upon immigration officers and country of origin. Short Stay Visa: These visas are granted up to 9 months to visitors willing to carry out different activities such as: - Setting business subsidiaries or branches in Panama - Relatives visit - Scientist and research - Medical treatment - Potential Investments for call centers, exporting processing zones, film industry - Natural disasters refuges - Potential investments in Banking sector Temporally Residence Visa · Employment: These visas are granted up to 6 years (renewal every year) to petitioners hired or to be hire within the following sectors: - Colon Free Zone Executive: Minimum salary US$ 2,000.00 - Employees within 10% workforce: Minimum salary US$ 850.00 - Expert or technical staff within 15% workforce: Minimum salary US$ 850.00 - Workforce hired in accordance to Marrakech Accord: Minimum salary US$ 1,000.00 · Investments: These visas are granted up to 6 years (renewal every 2 years) to petitioners willing to invest within the following activities: - Agriculture Investor: Investment of US$ 60,000.00 - Film making industry: Labor contract - Executive for International Companies (activity must take effect out of Panamanian territory): Minimum salary US$ 1,000.00 - Multinational Regional Headquarter employees: Salary must be paid from abroad. Permanent Residence · Economic reasons: These visas allows petitioners to obtain permanent residence by fulfilling the following proceedings: 1. Filing a residence permit for 2 years 2. Filing a permanent residence petition 3. Filing a petition for the procurement of citizenship Programs - Reforestation: Investment US$ 80,000.00 - Large Investor: Investment US$ 160,000.00 - Self Sufficient funds (Person of means): 300 K CD deposit, 300 K real estate purchase or mix investment (CD deposit & real estate purchase) · Special Policies :These visas allows petitioners to obtain permanent residence by fulfilling the following proceedings 1. Filing a residence permit for 2 years 2. Filing a permanent residence petition 3. Filing a petition for the procurement of citizenship Programs - Retired Annuitant Visa (2nd Passport): set a CD deposit that produces US$ 2,000.00 interests per month - Tourist Pensioned: pension of US$ 1,000.00 per month · Other Permanent Residence Programs: These visas allows petitioners to obtain permanent residence by fulfilling the following proceedings Programs - Employees hired as permanent staff of Panama canal authority: Labor contract - Panama Pacific Investor: Investment US$ 250,000.00 - Employees hired as permanent staff of an operator in the special economic area (Panama-Pacific): Labor contract - Export processing zone investor: Investment US$ 250,000.00 - Film making industry investor: Investment US$ 150,000.00

Panamanian Government reduces Bank Deposit required for Second Passport

By means of Executive Decree No. 26 of March 2, 2009, the Government of Panama significantly reduced from US$615,000 to US$260,000 the bank time deposit at the National Bank of Panama required to qualify for a Second Passport.

The new rule only requires that this deposit produces a minimum of only US$850.00 per month in interest which at current interest rates for a 5-year time deposit amounts to US$260,000.
About the Panama Second Passport, if you are looking to obtaining a second passport quickly, the only immigration program that provides that is the Panama Second Passport Program. This passport is excellent because is granted almost immediately and it lasts for 5 years, renewable.
We have found that the Panama Second Passport has been useful for Russian, Middle East and other nationalities with restricted entry into EU.
With the Panama Second Passport, they can enter most EU countries without Visa and without any invitation letters.
One important advantage when they travel with this Passport is that Panama has Visa-Free agreements with 40 countries.

USA PATRIOTIC ACT - FOR TAX REPORTS IN PANAMA

http://en.wikipedia.org/wiki/USA_PATRIOT_Act

OPENNING A BANK ACCOUNT IN PANAMA

FROM LEGAL FORUMS

1-

You do not need to pay anyone ONE PENNY to open a bank account for
> you
> > in Panama, and indeed,

nobody but YOU can open a bank account for
> you.
> > Your face and signature are required IN PERSON and anybody that
> tells
> > you otherwise is full of crap and trying to unecessarily separate
> you
> > from your money.
> >
> > If you are not a Panamanian citizen you will need various
> documents.

> > Most importantly a letter of recommendation from two home country
> > banks (or one bank with multiple accounts).

You will need a copy of
> > your passport.

If the account will be in the name of a corporation
> > you will need your corporation chartering documents and the "poder"
> > that says you can open the account and the directors must sign the
> > application.

You will have to fill out forms and complete a "know
> > your customer" form that asks a bunch of personal questions about
> your
> > money, where it comes from and what you will be doing with it in
> > Panama.

Some banks will open an account for you right away when you
> > come in with all the required documents, others will not and will
> make
> > you sign up and wait three or so weeks for their "committee" to
> > approve your application.
> >
> > Do not under ANY cirumstances attempt to deposit home country
> checks.
> > Use wire transfers to move money, in amounts under $10,000 if you
> are
> > from the USA. If you do that, your funds will be credited to your
> > account in a couple of days. Bring CASH to open the account, just
> a
> > few hundred bucks will suffice for most accounts.
> >
> > Anybody whose name will be on the account must present face and sig
> to
> > bank, in person, no exceptions. If your spouse isn't with you, the
> > account will be opened with your name only and your spouse will be
> > added upon presentation in person and signing of forms and cards.
> >

PANAMA BAR ASSOCIATION-FILING COMPLAINTS

Re: [Panama_laws_for_expats] Re: Panama Bar Association list of attorneys

http://www.cnapanama.com/leyes.htm has the provisions for disciplinary procedures.

This bar association can investigate and recommend discipline to
the Supreme Court with respect to an attorney who is NOT a member. The Supreme Court can also receive complaints about lawyers who
are not members, and then forwards it to the Bar Association.

The affected party can file a complaint seeking discipline of a
lawyer with the Panama Supreme Court (a client, a district attorney or official dealing with the attorney). Remember the bar association does not file complaints - it receives and investigates them, then forwards its recommendation for disbarment to the Supreme Court.

If the bar association refuses to investigate or does not do
it to the satisfaction of the allegedly wronged client, and does NOT
refer the matter to the Supreme Court for discipline, it is the same as if a district attorney refused to prosecute a crime: end of story.

Depending on what the attorney did, other agencies may receive complaints. If we are talking a forgery, misappropiation or another felony, obviously the criminal justice system. If the attorney violated his retainer agreement (which clients rarely demand and attorneys rarely offer), a civil case can be started. If an attorney doubles as an unlicensed real estate agent, the Real Estate Board. If an attorney acts as unlicensed trustee, the Superintendent of Banks. And so on... Purely ethical issues (conflict of interest, advertising in bad taste) are the ones prosecuted solely through the association.

In practice, lawyers who belong to this bar association can be disciplined because the association has record of their offices and can be served a summons to attend the investigation. Non-members do not have their office address in record with the association and are able to delay the investigation for years by avoiding service. Also, members are reminded on a regular basis about the Code of Ethics and forwarded copies of the Code, unlike non-members who do not even read the thing during law school years.

by : Alvaro from legal forums

Cost of HIRING EMPLOYEES IN PANAMA-FROM PANAMA LAW FORUMS..

Are you thinking of starting a business in Panama and hiring
employees?

Wages in Panama are low, but not quite as low as you may
think, because there are many "extra" payments that you, as an
employer, are required to make.

COSTS OF HIRING AN EMPLOYEE IN PANAMA


WHAT YOU DEDUCT FROM EMPLOYEE'S PAY CHECK:

Social security: 7.25%
Education security: 1.25%

EMPLOYER'S SHARE OF PAYMENTS:

Social security: 10.75%
Education security: 1.5%
"Riesgo" (workers' compensation): 2%

NOTE: There is another tax called ITBMS that is applicable only to
higher paid employees. My employees don't qualify so I haven't
researched it. Ask your attorney.


HOW YOU MUST PAY SEGURO THESE AMOUNTS:

When you first hire an employee, you fill out a document
called a "planilla." The planilla lists your employees, their
Cedula numbers, and you must fill in each employee's salary. The
next month, Seguro will deliver a planilla to you listing the
amounts you filled in and adding the total amount you must pay
Seguro for that month. You must pay Seguro either in cash (bad idea
to ever pay any government office with cash) or with a certified
check. You also write in what next month salaries will be for each
employee, which Seguro will use for the next month's planilla. If
you make a mistake you still have to pay the amount shown on the
planilla and you will write down the mistake and the planilla will
be adjusted the next month. If you pay any amount other than the
exact amount on the planilla, the check will be sent back uncashed
and you will have to pay a penalty.

DECIMO PAYMENTS

Every four months, you must pay your employee a bonus
payment called the "Decimo." The Decimo is equivalent to 9% of your
employee's gross pay for the preceding four months.

VACATION PAY:

Every employee is entitled to 30 days paid vacation, after
one year of employment. They must take their vacation in at least
15 day increments and cannot take them a day at a time.

PAID HOLIDAYS

There are approximately 15 paid holidays each year. I do
not know what they all are, but six of those days are in November (I
know that November 3, 4, 5 and 10 are on the list) and most of the
rest are in December. (The government publishes a listing of paid
holidays on one of its web sites, but unfortunately I do not know
what the URL is, ask your attorney to identify the holidays for you,
or you can check with your local bank.) If your employees are
required to work on those days you have to pay them double time.

PAID SICK LEAVE:

Each employee gets 6 days of paid sick leave. To accumulate
those days, they must provide you with a doctors "notice of
incapacidad" and you note each six day on the planilla.
in my capacity as an employer who is trying to follow the labor laws.

OVERTIME:

You have to pay overtime if your employees work more than 8
hours a day. In some cases, you have to pay time and a half if an
employee works on Sunday. (This gets complicated, ask your
attorney.)

CAVEAT: Don't let your employees talk you into paying them "off the
books" and not complying with the mandatory social security law.
You will end up having to pay anyway, plus penalties and probably
attorneys' fees. Gringos are prime targets for labor law
enforcement and it matters not a bit if your employee ASKED you to
violate and even signed an agreement to that effect. Don't listen
to people who tell you "I never pay Seguro" because they (and you)
WILL get caught. You are required to put your employee on Seguro 30
days after they begin employment. You may NOT (contrary to some
rumors circulating) avoid Seguro by putting your employees on
temporary contracts. A temporary contract does not affect your
obligation to enroll the employee and pay Seguro.