Table of Contents

1. Why Use an Offshore Private Foundation?
2. Jurisdiction Snapshots
3. Step‑by‑Step Setup Process
4. Management & Governance
5. Taxation & Reporting Duties
6. Comparative Advantages
7. Best‑Practice Tips
8. Popular Use Cases
9. FAQs
10. Conclusion & Next Steps

1. Why Use an Offshore Private Foundation?

Asset‑Shielding Legal Personality. Once assets are contributed, they cease to belong to the founder and become the independent patrimony of the foundation—insulating them from personal creditors.

Succession & Continuity. Foundations never die; they eliminate probate and allow seamless multigenerational wealth transfers via bylaws or letters of wishes.

Tax Optimisation. Properly structured, offshore foundations are exempt from local income, capital‑gains, inheritance, and wealth taxes on non‑domestic assets.

Confidentiality. Founder and beneficiaries remain off public record in Panama and The Bahamas; Cayman registers only minimal details through its Beneficial Ownership regime.

Philanthropy & Purpose Flexibility. A single vehicle can blend family governance with charitable giving, holding both operating subsidiaries and endowment portfolios.

2. Jurisdiction Snapshots

*The Bahamas introduced a 15% Qualified Domestic Minimum Top‑Up Tax (QDMTT) on 1 Jan 2025, but it applies only to MNE groups with ≥ €750 million consolidated revenue—private family foundations remain unaffected.

3. Step‑by‑Step Setup Process

3.1 Pre‑Incorporation Planning

1. Define Purpose & Beneficiaries. Clarify whether the goal is asset protection, succession, philanthropy, or a mix.
2. Select Jurisdiction. Evaluate residency, regulatory comfort, cost, exchange‑control exposure, and treaty networks.
3. Choose Governance Roles. Decide on council members, protector, and investment advisers; consider corporate or professional providers for added privacy.

3.2 Document Drafting

3.3 Registration Workflow

1. Name Reservation with Registrar/Companies House.
2. Execution & Notarisation of charter and bylaws.
3. Engage Licensed Agent (resident agent/secretary) and lodge statutory forms.
4. Government Fees payment and issuance of Foundation Certificate.
5. Open Bank/Custody Accounts; deposit initial endowment.
6. Asset Transfer & Record Update.

Jurisdiction‑specific nuances:

• Panama: Charter must state initial assets (may be nominal) and resident agent must be a Panamanian lawyer.
• Bahamas: Must appoint a foundation agent before filing; can elect to have a separate council.
• Cayman: A “qualified person” (licensed law firm, trust company) must act as secretary; no need for separate council—the board functions as directors.

4. Management & Governance

Good Governance Practices

• Adopt clear investment policy statements.
• Use a corporate protector with step‑in rights.
• Schedule annual strategy meetings and compliance reviews.
• Maintain strong KYC files to avoid banking delays.

5. Taxation & Reporting Duties

5.1 Panama

• No income, capital gains, or withholding tax on non‑Panamanian income.
• Annual franchise tax US$400; penalty for late payment.
• Bearer shares are prohibited; foundation may own registered shares only.

5.2 The Bahamas

• 0% tax on foreign‑source income, capital gains, estate or gift.
• QDMTT 15% from 2025 affects only large multinational groups; private foundations typically exempt.

5.3 Cayman Islands

• No direct taxes; 20‑year tax undertaking available on request.
• Must maintain Beneficial Ownership Register under 2025 Transparency Act; register is not public but must be updated within 30 days of changes.

Common Reporting Standard (CRS): Banks and custodians in all three jurisdictions report controlling persons, so ensure structures are tax‑compliant in founders’ home countries.

6. Comparative Advantages

Explanation: Panama’s formation and annual costs are lowest; The Bahamas keeps councils off all public registers; Cayman offers seamless continuation and enjoys a Tier‑1 FATF/G20 reputation.

7. Best‑Practice Tips for Long‑Term Success

1. Keep the Charter Minimal & Flexible. Place sensitive details (beneficiary classes, distribution triggers) in internal bylaws or letters of wishes.
2. Segregate Control from Benefit. Use independent council members and empower a protector to replace them if duties are breached.
3. Draft a Succession‑Proof Investment Mandate. Outline risk tolerances and rebalancing rules to guide future councils.
4. Maintain Clear Accounting Trails. Facilitates bank compliance and proves legitimate origin of funds.
5. Review Structure Annually for tax‑residency or substance rule changes.

8. Popular Use Cases

• Family Office Holding Vehicle for equities, bonds, and alternative assets.
• Pre‑IPO & Start‑Up Share Custody to ring‑fence founder equity.
• Intellectual Property Ownership to license trademarks and patents globally.
• Real Estate Portfolio consolidation across multiple countries.
• Philanthropic Endowment funding scholarships and grants.

9. Frequently Asked Questions (FAQs)

Q1: Can the founder be on the council? Yes, but this can weaken asset‑protection arguments—use an external council with founder veto rights instead.

Q2: Can beneficiaries be changed later? Absolutely; bylaws or the protector’s discretionary powers can provide amendment mechanisms.

Q3: Is public disclosure required? Only the charter/memorandum is filed; beneficiary identities remain confidential.

Q4: Can the foundation redomicile? Yes—Panama, Bahamas, and Cayman all permit inbound and outbound migration.

Q5: What are typical setup timelines? 3‑5 business days after receipt of due diligence; banking may add 2‑4 weeks.

10. Conclusion & Next Steps

Offshore private foundations in Panama, The Bahamas, and the Cayman Islands combine ironclad asset protection, tax neutrality, and estate‑planning efficiency within highly respected legal frameworks. To explore whether a foundation aligns with your objectives, contact our structuring team at SCGIBC for a  consultation and fixed‑fee quotation.