If you’re looking into Panama company formation with a bank account, this is an important article to read.
We’re going to share the critical factors that will influence whether Panama is the right jurisdiction for your company formation.
We will also discuss whether you will be able to open a business bank account in Panama for your newly formed company, which is not guaranteed.
This article is part of our free series on Business Banking in Panama. You can access this series right now by using the link above.
In addition to detailed account opening guides, this free series on Panama banking also discusses the largest banks in Panama, Panama opening requirements, the costs of banking in Panama, and much more. Use the link above to start exploring all of your free Panama banking content right now.
Alternatively, use the table of contents to continue exploring how to open a company bank account in Panama.
Table of Contents
- Panama Company Formation With Bank Account
- Benefits of Registering a Panama Company
- How to Register an Offshore Company in Panama?
- Frequently Asked Panama Banking Questions
- Do You Want to Open Panama Bank Accounts?
Panama Company Formation With Bank Account
Panama company formation with a bank account is a popular service that lawyers and corporate service providers offer to foreigners seeking offshore structures. But, Panama companies registered by foreign nationals struggle to access banking and financial services in Panama and abroad.
In short, while Panama is an offshore banking jurisdiction, a popular residency jurisdiction, and offers several interesting corporate structures for asset management and estate planning purposes, it is less useful when it comes to forming companies that will be used for operating purposes and require transactional banking services.
The simple reason for this is that Panamanian companies have limited banking options available to them. These limitations are the result of international regulatory pressure and an abundance of caution by domestic compliance teams in Panama – we’ll explain both briefly.
Why Panama Companies Struggle to Bank Abroad
Internationally, Panama is listed on all three of the major international watchlists, which include:
- The Financial Action Task Force (FATF) list of jurisdictions under increased monitoring
- European Union’s list of non-cooperative jurisdictions for tax purposes
- United Kingdom’s list of high-risk third countries for AML purposes
As a result, banks that are located in the EU, UK, or jurisdictions that leverage FATF lists for domestic regulation and compliance purposes may be required to conduct enhanced due diligence on Panama companies and related transactions.
Not surprisingly, this level of enhanced due diligence can be expensive. So, in order for a bank to be willing to onboard a Panama company, it needs to involve a significant deposit or have the potential to generate revenue for the bank to offset the related compliance costs through fees or other revenue streams.
Why Panama Companies Struggle to Bank in Panama
First of all, a Panama company registered by a Panamanian citizen (and even a foreign resident of Panama) with local operations, a local office, local customers, and local suppliers will have a wide range of Panama bank accounts to choose from.
That said, in our experience, most people searching for Panama company formation with a bank account are foreign non-residents looking for offshore companies to meet their international business and structuring needs.
In short, Panama companies owned by foreign non-residents with no substantial economic ties to Panama will struggle to open bank accounts in Panama. However, it’s important to point out that there are exceptions and there are certain banks in Panama that will open for Panama offshore companies, though not many.
Now that we’ve covered the challenges of opening bank accounts, let’s look into the benefits of registering a Panama company.
Benefits of Registering a Panama Company
There are a number of benefits to registering a Panama company, not the least of which is that Panama is a territorial tax jurisdiction. In other words, while income derived from Panama is taxable all foreign-sourced income is tax-free.
That said, while tax treatment is one of the main reasons individuals consider Panama company formation with a bank account, it is not the only reason. Here is a look at the key benefits that people cite when registering companies in Panama.
- Shareholders can be of any nationality
- Directors can be of any nationality
- Nominee directors are permissible
- Flexible share classes
- Capital expressed in any currency
- Strong privacy provisions
- Suitable for holding assets, estate planning, and more
If you would like to explore company formation further, the following steps will share how you can register an offshore company in Panama.
How to Register an Offshore Company in Panama?
The process to register an offshore company in Panama involves preparing and submitting a number of registration forms with the Public Registry in Panama. As a foreign non-resident, this entire process will be handled by the lawyer or corporate service provider that you choose to register your company.
Steps to Register an Offshore Company in Panama
- Prepare company bylaws with relevant information
- Appoint three directors and officers (nominees permitted)
- Registration with the Public Registry of Panama
- Registration with the General Directorate of Income (DGI)
- Open up a company bank account
Again, it’s important to point out that the steps to register a company in Panama are relatively straightforward. However, most individuals will face challenges opening bank accounts for their Panama company.
If you are interested in exploring business banking options in Panama further, don’t forget to visit our comprehensive guide on Banking in Panama, available in the link above.
Alternatively, if you would like to explore all of your offshore banking options, download our free guide and compare Panama to some of the top banking jurisdictions available.
Do You Want to Explore All Your Offshore Banking Options?
Frequently Asked Panama Banking Questions
Below are a few of the most common questions we receive from people exploring banking in Panama. If you have further questions about Panama, don’t hesitate to contact us directly.
Can a US Company Open a Bank Account in Panama?
While it is possible for a US company to open a bank account in Panama, there are limited benefits to banking in Panama for a US company. Additionally, it’s important to point out that foreign bank accounts held by US entities (and persons) need to be reported to US authorities, both by the bank where the account is held and by the individual or company holding the account.
How to Open a Business Bank Account in Panama?
To open a business bank account in Panama, you will need to identify a bank that matches your company’s profile, offers the service your company requires, and is willing to onboard your company as a client. If you have a local operating company, you will have more options to choose from compared to a foreign or offshore Panama company.
Can a Foreigner Open a Bank Account in Panama?
Yes, a foreigner can open a bank account in Panama. In fact, foreign non-residents from around the world can open Panama bank accounts remotely with reasonable deposits. That said, only a small number of Panama banks accept foreign non-residents and even fewer allow accounts to be opened without visiting Panama.
Do Panama Banks Report to the IRS?
Yes, Panama banks report to the IRS. In fact, Panama participates in the Automatic Exchange of Information (AEOI) and Common Reporting Standards (CRS), so certain account information will be shared with tax authorities in the country of residence of each individual opening accounts.
Do You Want to Open Panama Bank Accounts?
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