The Panama Foundation is a type of private foundation specifically designed as an asset protection tool. It was introduced in 1995 by the Panamanian government (through the Private Interest Foundation Law) and is based on the principles of the Swiss, Luxembourgish and Liechtenstein family foundations. The most obvious benefit of the Panamanian Private Foundation is that it is a separate legal entity, independently able to exercise its rights, enter into contracts, acquire property, etc.

On the other hand, the difference between an offshore limited liability company and a private foundation is that the latter does not engage in commercial activity and cannot be used for commercial purposes. It is also not to be confused with a corporation, which has owners and members. However, a Panamanian private foundation can engage in any investment activity: real estate, stocks, bonds, patents, equity, shares, etc.