Overview

The Panama IBC is a popular choice for teams who prefer civil law for their place of registration.

Use Cases

Holding Company

The Panama IBC is a good option for a holding company in a civil law jurisdiction. It is commonly used to hold crypto assets, as well as other assets like real estate, stakes in other companies or as a IP holding company.

Proprietary Trading Company

The Panama IBC is also a good entity to use as a proprietary trading entity to trade your own crypto. This is solely for your own use as there it no option to upgrade this entity into an investment fund. For this a BVI Limited Company is better suited.

Token Issuance

Token issuance is another use case for the Panama IBC. As there are no VASP regulations there is no licensing needed to issue the token. So for teams who prefer civil law, the Panama IBC is the right option to issue the token.

Tax status

Panama has no taxes on foreign sources income. This means that any income made by the company outside of Panama won't be taxable. For business conducted within Panama taxes might be applicable.

Privacy

Similar to other jurisdiction, the directors of the Panama IBC's are part of the public record. Beneficiaries are not public.

Onboarding

Setting up a Panama IBC involves KYC (Know Your Customer) and AML (Anti-Money Laundering) procedures as part of the due diligence process. For this we will need to know some information regarding the new company as well as a KYC and KYB check for all natural and corporate participants.

The following documents are required:

KYC Documents	KYB Documents
Certified Copy of Photo ID	Certificate of Formation
Certified Copy of 2nd Photo ID	Register of Directors
Certified Proof of Address	Register of Members
Professional Reference	Share Certificates
Resume that is up to date	M&AA
Source of Wealth declaration	Consent to act as Director

Online Form

After the Panama IBC is ordered you will receive a link to login to the Otonomos Dashboard. When you enter the dashboard you can start filling out the company application form to stage your company. In the company application form we will ask information about the new company. The following information will be requested:

Company Name Options
Purpose of the entity
Country
Source of Funds
Financial Year End
Legal Opinion (optional)
Org Chart (optional)
Nominee Participants (if applicable)
Corporate Participants (if applicable)
Natural Participants
Share Capital
Share distribution
Corporate Participant Information

Required roles in the Panama IBC

The following roles will need to be filled in the Panama Foundation

At least 1 Shareholder
3 Directors
- Treasurer
- President
- Secretary
Ultimate Beneficial Owner (UBO)

The treasurer, president and secretary are combined roles of the director(s). Unlike the Panama Foundation, the Panama IBC does need 3 directors, also if there is a corporate director.

While 3 directors are needed at all times, it is still advisable to appoint nominee directors.If needed, you can also hire Nominee Directors from Otonomos.

Once this is all declared, you move on to the KYC verification process.

KYC Verification Process

The KYC Verification process is very straight forward and smooth thanks to our friends at SumSub. After submitting the online form with all the new company information all natural participants will receive a KYC invitation to upload the needed documents along with the required information.

Entity Maintenance

Renewal Periods

Panama IBC's have two renewal periods each year:

1st Semester: Entities registered between January and June need to renew by July 15th.

2nd Semester: Entities registered between July and December need to renew by January 15th.

To maintain your Panama IBC’s good standing, ensure timely renewal payments to avoid penalties.

Reporting

It is mandatory to file yearly financial statements in Panama. These statements must be submitted with the renewal of your entity to ensure the renewal process is completed smoothly. These financials do not need to be audited.

Shutting down your entity

Company Dissolution: To properly close down the entity, you should file for company dissolution. This ensures that the entity is shut down correctly without any loose ends.

Company Strike Off: Alternatively, an entity can be struck off if it fails to pay renewal fees or submit the required statements. This process is less formal and occurs when the entity does not meet compliance requirements.

FAQs

What is a Panama IBC (International Business Corporation)?

A Panama IBC is a civil law entity used for international business, asset holding, and crypto activities. It is popular with teams and companies who prefer a Panama-based civil law jurisdiction for tax neutrality and privacy.

What are the main use cases of a Panama IBC?

Panama IBCs are commonly used for:

Holding company: Holding crypto assets, real estate, stakes in other companies, or IP
Proprietary trading: Trading your own crypto or other assets (not suitable as an investment fund)
Token issuance: Issuing tokens without requiring a VASP license in Panama
Asset management and international investments

How is a Panama IBC taxed?

Panama imposes no taxes on foreign-source income. Income generated outside Panama is tax-exempt, while business conducted within Panama may be subject to local taxation.

How private is a Panama IBC?

Directors are publicly filed
Beneficiaries and shareholders remain private
Nominee directors can enhance privacy

How do I set up a Panama IBC?

Setting up a Panama IBC requires KYC (Know Your Customer) and AML (Anti-Money Laundering) verification for all participants. Required documents include:

For Individuals (KYC):

Certified copy of primary and secondary photo ID
Proof of address
Resume or CV
Professional reference
Source of wealth declaration

For Corporate Participants (KYB):

Certificate of formation
Register of directors and members
Share certificates
Memorandum & Articles of Association (M&AA)
Consent to act as Director

After ordering, participants receive a link to the Otonomos Dashboard to complete the entity application form, including:

Company name options
Purpose of the entity
Country
Source of funds
Financial year-end
Corporate and natural participants
Share capital and distribution
Org chart and nominee participants (if applicable)

What roles are required in a Panama IBC?

At least 1 Shareholder
3 Directors (required at all times)
Treasurer, President, Secretary (roles combined with directors)
Ultimate Beneficial Owner (UBO)
Nominee directors are recommended for enhanced privacy and compliance. Otonomos can provide nominee directors if needed.

What is the KYC verification process?

All participants complete online KYC verification via SumSub. This includes submitting identification documents and other required information. The process is streamlined to reduce delays during entity formation.

How do I maintain a Panama IBC?

Renewal periods:

Entities registered Jan–Jun renew by July 15
Entities registered Jul–Dec renew by January 15
Annual financial statements are required but do not need to be audited
Timely renewals ensure the IBC stays in good standing

How do I close a Panama IBC?

Two options are available:

Company Dissolution:

Formal closure of the IBC
Ensures all obligations are settled properly

Company Strike Off:

Occurs if renewal fees or statements are not submitted
Less formal, may result in delays or penalties

Why choose a Panama IBC?

Civil law jurisdiction, suitable for teams preferring this legal framework
Tax exemption on foreign income
Supports holding, trading, and token issuance
Beneficiary privacy is maintained
Nominee director support available