The foundation is a special-purpose vehicle used for the collection and distributing of assets as per the instructions and wishes of the beneficiary. There are several types of these entities, which have a legal personality separate from that of their founder and may be used for targeted purposes.
In Liechtenstein, foundations enjoy a rather special regime because of the fact that their asses, as well as their non-commercial income, are not subject to tax. The founder is able to retain special rights, such as to also be the beneficiary or to become the protector of the foundation as well as to revoke it as the need may be. The assets of the foundation survive across generations and they can be invested or distributed indefinitely.
Investors who wish to set up a foundation in Liechtenstein can talk to one of our lawyers in Liechtenstein who can give you information on the legal structure of a foundation and the principles for incorporating such a legal entity.
The Company Law is the main act governing the establishment of a foundation in Liechtenstein, as the country is one of the few European states to recognize this legal entity. It is deemed as a vehicle without shareholders who are replaced by founders.
Apart from the law, a foundation also relies on its bylaws and internal regulations in order to determine the way it operates.
In Liechtenstein, a foundation can be created through a declaration, an inheritance act, or through a will. Also, considering the law that governs it, this entity is often seen as combination of a trust with a company, which is why it is considered a very advantageous legal form.
If you need support in drafting the paperwork related to setting up a foundation, you can rely on our lawyers in Liechtenstein. If you wish to create such an entity in order to protect your assets by leaving a will, our specialists can provide you with tailored support on inheritance matters.
A foundation in Liechtenstein can be set up for one of the following purposes:
Charity and family foundations generally do not carry out commercial activities. Investors who want to set up a foundation in Liechtenstein and also engage in some commercial activities can use a foundation for private purposes. These activities may be related to investment and asset management.
As mentioned before, one of the main advantages of setting up a foundation in Liechtenstein is that its assets, as well as non-commercial income, are not subject to taxation. The beneficiary does not need to pay an inheritance tax nor a gift tax on the assets or goods received from the foundation it is not a usual resident in Liechtenstein. However, the obligation to declare this income remains in their country of origin. One of our attorneys in Liechtenstein can provide investors with additional information on some of the other requirements that can apply as per the chosen type of foundation.
The beneficiaries of a Liechtenstein foundation may remain anonymous in some cases as there are no provisions for external supervision or registration and information disclosure with the Commercial Register (only for some types of foundations).
Our lawyers in Liechtenstein can give you complete details on the rights if the foundation founder, asset distribution and other issues related to the perpetuity of the foundation.
The video below illustrates the characteristics of the foundation:
An important issue to take into consideration when opening a foundation is its structuring. Below, our team of attorneys in Liechtenstein describes the main parties or the agents:
The structure of a foundation is only briefly described in the list above. Investors can reach out to the experts at our law firm in Liechtenstein for complete details about how the committee or the representative agent is to be appointed as well as the duties and liabilities of the founder and of the other mentioned agents.
The foundation is incorporated based on a deed, drafted in accordance with the scope of the foundation as well as any particular wishes of the founder. The document is confidential and our attorneys in Liechtenstein can assist founders who wish to draft this private deed.
Only foundations that engage in commercial activities must be registered with the Commercial Register. Information recorded here will have a public character. Private benefit foundations that are used for non-commercial activities are not subject to mandatory registration. Our lawyers in Liechtenstein can give you detailed information about the registration requirements for each type of foundation. A minimum capital is needed to open a foundation in Liechtenstein and its value is generally around 30,000 EUR. For private foundations, they are considered incorporated when the deed of establishment is signed and they do not need to submit an application with the Commercial Register.
In some cases, the founders may choose a special category of beneficiaries. We present some of these below:
Below, our team highlights a factsheet with the most important taxes or fees for opening a foundation:
Please note that the government and registration fees can be subject to changes.
The foundation can be successfully used both for personal as well as business interests and the fact that the founder and the beneficiary can engage in the specific activities discretely make it a useful tool for the protection of assets and family planning.
Considering there are several ways through which one can create foundation in Liechtenstein, there are also various types of beneficiaries. These are:
Our law firm in Liechtenstein can help foreign citizens who have moved here and who want to create foundation with the purpose of ensuring their last wishes will be respected.
In Liechtenstein, foundations can engage in both commercial and non-commercial activities. However, the primary purpose of creating such an entity is the non-trading one, as it is an excellent tool for estate planning and asset management.
Another use of the foundation can be the mixed one, where the private foundation is used for offering investment advice and asset management services.
The foundation is a very versatile legal vehicle, which is why we invite you to discover more about it with the help of our local lawyers.
If you are interested in moving to Liechtenstein, you can rely on our law firm for immigration services.
The main governing body in a Liechtenstein foundation is the supreme body alongside the council. Their members are established from the beginning through the Articles of Association. They are appointed by the founder.
The foundation deed must also provide for the way resolutions are made and passed by the councils, as well as the powers of the members.
When determining the accounting and tax regulations applied to a foundation in Liechtenstein, there is one important aspect to consider: whether it was created for private or commercial purposes.
Its creation is subject to a fee of 0.2% of the total value of the assets of the foundation which must be paid with the Liechtenstein Government.
A change in the tax legislation, abolished the 1% annual capital levy, private foundations becoming liable for a fixed amount of 1,200 CHF per year.
Also, in the case of family foundations, there is no corporate, inheritance, or gift tax. In the case of foundations created for commercial purposes, the corporate tax levied at a rate of 12.5% must be paid.
Another aspect to consider from an accounting point of view is for foreign citizens who must consider the tax regulations in their home countries where they may be subject to various levies.
For details on the avoidance of double taxation in Liechtenstein, we invite you to discuss with our local lawyers.
Setting up a foundation in Liechtenstein has several advantages, among which one of the less known refers to the fact that as long as the council of member is independent (the founder is not part of it), the foundation will be protected in national and EU courts.
The settlor has special rights when it comes to the management and distribution of the assets. Moreover, the founder can appoint him/herself as the beneficiary of the entity.
The beneficiaries of a private foundation can remain anonymous, as their details must not be entered with any authority.
Contact our law firm in Liechtenstein for more information on how to set up a foundation and how one of our attorneys can assist you with legal services.