Liechtenstein Foundations

The foundation may be formed as a pure family foundation (for the defrayal of expenses for upbringing and education, outfitting and equipping, etc.), as a non-profit making foundation (support and promotion, e.g. of a charitable, artistic, scientific, social nature) or as an ecclesiastical foundation. The establishment of a foundation as a purely maintenance foundation may also be considered. The foundation is not suitable for the pursuit of commercial objects. Commercial activities may only be undertaken when such activity serves to achieve the foundation’s non-commercial purpose or the type and scope of the participations held require the facilities provided by a commercial undertaking. Only the non-profit making foundation is subject, under certain circumstances, to official supervision.

Formation

Upon formation, the founder donates assets definitively for a certain specific purpose and regulates the beneficial interest. To a justifiable extent the founder may reserve certain rights by occupying a position (as a member of the foundation council, curator, protector) or by the inclusion of an appropriate provision in the articles/by-laws/regulations.

Existence

The foundation that is not under obligation to register comes into existence with the preparation of the deed of foundation, that which is under obligation to register, only upon entry in the Public Register.

Registration or Deposition

All foundations that undertake commercial activities in order to achieve their noncommercial purpose (e. g. youth hostel, old people’s home, welfare foundation in association with an enterprise) are under obligation to register. The mere obligation to deposit the foundation documents with the Public Register Office (without by-laws or regulations) is applicable to ecclesiastical foundations, pure and mixed family foundations (maintenance foundations, for instance) as well as foundations whose beneficiaries are specifically designated or definable. In this case evident existence of the foundation is not provided by any register and inspection is only possible when proof of an entitled interest is provided.

Nominal Capital

The minimum capital (foundation fund) must be CHF 30000.– or the equivalent value in any desired legal currency.

Governing Bodies

The supreme authority is the foundation council, which conducts the foundation’s business within the intendment of the articles, by-laws and regulations. The founder may designate other bodies as, for example, the auditor, to investigate the activities of the foundation council or limit these activities by means of the rights of protectors, curators or collators to instruct, check or veto. The appointement of an auditor is mandatory for registered foundations with a business conducted in a commercial manner.

Beneficiaries

Basically, beneficiaries must be designated in some way (for example, by reference to descent, sex, etc). Submission of Balance Sheet In so far as the registered foundation undertakes commercial activities or the articles provide for such activities, the annual account, examined by the auditor, must be submitted to the Liechtenstein Tax Administration, Vaduz.

Declaration

Voluntarily registered foundations that do not undertake commercial activities and whose purpose as determined in the articles does not provide for such activities are under obligation to declare. The deposited foundation is not required to declare.

Taxes

Assets donated by persons domiciled abroad are not subject to the Liechtenstein gift tax. In Liechtenstein, the distribution of beneficial interest to recipients living abroad is neutral with respect to tax. Basically, the capital tax of 0.1% of the foundation fund and the visible reserves (net assets), but at least CHF 1000.– per annum, must be observed. Net assets of CHF 2 million and above are taxed at the rate of 0.75‰ and net assets of CHF 10 million and above at the rate of 0.5‰.