Establishment of a Foundation in Liechtenstein
A Foundation in Liechtenstein is an autonomous special-purpose Fund that has its own legal personality. The said special-purpose Fund is separate from the assets of its founder and forms the assets of the Foundation from then on. The assets of a Foundation in Liechtenstein are wholly liable for the liabilities of the Foundation. A Foundation in Liechtenstein may be formed as a private-benefit Foundation in the form of a pure family Foundation, as a charitable Foundation, as a a church Foundation as well as a maintenance Foundation. In contrast to a corporation under private law, a Foundation in Liechtenstein has no members, partners or shareholders.
A Foundation in Liechtenstein may be formed for the carrying on of charitable or private purposes. Notwithstanding this, a charitable Foundation in Liechten- stein may only carry on commercial activities if they either lead directly to the achievement of its charitable purposes or they are expressly allowed for by law. In contrast thereto, a Foundation in Liechtenstein which is formed for private purposes may carry on commercial activities if the said activities are necessary for the proper investment and management of its assets.
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A Foundation in Liechtenstein is formed through an officially recorded Found- ation declaration. The said declaration is not publicly available. Foundations in Liechtenstein that are carrying on commercial activities must be registered in the Commercial Register. The Commercial Register is a public register. Charita- ble Foundations in Liechtenstein which are not carrying on commercial activities must similarly be registered in the Commercial Register. In contrast thereto, private-benefit Foundations in Liechtenstein which are not carrying on commer- cial activities require only to lodge its Foundation document with the court.
For the formation of a Foundation in Liechtenstein, a minimum 30,000 Swiss Francs or Euros or US. Dollars must be contributed to its capital.
The founder of a Foundation in Liechtenstein determines its purpose and its be- neficiaries. The said rights may be exercised by a trustee vis-à-vis third parties. However, a trustee is not authorised to transfer or bequeath the founder‘s rights. Furthermore, the founder of a Foundation in Liechtenstein may reserve the right to revoke the Foundation or to amend the Foundation document.
The Foundation Council
The Foundation council is the administrative body of a Foundation in Liechten- stein. It is required that at least one of its members has his law office address in Liechtenstein and that he possesses certain professional qualifications.
Appointment of an Auditor
Eine Revisionsstelle ist für eingetragene Liechtensteiner Stiftungen mit einem nach kaufmännischer Art geführten Gewerbe zwingend zu bestellen.
The address of the person registered as a Foundation‘s representative will be the Foundation’s official address. The representative will also act as the contact person between the Foundation and the authorities.
The rights of the beneficiaries of a Foundation in Liechtenstein shall be regulated by its articles of association and by-laws. The said rights may be restricted and conditions may be attached. Moreover, the founder of a Foundation in Liech- tenstein is entitled to designate himself as its beneficiary. A distinction requires to be made between the different classes of beneficiaries which include: pros- pective beneficiaries, discretionary beneficiaries and the ultimate beneficiaries. Following the death of a beneficiary of a Foundation in Lichtenstein, where this is explicitly provided for, the next specified person takes the deceased beneficiary‘s place and not the deceased beneficiary‘s heir (or heirs).
A Foundation in Liechtenstein may be dissolved within a few days following the satisfying of the liquidation requirements.
Tax Structure of a Foundation in Liechtenstein
A Foundation in Liechtenstein is required to pay annually corporate income tax rate at a single rate of 12.5% on its taxable income. Therein, a Foundation in Liechtenstein must pay annually at least 1,200 Swiss Francs in corporate income tax. Due to the interest deduction on equity capital, a deduction of 4% is to be deducted when calculating the tax liability of a Foundation in Liechtenstein. Furthermore, a Foundation in Liechtenstein which qualifies as a Private Asset Structure (PAS) in accordance with Liechtenstein‘s tax law of January 1st, 2011 shall always only pay corporate income tax of 1,200 Swiss Francs each year.
No tax requires to be paid by a Foundation in Liechtenstein on the dedicating of assets to the Foundation or on the allocation of the Foundation assets to its beneficiaries. Furthermore, following Liechtenstein‘s tax reforms, the Capital and Coupon taxes have been abolished. The estate-, inheritance- and capital transfer taxes no longer require to be paid by natural persons.
A Private-benefit (Family) Foundation in Liechtenstein
A private-benefit Foundation in Liechtenstein may be formed as a “pure” family Foundation for the management of family and commercial assets internatio- nally. Furthermore, the said Foundation may be formed to ensure the long-term safeguarding of the assets, particularly family structures which are internatio- nally dispersed, thereby optimising the allocation of the assets across borders.
A Private-benefit Foundation as an Estate Planning Instrument
A personal-benefit (family-) Foundation in Liechtenstein may be set up in such a way that founder‘s relatives shall be well provided for after his death whilst at the same time as compelling the said relatives to comply with certain conditions. A further advantage of a private-benefit Foundation in Liechtenstein being used to transfer the founder‘s assets to his offspring -instead of by way of a gift or a legacy- is that it avoids a fragmentation of the family assets. This is so due to the amendment of Liechtenstein‘s law on international private law restricting the right to challenge the allocation of its assets. This is so even where there is a reduction in the statutory entitlement due to a particular individual.
Effective Structure of a Private-benefit (Family-) Foundation
A private-benefit Foundation in Liechtenstein is not subject to external supervision and is not required to be registered in the Commercial Register – a public register. Furthermore, it is not mandatory that the Foundation document be lodged with the court. Instead it is sufficient that a private-benefit Foundation in Liechtenstein only submits a notification of its formation to the Registry of Deeds and Public Registry office. Moreover, there is no requirement for a pri- vate-benefit Foundation in Liechtenstein to disclose the identities of its benefici- aries to the Liechtenstein authorities.