Establish a foundation

Foundations in Liechtenstein

 

Liechtenstein has a long tradition of foundations. The most common are family foundations, which use their assets to benefit members of one or more families, and corporate foundations, which often act as a holding company. Liechtenstein is also a popular location for foundations with charitable purposes. 

A foundation can be both private and non-profit. It is a legal entity and is created by a founder who determines its purpose and dedicates its assets. In this way, the assets become independent and acquire their own legal personality. As a result, it is no longer included in the founder's private assets. One of the most common forms of foundation in Liechtenstein is the family foundation, which uses its assets to benefit members of one or more families. As a so-called mixed family foundation, such a foundation can also pursue charitable purposes. Corporate foundations are often founded in Liechtenstein, which are primarily intended to hold company investments and often take on the function of a holding company.

If the foundation's activities are intended to benefit the general public, a non-profit foundation is established. It can promote the common good in charitable, religious, humanitarian, scientific, cultural, moral, social, sporting or ecological areas.

The supreme body of the foundation is the foundation board, which manages the business, represents the foundation externally and is responsible for ensuring that the foundation's purpose is fulfilled. The board of trustees must consist of at least two members. The founder can appoint additional bodies to manage the assets and to advise and support the board of trustees.

 

Founding

A foundation can be founded by a single natural person. The foundation's minimum capital is 30,000 Swiss francs, euros or US dollars. This minimum capital can also be used for the purpose of the foundation.

The foundation is established through a certified foundation declaration. The founder does not have to appear himself, as the foundation can be carried out by a trustee. The required document is the mandatory foundation deed. This must contain the following information: 

• The founder's will to establish the foundation

• Name and location of the foundation

• Dedication of a specific asset

• Purpose of the foundation

• Regulations regarding the appointment, dismissal, term of office as well as type of management and power of representation of the board of trustees

• Use of assets in the event that the foundation is dissolved

• Last name, first name and place of residence or company and registered office of the founder or, in the case of indirect representation, the deputy

• The beneficiaries do not have to be named or precisely defined in the foundation deed or additional foundation deed. It is sufficient if a group of beneficiaries, such as a specific family or people close to the family members in question, are named.

Non-profit foundations must be entered in the commercial register. Other, so-called deposited foundations, only have to submit a notice of formation to the Office of Justice, Commercial Register Department. The fee for registering a foundation in the commercial register is CHF 700.

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Disclosure requirements

In any case, the board of trustees must keep appropriate records of the management and use of the foundation's assets and keep receipts from which the course of business and the development of the foundation's assets can be traced. In addition, the board of trustees must keep a list of assets, which shows the status and investment of the foundation's assets.

Commercial accounting only needs to be kept if a business is run in a commercial manner. Private-benefit foundations are not permitted to set up such an operation unless it is necessary for the proper investment and management of the foundation's assets, for example for the management of the foundation's shareholdings in companies. Non-profit foundations are allowed to set up a commercial operation if it serves to achieve their charitable purpose.

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Company name/naming

Foundations are free to choose their name. However, foundations registered in the commercial register must contain the word “foundation” in their name or in an addition. The foreign language additions “Foundation”, “Fondation” or “Fondazione” are also permitted. Fantasy and factual names can also be chosen, provided that these do not contradict the purpose of the foundation in the case of foundations registered in the commercial register.

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Pro and con

• A Liechtenstein foundation can be private or non-profit.

• Liechtenstein foundations offer a high level of privacy.

• Foundations offer favorable tax conditions.

• In comparison to other legal entities, the foundation does not have any owners. When the foundation is established, the founder determines at least the basic principles of how the foundation's assets are to be used for the duration of the foundation.

• A foundation has no members, partners or shareholders. However, the founder has the right to reserve certain rights in the statutes when setting up the foundation.

• Foundation law recognizes beneficiaries, i.e. people for whose benefit the purpose of the foundation is realized and who can also include the founder.

• They offer extensive design options when it comes to estate planning and asset protection.

 

Legal basis

Personal and Company Law (PGR) of January 20, 1926; LGBl. 1926 No. 4 as amended. 

Ordinance of February 11, 2003 on the commercial register (Commercial Register Ordinance; HRV); LGBl. 2003 No. 66 as amended

Ordinance of February 11, 2003 on land register and commercial register fees; LGBl. 2003 No. 67 as amended

AJU leaflet on registering a foundation

To the translationicht about the legal forms.

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