Liechtenstein is a preferred destination for foreign investors seeking to do business in an European country because of its low taxes. While some of them will choose the regular structures like limited liability companies or establishments, other use more tax-efficient forms, such as foundations.
You can find out more information about setting up a foundation from our company registration consultants in Liechtenstein.
What is a foundation?
The foundation is not a company itself, but it is an autonomous fund set up for special purpose and has a legal personality. Liechtenstein foundations may be established for various purposes; however, the most employed ones are:
- – charitable foundations;
- – private-benefit foundations;
- – pure family foundations;
- – church foundations;
- – maintenance foundations.
Even if it has a legal personality, a foundation in Liechtenstein will have no shareholders. Also, certain types of foundations may not engage in commercial activities. Only private-purpose foundation will be allowed to carry out commercial activities as long as these involve investment and management of the structure’s assets.
You can also watch our video on foundations in Liechtenstein:
How to establish a foundation in Liechtenstein
Unlike a company which must be registered with the Companies Registrar in Liechtenstein, a charitable foundation will be set up through a declaration signed before a public notary. Liechtenstein foundations set up for commercial purposes will have to register with the Trade Register.
Those setting up the foundation will be referred to as founders. They must appoint the beneficiaries and the trustee who can be an individual or a company and who will manage the assets of the foundation.
The minimum amount required to open a foundation in Liechtenstein is 30,000 CHF, US dollars or euros. The foundation must also have a representative whose address will be listed as the foundation’s address.
Legislation applicable to foundations in Liechtenstein
Liechtenstein foundations are governed by the Companies and Persons Law, shortly known as the Commercial Code and it is considered a legal entity without shareholders, but with founders as mentioned above. Also, apart from the public declaration, a foundation can be established by a deed of inheritance or by testament.
The following documents are required upon the establishment of a Liechtenstein foundation, according to the law:
- – the bylaws of the entity;
- – the deed of foundation;
- – the regulations of the foundation.
Our Liechtenstein company formation consultants can help with the preparation of the documents to set up a foundation.
Founders and beneficiaries of foundations in Liechtenstein
Both local and foreign citizens can act as founders of a foundation in Liechtenstein. They can also be member of executive councils or company directors. According, to the local laws, the founders can also be the beneficiaries of the foundation.
With respect to beneficiaries, these can be:
- – entitled beneficiaries who can only claim a part of the assets in a foundation;
- – discretionary beneficiaries, case in which the founders decide the share of the assets left to them;
- – prospective beneficiaries who can be appointed at a later date as beneficiaries;
- – ultimate beneficiaries who will receive the remaining assets after the liquidation of the foundation.
Why set up a foundation in Liechtenstein?
Among the advantages of opening a foundation in Liechtenstein are:
- – a low annual income tax;
- – low management costs;
- – easiness in setting the foundation up;
- – it offers enhanced privacy to the founders and the beneficiaries;
- – the founders can also be the beneficiaries of the foundation.
Moreover, Liechtenstein also allows the establishment of offshore foundation.
For assistance in setting up a foundation, please contact our company formation agents in Liechtenstein.