E Fiduciary Liechtenstein Service

LCG Treuhand AG is a licensed, internationally oriented tax consulting and fiduciary company with specialized services for companies and private individuals. Our advisors are qualified, experienced lawyers, tax advisors, economists and trustees and are subject to financial market supervision in Liechtenstein.

We support and advise founders, beneficiaries and their advisors in the conception, establishment, administration, control and liquidation of Liechtenstein foundations.

Our core competence is Liechtenstein and international tax advice / legal advice. International estate planning, asset protection, family office service, back office service, finance / accounting service and fiduciary service.

Checklist of international design variants

When designing a foundation in an international context, elementary considerations and decision-making criteria must be taken into account:

• What are the founder’s design goals?
• Which legal system offers the appropriate design tools to implement the objectives?
• Does the domestic legal system recognize the foreign legal
  design?

The following checklist is intended as an introduction to the differentiation and complexity of the subject matter:

1. is the foundation the appropriate legal form

• Have alternative legal forms (corporation, association, trust, institution) been examined? Family pool?
• Is the founder willing to part with all of his assets?
• Does the founder want to exercise strong control of his own?
• Does a long-term commitment to a foundation statute make sense?
• Do inheritance and duty relationships endanger the foundation design?

2. foundation purpose elaboration and setting the course

• Establishing a charitable, private-benefit or mixed foundation?
• What type of purpose? Family foundation, corporate foundation, self-purpose foundation?
• Is the planned establishment of the purpose permissible under the intended foundation law?
• What taxation is the desired purpose subject to?
• Perpetual foundation or temporary foundation? Which is permissible?
• Is international foundation activity permissible? Taxation?
• Does the available capitalization fit a foundation with legal capacity?

3. foundation establishment practical and strategic considerations

• Can a foreigner establish a foundation in the advised foundation law system? [See: A4]
• Does the establishment of the foundation require official involvement / approval? [See: A4]
• Is there a minimum capital requirement? Other minimum requirements? [See: A4]
• What are the costs and other expenses of setting up a foundation? [See: A4]
• Is it possible to set up a trust? [See: A4]

4. the legal status of founders, organs and beneficiaries

• Does the founder wish to reserve founder’s rights (right of revocation, rights to change the purpose)? [See: A5, A6]
• Does the advised foundation law allow for such founder’s rights? [See: A5]
• Can the founder be an active foundation director at the same time? [See: A6]
• Can the functionaries be directed via mandate contracts? [See: A5]
• What legal recourse does the founder have in the case of disloyal officers? [See: A8]
• How must the administrative bodies be staffed (nationality, professional qualifications, place of residence, number)? [See: A6]
• Is an advisory board/other secondary body necessary to advise or monitor the action body? [See: A7]
• Can the founder determine a remuneration for the members of the governing bodies? (FL yes)
• What compensation is possible with non-profit status? Elementary considerations and decision criteria
• How is the liability of board members regulated? [See: A8]
• Which persons does the founder want to and can benefit? [See: A4]
• Should and can grants be earmarked or unconditional? [See: A4]
• Should and can the beneficiary have his or her own right to receive a distribution, or should the distribution be at the discretion of the governing body? [See: A4]
• Can and will the founder grant the beneficiary his or her own rights of participation and control? [See: A9]
• How is the legal protection of beneficiaries structured in the foundation law system? [See: A9]

5. influence of the founder on the organisational structure

• Can the founder influence the organisational structure (e.g. specify specific organs)? [See: A6]

6) What requirements can the founder set for the management of the foundation’s assets?

• Are there any requirements for the timely use of funds? Distribution ratio? (FL no)
• Is the foundation allowed to reinvest? (FL yes)
• Does the founder want to and can he set up a foundation that consumes the share capital? (FL yes)
• Is there a capital maintenance requirement? (FL no)
• Are consumption foundations possible? (FL yes)
• What are the standards and due diligence requirements that the acting bodies must meet in asset management? [See: A8]
• What are the liability risks of the acting bodies? [See: A8]
• What documentation obligations are the institutions subject to? [See: A8]
• Are there any specific accounting obligations or duties to prepare an audit report? [See: A7]

7. external and internal control of the Foundation’s activities

• What governmental oversight mechanisms exist in the advised foundation law? [See: A4]
• Can the founder exert autonomous influence privately? [See: A6, A7]
• Is there a foundation supervisory authority or judicial jurisdiction for foundation control? [See: A5, A7]
• Does the supervisory authority supervise all types of foundations? Legal or also technical supervision? [See: A7]
• What publicity obligations are the foundation types subject to? Entries in a register of foundations? [See: A4]
• Can the founder use its own internal foundation governance system? (FL yes)
• Are internal audit units or similar control bodies possible or necessary? [See: A7]
• Should or must the beneficiaries be involved in the foundation’s activities? [See: A9]
• Do self-commitment rules exist? With what binding effect? (FL no)

8. avoidance of structuring errors from a tax perspective

• How does the advised foundation law tax the transfer of assets upon formation? [See: B1]
• Taxation of current income of foundation assets? [See: B2]
• Taxation on distribution? [See: B4]
• Taxation on dissolution? [See: B4]
• How can the founder influence the taxation?
• Tax consequences of transparent and non-transparent foundation? [See: B2]
• Tax privileges for certain foundation purposes? [See: B3]
• Requirements for charitable foundations? Practical handling?
• Tax assessment of the foundation by the home jurisdiction of the founder or other beneficiaries? [See: D1, D2, D3].
• Is there an addition taxation? [See: D1]
• What are the requirements for full tax compliance in foundation law and home law? Is the founder prepared to do this? [See: A2]

9. liability of the foundation towards third parties Asset Protection

• Does the founder pursue asset protection goals?
• Against which creditors should the foundation protect? Claims to a compulsory portion, compensation claims under property law, maintenance claims or claims arising from professional liability? Is there a background under insolvency law? Fear of state arbitrariness in the home country?
• What mechanisms protect the foundation’s assets in the advised foundation law system? [See: C1, C2, C3, C4].
• Are the foundation assets attributed to the founder or beneficiaries or treated as special assets without access? [See: C1, C2, C3, C4]
• Which liability cases are provided for in the various legal systems? What rules are there on the penetration of the foundation’s assets? [See: C1, C2, C3, C4]
• Are there protections based on time limits, enforcement privileges, or waste clauses? [See: C1, C2, C3, C4].
• Are foreign titles enforced? [See: C1, C2, C3, C4]
• Are the asset-protection mechanisms in the divergent home jurisdiction of the foundation’s participants recognized or considered a violation of mandatory law?
• Are the foundation assets considered part of the founder’s assets with the consequence of an addition in the home jurisdiction? [See: A6, D1]

10 Change of purpose and termination of a foundation

• Under what conditions is a change of purpose of a foundation possible? [See: A5]
• Is a merger with another foundation possible? [See: A10]
• When and how can the foundation be dissolved? [See: A10]
• Who can be a beneficiary? With what tax consequences? [See: A9]
• Can the foundation migrate to another jurisdiction? [See: A10]

11. which other framework conditions in the country of foundation may be relevant for decision-making

• How stable is the foundation legal system in political, economic and legal terms?
• What are the prospects for the future?
• What is the reputation of the foundation site?

Are there any international agreements or other international treaties between the jurisdictions (double taxation treaties, mutual assistance treaties, automatic exchange of information treaties)? [See: A2]