A4 Establishment of the private-benefit Liechtenstein Foundation
The incorporation procedure is simple and can be accomplished within two to four weeks. A state / official approval is not required. The drafting of the statutes and by-laws is time-consuming. The foundation deeds are decisive for the future asset security and tax recognition of the Liechtenstein foundation abroad.
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Establishment of a foundation
The foundation may be established by one or more natural persons or legal entities – nationals or foreigners. The foundation is established inter vivos by means of a written declaration of foundation by the founder. A notarial deed is not required. A certified signature is sufficient.
The establishment may also be effected by testamentary disposition or by contract of inheritance. The declaration of foundation can be included in the foundation deed (statute).
Fiduciary establishment of foundations
In practice, the business of setting up a foundation is entrusted to a trustee licensed in Liechtenstein.
The economic founder (backer) is considered directly as founder in the legal sense, all legal effects occur directly with him.
The trustee must identify the founder and establish him as the beneficial owner and disclose the identity of the founder to the foundation council. In principle, the backer is not to be disclosed to third parties. The disclosure obligation applies only in the internal relationship of the foundation, i.e. the identity of the beneficial founder of a Liechtenstein foundation is not stated in the founder’s deed.
The foundation board is required to file a notice of formation with the Office of Justice within 30 days of establishment. No further documents need to be submitted beyond this. The notification of formation must contain the following information:
- Name of Foundation:
- Seat of the Foundation:
- Purpose of the Foundation:
- Date of establishment of the foundation:
- Duration of the foundation, if limited:
- Surname, first name, date of birth, citizenship and domicile or registered office or company and registered office of the members of the Board of Trustees as well as the type of subscription:
- Surname, first name, date of birth, citizenship and domicile or registered office or company and registered office of the legal representative;
- confirmation that the designation of the specific beneficiaries or of the group of beneficiaries that can be individualized according to objective characteristics has been made by the founder, insofar as this does not result from the notified purpose of the foundation:
- confirmation that the foundation is not wholly or mainly intended to serve charitable purposes:
- an indication of whether the foundation is subject to supervision in accordance with a provision of the foundation charter; and
- confirmation that the statutory minimum capital is at the free disposal of the foundation.
An attorney or trustee must certify the accuracy in writing. Disclosure of beneficiary arrangements is not required. The official confirmation of the Office of Justice merely confirms the filing of the notification but not the legal facts. As the state foundation supervisory authority, the Office of Justice may inspect the foundation documents. If illegality is established during an inspection, the foundation is to be dissolved.
State supervisory regime in DE, CH, AT
DE: Creation of the foundation through constitutive recognition of an administrative authority
CH: State restricts itself to control of conformity with the overall legal order. Family foundations are excluded from the official supervisory regime.
AT: State guarantees legal protection through ordinary jurisdiction. Notarial act of establishment and entry in the commercial register.
Formation of legal personality | Commercial register
Private-benefit foundations in Liechtenstein are not required to be entered in the Liechtenstein Commercial Register. However, they are entitled to be registered. They acquire legal personality upon filing the notification of formation with the Office of Justice.
Statute Foundation deed
The foundation deed (statute) must be in writing and the signatures of the founder must be certified. It must have the following minimum content:
- Will of the founder to establish the foundation
- Name or company name and registered office of the foundation
- Dedication of a certain amount of assets, which must at least correspond to the legal minimum of CHF 30,000.00, Euro, US Dollar
- Purpose of the foundation. In the case of a private-benefit foundation, in addition to the purpose to be determined by the founder in the foundation deed, the designation of the specific beneficiaries or of the group of beneficiaries that can be individualised according to objective characteristics must also be stipulated, unless instead express reference is made to a supplementary foundation deed regulating this.
The purpose of the foundation must indicate whether or not a business is conducted in a commercial manner. The investment and management of assets or the holding of participations or other rights is not a commercial business, unless the nature and scope of the business requires a commercial operation and orderly accounting.
- Establishment date
- Duration of the foundation, if limited
- Regulations on the appointment, dismissal, term of office and type of management (passing of resolutions) and power of representation (right to sign) of the Board of Trustees:
- Determination of the use of the assets in the event of the dissolution of the Foundation:
- Surname, first name and domicile or company name and registered office of the founder or, in the case of indirect representation, the surname, first name and domicile or company name and registered office of the representative. The fact that the founder is acting as an indirect representative must be expressly indicated.
If the following contents are regulated, they must also be included in the foundation deed (statute):
- the indication that a foundation deed has been or may be established:
- the indication that regulations have been or may be adopted:
- the indication that other bodies have been or may be established: more detailed information on the composition, appointment, dismissal, term of office and duties may be given in the foundation deed or in regulations:
- the reservation of the right to revoke the foundation or to amend the foundation documents by the founder:
- the reservation of the amendment of the foundation deed or foundation supplementary deed by the foundation board or by another body:
- the exclusion of enforcement:
- the reservation of conversion:
- the provision that the foundation, although private-benefit, is subject to supervision.
Basic concepts of foundation law in DE, AT
DE: Foundation as sponsor of a commercially active enterprise => possible
Foundation as general partner of a partnership enterprise => possible
Foundation as holding company with limited liability => possible
Capital maintenance principle for foundation capital => yes
AT: Foundation as sponsor of a commercially active enterprise => not possible
Foundation as general partner of a partnership enterprise => not possible
Foundation as holding company with limited liability => possible
Capital maintenance principle for foundation capital => no
The founder may include further regulations that are not part of the mandatory content of the foundation deed in by-laws if he has reserved the right to do so in the foundation deed: e.g. the more detailed description of the beneficiaries and the dedication of further assets that exceed the statutory minimum assets.
The foundation deed (by-laws) is neither accessible to the court nor to third parties. It must be in writing and the signature of the founder must be certified.
Regulations | Internal directives
Ultimately, regulations may be issued by the founder, the foundation board or other competent foundation bodies as internal directives, insofar as this is reserved in the foundation deed. The regulations must serve to concretise the content.
Regulations issued by the founder take precedence over those issued by the foundation council or any other foundation body.
The one-off formation costs for simple foundations with minimum capital amount to CHF 6,000 (plus 7.7% VAT). Upon entry in the commercial register, further fees of CHF 800 are incurred.