B3 PVS private asset structure

Requirements for the classification of the private-benefit foundation as a private asset structure PVS

The Liechtenstein foundation may, upon application, benefit from the special tax privilege as a private asset structure under the following conditions:

• The Foundation may not engage in any economic activity in pursuit of its purpose.
• The benefit is limited to the following categories of persons: natural persons acting in the context of their private asset management, asset structures acting exclusively in the interest of the private assets of one or more natural persons, and intermediaries acting on behalf of a person mentioned above.
• The Foundation may neither solicit shareholders and investors nor receive remuneration or reimbursement of costs from them or from third parties for its activities in pursuing its purpose.
• It must be clear from the articles of association that the foundation is subject to the restrictions on private asset structures.

Prohibition of economic activity

• Any offering of goods or services on the market constitutes an unlawful economic activity.
• The acquisition or disposal of financial instruments in accordance with the Liechtenstein Asset Management Act is permissible provided that no active regular trading in them takes place. Income such as dividends, interest, etc. is only generated from the passive position as owner of these assets.
• The continued holding of a property donated directly by the founder is generally inadmissible, as the rental regularly constitutes an economic activity. It remains permissible to hold a property that is given to beneficiaries free of charge or for the private asset structure’s own use. However, the private asset structure may not make the decision as to which property is to be acquired in the individual case.
• The granting of loans generally constitutes an economic activity. Interest-free loans to beneficiaries, on the other hand, are a permissible appropriation of profits.
• A private wealth structure may only hold participations if it and its beneficiaries do not actually exercise control by directly or indirectly influencing the management of these companies. In principle, a seat on the board of directors of the companies is not possible. The private asset structure or beneficiaries must limit themselves to exercising their shareholding rights at the general meeting of shareholders. If the private asset structure holds a qualified interest or has blocking minorities or voting majorities, there is an increased obligation to prove that no influence is exercised on the management of the company. However, the control of an investment company through influence is permissible if the investment company is not economically active and, for example, is itself a private asset structure.

Taxation of PVS

Foundations that have been granted the special status of a private asset structure are exempt from income tax and are not assessed. They are subject to a minimum income tax of CHF 1,800.
Disadvantage of the PVS: Foundations under the PVS taxation regime are no longer considered resident persons within the meaning of the double taxation treaties and therefore lose treaty eligibility.