Setting up a foundation in Liechtenstein means creating a separate legal entity to hold and manage assets according to specific purposes, whether private or charitable.
It provides legal certainty, asset protection, and flexible governance tailored to the founder’s objectives.
This article covers:
- What are the types of foundation in Liechtenstein?
- What is the minimum amount to start a foundation?
- How to set up a foundation in Liechtenstein?
- What is the difference between a trust and a foundation in Liechtenstein?
Key Takeaways:
- Liechtenstein foundations can be private or public-benefit.
- Foundations need planning, minimum capital, and registration.
- They differ from Liechtenstein trusts and charities but can serve similar purposes.
- Professional advice is essential for legal, tax, and compliance requirements in Liechtenstein.
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The information in this article is for general guidance only. It does not constitute financial, legal, or tax advice, and is not a recommendation or solicitation to invest. Some facts may have changed since the time of writing.
What is a Liechtenstein Foundation?
A Liechtenstein foundation is a separate legal entity established to hold and manage assets according to a founder’s stated purpose.
They can serve private purposes, such as wealth preservation, succession planning, or family asset management, or public-benefit purposes, such as charitable, cultural, or scientific initiatives.
Foundations in Liechtenstein are governed by a council or board, which ensures that the entity fulfills its objectives while complying with Liechtenstein law.
Key characteristics include:
- Legal personality – The foundation is independent from its founder and beneficiaries.
- Asset protection – Assets transferred to the foundation are separated from the founder’s personal estate.
- Flexible governance – Founders can define rules for management, distribution, and succession.
- Confidentiality – Private foundations can maintain a high degree of privacy, while public-benefit foundations may have reporting obligations.
Overall, a Liechtenstein foundation is a versatile tool for structuring wealth, ensuring long-term asset management, and achieving philanthropic or succession goals.
What Are the Different Types of Foundations in Liechtenstein?
The main types of Liechtenstein foundations are designed to serve either private, charitable, or combined purposes.
Depending on your goals—whether wealth management, succession planning, or philanthropy—you can choose from the following options:
- Private Foundation (Stiftung) – Established primarily for private wealth management, asset protection, and succession planning. Beneficiaries are usually family members or designated individuals.
- Public Benefit Foundation (Gemeinnützige Stiftung) – Focused on charitable or public-interest purposes. These foundations can receive tax exemptions if they meet specific criteria.
- Mixed Purpose Foundations – Combines private and public objectives, for example, managing family assets while supporting charitable initiatives.
Choosing the right type depends on your objectives, whether wealth preservation, philanthropy, or estate planning.
How Do You Set Up a Foundation in Liechtenstein?
To create a foundation in Liechtenstein, you have to start by following a structured legal process that establishes it as a separate legal entity with defined governance and purpose.
The main steps involved include:
1. Drafting the Foundation Deed and Statutes
The deed must outline the purpose, beneficiaries, assets, and governance structure.
2. Appointing Governing Bodies
A foundation council or board is required to manage the foundation in line with its statutes.
3. Notarial Certification
The foundation deed must be notarized in Liechtenstein.
4. Registration
Certain foundations must register with the Liechtenstein Public Registry. Private foundations may remain confidential if allowed by law.
5. Funding the Foundation
Initial assets must be transferred according to the foundation deed and minimum capital requirements.
Professional legal and tax advice is strongly recommended to ensure compliance and proper structuring.
How Much Money Does It Take to Set Up a Foundation in Liechtenstein?
The minimum capital required for setting up a Liechtenstein private foundation is generally CHF 30,000 (Swiss francs).
For public-benefit foundations, the required endowment may be higher depending on intended charitable activities.
Additional costs include legal fees, notary charges, registration, and ongoing administration.
High-net-worth individuals often allocate significant assets to foundations for estate planning, asset protection, and tax optimization purposes.
Is a Liechtenstein Foundation a Trust?
No, a Liechtenstein foundation is not a trust, although it can perform similar functions.
- Foundation: A separate legal entity that holds assets and manages them according to its statutes for the benefit of beneficiaries or public purposes.
- Trust: A legal arrangement where a trustee holds and manages assets for beneficiaries, but the trust itself is not a legal entity.
Foundations offer greater legal certainty and continuity compared to trusts and are often preferred in civil-law jurisdictions like Liechtenstein.
What Is Liechtenstein Private Foundation?
A private foundation in Liechtenstein is primarily used for wealth management and succession planning.
Key features:
- Beneficiaries are usually private individuals or family members.
- Assets are legally owned by the foundation, providing protection from personal creditors.
- The foundation council manages assets in accordance with the founder’s instructions.
Private foundations are ideal for families seeking long-term preservation of wealth, confidential estate planning, and structured distribution to heirs.
What Is the Public Benefit Foundation Liechtenstein?
Public-benefit foundations are established to pursue charitable, cultural, scientific, or social objectives.
- These foundations can qualify for tax exemptions if recognized as serving the public interest.
- Governance must comply with regulatory requirements, and financial reporting is often required.
- Donors and founders can influence activities while ensuring alignment with philanthropic goals.
What’s the Difference Between a Foundation and a Charity in Liechtenstein?
While both foundations and charities can pursue public-benefit objectives, the key differences are:
- Legal Form: Foundations are separate legal entities with assets held in their name; charities may be structured as associations or trusts.
- Control: Founders of a foundation retain influence through statutes and governing bodies, whereas charities often have broader public oversight.
- Tax Treatment: Both can receive tax advantages, but foundations may have more flexible governance and asset management options.
Conclusion
Starting a foundation in Liechtenstein offers a flexible and secure way to manage assets, plan for succession, or support charitable causes.
By choosing the right type and following proper legal and administrative steps, founders can achieve long-term wealth preservation, asset protection, and philanthropic goals while benefiting from the country’s favorable regulatory framework.
FAQs
Is Liechtenstein a tax-free country?
No, Liechtenstein is not tax-free.
However, it offers favorable tax rates for foundations and individuals, particularly for private foundations with structured endowments.
What is the Liechtenstein controversy?
The controversy most often cited is the 2008 Liechtenstein tax affair, a major cross‑border investigation triggered by leaked banking data from LGT Bank in February 2008.
Hundreds of taxpayers in Germany and other countries used Liechtenstein‑based foundations and trust structures to conceal assets and evade tax.
In the wake of the scandal, Liechtenstein agreed to major reforms: it signed a tax information exchange agreement with the Organization for Economic Co‑operation and Development (OECD) in March 2009 and committed to increased transparency.
What is the tax rate for a trust in Liechtenstein?
Liechtenstein trusts are subject to a flat corporate income tax rate of 12.5% on worldwide income, excluding certain exempt categories.
However, dividends and capital gains from share sales are tax-exempt, offering favorable conditions for asset management and wealth structuring.
Is a foundation the same as a nonprofit?
Not exactly. Foundations can be private or public-benefit. Nonprofits typically refer to entities that operate exclusively for public or charitable purposes.
Foundations can serve private wealth management purposes as well.
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