Since 2003, Healy Consultants establishes trusts and foundations in every country in the world. One of our favorites is the Liechtenstein Foundation.
Advantages of a Liechtenstein foundation
- The foundation’s assets and non-commercial income are not subject to taxation in Liechtenstein;
- As long as the settlor is not on the Council of members, the Liechtenstein Foundation is impenetrable and protected by both the Liechtenstein and EU courts;
- The founder has special rights in the foundation to retain influence over the Liechtenstein foundation’s assets and its management. For example, the founder can i) appoint himself as a beneficiary of the foundation ii) revoke the structure or iii) appoint himself as the foundation’s protector (giving veto power over the foundation council);
- Following a tax reform in Liechtenstein, inheritance and gift tax have been abolished in Principality;
- There is no external supervision applied in the Principality, and the structure does not need to be need to be entered into the Commercial Register. Consequently, the beneficiaries of a Liechtenstein foundation remain anonymous, as the deed of wishes (the foundation’s constitution) is a private document;
- In Liechtenstein there is no “rule against perpetuities”, allowing the foundation assets to be invested and distributed indefinitely across many generations;
- Dissolving a Liechtenstein foundation is quick and straightforward process in comparison to other jurisdictions.
What is a foundation?
- A foundation is a hybrid of the characteristics of a company and a trust. This legal entity facilitates the confidential management of global family assets for the benefit of designated beneficiaries. To compare different family asset management structures, please refer to this foundation jurisdictions webpage (click link);
- Foundations in Liechtenstein can be public or private legal entities which differ in terms of the purpose and anonymity of the structure (for example, a family foundation or a charitable foundation);
- The foundation owns itself and simply has managers (known as the foundation council). At least one member of the foundation council must be resident in Liechtenstein;
- The founder defines the purpose and the beneficiaries of the foundation in the “deed of wishes” (foundation document). The terms of this document determine how the assets in the foundation are to be managed, controlled and distributed.
How to set up a foundation
- Healy Consultants and the founder draft the deed of wishes in accordance with Liechtenstein foundation law and the founder’s wishes. This document is strictly confidential and not available to the public as foundations are formed through the execution of a private deed;
- The founder can be an individual or company who remains anonymous and can designate himself as one of the beneficiaries of the foundation;
- Public foundations, (also known as common benefit foundations) must be registered with the Commercial Register in order to become legal entities. After registration, the particulars of this structure can be obtained via registry extract from the Land and Public Register Office;
- Private foundations are formed when the deed of establishment is signed. There is no requirement to submit application with the Commercial Register.
Healy Consultants feesThe estimated foundation registration cost is €29,440 (approximately US$31,990).
Optimum corporate structure
- The minimum capital required to setup a Lichtenstein foundation is 30,000 Swiss francs, Euros or US Dollars;
- It is mandatory for a Liechtenstein foundation to appoint an executive body called a foundation council, which must be appointed by the founder or his agent;
- The founder must appoint at least one council member who must be resident in Liechtenstein. Healy Consultants will provide a nominee resident council member for an additional fee of €7,900;
- Foundation council members owe fiduciary duties similar to those owed by directors of companies. Under article 2018 of the foundation law, members of the foundation council are personally liable in cases of negligent management that incurs losses for the foundation;
- The founder can include a clause in the foundation deed that would allow the founder to revoke the foundation and return the assets to his estate at any time. However, having such a clause may trigger adverse tax effects for the founder in his or her home country.
Accounting and tax considerations
- The creation of a Liechtenstein foundation incurs a one-time government fee of 0.2% of the total asset contribution payable to the Liechtenstein government;
- Liechtenstein’s tax reform abolished the 1% annual capital tax. Instead, foundations pay only the annual minimum tax of CHF1,200;
- There is no corporate, inheritance or gift tax in the Principality of Liechtenstein. However, our Clients may incur gift taxes in their country of residence when transferring assets into the foundation;
- Liechtenstein foundations that receive interest or business income directly are subject to Liechtenstein’s corporate tax rate of 12.5%. Consequently, Healy Consultants recommends investing the foundation’s funds through special purpose vehicles in low-tax jurisdictions.
- Healy Consultants will assist our client open a Liechtenstein foundation bank account or an international bank account in our Client’s preferred jurisdiction;
- View a global comparison of corporate bank account options (without travel).