Advantages of a foundation in Liechtenstein

The reform of tax and foundation law has brought a considerable leap in quality for Liechtenstein foundations. By harmonising with international standards, the Liechtenstein foundation opens up interesting, legally secure opportunities and advantages

  1. Founders‘ and beneficiaries‘ rights of influence: Liechtenstein foundation law grants founders and beneficiaries extensive rights of influence if required.
  2. Combination of family foundation and charitable status: The family foundation can use up to 49% of its surplus for charitable purposes.
  3. No need for state authorisation when setting up a foundation or amending the articles of association: Quick (formation time 1 week) and simple formation without a notary or state involvement
  4. Low minimum capital: The minimum capital on establishment of the foundation is 30,000 euros / dollars or Swiss francs. Subsequent investments or subsequent donations have no influence on the capital.
  5. Tax advantage low tax rate: The corporate income tax rate is 12.5%. Liechtenstein tax law does not recognise trade tax.
  6. No substitute inheritance tax in Liechtenstein
  7. Comprehensive tax exemptions: Only income generated by the foundation in Liechtenstein is taxed in Liechtenstein. Income from real estate and companies in other countries is tax-free in Liechtenstein. All dividends and profits from the sale of shares remain untaxed in Liechtenstein. Interest income is taxed at 12.5 % after deduction of the so-called equity interest.
  8. Liechtenstein foundation law offers a high degree of flexibility and legal certainty.
  9. Strong control rights: The well-developed system of internal control rights can replace (often internationally tax-damaging) external control.
Caution: Excessive rights of external influence and control (founder/beneficiaries) can be detrimental to international tax law (tax penetration of the founder).
  1. Effective asset protection: Strict separation of the foundation’s assets from the founder means that the foundation’s assets are effectively protected against external attacks.
Note: The disadvantage of the Liechtenstein foundation is that it can generate profits but cannot itself engage in commercial activities. There is an incomplete network of double taxation agreements.

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