Establishment of a foundation in Liechtenstein
The procedure for setting up a private-benefit foundation, family foundation in Liechtenstein, is simple and can be completed within a few weeks. State/official authorisation is not required. The drafting of the articles of association and by-laws is time-consuming. The foundation deeds are decisive for the future asset security and tax recognition of the Liechtenstein family foundation abroad.
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Formation (establishment) of a family foundation in Liechtenstein
The foundation can be set up by one or more natural or legal persons – domestic or foreign – both inter vivos and by will.
The foundation is established inter vivos by means of a
written declaration of foundation by the founder. A notarised deed is not required. A notarised signature is sufficient.
The foundation can also be established by testamentary disposition or by inheritance contract. The foundation declaration can be included in the foundation deed (articles of association).
Establishment of a fiduciary foundation
The beneficial founder (backer) is considered to be the direct founder in the legal sense; all legal effects are felt directly by him.
The trustee must identify the founder and establish him as the beneficial owner and disclose the identity of the founder to the Board of Trustees.
The disclosure obligation only applies to the internal relationship of the foundation, i.e. the identity of the beneficial founder of a Liechtenstein foundation is not listed in the founder’s deed.
Notice of formation
The Board of Trustees is obliged to file a notice of formation with the Office of Justice within 30 days of establishment. No further documents need to be submitted. The notification of formation must contain the following information:
- Name of the 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 founder has named the specific beneficiaries or the group of beneficiaries that can be individualised according to objective characteristics, unless this is evident from the purpose of the foundation as notified:
- confirmation that the foundation is not wholly or predominantly 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.
The official confirmation from the Office of Justice only confirms the filing of the notice but not the legal facts. As the state foundation supervisory authority, the Office of Justice can inspect the foundation documents. If an inspection reveals illegality, the foundation must be dissolved.
Legal comparison: State supervisory regime in DE, CH, AT
DE: Creation of the foundation through constitutive recognition by an administrative authority
CH: The state limits itself to monitoring compliance with the overall legal system. Family foundations are exempt from the official supervisory regime.
AT: The state guarantees legal protection through the ordinary courts. Notarial act of establishment and entry in the company register.
Creation of legal personality, commercial register
Private-benefit foundations (family foundations) in Liechtenstein are not required to be entered in the Liechtenstein commercial register. However, they are authorised to be entered. They acquire legal personality when the notification of formation is deposited with the Office of Justice.
Foundation deed (articles of association)
The foundation deed (articles of association) must be in writing and the signatures of the founder must be notarised. 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 certain assets, which must at least correspond to the statutory minimum assets of CHF 30,000.00, euros, US dollars
- Purpose of the foundation: In the case of a private-benefit foundation, in addition to the purpose to be defined by the founder in the foundation deed, the designation of the specific beneficiaries or the group of beneficiaries that can be individualised according to objective characteristics must also be stipulated, unless express reference is made instead to a supplementary foundation deed (by-laws) that regulates this.
The purpose of the foundation must indicate whether or not a commercial business is being conducted. 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 commercial operations and orderly accounting. - Date of establishment
- Duration of the foundation if it is limited
- Regulations on the appointment, dismissal, term of office and type of management (decision-making) and power of representation (signing authority) of the Board of Trustees:
- Determination of the utilisation of the assets in the event of dissolution of the foundation
- Surname, first name and domicile or company name and registered office of the founder. 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 person is acting as an indirect representative must be expressly indicated.
If the following contents are regulated or can be regulated, a note/reference/reservation must be included in the foundation deed (articles of association):
- the indication that a supplementary foundation deed has been or can be established
- the indication that regulations have been or may be issued
- the indication that other bodies have been or may be established. More detailed information on the composition, appointment, dismissal, term of office and duties can be provided in the foundation’s supplementary deed or regulations
- the reservation of the right to revoke the foundation or to amend the foundation documents by the founder
- the reservation of the right to amend the foundation deed or supplementary foundation deed by the Board of Trustees or another body.
- the exclusion of enforcement
- the reservation of conversion
- the provision that the foundation, although it is a private-benefit organisation, is subject to supervision
Legal comparison: Basic concepts of foundation law in DE, AT
DE: Foundation as sponsor of a commercially active company => possible
Foundation as a personally liable partner of a partnership => possible
Foundation as a holding company with limited liability => possible
Capital maintenance principle for
foundation capital => yes
AT: Foundation as a sponsor of a commercial enterprise => not possible
Foundation as a personally liable partner of a commercial enterprise => not possible
Foundation as a holding company with limited liability => possible
Capital maintenance principle for foundation capital => no
By-laws
The founder can include further provisions 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. For example, a more detailed description of the beneficiaries and the dedication of further assets that exceed the statutory minimum assets.
Regulations | Internal directives
Finally, regulations can be issued by the founder, the Board of Trustees or other responsible foundation bodies as internal directives, insofar as this is reserved in the foundation deed. The regulations must serve to concretise the content.
Formation costs
The one-time formation costs for simple foundations with minimum capital amount to CHF 5,000 flat rate (plus 7.7% VAT). Upon entry in the commercial register, additional fees of CHF 800 are incurred.
LCG Treuhand will be happy to draw up the articles of association and by-laws. Our specialised trustees are at your disposal as founding trustees.