Liechtenstein Foundation as a private asset structure PAS

Upon application, the Liechtenstein family foundation can benefit from special tax concessions as a private asset structure (PAS). In Liechtenstein, private asset structures are only subject to the minimum income tax of currently CHF 1,800 under certain conditions and are exempt from ordinary income tax.

Conditions for the special status PAS

Upon application, the Liechtenstein foundation can benefit from special tax concessions as a private asset structure under the following conditions:

  • The foundation may not engage in any economic activity in pursuit of its purpose.
  • Beneficiary status is limited to the following groups of persons: natural persons acting in the context of their private asset management, asset structures acting exclusively in the interests of the private assets of one or more natural persons, and intermediaries acting for the account of one of the above-mentioned persons.
  • 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 pursuit of 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 of a PAS family foundation

The following economic activities are prohibited for a PAS family foundation:

  • Any offering of goods or services on the market constitutes an unauthorised economic activity.
  • The acquisition or sale of financial instruments in accordance with the Liechtenstein Asset Management Act is permitted, provided no active regular trading 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 not permitted, as the letting regularly constitutes an economic activity. It remains permissible to hold a property that is transferred to beneficiaries free of charge or for own use by the private asset structure. However, the private asset structure may not decide which property is to be acquired in individual cases.
  • The granting of loans generally constitutes an economic activity. Interest-free loans to beneficiaries, on the other hand, are a permissible use of profits.
  • A private asset 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. A seat on the board of directors of the companies is generally not possible. The private asset structure or beneficiaries must restrict themselves to exercising their shareholding rights at the General Meeting. If the private asset structure holds a qualified shareholding or has blocking minorities or voting majorities, there is an increased obligation to prove that no influence is exerted on the management of the company. However, controlling an investment company by exerting influence is permissible if the investment company is not commercially active and is itself a private asset structure, for example.

Taxation of the PAS

Foundations that have been granted the special status of a private asset structure PAS are exempt from income tax and are not assessed. They are subject to a minimum income tax of CHF 1,800.

Caution: Foundations under the PAS taxation regime are no longer considered resident persons within the meaning of the double taxation agreements and therefore lose their eligibility status.

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