Liechtenstein foundations are renowned for their versatile structures, robust asset protection, succession planning solutions, and attractive tax benefits. With a stable political and economic environment, this small European country has become a popular destination for individuals and businesses seeking a secure and flexible solution for wealth management, succession planning, and philanthropy. In this comprehensive guide, we’ll explore the steps and requirements for setting up a Liechtenstein foundation and help you navigate the process with ease.
Understanding Liechtenstein Foundations
A Liechtenstein foundation (Stiftung) is a distinct legal entity that combines features of both trusts and corporations. It offers a high level of privacy, asset protection, and flexibility, making it an attractive option for various purposes, such as:
- Estate and succession planning
- Asset protection and management
- Charitable and philanthropic endeavors
- Holding and managing family wealth
- Business and investment purposes
Types of Liechtenstein Foundations
Liechtenstein foundations come in two primary forms:
- Family Foundation: Designed for private wealth management and estate planning, these foundations benefit a specific family or group of individuals. They are not subject to public registration, offering enhanced privacy.
- Charitable Foundation: Established for charitable, religious, or other public benefit purposes, these foundations enjoy tax-exempt status but are subject to public registration and supervision by the Liechtenstein authorities.
Steps to Establish a Liechtenstein Foundation
- Choose a foundation name: Select a unique name that is not already in use by another Liechtenstein foundation. The name must include the word “Stiftung” or an equivalent term to indicate its foundation status.
- Draft the foundation deed: The deed must specify the foundation’s purpose, governance structure, beneficiaries, and asset contributions. It must be executed before a Liechtenstein notary public.
- Appoint a foundation board: The board is responsible for managing the foundation’s assets and ensuring its objectives are met. At least one board member must be a Liechtenstein resident.
- Register the foundation: Submit the foundation deed, proof of initial assets, and the required government fees to the Liechtenstein Office of Justice. Registration typically takes 2-4 weeks.
- Open a bank account: Set up a bank account in Liechtenstein or another jurisdiction to manage the foundation’s assets.
Taxation and Regulatory Compliance
Liechtenstein foundations are subject to a low, flat annual tax of 0.1% on their net assets, with a minimum tax of CHF 1,000. Family foundations with no commercial activities are exempt from VAT. Charitable foundations may qualify for tax-exempt status.
Foundations must maintain proper accounting records and submit annual financial statements to the Liechtenstein authorities. While family foundations are not subject to public registration, they must still comply with anti-money laundering and know-your-customer regulations.
Setting up a Liechtenstein foundation can be a strategic way to manage and protect your assets while benefiting from the country’s favorable legal and tax environment. By following the steps outlined in this guide and seeking expert advice, you can successfully establish a foundation that aligns with your objectives and safeguards your wealth for generations to come.
Note: This information is for informational purposes only and should not be considered legal or financial advice. Always consult with a qualified attorney or financial advisor before setting up a Liechtenstein foundation or making any significant financial decisions.
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