Liechtenstein

The Liechtenstein Foundation (Stiftung) is a legal entity established under the Persons and Companies Act (PGR) of Liechtenstein, primarily used for asset protection, estate planning, and philanthropic or private benefit purposes. As one of the most recognized foundation regimes in Europe, Liechtenstein’s legislation provides a flexible yet robust legal structure that accommodates both private and public interests while ensuring regulatory alignment with international standards.

A Liechtenstein Stiftung is a separate legal person without shareholders or members. It is established through a foundation deed (Stiftungsurkunde), which must be executed in writing and signed by the founder (or their authorized representative). The foundation acquires legal personality upon entry into the Commercial Register (Public Register), unless exempted due to its private-benefit nature, in which case registration is optional but still possible under certain conditions.

The foundation deed typically sets out:

• The name and seat of the foundation
• The purpose (either charitable or private)
• Initial endowment of assets
• The internal organization of the foundation
• Governance structure and appointment of organs

The founder can be a natural or legal person and may reserve certain rights, including the power to amend the foundation deed, appoint or remove foundation council members, or revoke the foundation altogether under specific conditions.

Liechtenstein foundations are generally divided into two main categories based on their purpose:

1. Private-Benefit Foundations:
Established to benefit specific individuals, families, or a defined group of persons (e.g., for estate and inheritance planning, family wealth preservation, or succession structuring). These are typically not registered in the public Commercial Register, unless they carry out commercial activity that goes beyond mere asset management.

2. Common-Benefit (Charitable) Foundations:
Formed for purposes that serve the public interest, such as education, science, humanitarian causes, religion, or culture. These must be registered in the Commercial Register and are subject to oversight by the Foundation Supervisory Authority (Stiftungsaufsichtsbehörde).

Foundations cannot be used for commercial trading as a primary purpose but may engage in incidental commercial activity if it is closely related to the foundation’s objectives or necessary for the management of its assets.

The founder is required to endow the foundation with a minimum capital of CHF 30,000 (or the equivalent in EUR or USD). The assets endowed become the autonomous property of the foundation, meaning they are no longer owned or controlled by the founder. Once endowed, the foundation assets are ring-fenced from the founder’s personal creditors, subject to certain legal exceptions, such as fraudulent conveyance.

There is no obligation to publish financial accounts or disclose detailed information regarding the assets or beneficiaries for private-benefit foundations not entered into the public register, providing a high degree of confidentiality under Liechtenstein law.

Liechtenstein foundations are managed by a Foundation Council (Stiftungsrat), which is the primary executive body responsible for administering the foundation and implementing its purpose. The council must consist of at least one natural or legal person. However, in practice, more members are usually appointed, particularly where oversight or specialist asset management is required.

At least one member of the Foundation Council must be a Liechtenstein-resident trustee, licensed under the Trustee Act (Treuhändergesetz). This ensures a local point of contact and a degree of regulatory supervision, particularly where complex financial or fiduciary arrangements are involved.

Other possible organs include:

• Protectors or Supervisory Bodies: To oversee compliance with the foundation’s purpose and internal regulations.
• Auditor: Required for common-benefit foundations or if mandated by the deed.
• Advisory Committees: May be appointed to assist with specific matters (e.g., investment policy).

The founder may reserve the right to appoint and remove members of the Foundation Council, although such rights typically lapse upon the founder’s death unless otherwise provided for.

Beneficiaries of a Liechtenstein private foundation may be:

• Named directly in the foundation deed or by reference to objective criteria
• Identified in a supplementary by-law (Reglement), which is not filed with the registry and is therefore not publicly accessible

The foundation’s governing documents specify the terms and conditions under which beneficiaries may receive distributions. These may be fixed (e.g., annual income to named individuals) or discretionary, depending on the structure and the intentions of the founder.

Importantly, beneficiaries do not possess ownership rights over the foundation’s assets; they hold only an expectancy or claim, which becomes enforceable under the conditions set by the foundation’s governing documents.

Common-benefit foundations are subject to ongoing supervision by the Liechtenstein Foundation Supervisory Authority, which ensures that their operations remain in line with the stated purpose. Private-benefit foundations are generally exempt from such supervision, provided they do not engage in public or commercial activity.

All foundations, regardless of type, must:

• Maintain accurate financial records
• Ensure that management is conducted in accordance with Liechtenstein law and internal governance rules
• Retain certain core documents (e.g., foundation deed, regulations, minutes of meetings)

Foundations established in Liechtenstein are subject to corporate income tax at a flat rate of CHF 1,800 per year, provided they do not carry out commercial activity. If the foundation engages in business activity, it becomes subject to standard corporate income tax on its profits, currently set at 12.5%.

Foundations that are used for private wealth or estate planning, and which do not operate a commercial business, generally do not incur any further local taxation. 
Liechtenstein foundations are used in a variety of contexts, including:

• Intergenerational wealth transfer
• Family asset protection
• Succession planning for business owners
• Charitable giving and endowment structuring
• Holding of intellectual property or high-value assets

The ability to separate legal ownership from benefit, combined with robust asset protection and high confidentiality, makes Liechtenstein foundations a durable legal tool in both civil law and common law contexts.

The Liechtenstein foundation offers a sophisticated legal framework for the management and preservation of private or public wealth. With flexible governance, legal autonomy, and compliance with international standards, it serves as a versatile vehicle for estate planning, philanthropy, and long-term asset structuring. While private-benefit foundations are largely shielded from public scrutiny, robust regulatory mechanisms ensure alignment with international obligations and transparency standards when required.