Services · Trusts & private foundations

Liechtenstein private foundation (Stiftung)

How a Stiftung works: capital, foundation council, supervision, tax and an honest look at the risks. Open pricing.

A Liechtenstein private foundation (Stiftung) is a legal entity with no members and no shareholders. The founder transfers assets to the foundation, the foundation becomes their owner, and the foundation council manages them under the rules the founder set in the constitutive documents. Nobody holds shares that could be inherited, sold or attached: there is only a class of beneficiaries and a set of distribution rules.

The institution sits in article 552 of the Persons and Companies Act (PGR) and was substantially rewritten by the 2009 foundation law reform. Unlike the many offshore copies, the Liechtenstein Stiftung is the original, surrounded by a century of case law, settled doctrine and a professional community of licensed administrators.

Families choose a foundation when the task is consolidating wealth across generations, separating ownership from management of a business, or making sure that an inheritance does not tear a company into fragments held by heirs with conflicting interests. The other local vehicle is covered on the Liechtenstein trust page: if the choice is still open, start by comparing the two.

How a foundation differs from a company and from a trust

The difference from a company is that a foundation has no owners. In a joint stock company there are always shares, which means heirs to shares, matrimonial disputes over shares, and enforcement against shares. A foundation has no such layer: the assets belong to the foundation itself, and beneficiaries receive distributions under rules rather than by title.

The difference from a trust is legal personality. A trust is a relationship in which the property legally belongs to the trustee. A foundation is a person that itself holds accounts, shareholdings and real estate and itself contracts with third parties. The practical consequence: banks, registrars and notaries in civil law countries understand a foundation without explanation, whereas a trust sometimes needs a separate legal memorandum on applicable law.

There is another consequence. A foundation has a governing body with a clear structure, duties and liability. For a family that plans to bring the next generation into management over time, that is easier to work with than a contractual arrangement: a seat on the foundation council is simpler to describe than the position of a trust protector.

One recent regulatory shift is worth noting. The trust law reform that took effect on 1 July 2026 raised requirements specifically for trusts: a mandatory information-entitled person, written policies, minutes, long retention periods and expanded FMA powers. Foundation law was not materially affected. As of 2026 the foundation is the relatively more predictable option in terms of administrative burden.

Requirements: capital, deed and council

The minimum capital is 30,000 in Swiss francs, euros or US dollars. Declaring it is not enough: the capital must actually be paid in, and the foundation council confirms that the funds are at the foundation's free disposal. That is the first departure from most offshore foundations, where the stated capital stays on paper.

The foundation deed (Stiftungsurkunde) is made in writing and the founder's signature is certified. It records the name, seat, purpose, capital and the way the bodies are constituted. The detailed class of beneficiaries and the distribution rules are usually moved into a supplementary internal document, the Beistatut. It is filed with no register and stays with the foundation council or a notary. This is the core confidentiality mechanism of a Liechtenstein foundation: the frame becomes visible, the substance of the family arrangement does not.

The foundation council (Stiftungsrat) is a mandatory body of at least two members, individuals or legal entities, resident or not. The key requirement: at least one council member with management and representation authority must be a so-called article 180a PGR person - a national of an EEA state or a person granted equal status by international agreement holding a trustee licence, or a legal entity with the corresponding authorisation. In plain terms, the foundation does not function without a local licensed professional on the council, and his fee is a permanent cost line.

A private-benefit foundation acquires legal personality when the notice of formation (Gründungsanzeige) is filed with the Office of Justice. The filing deadline is 30 days from establishment, and the accuracy of the information is confirmed by a lawyer, trustee or other authorised person.

Private-benefit and common-benefit foundations: register, supervision, audit

Liechtenstein law splits foundations into private-benefit (privatnützig) and common-benefit (gemeinnützig), and the regimes differ fundamentally. This is the first thing to settle, because the choice drives both publicity and running costs.

A private-benefit foundation is not entered in the Commercial Register and is not supervised: it files a notice of formation with the Office of Justice and stops there. No auditor need be appointed. Control over the council comes from inside - beneficiary information rights and, where necessary, the courts.

A common-benefit foundation is registered in the Commercial Register and supervised by STIFTA. Before the 2026 reform the authority was called STIFA; once its remit was extended to charitable trusts it was renamed the foundation and trust supervisory authority. For each common-benefit foundation the court appoints an independent audit authority, which reports to STIFTA within nine months of the end of the financial year. The auditor reviews compliance with the foundation's purpose, the use and distribution of assets, asset management, accounting and organisation. STIFTA may exempt a foundation from the duty to appoint an audit authority, in which case it inspects the foundation itself every three years.

There is one more option: a private-benefit foundation may voluntarily submit to STIFTA supervision by so providing in the foundation deed. It then falls under the same regime as a common-benefit foundation, audit included. Families do this sometimes for extra legitimacy in the eyes of banks and foreign tax authorities, and sometimes to give themselves an external referee over the council. It is not free: audit and external reporting are added.

Beneficiaries: four categories and information rights

Liechtenstein law distinguishes several types of beneficiary, and the type chosen drives both asset protection and the tax characterisation in the beneficiary's country of residence:

• beneficiaries with an enforceable claim - a legally protected entitlement to distributions;
• prospective beneficiaries - the right arises in the future, on a condition or in turn;
• discretionary beneficiaries - receive distributions only at the council's discretion, with no right to demand;
• ultimate beneficiaries - receive the remaining assets on liquidation.

The distinction is not cosmetic. A hard entitlement is an asset that the beneficiary's home country may treat as his property, with all that follows: it enters the bankruptcy estate, it is split on divorce, it is taken into account for tax. A discretionary position creates no such exposure, but equally guarantees nothing. Most family structures are built on the discretionary model, supported by a detailed letter of wishes that does not bind the council but tells it what the founder intended.

Beneficiaries have information rights in respect of the foundation. Those rights can be narrowed in the documents but not extinguished. The practical point: you cannot fully shut an adult beneficiary out of knowledge about the structure, so it is better to decide in advance who learns what than to litigate it once a conflict has started.

A further layer is the beneficial ownership register. Data is filed within 30 days; the register is not public, but banks, financial institutions and other persons with customer due diligence duties can access it. A foundation's confidentiality shields you from outsiders, not from the state.

How a Liechtenstein foundation is taxed

A foundation is a legal entity and as a rule pays corporate income tax at 12.5%. A number of income streams are excluded from the base: dividends, gains on the disposal of participations, and income from foreign real estate. In other words, a classic holding portfolio inside a foundation is taxed very lightly.

The second option is private asset structure status (Privatvermögensstruktur, PVS). A foundation that carries on no economic activity and merely acquires, holds, manages and disposes of financial instruments, participations and cash pays only the minimum tax of CHF 1,800 a year and files no full accounts or tax return. The constraints: no commercial activity, and no publicly traded interests. The moment the foundation starts trading, the status is lost and the general regime applies.

At family level the picture is comfortable: inheritance and gift tax were abolished on 1 January 2011, coupon tax is gone, and distributions to beneficiaries and the liquidation surplus are not subject to withholding tax.

The foundation must nonetheless classify itself for CRS purposes, as either a financial institution or a passive non-financial entity. In the passive case the bank reports the controlling persons to the tax authorities - the founder, the beneficiaries and, where no other controlling person can be identified, the council members - along with the value of the assets and the amounts distributed. The ability to elect financial institution status through an opt-in was removed in 2020. How all of that lands under your own country's rules is a separate calculation: see CFC and taxes by country.

Asset protection: what works and where it breaks

The protection a Liechtenstein foundation offers is real but conditional. The mechanism is this: the transferred property ceases to be the founder's property, so the founder's creditors cannot reach it and forced heirship claims do not extend to the foundation's assets - provided the conditions are met.

The core condition is time plus surrender of control. Practice works to a two-year period: where the founder survived the transfer by two years, gave up his reserved powers (above all the power to revoke and amend), and the forced heirs are not themselves beneficiaries, the foundation's assets in Liechtenstein generally become immune to challenge. While the power of revocation is retained, the founder is treated as not having parted with the property at all, and the clock does not start.

Hence the central trade-off that has to be spelled out to every client: a revocable foundation is convenient and flexible but protects poorly. An irrevocable foundation protects, but demands a psychologically hard step - genuinely handing the assets to the council. There is no middle option with both full control and full protection, whatever a structure salesman promises.

The second way to break the protection is de facto control outside the documents. If the council rubber-stamps the founder's instructions, if a mandate agreement obliges it to obey, if the foundation account is used as a personal wallet, the structure turns out on examination to be a sham. A foreign court or tax authority then looks through the foundation at the founder, and the whole point is lost. This is where beautifully drafted structures usually fall apart.

Why Liechtenstein costs more than offshore, and who it does not suit

The price difference reflects the work involved, not a premium for prestige. The budget covers the 30,000 of capital that is actually paid in, the fee of the licensed article 180a council member, notarial acts, drafting a deed and by-laws for a specific family, bank compliance at Liechtenstein or Swiss level, annual administration and the CHF 1,800 minimum tax. In most island jurisdictions half of those lines simply do not exist - and neither does the century of case law people come here for.

Who a Liechtenstein foundation does not suit:

• Capital below the break-even point. Fixed costs do not scale down. With modest assets it is cheaper and more honest to rely on a will, a marital agreement and properly documented ownership.
• Operating a business inside the foundation. A foundation is not built for trading or providing services. Commercial activity belongs in a subsidiary that the foundation owns. Otherwise PVS status is lost and questions arise about the foundation's purpose. If a company is what you actually need, see company registration in Liechtenstein.
• Unwillingness to give up control. To repeat: the more control is retained, the less protection remains. If parting with the assets is emotionally impossible, the foundation becomes an expensive decoration.
• Residence in an attribution-tax country. Germany attributes family foundation income directly to the founder and beneficiaries. In Russia a foundation is treated as a foreign structure without legal personality, triggering notification duties for the controlling person and, in defined cases, tax on profits. Austria, Italy, Spain and France have their own anti-avoidance rules for foundations. The model has to be run against your country before the foundation exists, not after.
• A weak source of funds file. Liechtenstein is demanding: the bank and the licensed professionals will go through the origin of the capital in detail and will not accept a one-line answer. Sometimes the right sequence is to put the ownership history in order first and discuss the structure second.
• Expecting full anonymity. There is a beneficial ownership register, there is CRS, and there is a bank. Confidentiality here means protection from the public and competitors, not from states.

What usually goes wrong in practice: the documents are templates that do not describe the real family arrangement; the founder formally created an irrevocable foundation but in fact runs everything; nobody revisits the structure when a beneficiary moves country; the foundation was built for a tax saving that simply does not arise in the founder's country of residence. Regional alternatives are the Swiss private foundation and the Austrian Privatstiftung; among cheaper options, the Panama private foundation. For the wider overview see trusts and private foundations.

Fees

The cost of a foundation is made up of the capital paid in, the work of licensed professionals, state charges and annual administration. It depends on the volume of assets, the number of beneficiaries, whether there are operating subsidiaries and how deep the source of funds review goes, so it is quoted case by case.

Prices are indicative and cover our work on a typical case. We confirm the exact quote in writing after a short call - you know the final number before we start. The 30,000 minimum capital, government fees, the CHF 1,800 minimum tax and bank tariffs are billed separately unless explicitly included.

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