Services · Trusts & private foundations

Private foundations: jurisdiction guide

Eight jurisdictions compared on capital, council composition, register transparency and tax. Open pricing, final quote confirmed in writing before we start.

What a private foundation actually is

A private foundation is a legal entity with no shareholders and no members. The founder transfers assets to it irrevocably, a council manages those assets under rules written in advance, and beneficiaries receive distributions on terms set out in a private set of regulations. There is no share or unit that can be sold, pledged or inherited: the foundation owns the assets itself and outlives its founder.

The structure was invented in Liechtenstein in 1926 as the civil law answer to the common law trust. The logic is the same - separate the property from the person who used to own it - but it is packaged as an ordinary legal entity rather than as a split of legal and beneficial ownership. That is precisely why a foundation is easier to explain to a notary in Madrid, a bank in Frankfurt or a court in Sao Paulo than a trust is.

A foundation normally runs on two documents. The charter (Stiftungsurkunde, acta fundacional) is public or close to it: name, objects, council, registered office. The regulations (Beistatut, reglamento) stay private: names of beneficiaries, shares, timing and conditions of distributions, the council's power to reduce or defer a payment. That split is the practical point of the whole design - the register sees the shell, the substance stays with your provider.

We work with eight jurisdictions, and they differ far more than the brochures suggest. One requires EUR 70,000 of capital, a three-person board and a statutory auditor. Another is happy with USD 1 and a single councillor. Below is a comparison on the parameters that actually drive the decision, plus an honest account of what a foundation does not do.

Foundation versus trust versus company

These three tools solve different problems, and substituting one for another is the most common mistake made at the outset.

The practical conclusion runs like this. A company does not solve succession: shares fall into the estate, probate opens separately in every country where assets sit, and the business spends a year or more without an owner who can take decisions. A trust solves succession best of all, but it requires the countries where beneficiaries live and assets sit to understand split ownership in the first place. A foundation sits in between: it produces the trust effect in a form that civil law jurisdictions read without a translator.

The flip side is that a foundation is not built for operating business. Most jurisdictions expressly bar a foundation from commercial activity beyond managing its own property. A trading business is held through a holding company whose shares belong to the foundation. If what you actually need is a trading entity, start with company registration and add the foundation on top later.

If a trust fits your problem better, we cover it separately: trusts overview and comparison of trust jurisdictions.

What foundations genuinely do well

Succession without probate in several countries. The assets already belong to the foundation, so no estate is opened jurisdiction by jurisdiction after the founder dies. The council carries on the same day. For a family with property in three countries and a brokerage account in a fourth, this is the main reason to build a foundation at all.

Holding a family group. Shares in operating companies move into the foundation, so control is not fragmented among heirs who each want something different. Distribution terms can be as detailed as you like: fixed shares, age thresholds, education conditions, a council power to suspend payments.

Providing for specific people. A child with special needs, an elderly relative, a widow, an heir who should not receive capital in one lump. Handing money over directly does not solve any of this. A foundation does: distributions run on a schedule and under conditions.

Cutting off forced heirship - with a caveat. Panamanian law expressly disapplies foreign forced heirship rules to property transferred to the foundation. That works in Panama. Whether to apply its own law is decided by the court at the deceased's last residence, and a French, German, Spanish, Brazilian or Argentine court may award heirs compensation out of other property.

Protection against future creditors. The word future is doing the work. Panamanian law gives creditors three years to challenge a transfer made to their detriment. A foundation created after a claim already exists protects you in none of the jurisdictions on this page.

Philanthropy with family control retained. Mixed-purpose foundations, part public benefit and part family, are permitted in Liechtenstein, Austria, Malta and Jersey.

Jurisdictions compared: capital, council, register

Liechtenstein is the only option in the table where neither the founder's name, nor the beneficiaries, nor in practical terms the existence of the foundation reaches a public register. The price of that privacy is 30,000 in the capital currency, a mandatory local trustee on the council and the most expensive administration on the list. One subtlety: the private asset structure regime with its flat CHF 1,800 charge is available only for genuinely passive holding - no economic activity, no control over participations, no lending to them - and such a foundation ceases to count as resident for double tax treaty purposes.

Austria is the opposite pole. The foundation is public, court-supervised, audited annually, and from 1 January 2026 noticeably more expensive: entry tax rose from 2.5% to 3.5%, the real estate equivalent rose from 2.5% to 3.5% as well, taking the combined charge on contributing property from 6% to 7%, and interim tax rose from 23% to 27.5%. Interim tax is credited when distributions are made, but until then the money sits with the treasury rather than working.

Panama and Seychelles occupy the budget segment. It works, with one caveat about lists. Panama left the FATF grey list in October 2023 and the EU anti-money-laundering high-risk list in 2025, but as of February 2026 it remains on Annex I of the EU tax list. That affects whether European banks will open accounts and, in several EU states, the tax treatment of payments. Seychelles was removed from Annex II in February 2026 after a positive Global Forum rating.

Jersey and Guernsey offer a British legal tradition, predictable case law and access to good banks, at a level of beneficiary privacy comparable to Panama. Guernsey is unusual in splitting beneficiaries into enfranchised and disenfranchised: the latter receive neither information nor accounts, and the guardian polices the council instead.

Malta is the only entry fully inside the EU, with the full set of directives, recognition and treaties. The price is 35% tax up front with a refund on distribution, a full beneficial ownership register and Maltese reporting.

Switzerland is deliberately absent from the table. A Swiss family foundation may only be established to meet the costs of upbringing, establishment in life and support of family members; a foundation that simply maintains a family is invalid. The detail is on our Swiss private foundation page. If only low-budget options interest you, see offshore private foundations.

Tax, CRS and reporting: what a foundation does not fix

A foundation changes the ownership structure. It does not change your tax residence and it does not take you out of automatic exchange of information.

CFC and income attribution rules. Germany attributes the income of a foreign family foundation to a founder with unlimited tax liability, or failing that to the beneficiaries, with a narrow carve-out for EU and EEA foundations where the assets are genuinely and finally separated. Austria applies a comparable approach to foreign foundations. In Russia a foundation is a foreign organisation, and the question is whether you are treated as a controlling person; if you are, notifications and profit inclusion follow. In the United States a Panamanian or Liechtenstein foundation is characterised either as a trust or as a corporation, and either way separate filings appear. Our general treatment sits on the controlled foreign companies page and in the tax systems overview.

The features that feel convenient are the ones used against you. A retained power to revoke, a power to replace the council at will, de facto instructions to the council, the founder as sole beneficiary during his lifetime - each of these is used by tax authorities and creditors' counsel alike to argue that the property never really left you.

CRS. A foundation falls into one of two boxes, and both lead to exchange. If it is professionally managed and holds mainly financial assets, it is an investment entity, therefore a financial institution, and it reports its own equity interest holders: the founder and any beneficiary who received a distribution in the reporting year. Otherwise it is a passive non-financial entity, and the bank looks through it and reports the controlling persons: founder, council members, guardian or protector and beneficiaries. Where the founder or a beneficiary is itself an entity, that entity's controlling persons are reported instead.

Beneficial ownership registers exist everywhere on this list. Panama runs a closed register maintained by the resident agent under its 2020 legislation. Seychelles has its own under the Beneficial Ownership Act 2020. Malta operates an EU-standard register. Jersey and Guernsey maintain registers accessible to the authorities. Closed means invisible to the public, not non-existent.

The bank will ask anyway. Who the founder is, where the money came from, who sits on the council, who receives distributions, why this structure specifically. It makes sense to agree the foundation jurisdiction with the bank before registration: some European banks will not open accounts for Panamanian or Seychelles foundations at all. We handle bank account opening and normally check the bank first rather than last.

Who should not use a foundation, and what goes wrong

This is the most useful section on the page, and the one most advisers keep shortest.

If the goal is to hide money. This is not the tool. CRS exchange, beneficial ownership registers, bank requirements and home-country reporting close that idea off. A foundation gives privacy from the public and from third parties, not from tax authorities.

If you want to cut tax while staying where you live. The territorial systems of Panama, Seychelles and Gibraltar mean the foundation pays no tax where it is registered. What you pay where you are resident is decided by your own law, not by the foundation's charter.

If you are not prepared to actually give the assets away. This is the single biggest reason structures collapse in litigation. A foundation where the founder remained the real owner is treated as a sham, and asset protection disappears with it.

If the problem already exists. Panamanian creditors have three years to challenge a transfer to the foundation. Independently of the foundation's jurisdiction, the insolvency law of your own place of residence applies with its own clawback periods.

If the budget does not match the jurisdiction. An Austrian foundation holding EUR 70,000 is formally possible and economically pointless: a three-member board, an auditor, annual accounts, entry tax. Liechtenstein is the same story. Below seven figures of assets the running costs eat the purpose, and on the first few million it is worth expressing annual administration as a percentage of the portfolio.

If beneficiaries live under strict forced heirship. The Panamanian rule operates in Panama. A court at the deceased's residence in France, Germany, Spain, Brazil or Argentina will apply its own law and may award heirs compensation out of other property.

If you want to run a trading business inside the foundation. Commercial activity beyond managing its own property is barred in most of these jurisdictions.

If you expect an easy exit. Winding up a foundation is a taxable event for beneficiaries, and in cost and time it is comparable to setting one up. You do not close a foundation the way you close a company.

If you have not decided who runs it after you. A foundation is built for decades; a provider is not. Write the mechanism for replacing the council and the resident agent in from the start. Austria adds a hard limit: a foundation whose purpose is to support individuals is, as a general rule, dissolved after 100 years unless all final beneficiaries unanimously agree to extend it.

How to choose the jurisdiction

The order of work is the reverse of what marketing suggests. You do not start with the jurisdiction.

1. Tax residence. Yours and the beneficiaries'. CFC and attribution rules determine whether the foundation is effective at all and which jurisdiction produces the least friction.
2. Asset mix. EU real estate points to Malta or Austria. A brokerage portfolio points to Jersey, Guernsey or Liechtenstein. Shareholdings across several countries point to Liechtenstein, Jersey or Panama.
3. Privacy or recognition. These two move in opposite directions. Liechtenstein maximises the first; Malta and Austria maximise the second.
4. The bank. Ask your chosen bank which foundation jurisdictions it accepts before you register, not after.
5. Model year ten, not year one. Registration is a one-off number; administration recurs annually and is what actually determines the total cost.
6. Who controls the council. Guardian, protector, veto rights, the procedure for replacing council members. This is the entire point of the structure and the part most often drafted from a template.
7. Get the quote in writing. Before work starts, split between our fee, government duties and third-party provider tariffs.

Fees

Fees are indicative and cover our work on a standard matter. We confirm the exact quote in writing after a short consultation, so you know the final figure before work begins. Government duties and bank tariffs are calculated separately unless expressly included.

What almost always sits outside the headline number: the minimum capital you contribute to the foundation itself, the annual fee of the resident agent and of any licensed council member, the guardian's fee, bookkeeping and audit where it is mandatory, and one-off costs for translating and legalising asset documents. We itemise all of it in the quote so there is no surprise a year later.

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