Services · Trusts & private foundations

Private foundation in Switzerland

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The short answer: the foundation exists, the scope is narrow

A private foundation in Switzerland is a Stiftung, the civil law answer to the common law trust. Unlike a trust, where the trustee holds the property, a foundation is a legal entity in its own right and owns the assets itself. It has no members, no shares and no owner: there is a deed, a purpose, a foundation board and a circle of beneficiaries.

The first fork in the road is decisive. Swiss foundations split into charitable and family foundations. Charitable ones are supervised and tax exempt, but they are not a vehicle for family wealth. That leaves the family foundation, the Familienstiftung, and here comes the uncomfortable part: article 335 of the civil code draws its permitted purposes far more tightly than most people arriving with this request expect.

Below: what the foundation may and may not do, how the reform is progressing and why you should not count on it, how a foundation is set up, what happens with supervision and confidentiality, how tax arises at entry, during the foundation's life and on distributions, and when Liechtenstein wins. The trust route has its own page: trust in Switzerland.

The family foundation under article 335

Article 335 of the civil code allows assets to be dedicated to a family by creating a family foundation to meet the costs of the upbringing and education of family members, their establishment in life, and their support in need, or for similar purposes. The second paragraph of the same article expressly prohibits family entails, the chained transmission of property down the generations with restrictions on disposal.

The Federal Supreme Court reads that list narrowly and consistently. A family foundation cannot be a general wealth accumulation vehicle, a substitute for a holding company or an unrestricted discretionary trust. Above all it cannot be a maintenance foundation: regular payments to family members simply to live on, untied to education, establishment or need, are not permitted.

The risk is not theoretical. A foundation whose purpose steps outside article 335 is exposed: its creation can be challenged and the wording of its purpose read by a court against the founder's intent. That is why our work starts with testing whether the purpose is admissible, not with booking a notary. If the client's real aim is to sustain the family's standard of living, a Swiss family foundation is the wrong tool, and it is better to hear that at the first meeting.

Reform: what is moving and what to expect

The restriction has irritated the market for years. On 15 December 2022 a motion was filed in Parliament with a title that needs no decoding: strengthen the Swiss family foundation, lift the ban on the maintenance foundation. It instructs the government to propose an amendment to article 335 removing the prohibition on maintenance distributions.

Context matters. The motion arrived exactly as the Swiss trust project was collapsing, and the parliamentary committee considered the two together: if there is to be no domestic trust, at least free up the foundation. The motion has been adopted by both chambers.

Now the honest part. An adopted motion is an instruction to draft a bill, not a law. As of September 2026 article 335 stands unchanged, the ban on maintenance foundations is in force, and neither the timing nor the final wording of any reform can be predicted. The fate of the trust project shows what happens to initiatives like this once the tax chapter comes up.

The practical conclusion: do not design a structure around the law you hope will exist. Build for the article 335 that applies today, and if the objective does not fit inside it, look at Liechtenstein or a trust rather than waiting for reform.

Setting one up: deed, capital, bodies

A foundation is created by public deed before a notary, or by testamentary disposition. The founder dedicates assets and fixes the purpose; after formation the assets are no longer theirs and cannot be taken back. That is not small print, it is the whole point of the structure.

One detail is frequently described using outdated information: since 1 January 2016 a family foundation acquires legal personality only on entry in the commercial register, and foundations formed earlier had to register by 31 December 2020. The change implemented FATF recommendations, so older texts stating that a Swiss family foundation is not registered are simply wrong.

Audit requirements depend on the size and structure of the foundation, and practice is lighter for family foundations than for supervised charitable ones. We check this separately on every project, because it drives the annual cost of keeping the structure alive.

Supervision, the register and confidentiality

The key difference from a charitable foundation: a family foundation is not subject to state foundation supervision. A charitable foundation answers to a federal or cantonal supervisory authority, with annual reporting, approval of purpose changes and inspections. Family foundations are exempt, and for many families that is the main argument in their favour.

The flip side is obvious. With no supervisor there is nobody to turn to when a conflict arises. A dispute between a beneficiary and the foundation board goes to the ordinary civil courts, and the cost of sloppy drafting in the deed is therefore higher than in a supervised structure. Internal controls - a protector, qualified majorities on the board, a defined process for renewing it - have to be built in from the start.

Publicity works like this. The commercial register entry is open: name, seat, purpose and the members of the foundation board are visible. The beneficiaries and the distribution rules are normally placed in the by-laws, which are not part of the public entry.

From 1 October 2026 the act on the transparency of legal entities, adopted by Parliament on 26 September 2025, comes into force together with a revised anti money laundering act, creating a central federal register of beneficial owners. That register is not public: access is for authorities and obliged parties. Layered on top is the automatic exchange of information, under which a foundation reports as a financial institution or a passive non financial entity and data on controlling persons and beneficiaries flows to their countries of tax residence. Confidentiality for a Swiss foundation today means the absence of publicity, not invisibility.

Taxation of a family foundation

This is where expectations usually break. A Swiss family foundation is not a tax saving device but an asset governance device, and tax arises three times: on entry, during the foundation's life and on distributions.

Two practical rules follow. First, the canton is chosen by calculation, not by taste. On a substantial endowment the difference in entry tax between cantons runs into millions, and the decision is made once and cannot be revisited. Second, obtain the advance tax ruling before the assets move, not after. For the wider picture see taxes in Switzerland and the country comparison under taxes.

A separate word on foreign beneficiaries. Germany applies attribution rules to foreign family foundations, taxing income in the hands of the founder and beneficiaries, and Russia looks at foundations through its controlled foreign structure regime. A clean Swiss structure does not shield anyone from the tax consequences where the recipient lives, so both sides have to be modelled together.

Who a Swiss foundation is wrong for

Anyone who wants to fund the family's standard of living. Article 335 prohibits it, and stretching the purpose clause to get around the ban is a poor idea: broad clauses are exactly what courts take apart.

Anyone unwilling to part with the assets. A foundation is irrevocable, and the founder holds neither a share nor a claim. Trying to retain effective control breaks the structure from two directions at once: in civil law, where the transaction can be challenged, and in tax, where the assets are attributed back to the founder.

Anyone chasing tax savings. As shown above, the usual result is the opposite: tax on entry, tax on profit and tax on distributions.

Anyone who wants to hold an operating business and distribute profits freely to the family. A holding company with a shareholders agreement and a will fits better, or a Liechtenstein foundation where more freedom is needed.

Anyone with less than a few million. Notary, register, board, accounting, possible audit, banking - the fixed costs do not scale down.

What tends to go wrong: the purpose is drafted loosely and construed years later against the family; the canton is chosen without modelling the entry tax; heirs with a compulsory share challenge the endowment as a lifetime gift; the board drifts away from the family over a generation and the deed provides no way to renew it; beneficiaries move to countries that treat the foundation as transparent; assets are moved in on the eve of creditor claims and the transfer is clawed back. Every one of these is designed out at the deed stage, because changing a foundation's purpose afterwards is extremely hard.

Swiss foundation, Liechtenstein or a trust

Switzerland wins on reputation, banking and the absence of ongoing supervision for family foundations. It loses on having the narrowest scope of permitted purposes in the region. Liechtenstein does not impose that limit.

Combinations are normal: a Liechtenstein foundation with a Swiss bank account, or a Jersey law trust with a Swiss trustee, delivers flexibility where the Swiss form runs into article 335. Related pages: Liechtenstein private foundation, Jersey foundations, trust in Switzerland. For the full range see trusts and private foundations. If the foundation is tied to the family relocating, see also Swiss residence permits.

Fees

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. Government fees, notarial charges and bank tariffs are billed separately unless explicitly included.

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