Liechtenstein Foundation

The foundation is not suitable for the pursuit of commercial objects. Commercial activities may only be undertaken when such activities serve to achieve the founda­tion's non-commercial purpose or the type and scope of the investments held require commercial activity to be undertaken.

Only the non-profit foundation is subject, under certain circumstances, to official supervision.


Name

The name can be freely chosen in any language (in Latin or German characters), and imaginative names are also admissible. After registration, the company name is protected (exclusiveness of the registered name). Special permission must be obtained if you are intending to use national and international state or place names in the company name.

Language

German is the official language. A translation of the German-language formation deed may be prepared upon request.

Purpose/Object

A foundation exists to give effect to the stated, non-commercial wishes of its founder, as set out in a foundation deed and the articles of association. Liechtenstein foundations may only carry on business activities insofar as it is necessary for the realization of their non-commercial purpose.

Nominal Capital

The nominal capital, as determined in the articles, may be fixed in Swiss francs, euros or US dollars, however, attention must be paid to the minimum required capital. Upon formation the capital may be paid in cash or kind. The minimum capital must be CHF 30 000, or the equivalent value in any desired legal currency.

Formation

The Founder transfers assets he/she has into the foundation with a defined purpose. The Foundation has beneficiaries, who may be identified in a variety of ways. Certain requirements or specifications may be fixed in the articles so that the founder reserves certain rights to himself/herself (through a foundation board, as curator, or as protector) or by means of another regulation in the articles.

Creation

The foundation that is under obligation to register first comes into existence upon entry in the Public Register (Commercial Register). A foundation based on a deposit comes into existence with the signing of the formation documents.

Governing Bodies

The supreme authority is the foundation council, which conducts the foundation's business within the intendment of the articles, by-laws and regulations. The founder may designate other bodies or persons, such as the auditor, to investigate the activities of the foundation council, or limit the foundation council by granting protectors, curators or collators the rights to instruct, check or veto.

The appointment of an auditor is mandatory for registered foundations with business conducted in a commercial manner.

Administrative Body

At least one member of the administration (board of trustees) must have its law office address in Liechtenstein and be in possession of certain professional qualifications. In addition to this Liechtenstein administrative body, any number of natural or juridical persons, resident in Liechtenstein or abroad, may be co-opted. The administrative body is the company’s responsible body.

Auditor

If the registered Liechtenstein foundation engages in commercial activities or the articles provide for such activities, an auditor must be appointed. Trustees, trust companies with a trustee concession, auditors and chartered accountants are licensed to act as auditors.

Legal Representative

The legal representative is the official addressee of the foundation and the connecting link with the authorities, for instance, with the Tax Administration and the Public Register Office.

Beneficiaries

In the case of the foundation, the beneficiaries entitled to the yield and/or the assets are designated either by the founder or the settler, or, depending upon the provisions in the articles, by another body. In addition to deciding the entitlement to the beneficial interest, these persons or the body also determine, in the articles and/or by-law, the conditions and the extent of the beneficial interest. The by-laws which, as a rule, form an integral part of the articles and frequently have priority over them, need not be deposited with the Public Register Office. They may be revocable or irrevocable, modifiable or unalterable. It is also possible for amendments to be admissible to start with and then, following the occurrence of a certain event (for example, the death of the founder or settlor), for the by-laws to be unalterable. As a rule, the implementing bodies must, within certain limits, observe the founder’s or settlor’s instructions. Where no beneficiaries have been specifically designated it may be presumed that the founder is the beneficiary. In this case succession shall be by inheritance. If certain prerequisites are fulfilled, as determined by law and the articles, the beneficial interests shall be exempt from creditor’s attachment.

Accountancy

With the exception of the foundation by deposit, foundations are required by law to keep books of account. The books of account may be kept in any desired legal currency and also in any freely convertible currency and also in the English, French, Italian, Spanish or Portuguese language. The annual account which, under certain circumstances, must be submitted to the Liechtenstein Tax Administration Office, must be accompanied by a German translation.

Declaration

Voluntarily registered foundations that do not engage in commercial activities and whose purpose/object as laid down in the articles does not provide for the pursuit of such activities (thus a foundation solely for the investment and administration of assets or the holding of investments or other rights, without actually pursuing commercial activities) shall draw up a statement of assets and liabilities each year. Based on this, the Liechtenstein administrative body shall inform the Public Register Office that a statement of assets and liabilities is available and that in the preceding year commercial activities were not pursued (the statement of assets and liabilities must not be submitted). The deposited foundation is not required to make this declaration.

Time required for Formation

Not more than one week is required to form a Liechtenstein foundation.

Powers of Attorney

Powers of attorney may be conferred where, upon instruction of the administration, transactions are implemented by third parties. The holder of a power of attorney shall be under obligation to report to the administration. Due to the liability of the administration for the attorney it is usual to confer only specific powers of attorney limited with respect to time

Liquidation

Foundations by deposit may be deregistered in a few days. In all cases, a prerequisite for deregistration is the conclusion of liquidation.

Fees and Taxes

General note: In the case of companies organized in the legal form of domiciliary companies/holding enterprises, profits and asset growth are not subject to capital gains tax, or a tax on profits.

Assets transferred to the Liechtenstein foundation by persons residing abroad, as well as distributions to beneficiaries residing abroad are not subject to tax in Liechtenstein.

In the case of this form of company, the special corporation tax (capital tax) amounting to 0.1% of the capital and visible reserves, but not less than CHF 1000, is due annually.

a) Upon formation

- Stamp duty/formation duty

Upon the formation of the foundation the stamp duty amounts to 1 % of the taxable capital which accrues to the foundation liable to taxation. This is the case only if the capital exceeds 250.000 CHF. The same duty also becomes due when the capital is increased or when a change of hands takes place. If the capital amount is more than CHF 2 million, then the duty amounts to 0.75%. Upon petition, it may be reduced to 0.5% for capital amounts of CHF 10 mil­lion or more.

There is a further reduction for ecclesiastical, charitable and family foundations whose sole purpose is the administration of assets, investments, or permanent administration of investments in other undertakings, provided commercial activities are not pursued. For such foundations, the formation duty then amounts to 0.2% (with a minimum duty of CHF 200). Upon petition, this duty may be further reduced to 0.1% for capital amounts of CHF 5 million or more, and to 0.06 % for capital amounts of CHF 10 million or more.

- Registration or deposition Fees

A fee, dependent upon the capital involved and the legal form being registered, amounting to a minimum of between CHF 350-700 is due upon registration in the Public Register or (selective) deposition of formation documents, as provided by law.

b) Subsequent taxes

- Turnover Tax on Securities

In general, this amounts to 0.15% for domestic securities (Switzerland and Liech­tenstein) and 0.3% for foreign securities. The banks and brokers are normally liable for settlement; so, too, are other persons, in so far as they professionally undertake the acquisition and sale of securities. In addition, investment compa­nies, when fulfilling certain prerequisites, are deemed to be registered dealers in securities

- Value Added Tax (VAT)

Since January 1st, 1995 the turnover tax (referred to as WUST) has been replaced by the value added tax (VAT). Liechtenstein holding companies and domiciliary enterprises are exempt from VAT provided they have no domestic turnover. ‘Domestic’ embraced the common Swiss/Liechtenstein economic area.The VAT generally amounts to 7,6 %

The VAT is levied on:

* all domestic deliveries of goods and the provision of services;
* the importation of goods;
* goods consumed and services used domestically;
* services procured from abroad that amount to more than CHF 10,000 per annum.

For certain articles of daily use (e.g. food and beverage as well as cereals, medication, newspapers) a reduced rate of VAT is applied. At the present time this amounts to 2.4%.Exports are exempt from VAT.

* Customs Duties
* Other Fees

Fees may also accrue from the certification of signatures, the procurement of official confirmations and extracts from the Commercial Register, the granting of permission to register or deposit, the appointment of a liquidator, etc.

Registration or Deposition

All Liechtenstein foundations that undertake commercial activities in order to achieve their non-commercial purpose (e.g. youth hostel, old people's home, welfare foundation in association with an enterprise) are under obligation to register.

The mere obligation to deposit the foundation documents with the Public Register Office (without by-laws or regulations) is applicable to ecclesiastical foundations, pure and mixed family foundations (maintenance foundations, for instance) as well as foundations whose beneficiaries are specifically designated or definable. In this case, evidence of the existence of the foundation is not provided by any register and inspection is only possible when proof of an entitled interest is provided.

Submission of Balance Sheet

In so far as commercial activities are undertaken or, pursuant to the articles, such activities are possible, the annual account examined by the auditor must be submitted to the Liechtenstein Tax Administration Office.


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