para. | paragraph
Treaty on the Functioning of the European Union
AO | Tax Code
Edition | Edition
BewG | Valuation Act
BFH | Bundesfinanzhof
BGB | Civil Code
BStBl. | Bundessteuerblatt
or | or
CHF | Swiss Francs
EStG | Income Tax Act
EUR | Euro
f. | following
ff. | following
according to
GG | Basic Law
i. d. R. | usually
i. S. d. | in the sense of
i.V. m. (iVm) | in conjunction with
Come. | Comment
KStG | Corporate Tax Act
lit. | littera (letter)
No | Number
PGR | Personal and Corporate Law (PGR) of 20.1.1926 (Liechtenstein)
rkr. | legally binding
paragraph | recital
S. | sentence/page
SteG | Law on state and municipal taxes (Liechtenstein)
Tz. | subtotal
among others | among others
Judgment | Judgment
from
cf. | compare
e.g. | for example
Year | German Foundation | Tax burden | Liechtenstein Foundation | Tax burden
1 | 30.000.000,00 € | 225.000,00 € | 30.000.000,00 € | 37,500,00 €
2 | 31.275.000.00 € | 234.562,50 € | 31.462.500.00 € | 39.328.13 €
3 | 32.604.187.50 € | 244.531,41 € | 32.996.296.88 € | 41.245.37 €
4 | 33.989.865.47 € | 254.923.99 € | 34.604.866.35 € | 43.256.08 €
5 | 35.434.434.75 € | 265.758.26 € | 36.291.853,58 € | 45.364,82 €
6 | 36,940.398.23 € | 277.052,99 € | 38.061.081,44 € | 47,576.35 €
7 | 38.510.365.15 € | 288.827.74 € | 39.916.559.16 € | 49.895.70 €
8 | 40,147,055,67 € | 301,102,92 € | 41,862,491,42 € | 52.328,11 €
9 | 41.853.305.54 € | 313.899.79 € | 43.903.287.88 € | 54.879.11 EUR
10 | 43,632.071,02 € | 327.240,53 € | 46.043.573.17 € | 57.554.47 €
11 | 45.486.434.04 € | 341.148.26 € | 48.288.197.36 € | 60.360.25 €
12 | 47.419.607.49 € | 355.647.06 € | 50.642.246.98 € | 63.302.81 €
13 | 49.434.940.81 € | 370.762.06 € | 53.111.056.52 € | 66.388.82 €
14 | 51,535.925.79 € | 386.519.44 € | 55.700.220,52 € | 69.625.28 €
15 | 53.726.202,64 € | 402,946.52 € | 58.415.606.27 € | 73.019,51 €
16 | 56.009.566.25 € | 420.071.75 € | 61.263.367.08 € | 76.579.21 €
17 | 58.389.972,81 € | 437.924.80 € | 64.249.956.22 € | 80.312,45 €
18 | 60.871.546.66 € | 456.536.60 € | 67.382.141.59 € | 84.227.68 €
19 | 63,458.587.39 € | 475.939.41 € | 70.667.020.99 € | 88.333.78 €
20 | 66.155.577.36 € | 496.166.83 € | 74.112.038.27 € | 92.640.05 €
21 | 68.967.189.39 € | 517.253.92 € | 77.725.000.13 € | 97.156.25 €
22 | 71.898.294.94 € | 539.237.21 € | 81.514.093,89 € | 101.892.62 €
23 | 74.953.972,48 € | 562.154.79 € | 85.487.905.97 € | 106.859.88 €
24 | 78.139.516.31 € | 586.046.37 € | 89.655.441.48 € | 112.069.30 €
25 | 81.460.445.75 € | 610.953,34 € | 94.026.144.15 € | 117.532.68 €
26 | 84.922.514.70 € | 636.918.86 € | 98.609.918.68 € | 123.262.40 €
27 | 88.531.721.57 € | 663.987.91 € | 103.417.152,21 € | 129.271,44 €
28 | 92.294.319.74 € | 692.207.40 € | 108.458.738.38 € | 135.573.42 €
29 | 96.216.828.33 € | 721.626.21 € | 113.746.101.88 € | 142.182.63 €
30 | 100.306.043,53 € | 752.295.33 € | 119.291.224.34 € | 149.114.03 €
31 | 104.569.050.33 € | 30.636.080.94 € | 125.106.671.53 € | 156.383,34 €
32 | 79.161.421.96 € | 131.205.621,77 €
BFH judgment of 28.06.2007 | II R 21/05 BStBl 2007 II p. 669
BFH judgment. of 03.11.2010 | IR 98/09, BStBl. 112011, 417
BFH judgment of 16.2.2012 | II B 91/11, BFH/NV 2012, 952
BFH judgment of 5.12.2018 | IIR 9/15, BStBl. II 2020, 655
BFH judgment of 3.7.2019 | IIR 6/16, BStBl. II 2020, 61
FG Niedersachsen, judgment of 29.6.2022 | 3 K 87/21, EFG 2022, 1471 (Rev BFH II R 30/22)
Hessian FG, judgment of 7.3.2019 | 10-K-541/17, EFG 2019, p. 930 (rkr.)
If you hope for tax advantages from foundations in Liechtenstein, you should inform yourself in advance. Even when establishing a foundation in Liechtenstein, one must have thought of all eventualities in order to make the statutes stormproof for the occurrence of these cases. After all, the foundation should continue as long as possible and secure future generations. For this purpose, the organs are to be designed accordingly. But you should also pay attention to the tax peculiarities here. How, for example, is the taxation of the foundation in Liechtenstein and of the donor in Germany? What are the differences in current taxation between a foundation in Germany and Liechtenstein? All this tells you now the reading of this article.
List of abbreviations
Introduction
I. Starting point
The worldwide high inheritance tax burden in Germany and the ever-present problem of succession have brought the establishment of foundations as an important instrument of asset management and tax optimization into focus. In Germany, as of March 2021, there were 30,158 foundations, which is a historically high level.1 In the context of this development and the problem of preserving assets through the fictitious succession of German foundations, it makes sense to take a look outside German law and thus consider the foundation rights options in an international framework. Liechtenstein is manifesting itself as an attractive location, which represents a promising option for the establishment of foundations, in particular family foundations, due to specific legal and tax framework conditions. The present investigation is a starting point for examining the tax advantages of foundations in the phases of establishment and ongoing activity in Liechtenstein and also for elaborating the possible disadvantages.
Il. course of investigation
In order to examine the tax advantages of foundations in Liechtenstein in detail, the work follows the following examination method. First, the tax treatment of the establishment of foundations is analysed, with the focus on the tax implications for the founder in Germany and the taxation of the foundation in both Germany and Liechtenstein. Subsequently, the focus will be on ongoing taxation, with the tax regulations in Liechtenstein being worked out in comparison to domestic taxation. Not only the tax obligations of the foundation itself are considered, but also the tax treatment of the founder and the possible beneficiaries. The following chapter pays particular attention to the specific tax advantages that foundations offer in Liechtenstein compared to their counterparts in Germany. This includes, in particular, the substitute inheritance tax, income taxes and an exemplary calculation of wealth development. Finally, it highlights potential disadvantages, such as the minimum taxation and the inheritance tax bracket, to ensure a balanced view. The conclusion draws conclusions from the tax aspects presented and offers an overall assessment.
A. Taxation of establishment
I. Taxation of the Founder in Germany
A possible taxation of the founder may result from the discovery of possible hidden reserves according to § 6 para. 1 S. 1 No. 2 AStG (de-involvement taxation) in the transfer of assets to a Liechtenstein foundation. Affected are natural persons as founders who have been subject to unlimited income tax for at least ten years.2 The subject of such disclosure are shares in a corporation within the meaning of § 17 para. 1 p. 1 EStG. Shares can be: shares, shares in a GmbH, profit participation certificates or similar participations and entitlements to such participations as well as shares in an opting company within the meaning of § 1a KStG3. These shares must be in accordance with the conditions of § 17 Abs. 1 S. 1 EStG a participation of at least one
Percent within the last five years. It is sufficient if there was a participation of at least one percent within the last five years. A participation of one percent therefore no longer necessarily has to be present at the time of the transfer, as long as this has been present in the past 5 years before the de-entangling.4 In the event of such a relevant transfer of shareholding to a non-unrestrictedly taxable person, such as a Liechtenstein foundation, in accordance with § 6 para. 1 S. 1 AStG these are treated as a fictitious sale of the shares at common value. This leads to an income tax burden on the hidden reserves as commercial income according to § 15 S. 1 EStG i.V.m. § 17 para. 2 S. 1 EStG taking into account the allowance according to § 17 para. 3 EStG and using the partial income procedure according to §§ 3 S. 1 No. 40 lit. c iVm § 3c Abs. 2 EStG. If the participation is in a business asset subject to trade tax, it can also be burdened with trade tax, with simultaneous reduction of income tax according to § 35 Abs. 1 S. 1 EStG (trade tax accounting).5 Outside the discovery of the hidden reserves in this case, the transfer of the assets to a Liechtenstein foundation by the founder himself is not subject to income tax.6
II. Taxation of the Foundation in Germany
The transfer of assets to a foundation in Germany is in principle subject to gift tax (§ 7 para 1 no. 8 ErbStG). However, this must be an actual enrichment of the foundation. In contrast to German foundation law, however, Liechtenstein law offers far-reaching possibilities to set up veto, instruction or revocation rights, which still guarantee the founder the actual power of disposal over the assets.7 Thus, it is possible that there is only a hidden trust relationship between the founder and the foundation and no tax-correct donation. In such a case, the foundation would not actually be enriched by the gift, which would in principle exclude a gift tax liability at the time of the transfer.8 In this case, it would be a so-called “transparent foundation”. The current income would then continue to the founder, as the beneficial owner iSd § 39 Abs. 2 AO, since it is still tax law assets of the founder even after the civil transfer to the foundation.9
A transfer or inheritance of such rights of the founder is in Liechtenstein law acc. However, Art. 552 § 30 para 1 p. 2 PGR is excluded, so that if the founder dies, these rights inevitably lapse and thereafter an actual tax enrichment of the foundation is present at the time of death, which in turn triggers gift tax at that time.10
If the founder does not reserve such rights of intervention on the property that he has transferred to the foundation and thus an actual donation is available, such a right would be in accordance with § 7 para. 1 No. 8 S. 1 ErbStG for initial equipment with assets and according to § 7 Abs. 1 No. 1 ErbStG subject to gift tax for further transfers (grantings). The foundation would then be a “non-transparent foundation”.
As a tax liability would initially be an unlimited tax liability according to § 2 para. 1.No. 1 ErbStG possible. This would be present if the founder his residence acc. § 8 AO or his habitual residence acc. § 9 AO in Germany (§ 2 Abs. 2 ErbStG) or, in the event of establishment of the foundation, had died (§ 3 para 2 no. 1 ErbStG). If such an unlimited tax liability does not exist, an extended unlimited inheritance and gift tax liability acc. § 2 Abs. 1 no. 1b ErbStG possible. Such a tax liability would exist if the founder had his residence or habitual residence in the country within the last five years. In these two cases, all assets transferred to the foundation would be subject to gift tax.
By way of derogation, if no such tax liability exists, a limited tax liability according to § 2 para. 1 no. 3 ErbStG if domestic assets within the meaning of § 121 BewG are transferred to the foundation. In such a case, only the relevant domestic assets concerned, such as land assets or businesses, would be subject to gift tax. A further tightening exists according to §§ 4 Abs. 1 in vs. 2 par. 1 AStG for natural persons who have been subject to unlimited income tax in Germany within the last ten years for a total of at least five years and who are now resident in a low-tax country or still have essential economic interests in Germany. Even domestic assets that are not relevant according to § 121 BewG, such as bank balances or free float shares in corporations, are in this case subject to gift tax when transferred to a foundation.
The advantage of § 15 para. 2 ErbStG for family foundations do not apply to a family foundation in Liechtenstein.11 The acquisition subject to gift tax according to § 10 para. 1 ErbStG is in principle subject to tax class III according to § 15 para. 1 ErbStG, which leads to a tax rate of 30% for transfers up to 6,000,000 euros and 50% for larger transfers. Also the allowances are in such a transfer with 20,000 euros acc. § 16 Abs. 1 No. 7 ErbStG for unlimited taxable founders and limited taxable founders according to § 16 para. 2 ErbStG in comparison low.
III. Taxation of the Foundation in Liechtenstein
In 2011, Liechtenstein abolished the gift tax liability of asset deposits in foundations and in general inheritance and gift tax. 12 Income tax law is also acc. Art. 47 para 4 lit. c SteG the deposit is tax-free. Only a foundation fee is acc. Art. 66 para 3 SteG, which 2 ‰ of the statutory capital determined by art. 66 para 1 SteG, but at least CHF 200.
The so-called dedication taxation of art. 13 para 1 SteG applies if the property is withdrawn by the transfer of property tax. However, this is not the case for a founder who has no residence or habitual residence in Liechtenstein, so that there is no tax liability for German founders.13
B. Current taxation
I. Taxation of the Foundation in Liechtenstein
Legal persons with registered office or place of effective administration in Liechtenstein are acc. Art. 44 para 1 lit. a SteG unlimited taxable. Taxable income does not include income from foreign real estate, foreign commercial enterprises, participations in legal persons and other distributions of legal persons, provided that these could not be claimed for tax purposes as expenses and a participation of more than 25% is available.14 As a regulation for the equality of debt and equity capital, there is also according to art. 54, par. 2 SteG the possibility of deducting an equity interest deduction from income. The applicable percentage is set annually (§ 5 SteG) and is 4 % for 2024, as in the previous year.15 The equity capital is reduced by assets that would lead to non-taxable income.
The income tax rate of the determined income is acc. Art. 61 SteG 12.5%, however, at least CHF 1.800 (so-called minimum income tax acc.) Article 62, par. 2, p. 1 SteG.
In Liechtenstein, there is also the possibility of a different taxation as a private asset structure (Art. 64 para 1 SteG). In this case, the regular income taxation in Liechtenstein is waived and only the minimum income tax according to art. 64 para 8 in conjunction with Art. 62 para 1 and 2 of the Act. This amounts to CHF 1,800 and must be paid in advance annually. A predisposition does not take place in this case. The prerequisite for such a structure is according to type. 64, par. 1, p. 1 lit. (a) SteG that the foundation does not engage in any economic activities and thus operates only in asset management. It can provide benefits if income from bonds or physical assets, such as gold, deducts equity interest by type. exceeds 54 bars. Unless this is the case, there are usually no differences in the actual taxation, since the income from other asset management activities is tax-free at a regular foundation.16
II. Taxation of the Foundation in Germany
It is possible that the Liechtenstein Foundation will relocate its headquarters to the Federal Republic of Germany. In this case, an unlimited tax liability according to § 1 Abs. 1 no. 4 KStG and how a regular German foundation deals with taxation. However, since this is equivalent to a liquidation of the Foundation in Liechtenstein (Art. 552 § 39 para 3 PGR), it is assumed that the Foundation has its registered office in Liechtenstein. In this case, there could be a limited corporate tax liability under § 2 No. 1 KStG. For this purpose, the foundation must provide domestic income within the meaning of § 8 Abs. 15.1 KStG i.v.m. § 49 EStG. According to § 49 EStG, this would include, inter alia, income from agriculture and forestry, business operations, real estate or certain capital income. However, income from significant capital investments is excluded, as the Liechtenstein-Germany DBA assigns Liechtenstein the right to tax. These incomes are regularly taxed under corporate tax law and also under trade tax law in the case of companies subject to trade tax.
The substitute inheritance tax does not apply to a Liechtenstein, ergo foreign, foundation. (see Chapter V.A)
III. Taxation of the Founder
If the founder reserves extensive rights, so that the power of disposal over the property was not actually transferred to the foundation, the property is still tax-related to the founder and taxable with him. (cf. Chapter III A.) If this is not the case, it can only come to a taxation of the founder, if he is also destinataire of foundation grants.
In the past, there was also the problem of additional taxation according to § 15 para. 1 AStG if the Liechtenstein Foundation was a family foundation. This existed according to § 15 Abs. 2 AStG, if the founder, his family or his employees were more than 50% destinataries. In the framework of the Annual Tax Act 2009, para 6 of the paragraph was inserted, which contains an exception for foundations from EEA states which have an information agreement with the Federal Republic and in which the assets are actually withdrawn from the power of disposal of the founders or destinataries.17 Such an agreement for the exchange of information was concluded with Liechtenstein in 2009, so that an allocation of the foundation assets according to § 15 AStG is now excluded.18
IV. Taxation of beneficiaries
As a rule, all contributions from the Liechtenstein Foundation to its destinataries are subject to income tax according to § 22 para. No. 1 S. 2 lit. a EStG and are taxed at the individual progressive tax rate.
An exception exists for profit distributions of the Foundation if the Destinataries can influence the type, manner or amount of distributions. This is based on the similarity to shareholders, which leads to an economic profit distribution similar to that of § 20 para. 1 No. 9 EStG leads and acc. BFH judgment of 03.11.2010 in Germany with the capital gains tax according to § 43 EStG or alternatively the partial income proceedings according to §§ 3 p. 1 no. 40 lit. c EStG iVm 3c para. 19 The purchase from a Liechtenstein foundation is thus subject to the special tax rate of § 32d para. 1 sentence 1 EStG iHv 25 % (so-called withholding tax).
As with domestic foundations, even if they are voluntary, the foundation grants are not subject to gift tax at the destinataries (§ 7 para). 1 No. 1 ErbStG.20
There is a certain amount of legal uncertainty, which could impose an additional burden on the donations of Liechtenstein foundations with gift tax by § 7 para. 1 No. 9 S. 2 ErbStG.21 This would mean a double taxation of the income of destinataries. The BFH has decided that inheritance or gift tax and income tax are not in principle mutually exclusive, but at the same time left open whether this would still be constitutional.22 A taxation according to § 7 para. 1 No. 9 S. 2 ErbStG would occur if one of the destinataries had a legal claim on the property of the foundation, which would make him an intermediate beneficiary within the meaning of this law. It is therefore important to note that the legal claim of destinataries is always excluded in the statutes of the foundation and in addition in the
Letters of support make it clear that even regular grants do not give rise to any legal claim.23
C. Tax advantages compared to a German foundation
I. Replacement tax
The substitute inheritance tax applies according to § 1 para. 1 No. 4 ErbStG Foundations which have been set up in the interests of a family in accordance with their statutes.24 “Family” is understood to mean the group of persons in § 15 AO. 25 For such family foundations, a tax advantage can result when founding in Lichtenstein.
The inheritance substitute tax arises regularly every thirty years (cf. § 1 para 1 no. 4 in the V. m. § 9 para). 1 no. 4 ErbStG) after the first transfer of assets to the family foundation. By means of these, the holding of assets in a foundation is to be at least roughly aligned with holding of the same assets in the private assets of subsequent generations.26 Since this is intended to reflect regular inheritance, as in the case of the transfer of assets to a family foundation, tax class I. Fictitious is assumed that two children would inherit (§ 15 para.) 2 sentence 3 ErbStG), so that the foundation receives a double allowance according to § 16 para. 1 No. 2 ErbStG in the amount of EUR 800,000 is granted and the tax rate based on half the assets must also be determined (progression advantage).
The tax bracket and allowances can cause less wealthy family foundations to be less affected by this regular taxation. For larger assets, where the allowances are less significant and the tax rates gradually increase to up to 30% for assets above EUR 26,000,000, this, in conjunction with inflation, can lead to a threat to the preservation of assets and will at least significantly limit the growth of assets over the decades. Although the tax liability can be deferred to thirty years (§ 28 para 2 ErbStG), so that there is a regular charge instead of a one-time charge, an interest is then to be made.27 However, this has the advantage that no assets of the foundation stock have to be used for tax purposes and this shrinks gradually, but that the tax can be paid from the current income, as far as this is sufficient.
A Liechtenstein foundation is not affected by the substitute inheritance tax unless it has its registered office or place of management in Germany.28 Its German domestic assets are also not subject to this additional taxation.29 Although such foundation establishment and administration involve additional expenses and costs, a foundation in Liechtenstein may be worthwhile for larger assets. For smaller foundations with assets of less than EUR 800,000, however, there is no advantage, as the allowances lead to no tax burden. For larger assets, it must be weighed whether, depending on the size, the additional expense of a foreign foundation or the tax savings outweighs.
II. Income taxes
As already mentioned in Chapter III C, income taxation in Liechtenstein acc. Art. 61 SteG only 12,5 % compared to the German 15 % corporation tax, the solidarity surcharge attributable thereto (§§ 1, 3, 5 SolzG) and the additional trade tax of around 15 % for commercial proceeds of the foundation. In the case of commercial income, a Liechtenstein foundation can offer a tax saving of up to 17.5%, even a little higher, depending on the tax levy. However, the possible tax savings for German / domestic income acc. § 8 Abs. 1 5. 1 KStG i.v.m. § 49 EStG, since here there is a limited tax liability and thus a taxation with corporation tax and possibly business tax is carried out. The tax savings thus only result for non-domestic income under German tax law.
In addition, the equity interest deduction of currently 4% can be very attractive. Due to the compound interest effect, this can lead to significant differences in the development of assets compared to a German foundation over a longer period of time.
III. Example of asset development
In both cases, the foundation is a family foundation. It is assumed that a fully taxable fixed-income investment of the entire foundation assets and its compound interest for an interest of 5 % per annum will be made. The equity for the calculation of the equity interest deduction is only 6 % by type. 54 para 2 d) SteG. The substitute inheritance tax is paid in a single sum in the 31st year. There are no grants to beneficiaries.
The compound interest effect is also clearly visible in the 30th year before the inheritance tax is taken into account. In this variant, there is a 65.7% higher net worth in the 32. Year at the Liechtenstein Foundation opposite its German counterpart.
D. Possible disadvantages
I. Minimum taxation
In Liechtenstein, there is a minimum taxation of CHF 1,800, which is also due if the foundation earns no income, while in Germany it does not. However, it is usually not assumed that the assets, with the exception of special incidents, i.e. in the case of stock losses or a business, do not generate profits or temporary losses. For a pure fixed-interest investment with an interest rate of e.g. 4%, which is currently easily achievable (fixed money: Akbank AG, KT Bank AG; Sparbrief: Volkswagen Bank, Santander Bank), the minimum tax would only have a negative effect on a foundation with foundation assets of less than CHF 1,800 / 4% = CHF 45,000. With such a small amount of assets, the purpose of a foundation is generally not achievable, in my opinion, with its rather high administrative expenditure. In addition, this would be below the necessary limit of § 80 Abs. 1 BGB.
Two conceivable variants, in which there can be no income and thus an “unjust” burden with the minimum tax, is if all income generated in Liechtenstein is tax-free or compensated by the equity interest deduction. However, the first variant only offers a disadvantage compared to a German foundation if these incomes would also be tax-free in Germany. This would not be the case, for example, for shares or various foreign income. In the second variant, there can be no disadvantage compared to the German foundation, since such an equity interest deduction is generally not permitted in Germany.
Nevertheless, in bad years, when income is only tax-free in both countries, no income or even losses due to exceptional circumstances, the minimum taxation can lead to a disadvantage compared to a German foundation.
II. Tax class on establishment
A German family foundation is in accordance with § 15 para. 2 ErbStG by being assigned the favourable tax class I in the transfer of assets. Such a benefit does not receive a Liechtenstein family foundation, but it is always the tax class II to apply. This means that the acquisition subject to gift tax in accordance with § 10 Abs. 1 ErbStG for family foundations in Liechtenstein in principle of tax class II according to § 15 para. 1 ErbStG is subject to. This arrangement leads to a tax rate of 30% for inheritances below EUR 6,000,000 and 50% for inheritances above this limit. A German foundation, on the other hand, will only be charged a tax rate of 7% for assets of EUR 75,000 to a gradual increase of a maximum of 30% for assets of over EUR 26,000,000 if the destinataries are attributable to tax class I. Due to the many intermediate stages, it is also easier for the German foundation from the special regulation for smoothing the stepped tariff according to § 19 Abs. 3 ErbStG to make use of. Also with regard to the allowance, the German family foundation is preferred over a Liechtenstein foundation. Whereas in the case of a transfer to a Liechtenstein foundation only the allowance of § 16 Abs. 1 no. 7 ErbStG in the amount of EUR 20,000 can be applied, the allowance for the transfer of assets to a German foundation is based on the kinship relationship of the distantly related beneficiary to the founder and can thus be significantly higher.
Conclusion
The present seminar paper has dealt with the tax advantages of a Liechtenstein foundation and made a comprehensive assessment. The analysis of various tax aspects showed that Liechtenstein foundations are an attractive option for high net worth individuals and families who want to manage their assets efficiently and optimise them for tax purposes. In particular, the possibility of circumventing the substitute inheritance tax, the lower income tax rate and the equity interest deduction make them an interesting instrument in asset, tax and estate planning.
Despite the tax advantages, Liechtenstein foundations are not free of risks and challenges. Regulatory changes at international level, such as the BEPS initiative, could affect tax benefits and require continuous monitoring and adaptation. The transfer of assets to the foundation is also associated with significantly greater gift tax losses and the administrative expenses for a foreign foundation are significantly increased. In general, it is only worth considering a foundation design in Liechtenstein for slightly larger assets.
Overall, it can be said that Liechtenstein foundations can play an important role in asset and estate planning. It is essential to take due account of the individual situation and the long-term objectives and to seek comprehensive advice in order to assess the potential benefits and risks. Tax-wise, however, for large assets over a longer period of time, very significant advantages can result when establishing a foundation in Liechtenstein.
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.