Originally published on 24 July 1999

The Liechtenstein Foundation is an ideal portfolio investment vehicle from the management of numbered accounts to the structuring of complicated estates. Investors wishing to shelter their assets from high taxes, to maximize asset protection and at the same time to maintain personal control over their assets as well as provide for the orderly devolution of their worldly goods upon their death, are well advised to consider the Liechtenstein foundation.

Liechtenstein foundations which manage offshore funds pay practically no taxes in Liechtenstein and are free from supervision. All information concerning the foundation is inaccessible to the public and to all authorities.


A foundation is an incorporated estate which has been set up for specified purposes. The estate has the status of a legal person and exists entirely separate from the founder's personal assets. The formation of the foundation makes possible the severance of certain assets from the personal estate of the founder and assures the legal autonomy of assets so severed. The assets must be exclusively administered so as to realize the intentions of the founder.


The founder may be a natural person or legal entity of any nationality or residence. The formation of the foundation is achieved by means of an endowment either in the form of a deed or by testamentary disposition. The foundation deed must state the name and residence of the foundation, its objects, the foundation assets, the method of designating the foundation executive and the use to be made of the foundation assets, should the foundation be liquidated.

As a general rule a foundation may not be revoked, nor may its purpose be altered unless the foundation deed expressly so provides.


Normally the foundation only acquires legal personality when entered in the Public Register. However, certain types of foundations, depending upon their purpose, may acquire legal personality upon formation and need not be registered. These include ecclesiastical foundations, family and mixed family foundations, being foundations created for the purpose of maintaining and educating the members of one or more families, as well as foundations whose beneficiaries are specifically designated or ascertainable. If, however, such foundations engage in commercial activities they must nevertheless be registered. Such foundations as do not require registration must deposit the deed (but not the by-law) of the foundation with the Public Register Office. Deeds so deposited are not accessible to the public. Any information whatsoever concerning the foundation, including the foundation name, the founder, the executive and so forth, are not available to the public.

The existence of the non-registered foundation and the assets owned by it, is held absolutely confidential rendering foundation an excellent vehicle for maintaining investor anonymity.


The foundation assets are administered by an executive consisting of one or more members, one of whom must be a qualified Liechtenstein attorney-at-law or fiduciary. The foundation executive must realize the founder's wishes as stated in the constitutive foundation documents.

The founder may make special arrangements in order to retain full control over the foundation during his lifetime. A protector may be appointed to supervise the activities of the foundation executive after the decease of the founder.


At the time of formation the foundation requires a minimum paid-up capital of CHF. 30.000,--. It may, at the time of its formation or at any time thereafter, receive further assets from the founder or third parties.


Only the foundation assets are available to creditors in satisfaction of the foundation debts. The foundation has neither members nor shareholders. If the constitutive documents provide accordingly, the foundation may have beneficiaries who may be named in the foundation deed or the deed may describe the manner of naming beneficiaries at a later date, possibly by means of a separate by-law. In this way the identity of the beneficiary will never be revealed to the Public Register with whom a copy of the foundation deed, but not of the by-laws, must be deposited.

Foundations may also be set up for charitable or ecclesiastical purposes. Many employers form a foundation which manages employee pension and benefit funds. The foundation may not be formed to pursue commercial objects unless such activities are ancillary or necessary to the pursuit of the non-commercial foundation objects. The law places practically no limits whatsoever upon structuring of beneficial interests which may be absolute, conditional or entirely discretionary.

The founder may designate himself as a beneficiary for life and provide successive generations with successive life interests in the foundation assets. Liechtenstein foundations are not subject to a rule against perpetuities or accumulations. The beneficial entitlements may be conditional or unconditional, discretionary or vested, subject to time limitations or to positive or negative obligations. Inasmuch as the foundation assets will not form part of the founder's testamentary estate, the legal norms of his personal law cannot restrict the structuring of the rights of heirs and remaindermen. The constitutive instruments may provide that any person who challenges the same is to be automatically deprived of any entitlement from the foundation. These possibilities are very important for founders who live in countries where a fidei commis is not possible or may only be limited to one or two generations. It is of a major importance to founders living in jurisdictions having high succession taxes which considerably reduce the share which each successive generation may inherit. Foundation assets are not subject to succession taxes.


A founder can judgement-proof the rights of his beneficiaries. In the case of family foundations, the founder may specify that the creditors of specifically designated beneficiaries may not deprive such beneficiaries of any gratuitously acquired benefits, whether by means of injunction, execution or bankruptcy proceedings.

Through the implementation of a foundation, the founder has a maximum range of possibilities in settling his estate. He can for example circumvent future problems posed by a spendthrift child by providing the child with a non-assignable, non-attachable monthly pension for life and leaving the corpus of the estate to his grandchildren.

The wishes of the founder are executed by the foundation executive without the knowledge or interference of public authorities.


Unless the foundation carries on business or a trade, the law does not require it to keep accounts, nor to submit financial statements of any sort to authorities.


If the foundation qualifies as an offshore company, it is not subject to income tax or capital gains tax in Liechtenstein. It must merely remit an annual tax on capital which is currently the greater of one per mille of the foundation equity or CHF. 1.000,--. This tax is reduced to three quarters per mille for foundations with equity in excess of CHF. 2.000.000,-- and to one-half per mille for those with equity in excess of CHF. 10.000.000,--. Payments to beneficiaries residing outside of Liechtenstein are not subject to any Liechtenstein taxes.


A unique combination of factors, being the practical non-existence of taxes and filing requirements, the guarantee of investor anonymity and a wide range of structuring possibilities enables the Liechtenstein attorney to structure a foundation which optimally meets individual requirements.

Please contact Arcomm Trust Company directly for an update on the subject matter.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.