History and Origins
The foundation appeared in Liechtenstein law in 1926 together with the Persons and Companies Act (PGR); the Anstalt also emerged at the same time. The provisions on private foundations were largely borrowed from Swiss civil law and adapted to local conditions. The novelty was that assets could be dedicated to the interests of the founder's own family while retaining separate legal personality and asset protection—a rarity for continental Europe of that era.
Over the following decades, the Stiftung became the primary instrument for private capital and accumulated extensive case law. By the late 2000s, accumulated corporate governance issues and international pressure for transparency required an update: a comprehensive revision in 2008, which entered into force on 1 April 2009, rewrote the section on foundations and strengthened beneficiary rights, board duties, and supervisory mechanisms. The modern foundation operates under this version.
Concept
The Liechtenstein Stiftung is one of the oldest and most refined constructs of continental law for private capital. It is a legal entity without members or shareholders: the assets transferred by the founder are dedicated to a purpose and "belong to themselves." Functionally, the foundation is similar to a trust, but is structured as an independent legal person under civil law.
Legal Basis
The foundation is governed by the Persons and Companies Act (PGR), articles 552 et seq.; the current version was introduced by the 2008 reform and entered into force on 1 April 2009. The minimum capital is 30,000 francs, euros, or dollars. The foundation is managed by a board (Stiftungsrat); at the founder's discretion, a protector and auditor may be added.
Management is structured through the foundation board (Stiftungsrat): a minimum of two members, and at least one must be a licensed Liechtenstein Treuhänder or equivalent person under article 180a PGR—such a manager is supervised by the Financial Market Authority and bound by due diligence and AML rules. The founder's will is recorded in the statutes (Statut) and a confidential regulation (Beistatut), which describe the beneficiaries and distribution procedures; the founder may reserve certain powers, and if necessary, a protector and auditor are added. The mandatory local manager ties the structure to real substance in the jurisdiction.
The diagram below shows how the roles divide and where the payments go.
The key parameters of the regime in one table.
| Statute | PGR, articles 552 et seq.; the 2008 reform version in force since 1 April 2009 |
|---|---|
| Minimum capital | 30,000 francs, euros, or dollars |
| Foundation board | At least two members, one of them a licensed Treuhänder under article 180a PGR |
| Supervision | Private family foundations exempt from ongoing state supervision; charitable ones under STIFA |
| Corporate tax | 12.5% on worldwide income, with a minimum tax of 1,800 francs per year |
| PVS status | Minimum tax only, as long as the foundation conducts no economic activity |
| Withholding tax | None: distributions to non-resident beneficiaries are untaxed in the Principality |
Family Foundation and Privacy
For private capital, a family foundation (Familienstiftung) is used. Charitable foundations are supervised by the Stiftungs- und Trustaufsichtsbehörde (STIFA); since 1 July 2026 that is the statutory name—the same body also supervises charitable trusts—and under Art. 552 § 29 Abs. 2 PGR those functions are discharged by the Office of Justice (Amt für Justiz). Private family foundations are exempt from ongoing state supervision and may only be subject to inspection voluntarily. A private foundation is not entered in the public commercial register: what is deposited with the Office of Justice is the Gründungsanzeige, a formation notice carrying a limited data set (name, seat, purpose, date of establishment, board members, representative), while the Stiftungsurkunde and the Beistatut stay with the foundation itself (Art. 552 § 20 PGR). That is what secures the structure's privacy.
The PGR distinguishes between pure and mixed family foundations: a pure Familienstiftung directs income exclusively to the maintenance and education of family members, while a mixed one directs income primarily to the family but allows for charitable or other private purposes. This qualification determines the supervisory regime. Privacy here should be understood precisely: the deed of foundation is indeed not entered in the public register, but information about the beneficial owner is entered in the non-public Register of Beneficial Owners (VwbP), accessible to authorities and, under statutory conditions, banks and other persons subject to due diligence, and the foundation itself reports under CRS. There is no unrestricted public inspection of the register, but third parties may request disclosure on the basis of a substantiated legitimate interest in preventing money laundering, its predicate offences or terrorist financing (VwbPG, Article 17(4)–(12)); for tax authorities, the structure is transparent.
Beneficiaries
The circle of beneficiaries is flexible. The law distinguishes several types:
- entitled beneficiaries — a direct claim to benefits;
- expectant beneficiaries — they become entitled in the future;
- discretionary beneficiaries — benefits depend on the board's discretion;
- final beneficiaries — they receive the remainder upon liquidation.
This allows the founder to finely tune distribution across generations.
Beneficiaries' Information Rights
The 2008 reform codified the beneficiary's right to information in Art. 552 § 9 PGR: inspection of the statutes, the Beistatut, and regulations, plus disclosure of reports and accounts—but only insofar as the beneficiary's own rights are concerned. Other beneficiaries' names or the full asset picture cannot be obtained this way.
The scope of these rights became the main litigation front after the reform: disputes over which documents must be disclosed are among the most common categories of foundation cases in Liechtenstein courts. Transparency can lawfully be narrowed by establishing a Kontrollorgan: under Art. 552 § 11 PGR the beneficiary then retains only information on the foundation's purpose, organisation, and their own rights.
Relying on a discretionary structure to switch those rights off is a mistake: Art. 552 § 5 Abs. 2 PGR expressly counts Ermessensbegünstigte among the beneficiaries, the § 9 right applies to them to the extent it concerns their own position, and § 9 Abs. 5 lists the exceptions exhaustively—§§ 10 to 12 PGR (founder's right of revocation, Kontrollorgan, supervised foundations). Only a person holding a mere Anwartschaft on a future discretionary benefit falls outside the circle (Art. 552 § 7 Abs. 1 PGR). The balance is deliberate: transparency compensates for the absence of state supervision without becoming a lever of pressure on the foundation.
Liability of the Stiftungsrat
Art. 552 § 24 PGR entrusts the council with managing the foundation and fulfilling its purpose; breaches trigger liability under the PGR's general rules on the responsibility of governing bodies (Art. 218 ff.)—culpable members answer jointly and severally, while the codified business judgment rule (Art. 182 para 2 PGR) acts as a safe harbour: a business decision stands if taken free of extraneous interests, on adequate information, and in the reasonable belief of serving the foundation's good. The standard of care is objective: the yardstick is a diligent manager in the same circumstances.
Typical risk points are conflicts of interest and following the founder's instructions contrary to the statutes: a mandate agreement with the founder does not override duties owed to the foundation itself, while an influential founder risks answering as a "de facto Stiftungsrat" under the functional concept of a governing body. Professional council members therefore routinely carry D&O insurance.
Application: Typical Scenarios
Succession Planning
This is the most common motive. The founder consolidates scattered assets into a single independent entity that outlives the founder: assets pass to subsequent generations according to predefined beneficiary classes, bypassing fragmentation through multiple national inheritance procedures. This is especially valuable for families whose assets and heirs are located in different countries.
Family Business and Capital Protection
The foundation holds shares in the holding company of a family business, separating ownership from operational management and protecting the group from forced sale during generational transitions; it is often combined with a PTC or underlying holding. Related uses include capital protection (asset protection after challenge periods expire) and holding cross-border portfolios—securities, real estate, art, and equity interests—under a single structure.
Anfechtung: The Limits of Asset Protection
An endowment does not place assets out of reach by itself—the founder's creditors may challenge the transfer under the Rechtssicherungsordnung (RSO, Art. 64 ff.), and forced heirs run on a separate track. Three grounds and the periods in which they operate:
| Ground | Period | Provision |
|---|---|---|
| Gratuitous disposition | 1 year from transfer | Art. 65 RSO |
| Transfer with intent to disadvantage creditors, which the foundation knew or should have known of | 5 years from transfer | Art. 67, Art. 74 Abs. 1 RSO |
| Forced heirs' share (Pflichtteil) | 2 years before the founder's death | § 779 ABGB |
The five-year period is a benchmark the creditor can shift: Art. 74 RSO is headed "Anfechtungsfrist – Verlängerung", and under Abs. 4 a creditor who serves judicial notice of an intention to challenge counts those five years back from the date of that notice.
§ 778 Abs. 2 Ziff. 4 ABGB expressly classes an endowment to a foundation as a gift, while contributions older than two years are disregarded. The numbering here is recent: Liechtenstein's succession-law reform (LGBl. 2024 Nr. 259) has applied since 1 August 2024, and the former § 785 ABGB now governs valuation of the gift.
The practical takeaway: a foundation shields against future risks, not against claims that matured before the endowment—asset protection is built early, letting the Anfechtung periods quietly expire.
Taxes: 12.5% and PVS Status
Resident foundations pay a 12.5% corporate tax on worldwide income with a minimum tax of 1,800 francs per year. If the foundation merely owns and manages private assets and does not conduct economic activity, it can obtain Privatvermögensstruktur (PVS) status and pay only the minimum tax. Liechtenstein is part of the EEA, participates in CRS, and has a network of tax treaties, so it is perceived as a "white" jurisdiction.
Distributions to Foreign Beneficiaries: Where Tax Arises
Liechtenstein withholds nothing at source—there is no withholding tax at all. The entire tax burden shifts to the beneficiary's country of residence, and it must be modelled before the foundation is set up. Where exactly it arises:
| Jurisdiction | Where tax arises |
|---|---|
| Liechtenstein | Distributions to beneficiaries are tax-exempt in the Principality unless the recipient is a Liechtenstein tax resident |
| Russia | For a Russian tax-resident beneficiary, assess CFC status and control separately from personal income tax on distributions; beneficiary status alone does not establish a CFC tax charge (Sources: FNS: CFC). |
| Germany | § 15 AStG attributes a foreign family foundation's income to resident founders or beneficiaries before any distribution |
| Austria | Stiftungseingangssteuer on entry: 3.5%, rising to 25% on any of five triggers, lit. a–e |
| United Kingdom | HMRC can treat the foundation as a settlement: the transfer of assets abroad code attributes income to a UK-resident founder, beneficiaries are taxed on benefits matched to income and gains, and relevant-property IHT charges run while the founder is a long-term UK resident — see the UK hub |
| United Arab Emirates | No personal income tax: a distribution to a UAE-resident beneficiary is untaxed on arrival |
| Spain | For a resident individual, first classify the transfer. In DGT V0781-16, an irrevocable Stiftung/Anstalt with independent management and no disposal or control rights for the founder or beneficiaries made gratuitous allocations subject to inheritance and gift tax (ISD). This is a conclusion on those facts, not a rule that every foundation payment is a gift. Resident recipients are liable on worldwide gratuitous acquisitions; regional rules, available reliefs and the relevant connecting factors determine the ISD bill. An amount subject to ISD is outside IRPF; a payment with another legal character requires its own income-tax analysis. |
| Switzerland | For a Swiss-resident individual, distributions from a legally independent foundation generally fall within taxable income under Art. 16 DBG, subject to statutory exceptions. The Federal Supreme Court, 2C_799/2021, §§4.1–5, confirmed that foundation principle; in the Liechtenstein Anstalt case before it, payments after the founder’s death remained income even if drawn from original capital. The burden combines federal, cantonal and communal income taxes, so residence, commune, total income and personal circumstances matter. A genuine gift or inheritance has a separate exemption test and potentially cantonal inheritance/gift tax; the label “family foundation” does not establish either treatment. |
These two rows concern individual beneficiaries and distinguish the distribution from the foundation’s own tax. Before applying them, establish the foundation’s legal independence, any retained control, the beneficiary’s enforceable rights, the legal basis of the payment and residence when it arises. The Spanish DGT ruling dates from 2016 and is used here for its fact-specific allocation analysis; its historical discussion of tax-haven status is not a current classification. In Switzerland, do not select a gift-tax rate merely from the beneficiary’s canton: the ordinary connecting rules look to the donor’s domicile for movable gifts, the deceased’s last domicile for movable inheritances and the location of real estate. First establish whether the foundation payment qualifies as such a transfer at all.
Germany is the strictest, but for Liechtenstein § 15 Abs. 6 AStG is decisive: attribution switches off where the foundation sits in an EU or EEA state, it is proven that the foundation assets are legally and factually beyond the disposal of the founder and the beneficiaries, and information exchange with that state is available. Liechtenstein meets the EEA condition, so the argument with the German side usually turns on the factual absence of control.
The Austrian 3.5% has applied since 1 January 2026 (§ 2 Abs. 1 StiftEG as amended by BGBl. I Nr. 25/2025; previously 2.5%), and of the five triggers in § 2 Abs. 1 lit. a–e StiftEG the decisive one for a deposited Liechtenstein foundation is lit. d—the absence of an entry, together with the deed, in the Firmenbuch or a comparable foreign public register.
The conclusion: "12.5% and done" is an illusion; the real burden depends on the beneficiary's country.
Evolution of the Regime and Its Regulation
The current tax profile of the foundation took shape after the 2011 reform. Previously, Liechtenstein divided companies into ordinary and domiciliary (Sitzgesellschaft) with preferential treatment, but these privileges contradicted EEA state aid rules. The new tax law, which entered into force on 1 January 2011, abolished this division and introduced a uniform 12.5% rate, and on 15 February 2011 the EFTA Surveillance Authority concluded that the Privatvermögensstruktur regime involves no state aid at all: a PVS carries on no economic activity and therefore is not an "undertaking" within the meaning of the EEA state aid rules.
Thus the foundation became an instrument of a "white" jurisdiction: a predictable regime, mandatory licensed manager, extensive network of tax treaties, and full tax information exchange. This means the structure does not automatically raise questions from banks and counterparties, distinguishing it from classic offshore jurisdictions. When planning, the foundation is often considered alongside Liechtenstein residence and compared with the Panama foundation or Austrian Privatstiftung. Against those two, a DIFC or ADGM foundation and a Jersey trust, the Stiftung sells the EEA address, the mandatory licensed board member and a court system continental banks already know; it does not sell the lowest running cost, since the licensed board seat and the minimum tax recur every year. Thirteen foundation jurisdictions on capital, board, register, tax, firewall, challenge period and fees are set out in the matrix of private foundations, and the trust alternatives in the map of trust jurisdictions.
Pillar Two and Application
Since 1 January 2024, Liechtenstein has applied the global minimum tax (Pillar Two / GloBE): a domestic QDMTT and IIR rule at a 15% rate. These rules cover multinational enterprise groups or large-scale domestic groups with annual consolidated revenue of at least €750 million in at least two of the four fiscal years immediately preceding the tested fiscal year. The ordinary legal-entity rate is 12.5%; private asset structures pay only the minimum income tax.
Q/A
If a foundation is functionally close to a trust, why choose a Stiftung?
Because of the form. A trust is a relationship between settlor and trustee; a Stiftung is an independent legal person under civil law, with statutes, a board and its own legal personality that continental banks and courts read without translating it into a foreign doctrine. The price of that form is a minimum capital of 30,000 francs, euros or dollars and a licensed local manager on the board under article 180a PGR.
The beneficiary is discretionary — can the foundation withhold documents?
No. Art. 552 § 5 Abs. 2 PGR expressly counts Ermessensbegünstigte among the beneficiaries, so the § 9 right to information applies to them as well, to the extent it concerns their own position. The only lawful way to narrow transparency is a Kontrollorgan (Art. 552 § 11 PGR): the beneficiary then retains the purpose, the organisation of the foundation and their own rights. § 9 Abs. 5 lists the exceptions exhaustively.
The founder wants to instruct the board. What does that risk?
It takes nobody out of liability. Art. 552 § 24 PGR entrusts management and fulfilment of the purpose to the Stiftungsrat, and a mandate agreement with the founder does not override duties owed to the foundation itself; breaches trigger liability under the PGR's general rules on governing bodies (Art. 218 ff.), with culpable members answering jointly and severally. An influential founder risks answering as a "de facto Stiftungsrat".
A creditor is already threatening to sue. Is it too late for a foundation?
Not against a claim that matured before the endowment. Gratuitous dispositions are attackable within one year (Art. 65 RSO), and transfers made with intent to disadvantage creditors that the foundation knew or should have known of (Art. 67 RSO) within five years (Art. 74 Abs. 1 RSO) — and Abs. 4 lets a creditor count those five years back from a judicial notice. Forced heirs reach endowments made in the two years before the founder's death (§ 779 ABGB).
Is it true that the foundation pays 12.5% and the tax story ends there?
No. In the Principality a resident foundation pays 12.5% on worldwide income with a minimum tax of 1,800 francs a year, a PVS pays only the minimum, and there is no withholding tax on distributions at all. The real burden is set by the beneficiary's country: Germany attributes a family foundation's income under § 15 AStG before any distribution, and Austria charges Stiftungseingangssteuer at 3.5% on entry — up to 25% where the foundation is not entered, with its deed, in a public register.