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Offshore Trusts Report: Liechtenstein

Foundations

In 2008, Liechtenstein's parliament approved reform of the jurisdiction's foundations law which, the government claims, adhere to international standards while continuing to protect privacy.

The new foundation law was due to enter into force on April 1, 2009. The reform is part of the government's ongoing modernization of Liechtenstein company structures which has included revisions to the law governing associations and cooperative societies, and the introduction of the European Company and the European Cooperative Society. As announced by the government, a revision of trust law will follow.

"Liechtenstein’s total revision of foundation law is based on the contemporary demands and needs of the financial centre's’s clients," the government announced in mid-2008.

"The balanced overall concept of the reform...meets international standards without deviating from the Liechtenstein legal tradition, which has always considered the protection of privacy to be a valuable good," the government said.

"The requirements of market participants were taken into account, as well as the need to create a legal foundation that can be measured in accordance with scientific criteria and international standards, as the government stipulated in its guideline at the beginning of the reform process," the government stated.

The new foundation law is a self-contained body of law with a new systematic structure differentiating private-use from charitable foundations and strengthening the responsibility of the founder. The protection of the foundation assets is subject to new rules, as are the supervision of foundations and foundation governance. The non-transferability of the founders’ rights as a further new key feature entails greater legal certainty and clarity.

The “deposited” foundation, which need not be registered in the Public Registry and has thus been an object of criticism, has been retained. The government justifies the retention of this type of foundation by noting that it serves to protect the confidentiality of the founder if he wants to engage in long-term asset planning in the interest of his family. The exemption from the registration requirement only applies to private-use foundations, however, not to commercially operating foundations, which as a rule are limited to the mere management of assets.

The government also asserts that confidentiality in the foundation system is not peculiar to Liechtenstein. In Austria, where foundation law is closely based on Liechtenstein law, foundations must be entered in the corporate registry, but since a professional trustee acts on behalf of the founder when establishing the foundation and the name of the foundation may be freely chosen, the beneficial founder can remain in the background.

The government also points out that in Switzerland, with which the old Liechtenstein foundation law had close links, family foundations are exempt from entry in the commercial registry. Meanwhile, in Germany, only a limited publicity of foundations applies, which as a rule does not extend to the person of the founder.

The Principality argues that a switch to a general registration requirement for all foundations, including private-use foundations without a commercial purpose, would significantly diminish the attractiveness of the Liechtenstein foundation in an international comparison.

The government's so-called 'Futuro' project, which sets out the future vision of Liechtenstein's economy, calls foundations the “heart of the financial centre." The government believes that the new system of foundation supervision will serve as a model internationally. The 'Futuro' project also harbours plans to make Liechtenstein into a location for trusts, by harmonizing them with Anglo-Saxon trust structures.

The Report

Offshore Trusts Guide: Introduction

Offshore Trusts Guide: Jurisdictions

Bahamas Barbados Bermuda British Virgin Islands Cayman Islands Cook Islands Cyprus Gibraltar Guernsey Isle of Man Jersey Liechtenstein Madeira Malta Mauritius Monaco Nevis New Zealand Panama Seychelles Turks & Caicos Vanuatu


Liechtenstein News

Guernsey Welcomes Migration Of First Foreign Foundation
Wednesday 8/10/2014
Guernsey's company registry has approved the first ever migration of a foundation from another jurisdiction to Guernsey.

Liechtenstein, Malta Sign DTA
Friday 4/10/2013
Liechtenstein's Foreign Minister Aurelia Frick and her Maltese counterpart George Vella have recently signed in New York a bilateral double taxation agreement between the two countries in respect of taxes on income and on wealth.

Liechtenstein Congratulated On Successful Tax Policy
Thursday 19/9/2013
Standard and Poor's has maintained Liechtenstein's triple A rating, alluding to a stable outlook and highlighting the fact that the Principality's fiscal and financial policies have very much contributed to Liechtenstein's reputation and strength as a safe, reliable, and attractive economic location.

Austria Eyes US FATCA Deal
Friday 10/5/2013
Austrian Chancellor Werner Faymann has announced plans to enter into talks with the US and with the Organization for Economic Cooperation and Development, aimed at combating tax fraud and tax evasion.

Austria Willing To Negotiate With EU On Banking Secrecy
Wednesday 1/5/2013
Austrian Chancellor Werner Faymann and Deputy Chancellor Michael Spindelegger have recently confirmed Austria's willingness "to participate constructively" in negotiations between the European Union and third states on an automatic exchange of banking information.

LGT Headquarters Middle East Business In Dubai
Tuesday 19/2/2013
LGT Group, the international private banking and asset management group, owned by the royal family of Liechtenstein, has chosen Dubai as the headquarters of its new subsidiary, LGT (Middle East) Limited, following regulatory approvals to operate in the Dubai International Financial Center.

Liechtenstein, Austria Close To Tax Agreement
Friday 18/1/2013
Liechtenstein’s Prime Minister Klaus Tschütscher has confirmed plans to conclude a tax package with Austria shortly.

Austria To Agree Swiss-Style Tax Deal With Liechtenstein
Tuesday 15/1/2013
During an upcoming working visit to Vienna, Liechtenstein’s Prime Minister Klaus Tschütscher is due to hold talks with key ministers from the Austrian chancellery and from the finance ministry, with the discussions focussing on the "imminent conclusion" of a bilateral tax agreement between the two countries.

Liechtenstein, UK DTA In Force
Wednesday 2/1/2013
Following the exchange of relevant notifications, the agreement pertaining to the avoidance of double taxation and tax evasion in the area of taxes on income and on wealth between Great Britain and Northern Ireland and the Principality of Liechtenstein has now entered into force.

Liechtenstein, Austria Eye Swift Conclusion Of Tax Deal
Wednesday 12/12/2012
Negotiations between Liechtenstein and Austria on a tax deal aimed at resolving the issue of Austrian citizens' undeclared bank accounts in the Principality are said to be in full swing.