Coun­try of foundation

Foun­da­tion law in Liech­ten­stein was reali­gned with the entry into force of the amen­ded foun­da­tion law on 1 April 2009. One key element was the imple­men­ta­tion of an inno­va­tive system of inter­nal and exter­nal gover­nance in order to align the effec­tive super­vi­sion of foun­da­ti­ons with the requi­re­ments of foun­da­tion prac­tice. Since then, all chari­ta­ble foun­da­ti­ons have been subject to the super­vi­sion of the Foun­da­tion Super­vi­sory Autho­rity (STIFA). Amongst other duties, this ensu­res that foun­da­ti­ons are orga­nised properly and that their assets are used appro­pria­tely. Private foun­da­ti­ons, by contrast, are gene­rally subject to inter­nal gover­nance that can be supple­men­ted by other optio­nal bodies and elements. In addi­tion, it is also possi­ble for private foun­da­ti­ons to be subject to exter­nal super­vi­sion by STIFA.

Another loca­tio­nal advan­tage is the fact that chari­ta­ble foun­da­ti­ons are exempt from income tax, provi­ded that they can provide proof of their exclu­sive and irre­vo­ca­ble pursuit of chari­ta­ble ends. The synergy between the effec­tive super­vi­sion of foun­da­ti­ons and this tax perk crea­tes an attrac­tive frame­work for phil­an­thro­pic and chari­ta­ble work. This is reflec­ted in Liechtenstein’s excel­lent rating as a loca­tion for phil­an­thropy in the Global Phil­an­thropy Envi­ron­ment Index (GPEI) 2025, a rese­arch project by Indiana University’s Lilly Family School of Phil­an­thropy that asses­ses legal and fiscal frame­work condi­ti­ons and other decisive factors for phil­an­thro­pic acti­vity. That said, the number of chari­ta­ble foun­da­ti­ons in Liech­ten­stein has remained constant in recent years and curr­ently stands at 1,398 in total (as at the end of 2024). By compa­ri­son, Switz­er­land, with a popu­la­tion 225 times higher than Liech­ten­stein, had around 10 times as many chari­ta­ble foun­da­ti­ons  (13,722) as of this same date.

The Segmen­ted Asso­cia­tion Person, which has been imple­men­ted in Liech­ten­stein law follo­wing the model of the Protec­ted Cell Company (PCC), repres­ents another special form of orga­ni­sa­tion. This is not an inde­pen­dent legal form, but rather a struc­tu­red option for pre-exis­ting Liech­ten­stein legal enti­ties that makes it possi­ble to divide the orga­ni­sa­tion into sepa­rate segments, known as ‘cells’. Each segment has its own assets that are sepa­rate from the other segments and from the core of the orga­ni­sa­tion. Liabi­lity is also segmen­ted, so that third-party claims are usually limi­ted to the assets of the segment concer­ned. The assets of the core and the other segments remain protec­ted. The indi­vi­dual segments do not have their own legal perso­na­lity; the entire Segmen­ted Asso­cia­tion Person reta­ins this.

In Liech­ten­stein, segmen­ta­tion crea­tes the scope for crea­ting a codi­fied, cost-effi­ci­ent umbrella foun­da­tion for chari­ta­ble projects within indi­vi­dual segments that are legally sepa­rate. In contrast to the umbrella foun­da­tion model in Switz­er­land and Germany, the codi­fi­ca­tion of the Segmen­ted Asso­cia­tion Person means that there is a real sepa­ra­tion of liabi­lity. For exam­ple, smal­ler projects can be spun off from a foundation’s larger commit­ment and be deve­lo­ped inde­pendently but mana­ged by the common core, sharing resour­ces and crea­ting synergies. 

With its inno­va­tive legal capa­city, attrac­tive tax regime and prac­ti­cal free­dom, Liech­ten­stein offers the ideal frame­work for chari­ta­ble endea­vours. The nume­rous foun­da­ti­ons in Liech­ten­stein use these perks to promote soci­ally bene­fi­cial projects, ranging from social inte­gra­tion, as supported by the Hilti Foun­da­tion, to initia­ti­ves in the area of climate protec­tion and envi­ron­men­tal sustaina­bi­lity, such as those backed by the LIFE Climate Foun­da­tion Liechtenstein.

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About

Alex­an­dra Butter­stein is Profes­sor of Corpo­rate, Foun­da­tion and Trust Law. She is also Dean of the Liech­ten­stein Busi­ness Law School and a member of the Univer­sity of Liech­ten­stein’s Recto­rate. She is also, among other things, the scien­ti­fic co-direc­tor of the Execu­tive Master of Laws in Corpo­rate, Foun­da­tion and Trust Law at the Univer­sity of Liech­ten­stein. In her rese­arch, teaching and advi­sory work, she has specia­li­sed in current issues in company law, corpo­rate law and foun­da­tion and trust law.