The financial centre of Liechtenstein can look back on a long tradition: its liberal company law framework has offered reliability for private and charitable foundations, in particular, since 1926. ‘The foundation is still the most popular corporate form for structuring complex assets,’ says Stefan Wenaweser, President of the Liechtenstein Institute of Professional Trustees and Fiduciaries and a partner at Marxer Rechtsanwälte.
Thomas Zwiefelhofer, President of the Association of Liechtenstein Charitable Foundations and Trusts (VLGST), member of the board of the Liechtenstein Institute of Professional Trustees and Fiduciaries and former Justice Minister and Deputy Head of Government, explains: ‘Charitable foundations are subject to a few more regulations than their private counterparts. For example, charitable foundations are subject to the supervision of the Foundation Supervisory Authority (STIFA), while private foundations can voluntarily submit to this. Charitable foundations are required to keep accounts and appoint auditors. The auditors also review all of the charitable foundation’s distributions and annual financial statements each year.’
Expertise and responsibility
Liechtenstein’s trustees play a key role in Liechtenstein’s foundation system – not only as advisers, but also as guarantors of legally sound structures. Around 128 trustees and 219 trust companies are registered at present, with a total of about 2,500 employees – a significant proportion of the Principality’s labour market. ‘Under Liechtenstein law, a foundation – be it charitable or private – must always have a “180a person” represented on its board,’ says Zwiefelhofer. ‘A 180a person is a Liechtenstein-based trustee or a self-employed or employed individual approved by the Financial Market Authority (FMA) with a professional relationship with a trust company who meets the specific requirements for the fulfilment of this function – in particular with regard to their qualifications and trustworthiness.’ This ensures that a minimum threshold of qualifications, integrity and control is met. Zwiefelhofer continues: ‘The individual in this role also holds a great deal of responsibility, particularly with regard to fulfilling the statutory due diligence obligations to combat money laundering. In the event of liability, they bear greater responsibility than another member of the board of trustees without the relevant expertise.’
Wenaweser highlights another aspect: ‘Needing to include a person with 180a status means that this individual is within the supervisory authority’s reach. This connection to the local area is important because the foundation sector is internationally oriented and foreign trustees are not uncommon. It is also part and parcel of Liechtenstein’s liberal regulatory framework that the country does not place any restrictions on the area of activity.’ Zwiefelhofer adds: ‘There are lots of foundations in Liechtenstein that are basically solely active in charitable activities abroad.’ In 2019, the VLGST conducted a voluntary survey on the scope of charitable foundations. 77 percent of the funding volume was awarded internationally, with a further 16 percent going to Switzerland. Zwiefelhofer estimates that the actual foreign shares are at least as high. ‘Despite this international focus, the local regulations governing foundations and due diligence must be complied with, which requires the board of trustees to have specific knowledge of this area,’ he emphasises.
Fully implementing the EU requirements
‘Liechtenstein was one of the first to adopt the automatic exchange of information (AEOI) in tax matters according to the OECD standard. As an EEA member, Liechtenstein also ensures that other EU legal acts, such as those on combating money laundering, are implemented in a timely and correct manner,’ says Zwiefelhofer. Wenaweser adds: ‘Liechtenstein’s government has long strived to ensure that the country is at the forefront of implementation.’ Zwiefelhofer believes that this also brings challenges. Of course, regulatory pressure sometimes entails a great deal of effort, he says. Nevertheless, the overwhelmingly positive view of EEA accession – from business to trade, from industry to commerce and from financial intermediaries – is shared across the board. Liechtenstein celebrated its 30th anniversary of joining the EEA this year. ‘The compatibility and easy market access are worth their weight in gold for industry, the financial sector and the philanthropic sector alike,’ emphasises Zwiefelhofer. According to Wenaweser, the EU’s new Anti-Money Laundering Package (AML Package), which is to be implemented or directly applied by June 2027 insofar as the substantive due diligence obligations arising from the AML Regulation (AMLR) are concerned, will further bolster the fight against money laundering. He firmly believes that this will also boost transparency. ‘Data on companies and foundations will then be accessible to public authorities across the EU,’ he says. At present, this data can only be accessed via Liechtenstein. In future, an authority in an EU country will have direct access and will also be responsible for checking whether a request to view the data is justified.
Increase in clarification work
Being compliant necessitates a great deal of clarification work. When it comes to tax matters in particular, trustees spend a great deal of time on clarifications and consultations. This raises many other questions, such as those relating to marriage and inheritance law. ‘We have to ask a lot of questions, because that’s the only way we can properly classify and assess the facts,’ says Thomas Zwiefelhofer. ‘Meeting the legal due diligence obligations is very complex, especially when it comes to clarifying the origin of assets,’ adds Wenaweser. However, as similar standards apply throughout Europe, clients are now used to these extensive clarifications. Twenty-five years ago, it was a different story: back then, clients were surprised if you asked them for a copy of their passport. In addition to clarification with clients, their international nature also means that collaboration with foreign experts, particularly tax specialists, is essential.
Compulsory or optional registration
In Liechtenstein, a distinction is made between foundations with and without a registration obligation. Charitable foundations are required to be entered in the commercial register; private foundations can register voluntarily. ‘The commercial register, including the registrations and supporting documents, is public. When a foundation is registered, this also encompasses information on the members of the board of trustees or the domicile of the foundation, as well as the supporting documents and documents on which the entries are based,’ says Wenaweser. In the case of foundations that are not subject to registration – known as ‘deposited foundations’ – the information must be filed with the commercial register. ‘In these instances, third parties can request an official confirmation from the commercial register, containing information on the foundation’s name, registered office and purpose, the date of its establishment and, if applicable, its duration, the members of its board of trustees and their signatory rights, the representative and any supervision. No further information is disclosed to third parties,’ he explains.
Discretion and privacy
The Principality’s clear regulations make a significant contribution to the acceptance of the foundation sector. ‘In Liechtenstein, there is no public pressure for more transparency,’ explains Wenaweser. ‘Privacy is regarded as an asset worthy of protection and is constitutionally safeguarded. There is, of course, transparency towards the authorities. There is a register that provides information on beneficial owners, and founders are recorded in this too. The traceability of assets is also guaranteed,’ says Wenaweser. Even though clients are now accustomed to transparency vis-à-vis the authorities, the discretion with regard to third parties is appreciated, he notes. Some people also have a legitimate interest in this. He explains: ‘Depending where clients come from, say Latin America, they may be concerned that information about their financial circumstances could put their families in danger.’ These people understandably require a high level of discretion. Conversely, some have a vested interest in providing more information, such as family foundations whose origins are clear due to their name, or corporate foundations that deliberately communicate their origins and often have a partial charitable purpose. ‘These want to do good – and they also want people to see that they are doing good. Some of them showcase themselves on websites and are active on social media,’ says Wenaweser.
Attractive foundation law
The high degree of flexibility when setting up a foundation, the professional advice and the combination of privacy protection with transparency towards law enforcement and tax authorities all contribute to making Liechtenstein such an attractive location. ‘In addition, there is a well-functioning supervisory body, which is key to building trust in the country as a location for foundations. In the case of charitable foundations, the supervisory authority monitors compliance with the foundation’s purpose and the founder’s stipulations set out in the foundation documents, including investment regulations,’ explains Wenaweser. ‘The monitoring of the foundation by an external supervisory body gives founders the confidence that their wishes will be respected even after their death,’ he says. In addition, civil law control mechanisms apply to all foundations – both public and private – through the ordinary courts, creating transparency, legal certainty and trust. It is also noticeable that charitable foundations are becoming increasingly important, he adds. Successful entrepreneurs want to use their assets to do good. ‘They are realising that they have more wealth than they want to pass on to their descendants,’ says Wenaweser. Liechtenstein’s liberal foundation law attracts founders wishing to take this step. ‘We’re receiving more and more enquiries about setting up charitable foundations,’ reports Wenaweser. Zwiefelhofer confirms this: ‘Liechtenstein is growing steadily as a location for philanthropy. The 2009 revision of foundation law brought about a side effect that few paid attention to: the number of charitable foundations increased significantly. Today, the Principality is home to more than 1,400 charitable foundations, which now make up around 20% of all foundations. In some cases, private foundations are set up first to protect the surviving spouse, for example. If there are no children, the foundation often becomes charitable after both spouses have passed away.’ The fact that Liechtenstein was once again named the leading location for philanthropic engagement by the international Global Philanthropy Environment Index (GPEI) in 2025 demonstrates the strength of Liechtenstein’s foundation concept.
A trust or a foundation?
With a Liechtenstein-based trust, the services offered to clients are expanded to include a structure specific to the target group, including in the non-profit sector. Wenaweser explains: ‘Unlike a foundation, which holds its own assets as a legal entity, a trust is based on the fiduciary relationship between the settlor, the trustee and the beneficiaries. Here, too, clear legal obligations and judicial review apply. Both structures – foundations and trusts – enable assets and property to be separated with the aim of achieving a long-term impact. They require objectives and governance requirements to be clearly defined and are embedded within a regulatory environment that revolves around transparency and accountability – including in an international context.’ Zwiefelhofer adds: ‘The structures are therefore very similar in terms of impact.’ He does not see one structure as being superior to the other per se: both offer scope for entrepreneurial and philanthropic thinking – in compliance with clear legal requirements. Wenaweser also sees the two solutions as equals. In the case of foundations, beneficiaries’ right to information is more firmly anchored in the law, he notes, whereas with trusts, the trustee can regulate beneficiaries’ information rights more flexibly and autonomously. ‘This difference has become more acute over time,’ he explains. Both agree that the choice of structure often depends on the client’s place of origin. Zwiefelhofer says: ‘Since trusts are standard in common-law countries, clients there are more familiar with this structure. Accordingly, they place more faith in the legal form of a trust than in the concept of a foundation under civil law, which they are unfamiliar with.’ Wenaweser confirms this experience: ‘Conversely, people from the Roman legal tradition tend to be more familiar with foundations.’ In conclusion, they both state that the option of choosing between the two concepts is another significant advantage of Liechtenstein’s system.
