Nowadays, private foundations are the most popular form of tax-planning, the especially efficient ones registered in either St. Kitts & Nevis, Liechtenstein, or Labuan, Malaysia.
Private foundations are great contrivances, not only for tax-planning, but also for family wealth-planning, and probate matters.
Private foundations most common fields of use:
– confidential (discreet)asset and wealth management,
– subsiding family members,
– tax efficient holding of financial assets (investments, shares, and business
– preparation for retirement,
– charitable offerings, handling offerings for important matters
– handling the fate of collections
A private foundation is not a usual (offshore) company, because it’s not suited for doing any active business activity on its own. When the foundation was formed, the founder gives away the necessary amount of money or implements, and assigns the beneficiary, or beneficiaries. After this, the private foundation itself becomes the owner of the implements.
A private foundation has no owner or partners, however it’s directed by a foundation board of trustees. The members of the board, got chosen by the founder, and they task is to ensure, that the will of the founder will be carried out. Apart from the board of trustees, the founder has the right, to assign a supervisory body as well. The founder doesn’t have to be a private person, but can be a company or any other legal entity as well. In case the founder wants remain anonym during the foundation process, any appointed nominee can substitute the founder. In case of tax planning, a private foundation can be converted into a trust. The private foundation can work continuously or it can cease after reached its goal. The regulations in this matter, on a global scale, are fairly flexible, but carrying out the will of the founder is essential! In case the private foundation ceases, its assets will go to the beneficiaries.
It’s an important question, if the founder can or cannot empty the already given
assets of the foundation? The regulations on this matter are different, based on
each country’s regulations, but mostly, it’s possible. However, this has to be taken into account during the foundation process, because it’s a key question of International taxation. It’s also important to check before registering a private foundation to a certain country, whether they accept any foreign court decisions or the whole legal process has to be made or restarted there. In this case, it can take years before any decisions will be made, and usually the process is hugely expensive.
Private Foundations in Liechtenstein
The necessary documents for establishing a private foundation in Liechtenstein:
– foundation deed – in this the founder assigns the proffered assets, it must
contain either the official signature of the founder, or
– a testament, or
– a succession contract.
The minimum fund of a private foundation is CHF 30,000 or any other assets equivalent of this value. The whole amount has to be deposited during the establishment. If the net value of the assets worth more than 2 million Swiss francs, then capital tax must be paid – which is 0,075% in case of 2 million and 0,05% in case it’s more than 10 million Swiss francs.
The greatest advantage of any private foundation registered in Liechtenstein, is that apart from the capital tax, no other form of taxes has to be paid, as long as the beneficiary does not live in Liechtenstein. This way, double taxation can be avoided.
In Liechtenstein, Private Foundations are directed by Board of Trustees. In case, achieving the non-profit goals of the foundation requires doing business, then the foundation will need an auditor. Also, at least one member of the Board of Trustees has to be a natural person, who must have a postgraduate specialist degree. The founder of the foundation gives over his ownership rights to the board of trustees, but he can’t be a member of the board, however he can have special rights, so he can ensure that his will can be enforced if necessary. It is possible to take in a nominee as founder or a beneficiary as well.
Because the private foundation is an independent legal person, it role is similar to the trust. But unlike the trust, the assets and the bank-account of the private foundation, belongs to the foundation itself. Because of this, any changes among the members of the board of Trustees, does not effect the ownership of the foundation. The official controlling institution of the private foundations is the government of Liechtenstein.
The following foundation types are not subject to any supervision by the Liechtenstein Government:
– Ecclesiastical foundations,
– Private foundations where, the beneficiary has already been appointed,
– and those private foundations, which manages, holds, or distributes its assets or fund. In these cases, the founder must ensure, by appointing a suitable board of trustees, that the foundation will reach its goals.
One of the most important benefits of registering a private foundation in Liechtenstein that it offers the highest level of discretion. Apart from the remains of banking secrecy the local agent in addition to criminal liability, has to protect any information related to the foundation.
– See more information about formation of private foundations at: http://crwwgroup.net/en/our-services/private-foundations
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