The law of foundations is governed by the Civil Code Article 80-89 and is recognized as one of the most liberal. Hence, the foundation is a frequently used legal form in Switzerland.
Establishment of the foundation
For the establishment of a foundation the fortune must be employed for a particular purpose. The donor has to demonstrate his will to build an independent foundation, to provide the deposit assets of the foundation and to define the purpose of the foundation in the deed of foundation. The foundation is registered in the commercial register, unless the underlying is a church or family foundation.
Tax authorities are concerned with commercial foundations. These foundations are, depending on the purpose of foundation, either taxed as a holding company or as normal foundation. If the purpose of foundation is approved as charitable, a tax exemption can be expected. This assumes, however, that the dividends of the foundation are solely distributed to nonprofit organizations or projects.
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When establishing the foundation the assets of the company or person, often shares, will be transferred to them. This transaction is qualified as a donation by the tax authorities and trigers in most cantons gift- or inheritance taxes, except the canton of Schwyz.
Taxation of the foundation
Foundations are legal entities and subject to corporate income and capital taxation.
Corporate income tax (foundation)
The net profit is subject to the profit tax. Deposits of the founder of the foundation to the company assets at the point of establishment (or even at a later stage in the company life cycle) are not taxable at this level as net profit.
When it comes to the federal tax for profits and the district tax amounts under CHF 5.000.- and under CHF 10.000.- will not be taxed. If the net income does exceed the threshold of CHF 5.000.- or CHF 10.000.-, the entire net profit is taxable.
The corporate income tax amounts to 4 % of the taxable net income. The amount of tax due is calculated by multiplying the simple income tax with the tax rate applicable in the municipal seat.
Tax on capital (foundation)
The taxable equity qualifies as net capital, which is determined according to the rules of for individuals. Consequently, in real estate, securities and other investments, not the book value, but the market value is decisive.
From the equity the first CHF 80.000.- are exempt from tax. When it comes to the federal tax, the tax on capital is no longer applicable since the 1st of January 1998.
The simple tax on capital is 0,5 ‰ of the taxable capital. The amount of tax due is calculated by multiplying the simple tax on capital by the applicable municipal tax rate in the seat of the company.
Frequently asked questions concerning the foundation in Switzerland
- Do I need to be Swiss citizen?
No. The citizenship does not matter. Also associations, public corporations as well as public authorities can establish a foundation in Switzerland.
- How much capital is required?
Depending on the purpose of the setting, the capital requirements vary. It is, however, possible to supply the foundation with further means, capital or real estate even after the establishment of the foundation.
- How much influence does the founder have?
The founder, during his lifetime, can be appointed as president of the board of foundation and decide how to adhere to the purpose of the foundation.
- Is the residence in Switzerland a requirement?
No. You can set up a foundation at any location in Switzerland and maintain your residence in Switzerland or abroad.
- What is the name of the foundation?
The name can be chosen freely. Often the name of the founder is chosen.
- Can my family be the beneficiary?
Family foundations are permitted under the Swiss law. However, only for the purpose of education or support of the family members, not for their financial alimentation.
- Is the purpose of the foundation modifiable?
The dedicated assets are at free disposal to the once chosen purpose of the foundation, which has been stipulated in the deed of foundation. However, legal developments more and more allow for flexibility.
Do you have any questions?
We are happy to advise you with the detailed guidelines concerning foundations, their capabilities as well as costs, and carry out the establishment for you. For further questions we are at your disposal any time. » to the contact options