Liechtenstein – attractive for philanthropists
Even though it is the sixth smallest country in the world, Liechtenstein has offered ideal conditions for philanthropic commitment for many years. It is therefore no wonder that almost 1,400 charitable foundations have established themselves in a country with 38,000 inhabitants. There are many reasons in favour of setting up a charitable foundation in the Principality.
Internationally recognised location
Liechtenstein was recognised as an outstanding location for philanthropic engagement by an American study in 2022. Since 2014, the Lilly Family School of Philanthropy at Indiana University has been analysing the development of the philanthropic sector worldwide with the Global Philanthropy Environment Index (GPEI). Liechtenstein was ranked first out of 91 countries, confirming that it offers the best regulatory, political, economic and socio-cultural conditions for philanthropic engagement.
Liechtenstein’s unique location at the interface between the EU and Switzerland also makes it particularly interesting for international philanthropists. The country is part of an economic, customs and monetary union with Switzerland. Liechtenstein also benefits from the free movement of goods, persons, services and capital under the EEA Agreement, which means that Liechtenstein charitable foundations are recognised equally in the EU and the EEA.
Flexible and modern foundation law
A particular advantage of Liechtenstein as a business location is its liberal foundation law practice. The flexible and modern legal system enables the establishment of foundations that precisely fulfil the needs and wishes of the founders. Founders have extensive opportunities for organisation and participation.
This includes, for example, the right to revoke the foundation during the founder’s lifetime or to amend the foundation documents, including the foundation’s purpose or organisational structure. The founder has the freedom and flexibility to adapt or even dissolve the foundation according to his or her wishes. In addition, foundations in Liechtenstein offer extensive structuring options with regard to estate planning.
A special feature of Liechtenstein foundation law is the possibility of establishing foundations that serve both private and charitable purposes. Family foundations are also frequently set up in Liechtenstein with the proviso that only charitable purposes are pursued after the beneficiaries cease to exist.
Long-standing trust in the location
The oldest charitable foundation was established in the 1940s. The number of charitable foundations in Liechtenstein has grown steadily since then and has remained stable even in difficult economic times. The country has gained an international reputation as a reliable location, which is due to a stable political and economic environment as well as a long tradition in asset management. Short distances and a high level of advisory expertise in the country make it easier for philanthropists to realise their projects.
Liechtenstein offers charitable foundations particularly flexible tax conditions compared to other countries. At the same time, Liechtenstein has made considerable efforts in recent years to combat money laundering and abuse of the financial system.
The country has introduced strict legal and supervisory measures and laws that comply with the recommendations of the Financial Action Task Force (FATF). The Liechtenstein Financial Market Authority (FMA) effectively monitors the financial centre and there is extensive international cooperation to exchange cross-border information and conduct investigations.
Conclusion
Liechtenstein is an excellent location for philanthropic commitment and the establishment of a charitable foundation. The flexible and modern foundation law practices enable philanthropists to customise the structure of their foundation. A stable political and economic environment and many years of expertise in asset management further strengthen confidence in the location.
