Published on and written by Cyril Jarnias
The Stiftung Liechtenstein 2026: secret trust corporate tax 12.5% structures occupy a unique place in the European wealth planning landscape. A hybrid between a civil law foundation and the Anglo-Saxon trust, the Liechtenstein Stiftung has, within a few decades, become one of the preferred vehicles for wealthy families, entrepreneurs, and philanthropists seeking to protect their wealth, organize their succession, and benefit from a clear tax framework, with a corporate income tax rate set at 12.5%.
The ‘Stiftung Liechtenstein 2026: secret trust corporate tax 12.5%’ formula is based on a balance between confidentiality, international transparency, and legal tax optimization. Its operation involves a specific legal foundation and a particular tax mechanism. It is important to note that its confidentiality is now limited in the era of automatic exchange of information between countries.
The Liechtenstein Stiftung is a civil law legal entity, governed by the Persons and Companies Act (PGR), and more specifically by Article 552 and Articles 522 §1–41. It differs from classic companies by the complete absence of shareholders or partners: legally, the foundation’s assets are a fund dedicated to a specific purpose, which “owns itself”.
The creation of a foundation begins with a written unilateral declaration by the founder (an individual or legal entity, resident or not), authenticated by their signature or that of their representative. This declaration, which dedicates assets to a specific purpose, can be established during the founder’s lifetime, by will, or via a succession pact.
From the moment of establishment, three elements are essential: the founder’s will, the contribution of assets, and the definition of the purpose. To this is now added the identification of beneficiaries, required by the 2008/2009 foundation law reform, at least in internal documents. The legal core of the structure is the foundation deed (Stiftungsurkunde), possibly supplemented by internal bylaws (by-laws or Stiftungsstatut) which remain non-public.
The minimum required capital is CHF 30,000 (or equivalent in euros/dollars). It must be fully paid up upon creation, typically into a blocked account at a bank in Liechtenstein, Switzerland, or the EEA, which will provide a funds confirmation certificate.
There are two main families of foundations: private-purpose foundations (family, maintenance, business) and public-benefit foundations (charitable). To these are added mixed structures, combining private interest and philanthropy, with the law allowing, for example, a family foundation to allocate up to 49% of its surplus to public interest causes.
Organized control centered around the foundation council
At the center of governance is the foundation council (Stiftungsrat). It manages the assets, represents the foundation externally, and ensures the purpose is achieved. It must consist of at least two members, individuals or legal entities, domiciled in Liechtenstein or abroad, but with a key requirement: at least one member must be a qualified professional based in Liechtenstein, typically an authorized trustee or trust company, often designated as a “Paragraph 180a person”.
This requirement for an authorized local administrator is not trivial. It guarantees the foundation’s anchor within the Liechtenstein legal order and provides tax and supervisory authorities with a qualified point of contact subject to local law. Around this council, the founder can establish other bodies, such as a protector, an advisory committee, a supervisory board, or an auditor. For charitable foundations, an auditor is mandatory; for private foundations, it remains optional, unless there is commercial activity or supervision by the Foundation Supervision Authority (STIFA).
This architecture allows for great flexibility in the distribution of powers: the founder can, to a certain extent, reserve rights (appoint and remove council members, amend the foundation deed, or even revoke the foundation itself). But there is a red line: if these reserved rights are deemed excessive, it crosses into the sphere of a “controlled foundation,” which can undermine asset protection and the structure’s tax qualification.
Beneficiaries at the core, but often in the shadows
Beneficiaries are the individuals or legal entities likely to derive an economic benefit from the foundation. Liechtenstein law distinguishes several categories: beneficiaries with an acquired right to a benefit, discretionary beneficiaries (with no legal right, subject to the council’s decision), prospective beneficiaries, and ultimate beneficiaries, recipients of the remainder upon dissolution.
In a non-transparent discretionary foundation, beneficiaries have no enforceable right to distributions without a council decision. Their creditors can therefore only act on sums actually received, not on a mere expectancy, which has direct impacts on asset protection and taxation.
The Liechtenstein legislator has also regulated beneficiaries’ rights to information. In principle, they can consult the foundation deed, supplementary deeds, regulations, as well as accounts and business documents that affect their rights. The Supreme Court interprets this right broadly, extending it in principle to the complete history since creation. But this principle has many limits. The law allows the founder to restrict these rights by establishing an internal control body or by voluntarily placing the foundation under STIFA supervision. In these cases, beneficiaries receive only an annual control report and limited information about the purpose, organization, and their own rights, without access to the entirety of assets or the identity of other beneficiaries.
This delegation of control mechanism well illustrates the logic of Stiftung Liechtenstein 2026: secret trust corporate tax 12.5%: oversight exists, but it is indirect, channeled through professional bodies rather than total transparency towards each beneficiary.
Liechtenstein “secrecy” in the era of transparency
Liechtenstein’s reputation for discretion is not undeserved, but it must now be understood within a deeply transformed international framework. Internally, information on the founder and beneficiaries of an unlisted private foundation is not made public. Beneficiaries can be designated in documents not filed with the commercial register, such as internal bylaws, which remain in the council’s or a notary’s drawers. The foundation can even be created in a fiduciary manner, with a local trustee acting as the nominal founder, masking the identity of the economic founder from third parties.
The confidentiality of foundation documents, particularly for family structures, is protected by the Constitutional Court despite an international trend towards more transparency. The founder’s letters of wishes addressed to the council prior to establishment are protected from disclosure to beneficiaries, while those written afterwards may be subject to information rights.
But this secrecy is now framed by targeted transparency mechanisms. Liechtenstein applies the CRS standard on automatic exchange of information, as well as FATCA regulation vis-à-vis the United States. Accounts held by foundations not classified as “financial institutions” are subject to reporting transmitted to the states of residence of beneficiaries or the founder, including the balance, interest, dividends, and sale proceeds. In parallel, the country maintains a register of beneficial owners (VwbP). All legal entities, including foundations, must register their beneficial owners within 30 days of registration in the commercial register or filing the creation notification. This register is not public, but it is accessible upon request to banks, financial institutions, and other professionals subject to due diligence obligations.
The “secret trust” of the Stiftung Liechtenstein 2026: secret trust corporate tax 12.5% formula is therefore no longer absolute opacity. It is rather an organized confidentiality vis-à-vis the general public, coupled with selective transparency towards tax authorities and intermediaries subject to prudential regulation.
Stiftung Liechtenstein 2026
A 12.5% profit tax at the heart of the model
From a tax perspective, the cornerstone of the system is the corporate income tax at a flat rate of 12.5% on taxable net profit. Any foundation with its registered office or effective place of management in Liechtenstein is in principle subject without limit to this tax on its worldwide income. The taxable base is determined based on annual accounts, after considering numerous favorable regimes.
The regulations highlight a series of exemptions that often reduce the effective rate well below the nominal 12.5%: dividends from participations, capital gains on the sale of securities, income from real estate and foreign permanent establishments, distributions received from other foundations, proceeds from collective investment schemes, gains from inheritances or donations, etc. To this is added a deduction for notional interest on fiscally adjusted equity, around 3.75% to 4%, which further reduces the taxable base.
Summary table presenting the main tax characteristics of so-called “ordinary” foundations.
Ordinary foundations are generally subject to corporate income tax (CIT) at the standard rate, subject to the possible application of the non-profit organization regime.
Ordinary foundations may be subject to real estate wealth tax (IFI) if their real estate assets exceed the applicable legal threshold.
Operations carried out by foundations are, in principle, subject to VAT. Certain non-profit activities may benefit from exemptions under conditions.
Like any owner, an ordinary foundation is liable for property taxes (taxe foncière on developed and undeveloped properties) for the real estate it owns.
Donations and bequests received by foundations may be exempt from gratuitous transfer duties, provided formalities are met and they have a public interest purpose.
Foundations must prepare and file an annual tax return, and may be subject to other specific declarations depending on their activities and assets.
| Tax element | Treatment for an ordinary foundation in Liechtenstein |
|---|---|
| Profit tax rate | 12.5% on taxable net profit |
| Minimum annual tax | CHF 1,800, creditable against tax due |
| Dividends from participations | Exempt |
| Capital gains on sale of participations | Exempt |
| Income from foreign real estate | Exempt |
| Profits of foreign permanent establishments | Exempt |
| Inheritance and gift tax | None |
| Withholding tax on distributions | None in Liechtenstein |
This framework largely explains the success of the Stiftung Liechtenstein 2026: secret trust corporate tax 12.5% with international planners: one obtains a fully recognized legal entity, but with a holding-type tax regime, where only a limited portion of income remains effectively taxed.
The Private Asset Structure: the “CHF 1,800” foundation
Beyond this 12.5% rate, the legislation offers an even more radical path for purely asset-holding structures: the Private Asset Structure (PAS) status. A foundation that conducts no economic activity in the strict sense and is dedicated exclusively to private asset management can apply for this special status.
Lump sum amount of the minimum annual tax for an accepted structure, in lieu of the ordinary 12.5% tax.
This regime, however, comes at a price: the PAS cannot engage in any commercial activity. It can hold bankable assets, participations, even real estate, but only from a passive holding and management perspective; it must not “conduct business,” nor invoice for services or products. It also cannot seek investors or be remunerated for its activities. Furthermore, a foundation benefiting from PAS status cannot avail itself of double taxation treaties; it is considered outside the scope of treaty benefits.
The following schema puts into perspective the difference between an ordinary foundation and a PAS:
| Criterion | Ordinary foundation | PAS foundation |
|---|---|---|
| Profit tax rate | 12.5% | Exempt |
| Minimum tax | CHF 1,800 | CHF 1,800 |
| Reporting obligation | Yes, annual return | No detailed return, in principle |
| Permitted economic activity | Yes, under conditions | No, simple asset management |
| Access to tax treaties | Yes, if subject to ordinary tax | No |
In the context of Stiftung Liechtenstein 2026: secret trust corporate tax 12.5%, this PAS status is often used for large family estates wishing to benefit from both a quasi-lump sum tax environment and enhanced confidentiality, while remaining under the radar of anti-abuse provisions related to “letterbox” entities.
An environment without inheritance taxes or withholding taxes
Liechtenstein also stands out for the absence of many taxes that burden wealth transfers and holdings elsewhere. There is no inheritance tax, no gift tax, no wealth tax, nor exit tax at the Liechtenstein level. Donations made to a foundation do not, in principle, trigger taxation at the foundation level itself, although, in very limited cases, a 3.5% endowment tax may affect the founder when the donated assets were already subject to wealth tax in Liechtenstein. In practice, this scenario is rare, typically limited to real estate or commercial assets located in the Principality.
Distributions made by the foundation, whether during its existence or upon dissolution, are not subject to any withholding tax in Liechtenstein. For a non-resident beneficiary, these flows are fiscally neutral in this country. Any potential taxation will therefore depend on the tax legislation of the beneficiary’s country of residence.
This contrast is particularly striking for some neighboring states. In Germany, for example, distributions paid by a Liechtenstein foundation to a resident beneficiary are in principle subject to the final withholding tax of 25% (Abgeltungssteuer). Similarly, the transfer of assets to a foreign foundation may be treated as a taxable donation at a rate that can go up to 50%, with a very low exemption threshold for foreign structures. This explains why practitioners emphasize the need to anticipate and coordinate planning between Liechtenstein and the country of residence.
Tax transparency: “transparent” or “non-transparent” foundation
A central concept of the Liechtenstein regime is the distinction between a transparent and a non-transparent foundation, which rests on a single criterion: revocability. If the founder has reserved a right of revocation, the foundation is considered transparent from a tax perspective: assets and income are attributed directly to the founder (or possibly the beneficiaries), as if there were no separation of assets. Conversely, in the absence of a right of revocation, the foundation is a separate tax subject, non-transparent.
In a transparent foundation, the founder declares the income on their own tax return, and the foundation pays only the minimum tax without a full return for capital income. In a non-transparent foundation, the legal entity is taxed at 12.5% (with its exemptions and deductions), then distributes benefits to beneficiaries, who will themselves be taxed according to their domestic law.
This structural choice is not neutral in terms of international recognition. For access to double taxation treaties, some states, like Switzerland, require that the foundation be “uncontrolled”: absence of a right of revocation, no hidden mandate giving real power to the founder, council with independent discretion. Practitioners frequently recommend using non-transparent discretionary foundations to maximize tax recognition abroad.
A jurisdiction integrated into the European space, but protective of its sovereignty
Liechtenstein is a member of the European Economic Area, meaning that all EU directives, regulations, and decisions apply in its legal order. This European anchor enhances the credibility of Liechtenstein entities, including foundations, with EU countries: they are treated as European legal entities benefiting from fundamental freedoms of movement.
The Principality is not subject to the Brussels I Regulation nor the European Fiscal Union. Foreign court decisions (except those of Switzerland and Austria via bilateral agreements) are not directly enforceable: they require a new trial before local courts, under Liechtenstein law. For a creditor or former spouse, this procedure is complex and a security deposit for court costs is often required.
This dual positioning – economic integration, judicial autonomy – contributes to the appeal of Stiftung Liechtenstein 2026: secret trust corporate tax 12.5%, by strengthening the robustness of asset protection without isolating the jurisdiction from the rest of Europe.
Supervision and “supervision of supervisors”
The supervision of charitable foundations is carried out by the Foundation Supervision Authority (STIFA). This authority, led by specialized lawyers, verifies that assets are managed in accordance with the declared purpose and can demand the communication of all relevant documents. A three-tier system combines STIFA’s control, the auditor’s control, and the judicial control of the Princely Court (Landgericht) in Vaduz. This model is often presented as an international “best practice” of the “supervision of supervisors” type.
A purely private foundation is not automatically subject to state supervision. Its founder can, however, opt for voluntary control by STIFA or an internal body, notably to reassure beneficiaries or enable tax deductions abroad. This decision has an important consequence: it significantly limits beneficiaries’ rights to information. Control and access to data are thus centralized in the hands of professional actors, reinforcing a principle of regulated secrecy rather than broad dissemination of information.
Philanthropy and international rankings
The strength of the model is not limited to private planning. In the charitable segment, Liechtenstein has established itself as a leading hub. According to the Global Philanthropy Environment Index (GPEI), established by the Lilly Family School of Philanthropy at Indiana University, the Principality ranks first in the world, with a score of 4.92/5, ahead of Switzerland, Germany, and the United States. This index assesses 95 economies based on criteria such as the legal framework, tax regime, political climate, and social attitudes towards philanthropy.
Estimated number of foundations in Luxembourg, a considerable volume for a country of about 40,000 inhabitants.
Recent reforms have further relaxed the framework, clarifying that charitable foundations can engage in impact investing and venture philanthropy without losing their tax exemption, provided they remain true to their public interest mission. In other words, a Liechtenstein charitable foundation can invest in social impact enterprises or socially-oriented start-ups, without these inherently economic activities jeopardizing their tax benefits.
Establishment costs and creation taxes
Creating a Stiftung in Liechtenstein is neither trivial nor out of reach. The law provides for a foundation tax equivalent to 0.2% of the statutory capital, with a minimum of about CHF 200 and an exemption above a certain capital threshold (CHF 1 million in one reference). Subsequent creations, as long as the statutory capital is not increased, are exempt from this tax.
Fees for a standard structure with minimum capital typically range between CHF 5,000 and 6,000 excluding VAT.
Overall, the entry ticket for a structure consistent with the Stiftung Liechtenstein 2026: secret trust corporate tax 12.5% logic remains significant, but it is calibrated for a high-net-worth clientele, for whom legal security, political stability, and anticipated tax savings largely offset the initial costs.
Asset protection and effects on third-party rights
One of the major attractions of the Liechtenstein Stiftung lies in its ability to protect assets against the vicissitudes of life of the founder and beneficiaries: professional creditors, divorce proceedings, succession conflicts. The legal separation between the founder’s estate and that of the foundation is clear: once the transfer is irrevocable, the assets belong to the legal entity, and no longer to the founder. The latter’s creditors cannot in principle seize assets that no longer belong to them.
The principle of the inviolability of transfers has limits via avoidance actions (such as the actio pauliana), allowing creditors to challenge fraudulent transfers. The time limits for bringing such actions vary: in Liechtenstein, generally one year (asset liability) and up to five years (fraud), after which the transfer becomes unassailable. In comparison, German law provides for a four-year period and Austrian law for two years.
For forced heirship rights, duration also plays a role. In Germany, heirs can claim a supplement to their statutory portion for ten years on donations made, according to a mechanism of gradual “evaporation” of the right (10% per year). In Liechtenstein, contesting infringements of the statutory portion is limited to two years from the founder’s complete divestment, and certain gifts, notably charitable ones, are simply not taken into account.
Liechtenstein law does not recognize claims arising from an equalization of accrued gains (Zugewinnausgleich) ordered by a foreign court, except for assets located in the state that rendered the decision. This compartmentalization reinforces the effectiveness of asset protection via a foundation, but planning must account for risks in states of residence and contestation periods.
Secrecy, 12.5% tax, and international recognition: a moving balance
By combining a foundation profit tax of 12.5%, a generous arsenal of exemptions, the absence of inheritance taxes or withholding taxes, and a strong residual confidentiality, the Stiftung Liechtenstein 2026: secret trust corporate tax 12.5% formula embodies a compromise highly sought after by the world’s great fortunes.
The compromise between fiscal sovereignty and international cooperation is under permanent renegotiation. This dynamic translates into the extension of automatic exchange of information (CRS), the introduction of global rules like Pillar Two for large groups, and the proliferation of beneficial owner registers. These developments testify to sustained pressure to enhance transparency and combat the abusive use of offshore structures.
Liechtenstein has chosen to adapt rather than resist. By aligning its company and foundation law with European standards, modernizing its tax law, creating statuses like the PAS, or framing beneficiaries’ information rights through professional control mechanisms, the Principality seeks to preserve the core of its attractiveness: legal security, political stability, structural flexibility, and competitive taxation.
For families and investors, the goal is no longer concealment but robust structuring. It is about establishing a real and opposable separation of assets, optimizing taxation within legality, protecting beneficiaries’ rights while avoiding the foundation being paralyzed by internal conflicts, and enabling philanthropy to develop within a framework that is both generous and professional.
In this changing landscape, the Liechtenstein foundation retains an edge. It no longer promises total shadow, but a subtle play of light and shade, where the “secret trust” is no longer synonymous with opacity, but with fine-tuned control of information in a tax world now transparent by default.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
