How do I set up a foundation in Switzerland? - Complete guide 2025

What is a Foundation in Switzerland?

A foundation (Stiftung) is autonomous assets made available by a founder for a specific permanent purpose. As a legal entity with its own legal personality, it holds its own rights and obligations.

Swiss Foundation Landscape:

• Over 13,000 active public benefit foundations
• Total foundation assets: Around CHF 100 billion
• Global leader: 6x more foundations per capita than USA/Germany
• Very liberal foundation law with high flexibility

Minimum Capital and Recommended Asset Values

Legal Minimum Capital:

• CHF 50,000 required at formation
• Capital need not be fully paid immediately
• Proof of later funding contributions possible

Recommended Capital Levels for Effective Foundation Work:

• CHF 3 Million: Minimum for regular distributions (VZ Wealth Center)
• CHF 5 Million: General recommendation for meaningful foundation management
• CHF 10 Million: For perpetual grant-making foundations (expert recommendation)
• CHF 10 Million: Rütli Foundation recommendation for independent foundation

Capital Forms:

• Cash
• Real estate
• Company shares
• Other assets

Formation Costs in Detail

One-time Formation Costs:

• Total Costs: Up to CHF 12,000
• Notary Costs: Public certification of foundation deed
• Commercial Register Fees: CHF 600-800 (depending on canton)
• Consulting Costs: Legal advice for articles and purpose formulation
• Pre-examination Costs: Optional with foundation supervision

Annual Ongoing Costs:

• Administrative Costs: CHF 10,000+ per year
• Accounting and audit costs
• Foundation supervision fees
• Tax return costs (every 1-2 years depending on canton)

Legal Requirements for Formation

Basic Requirements (Art. 80-89c Swiss Civil Code):

1. Foundation Purpose:

• Freely determinable, must not be illegal or immoral
• Must be precisely and permanently implementable
• For public benefit foundations: Altruism and non-profit orientation

2. Proportionality:

• Reasonable relationship between assets and foundation purpose
• Assets must be sufficient for purpose fulfillment

3. Formation Method:

• Public deed (notarial certification)
• Testament or inheritance contract possible
• Commercial Register entry mandatory for legal capacity

Foundation Types and Their Characteristics

Public Benefit Foundations:

• Tax exemption possible with public benefit purpose
• Donations tax-deductible (up to 20% of net income)
• Public transparency and accountability obligation

Family Foundations:

• Asset management for family members
• Normal taxation according to tax laws
• Family interest protection and succession planning

Ecclesiastical Foundations:

• Support religious activities
• Special tax treatment possible
• Religious institutions as beneficiaries

Foundation Organs and Governance

Foundation Board (Mandatory Organ):

• Minimum Number: 3 natural or legal persons (practical requirement)
• International Foundations: At least one signatory member with Swiss/EU citizenship and Swiss residence
• Tasks: Management, administration, and purpose implementation
• Liability: Personal liability of foundation board members not excludable

Additional Possible Organs:

• Management
• Audit body (mandatory for larger foundations)
• Investment committee

Step-by-Step Formation Guide

Phase 1: Preparation and Planning

• Purpose Definition: Clear formulation of foundation purpose
• Financial Planning: Create capital requirements and distribution planning
• Legal Advice: Consult specialized lawyers for foundation law
• Organizational Structure: Determine foundation board and other organs

Phase 2: Document Creation

• Foundation Deed: Articles with all required information
• Foundation Regulations: Detailed implementation provisions
• Purpose Formulation: Precise and future-proof formulation
• Organizational Regulations: Tasks and competencies of organs

Phase 3: Official Steps

• Pre-examination: Voluntary examination by foundation supervision recommended
• Notarial Certification: Create public deed
• Commercial Register Entry: Registration with competent Commercial Register office
• Foundation Supervision: Registration with competent supervisory authority

Phase 4: Operational Setup

• Bank Accounts: Opening foundation accounts
• Accounting: Set up system and determine audit body
• Tax Registration: Register with tax authorities for public benefit status
• Insurance: Conclude liability and other insurance policies

Tax Aspects and Benefits

Tax Exemption for Public Benefit Foundations:

• Requirements: Public benefit, altruistic purpose
• Exemption from: Profit, capital, and real estate taxes
• Tax Return: Annually or every 2 years (depending on canton)
• Review: Regular examination of public benefit status

Donation Benefits:

• Tax Deduction: Up to 20% of net income (federal and most cantons)
• Annual Endowments: Deductible as donations
• Inheritance Tax: Often complete exemption for public benefit purposes

Supervision and Compliance

Federal Foundation Supervision Authority (ESA):

• Jurisdiction: Foundations with supra-cantonal/international character
• Annual Reporting: Activity report, annual accounts, audit report
• Control: Appropriate use of foundation assets

Cantonal Supervisory Authorities:

• Jurisdiction: Locally active foundations
• Supervisory Duties: Analogous to federal supervision
• Reporting: Annual accountability

Alternative: Umbrella Foundation vs. Own Foundation

Umbrella Foundation (Sub-foundation/Foundation Fund):

Advantages:

• Lower Minimum Capital: From CHF 200,000 (VZ Umbrella Foundation)
• Lower Costs: No own administrative costs
• Less Effort: Administration by umbrella foundation
• Faster Implementation: Simpler formation

Disadvantages:

• Less Autonomy: Dependency on umbrella foundation
• Limited Design Freedom
• No Own Legal Personality

Own Foundation:

Advantages:

• Complete Autonomy: Own decision-making power
• Individual Design: Tailored articles
• Own Legal Personality: Complete legal independence
• Prestige Effect: Own name and appearance

Disadvantages:

• Higher Costs: CHF 12,000+ formation, CHF 10,000+ annually
• More Administrative Burden: Own administration required
• Higher Minimum Capital: Recommended CHF 3-10 million

Common Mistakes and How to Avoid Them

Purpose Formulation:

Mistake: Too narrow or too broad purpose definitionSolution: Precise but future-proof formulation with expert advice

Capital Planning:

Mistake: Underestimating ongoing costsSolution: Realistic financial planning over several years

Governance:

Mistake: Unclear competencies and responsibilitiesSolution: Detailed regulations and regular training

Supervision:

Mistake: Neglecting reporting obligationsSolution: Professional accounting and timely reporting

Advantages and Disadvantages Overview

Advantages of Foundation Formation:

• Tax Benefits: Donations deductible and tax exemption
• Sustainable Impact: Permanent societal contribution
• Flexibility: Liberal Swiss foundation law
• Legal Security: Stable Swiss legal system
• Asset Protection: Separate foundation assets

Disadvantages of Foundation Formation:

• High Formation Costs: Up to CHF 12,000 initial
• Ongoing Administrative Costs: CHF 10,000+ annually
• Irrevocability: Asset transfer not reversible
• Administrative Burden: Regular reporting and compliance
• Bound Assets: No private use possible anymore

Frequently Asked Questions (FAQ)

Who can establish a foundation?

Natural persons from age 18 and legal entities (even without Swiss residence).

Is an own foundation worthwhile?

Recommended from assets of CHF 3-10 million. For smaller amounts, choose umbrella foundation.

Can the foundation purpose be changed later?

Only in exceptional cases and with approval of supervisory authority. Therefore careful initial planning important.

Which supervisory authority is responsible?

Federal Foundation Supervision for supra-cantonal/international character, otherwise cantonal authority.

How long does formation take?

With professional support, 2-4 months from decision to registered foundation.

Expert Tips for Successful Foundation Formation

1. Use Professional Advice:

• Specialized law firms for foundation law
• Tax advisors for optimal structuring
• SwissFoundations for networking and best practices

2. Long-term Financial Planning:

• Realistic assessment of administrative costs
• Distribution planning over several years
• Consider inflation and market risks

3. Think Through Governance Structure:

• Choose qualified and committed foundation board members
• Define clear competency regulations
• Ensure regular continuing education

Conclusion

Establishing a foundation in Switzerland offers unique opportunities for sustainable societal engagement. Liberal foundation law and tax advantages make Switzerland an attractive foundation location.

Key Decision Factors:

• Assets: Minimum CHF 3-10 million for meaningful own foundation
• Purpose: Clearly defined, permanently relevant foundation purpose
• Commitment: Willingness for long-term responsibility and administration
• Expertise: Use professional advice and support

For smaller assets or less administrative effort, an umbrella foundation is often the better alternative. In any case, you should seek comprehensive advice to find the optimal structure for your philanthropic goals.