Family foundations

The essence of a family foundation

A family foundation enables the creation of solid organisational structures and ensures the continuity of business operations and the protection of assets in the long term.

Transfer of assets to a family foundation

The transfer of assets to a foundation is generally not subject to tax, but in some situations it may be necessary to adjust the tax previously deducted.

Taxation of foundations

Income from business activities carried out by a family foundation within the scope specified in the relevant act (including the sale of property, rental of real estate, participation in companies, investment in shares) is exempt from CIT.

It is taxed only when it is paid out to beneficiaries. This solution is therefore similar in principle to the so-called Estonian CIT – it allows untaxed funds to be invested. No payment of funds from the foundation means no tax liability.

The income tax paid by the foundation is 15% of the amount paid out – it cannot be reduced by tax-deductible costs or, for example, depreciation.

Tax avoidance

Most importantly, a family foundation cannot be used solely as a vehicle for tax avoidance or reduction of the tax due.

This does not mean that family foundations cannot engage in activities such as share trading. However, such activities should be properly planned, secured and documented.

Our services

If you need advice on family foundations, comprehensive assistance in setting them up or choosing the optimal way to use them - do not hesitate to contact us.

We also encourage you to find out more about our Corporate / M&A department.