Structures Switzerland
The family foundation in Switzerland: purpose, limits, administration
Updated: · Leutrim Miftaraj, FLIORE · Editorial standards · Other languages: Deutsch · Français · Español
Short answer
A Swiss family foundation may only use its assets for specific purposes: the upbringing, endowment and support of family members, or similar purposes (Art. 335 ZGB). Pure maintenance foundations, which pay the family benefits without a particular occasion, are not permitted under case law. That is why Swiss families often use Liechtenstein foundations or trusts for succession – and administer them from Switzerland.
Permitted and prohibited purposes
The Swiss Civil Code allows family foundations to cover the costs of upbringing, endowment or support of family members, or to pursue similar purposes. This means benefits in specific life situations – such as education, marriage, starting a business or hardship.
Under the established case law of the Federal Supreme Court, so-called maintenance or enjoyment foundations, which pay beneficiaries regular benefits without conditions, are not permitted. Such a foundation is void; the assets revert to the founder or their heirs. Anyone setting up a family foundation should therefore have its purpose drafted carefully.
Organisation and supervision
In Switzerland, family foundations are not subject to state foundation supervision and do not need an auditor (Art. 87 ZGB). Since 1 January 2016, however, they must be entered in the commercial register: newly established family foundations acquire legal personality only upon entry, and existing ones had until the end of 2020 to register (Art. 52 ZGB). Clean documentation of their own is all the more important: the foundation deed, regulations, the composition of the foundation board, resolutions on benefits and the beneficiaries.
When identifying beneficial owners, banks treat family foundations like other foundations: the founder, the foundation board, the beneficiaries and any protectors are recorded (Form S).
Reform status
Parliament has adopted Motion 22.4445, which calls for strengthening the Swiss family foundation and lifting the ban on maintenance foundations – the Council of States in December 2023, followed by the National Council – and has instructed the Federal Council to amend Art. 335 ZGB accordingly. Until an amendment enters into force, the ban continues to apply. Foundation deeds should therefore be drafted under current law and reviewed when new rules take effect.
Taxation in outline
The family foundation is a taxpayer in its own right and pays profit and capital taxes. Contributions to the foundation may trigger cantonal gift or inheritance taxes; distributions are usually subject to income tax for the beneficiaries, and depending on the canton and the structure, gift taxes may also come into play. Rates and practice differ from canton to canton, so a tax clarification in the canton where the foundation has its seat and in the cantons of residence of the beneficiaries is needed before it is established.
Foreign alternatives and administration from Switzerland
Because of the narrow purpose rules, many Swiss families set up foundations in Liechtenstein or trusts under foreign law. Switzerland recognises trusts through the Hague Trust Convention. These structures are often administered by Swiss family offices and trustees – with all the requirements for documentation and due diligence.
FLIORE maps Swiss and foreign foundations in the same way: bodies and beneficiaries with history, resolutions and deeds with validity, assets with look-through consolidation.
At a glance
| Legal basis | Art. 335 ZGB (Swiss Civil Code) |
|---|---|
| Permitted purposes | upbringing, endowment, support of family members and similar purposes |
| Not permitted | maintenance or enjoyment foundations (Federal Supreme Court case law) |
| State supervision | none (Art. 87 ZGB) |
| Commercial register | registration required since 1 January 2016 (Art. 52 ZGB) |
Terms on this page
- Beneficial owner
- The natural person who ultimately owns or controls a company, foundation or trust, or on whose behalf a transaction is carried out.
- Forms A, K, S and T
- Standardised forms used by Swiss banks to establish the beneficial owner: A in general, K for controlling persons, S for foundations and T for trusts.
- Hague Trust Convention
- International convention governing the recognition of trusts in states without their own trust law; in force for Switzerland since 1 July 2007.
- Family foundation
- A foundation whose purpose lies predominantly in the interest of one or more families.
- Protector
- A person or body that supervises the trustee of a trust or the board of a foundation and holds certain consent rights.
- Look-through consolidation
- Consolidation of wealth across several structural levels, pro rata according to the shareholding percentages.
Frequently asked questions
Can a Swiss family foundation make regular distributions?
Only if they are tied to a permitted purpose such as education or support in hardship. Unconditional maintenance payments are not permitted.
Does a family foundation have to be entered in the commercial register?
Yes. Since 1 January 2016, family foundations must also register; newly established ones come into existence only upon entry. State supervision and an auditor, on the other hand, are not required.
Will the ban on maintenance foundations be lifted?
Through Motion 22.4445, Parliament has instructed the Federal Council to amend Art. 335 ZGB. Until the amendment enters into force, the ban continues to apply.
Why do Swiss families often choose Liechtenstein foundations?
Because Liechtenstein foundation law allows more flexible purposes, including maintenance payments to the family.
Sources
- Fedlex – Swiss Civil Code (Art. 52, 87 and 335 ZGB)
- Swiss Federal Supreme Court – case law
- The Swiss Parliament – Motion 22.4445 (Curia Vista)
- Federal Office of Justice – Federal Commercial Registry Office
This page provides orientation and does not replace legal or tax advice. The cited legal sources in their applicable version are authoritative.
Read more
More on Structures, tax & succession
FLIORE in your family office
See structures, compliance and consolidated wealth with your own questions – in a personal demo.