Foundation Services

Foundation Services

The Austrian Private Foundation Act (Privatstiftungsgesetz, PSG) came into force as of 1 September 1993. With this new law the legislator responded to the demand for the creation of a "modern foundation law". Previously only permissible for charitable or public interest purposes, this milestone Act made it possible for foundations for private purposes to be established in Austria for the first time. Concurrently, a tax law package with particularly attractive features for founders and beneficiaries was enacted. Widely recognised outside Austria, the Private Foundation Act creates excellent investment opportunities for high-net-worth individuals from both Austria and abroad. Moreover, a private foundation is an excellent instrument for bringing a clear structure into large family estates.

Roughly 2,500 private foundations have been set up since the coming into force of the Private Foundations Act, thus substantial experience is already available in this relatively young field of law. Just for comparison, the number of stock corporations set up to date runs to just over 2,000. Tax advantages are invariably stated as the prime motive for setting up a private foundation. Considering the short-lived nature of tax laws, however, the principal advantages of private foundations should rather be seen in the versatile structures this legal entity may take under private law, an approach that
also takes the sting out of future tax reforms.

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