Swiss foundations explained: how they work, and why they run like clockwork.
Dr. Ariel Sergio Davidoff offers an update on the usefulness of Swiss foundations. Most readers know the Liechtenstein foundation. However, people often confuse its services with the Swiss model. Even international experts do. This article does not dwell on Liechtenstein. Instead, it clarifies the scope and value of Swiss foundations.
What they are used for
These vehicles serve several purposes. They can be charitable. They can also fund employee benefits. Some even hold companies. Yet the great majority are charitable, about 13,000 in total. The Federal Supervisory Board for Foundations oversees the sector.
Why the model cannot be abused
Some confusion even reached the OECD. Many in the sector believe the OECD saw no difference between the Liechtenstein and the Swiss model. As a result, it wanted to include beneficiaries of Swiss charitable foundations in the automatic exchange of information. Yet the Swiss model cannot be used to evade taxes. A special authority supervises each foundation. The tax authorities also review it. Moreover, the founder and the beneficiaries cannot control it. The council may act only within the law. Finally, the funds settled into it are irrevocable.
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