A Swiss foundation differs significantly from a foundation established in Liechtenstein. However, even international advisers sometimes confuse these two legal structures.
This confusion also influenced earlier debates about the Automatic Exchange of Information. Importantly, the OECD develops the Common Reporting Standard, not the OSCE. This standard governs the international exchange of financial account information.
Protecting beneficiaries of a Swiss foundation
Earlier proposals caused concern within the Swiss philanthropic sector. In particular, foundations feared that reporting obligations could expose recipients of charitable grants. SwissFoundations and the Swiss Government therefore supported an exemption for genuine non-profit entities.
Confidentiality remains essential for foundations that support humanitarian projects abroad. For example, some beneficiaries live in countries with weak legal safeguards. Revealing their identities could expose them to political pressure or personal danger.
What do the current rules provide?
Current Swiss rules recognise qualified charitable entities as non-reporting financial institutions. However, an organisation must meet all the statutory requirements.
It must pursue recognised non-profit purposes and hold Swiss tax-exempt status. Moreover, nobody may hold ownership rights in its income or assets. Its governing documents must also restrict distributions to private persons.
Consequently, a qualifying Swiss foundation has no CRS reporting duty as a financial institution. Nevertheless, other legal and regulatory obligations may still apply. Therefore, every foundation should review its individual classification carefully.
Transparency and confidentiality
Foundation boards must balance transparency, compliance and beneficiary protection. Clear governance procedures help them achieve this balance. In addition, regular legal reviews reduce regulatory and reputational risks.
The Swiss Federal Tax Administration explains the current AEOI rules. The OECD provides further information about the international standard.
