Why Liechtenstein at all?
The combination Liechtenstein offers exists nowhere else in Europe. The Principality has been a member of the European Economic Area since 1 May 1995, so it belongs to the single market without joining the EU. At the same time, since the customs treaty of 1923 its territory has been part of the Swiss customs area, and since the VAT treaty of 1994 the two countries have formed a common VAT territory. For your assets, this means: you get a sovereign legal space of its own, with its own foundation law and its own taxing power, tied economically to Switzerland and taking part in the European single market in law.
For readers in the United Kingdom, the EEA point no longer carries the tax weight it once did. Until the 2024 to 2025 tax year, the UK rules on transfers of assets abroad contained an exemption for genuine transactions tied to EU and EEA freedoms; that exemption was removed from the 2025 to 2026 tax year. The case for Liechtenstein therefore rests on its substance: a mature foundation law, professional local trustees, and a legal tradition that has made Vaduz the centre of foundation practice in the German-speaking world for decades.
The family foundation: what it is and what it is not
A Liechtenstein foundation is a legally independent fund dedicated to a purpose, with legal personality of its own. You transfer assets to the foundation, and from that moment they belong neither to you nor to your children, but to the foundation itself. It pursues the purpose you set in its statutes, typically providing for your family over generations. The minimum capital is 30,000 francs, euros or US dollars.
The foundation thereby separates two things that are inseparable in private wealth: control over the assets and the benefit from the assets. Control lies with the foundation council, which runs the foundation's affairs and represents it. It has at least two members, and under Liechtenstein law at least one managing member must hold a local professional licence as a trustee or an equivalent authorisation. The benefit lies with the beneficiaries you name in the statutes or by-laws: your children, your spouse, future generations, even yourself.
A Liechtenstein foundation is therefore not a letterbox and not an account under another name. It is a working institution with a body that takes real decisions, in a country whose foundation law has existed since 1926 and was fundamentally modernised in 2008. Liechtenstein taxes it at 12.5 percent of net income, with a minimum of 1,800 francs a year. If the foundation manages only private assets and carries on no economic activity, it can apply for the status of a private asset structure and then pays only the minimum income tax.
The conditions everything depends on
Now to the core. UK tax law has long had rules designed to make structures abroad unattractive for UK residents: under the rules on transfers of assets abroad, the income of a person abroad can be treated as the income of a UK resident individual who has "power to enjoy" it, even if the foundation does not pay out a single pound. Advisers call this dry income: you pay tax on money you have never seen. A foundation taxed in this way is worthless as a protective structure.
The decisive question is when that power to enjoy exists, and the statute answers it broadly. It is enough that you can control, directly or indirectly, how the income is applied, or that you receive or are entitled to receive a benefit from it. In other words, the UK looks at two things: control and benefit. Anyone who reserves a right of revocation, a right to give instructions or a claim to the assets keeps control and is caught. Anyone who gives up control but stays among the beneficiaries can still be caught through the benefit.
How HMRC classifies the foundation matters too. Under the 2009 joint declaration between HMRC and the Government of Liechtenstein, Liechtenstein foundations are, as the general approach, characterised and treated as trusts for UK tax purposes, with the final consequences always depending on the facts. For a trust in which the settlor has an interest, UK law treats its income as the settlor's income as long as the settlor is alive. The condition therefore hangs on your residence, your control and your benefit, all three.
What giving up control means in everyday life
On paper, giving up control sounds abstract. In everyday life it means: the foundation council decides on distributions, not you. In the statutes and a set of by-laws you can lay down precisely by which rules it decides, who should receive what and when, what the assets may be used for and what never. But you cannot give it instructions by phone, and you cannot take the assets back if you change your mind.
This is exactly where structures fail in practice, and in two ways. In tax: anyone who builds in rights to call the assets back keeps control and is taxed as if the income were their own. And more fundamentally there is a second trap that many overlook: a foundation that is in fact run from home by its founder is not separated from its founder at all. The place where decisions are really taken counts, not the address in the register. So control must lie with the Liechtenstein foundation council not only on paper but in fact. That is no formality; it is the reason this does not work without reliable professionals on site. Liechtenstein even prescribes this professionalism by law: no foundation without a locally licensed trustee on the foundation council. For this, we work with established local firms that have filled this role for decades.
One more point belongs on the table, because it is regularly underestimated: endowing the foundation is a gift, and where the assets fall within UK inheritance tax, a transfer into a structure treated as a trust is charged at 20% on the amount above the £325,000 threshold. After that, the trust regime adds a charge at every ten-year anniversary and an exit charge of up to 6% when assets leave. If you can still benefit yourself, the gift-with-reservation rules can treat the assets as part of your estate when you die. Which weighs more in your case is a calculation, not a matter of belief, and it belongs at the start of the consultation, not at the end.
The honest alternative: a structure built for control
If you have read this far and sense that giving up control and benefit is not for you, the right answer is not to set up the Liechtenstein foundation anyway with watered-down statutes. The right answer then is a structure built for control. The foundation-style Limited (Company Limited by Guarantee) is the simple alternative to a foundation, one in which you keep 100% control over your assets; level with it stands the Wyoming LLC. With these, the question of giving up control does not arise in the first place.
The price must be named just as honestly: such a structure does not separate the assets from you the way a foundation does, because you keep the steering wheel. It is a trade: more control for less distance. Which side of the trade is right for you depends on what you want to protect your assets from and on how you answer the question in the first paragraph of this page for yourself. Both paths are legitimate, and we build both. Only the hybrid, a Liechtenstein foundation with remote control from home, we do not build, because it does not work for tax.
Reporting duties and transparency, seen soberly
Anyone looking for secrecy with a Liechtenstein foundation is looking in the wrong place, and we say so this clearly because claiming the opposite would be dishonest. Liechtenstein has taken part in the automatic exchange of information on financial accounts since 2017, on the basis of the OECD standard and its own agreement with the EU. The United Kingdom and Liechtenstein have also had a tax information exchange agreement in force since December 2010 and a double taxation convention effective since 2013. Your bank in Vaduz reports, and HMRC finds out.
That is not a weakness of the structure but its very basis. Today's Liechtenstein foundation works not by hiding but through clean legal separation with full transparency: HMRC knows about the foundation, the beneficiaries declare what they receive, and the protective effect comes from the fact that the assets belong to someone else in civil law, not from the fact that nobody knows about them. Anyone who promises you a discreet solution without reporting is selling you a problem with a delayed start.
Storing precious metals in Liechtenstein
Not everyone who thinks about Liechtenstein needs a foundation. The most frequent concrete enquiry we receive about the location is the physical storage of gold and silver outside the banking system, and for that Liechtenstein is interesting even without a structure: it lies outside the EU, forms a common customs and VAT territory with Switzerland and hosts private high-security vaults with free-port status. Silver, platinum and palladium are stored there free of VAT as long as they do not leave the vault. How this works in practice, what role the customs treaties play and where the limits lie, you can read in our article on free ports in Switzerland and Liechtenstein. A foundation and a vault do not exclude each other, by the way: for larger holdings, the combination of the foundation as owner and the free port as place of custody is one of the most robust ways of holding precious metals over generations.
What we do
For many fortunes, a Liechtenstein foundation is oversized. Whether it is in your case depends on three questions: the size of the assets relative to the running costs of a real, professionally managed structure; the time horizon, because a foundation shows its value over generations, not quarters; and whether giving up control is truly bearable for you, not only on paper but in your gut. The first two questions are a calculation, the third a question of character. None of the three is a product decision.
That is exactly why the path to a foundation does not start with a form at our firm, but with a conversation. We examine with you whether a Liechtenstein family foundation, a structure built for control or an entirely different structure suits your situation; we work through the tax consequences of the initial endowment before anything is signed; and if Liechtenstein is the answer, we carry out the formation with established local firms and remain your point of contact throughout.
Frequently asked questions
Do I have to emigrate for a Liechtenstein foundation to work for tax?
If you live in the United Kingdom, residence matters. The UK charge on transfers of assets abroad applies to individuals who are UK resident, and it bites where you can control the income or can benefit from it. Giving up control alone is not enough while you remain among those who can benefit. If you are not UK resident, the charge does not apply to you.
What happens if I reserve influence over the foundation?
If you can control how the foundation's income is applied, or can receive a benefit from it, UK law can treat its income as yours every year, whether or not anything is paid out. You then pay tax on returns you never received, and the structure misses its purpose.
Why Liechtenstein and not Switzerland?
For a UK resident, UK tax law no longer draws a line between the two: the exemption in the transfer of assets abroad rules that was tied to EU and EEA freedoms was removed from the 2025 to 2026 tax year. What speaks for Liechtenstein is the substance: its own foundation law, in force since 1926 and modernised in 2008, EEA membership, and the densest foundation ecosystem in the German-speaking world.
How much wealth does a Liechtenstein foundation need?
The statutory minimum capital is 30,000 francs, euros or US dollars. The structure only makes economic sense well above that, because a professional foundation council and the ongoing administration have to be paid permanently. Where the threshold lies in your case, we calculate in the consultation before you commit.
Will HMRC find out about my foundation?
Yes, you should assume so. Liechtenstein has reported financial accounts automatically since 2017, and the United Kingdom and Liechtenstein have a tax information exchange agreement and a double taxation convention. The structure works through clean legal separation with full transparency, not through silence.
Can I use the foundation to cut my children out of my estate?
Do not count on it. In England and Wales, family members and dependants can apply to the court for financial provision from your estate, and the court can reach gifts made less than six years before death with the intention of defeating such a claim. Anyone who wants to shape succession has to start early. We explain how it all fits together on the page Succession planning.
Can I store gold in Liechtenstein without setting up a foundation?
Yes. The private high-security vaults with free-port status are also open to direct clients, with no structure at all. Silver, platinum and palladium are stored there free of VAT as long as they do not leave the vault. Details and the cost logic are in our article on free ports in Switzerland and Liechtenstein.
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