Full text: Taxation of foundations in Europe

beneficiaries. Moreover, we will discuss the consequences that the liquidation of a private 
foundation may have in terms of taxation.  
Fiscal Treatment of Endowments to a Foundation 
When the estate and gift tax was abolished in Austria on 1 August 2008, the legislator also 
set up new rules for the fiscal treatment of endowments to private foundations. Donations by 
the founder or third parties to a private foundation are subject to a so-called foundation en-
trance tax (Stiftungseingangssteuer) of 2.5%. If a foundation is endowed with Austrian land, 
the foundation entrance tax is increased by 3.5 percentage points to 6% in total.  
The foundation entrance tax applies if at the date of the donation, the donor (founder) is 
domiciled or usually resides in Austria or if the foundation has its registered seat or man-
agement there. In principle, the value of the donation minus debt and charges related thereto 
serve as the assessment basis for the foundation entrance tax. Donations of agricultural or 
forest property, Austrian land and premises are subject to a specific rule according to which 
the rateable value of these assets multiplied by three forms the tax assessment basis. The 
tax assessment basis for the donation of other assets to foundations is determined according 
to the provisions of the Estate and Gift Tax Act in connection with the Austrian Valuation Act 
(Bewertungsgesetz). This means that the following valuation rates are to be applied to assets 
which are typically bestowed upon foundations:  
Shareholdings in companies such as participations in a partnership are to be reported at their 
current value. For securities and shareholdings in companies, the ordinary value (i.e. the 
value at which the securities or shareholdings could be sold) forms the assessment basis; if 
a market price can be determined, this price is relevant. If no market price exists, the value of 
the security or shareholding must be derived from historic data; if this is impossible, their 
value has to be determined on the basis of the expected development of earnings and capi-
tal. Capital investments which are subject to capital income tax (such as savings books) are 
to be reported at their nominal value. Other movable assets, cash or receivables need to be 
stated at their current value. 
In the event of endowments causa mortis (in the context of foundations, this means that the 
foundation is established only upon death of the founder) or subsequent endowments upon 
the death of the founder, capital investments which are subject to capital income tax and 
shareholdings in companies (provided that the stake in the companies amounts to less than 
1%) benefit from tax exemptions. 
Current Taxation of Private Foundation 
As a legal person, the private foundation is subject to corporate income tax. Due to special 
provisions, which are essentially set forth in Article 13 Corporate Tax Act (Körperschafts-
steuergesetz), private foundations usually benefit from a more favourable tax treatment than 
companies (stock companies, limited liability companies). Although income from private

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