Full text: Taxation of foundations in Europe

2.1. Civil Law Framework 
General Information 
In Austria, there are in principle two different types of foundations: public benefit foundations 
and foundations for private purposes. Only the establishment of public benefit foundations is 
governed by the Federal Foundations and Funds Act (Bundesstiftungs- und Fondsgesetz) 1 
and nine provincial foundations and funds acts. The Austrian Private Foundation Act (Privat-
stiftungsgesetz, PSG)2 enabled the establishment of foundations for both private and public 
interest, charitable or religious purposes. Under this section, we will primarily cover the so-
called private foundations. 
The Private Foundation 
A private foundation is a legal entity having a legal personality in its own right; it can exercise 
rights and assume duties. However, in contrast to other legal entities such as companies or 
associations, private foundations have neither a proprietor nor members. It is the private 
foundation itself that owns the assets donated. While public benefit foundations have to pur-
sue exclusively public interests, this is not the case for private foundations, and the majority 
of Austrian private foundations do not pursue any purposes of common interest at all. In fact, 
the reason for setting up a private foundation is in general the provisioning for family mem-
bers or other beneficiaries. There are of course also private foundations in Austria that pur-
sue public utility purposes, but this is certainly not the case for the majority of private founda-
The Establishment of the Private Foundation 
Private foundations are set up by means of drawing up a declaration of establishment (“Stif-
tungserklärung”) and come into being upon entry in the Company Register. The private foun-
dation must be endowed with assets of at least EUR 70,000. At the time of establishment, 
this amount has to be effectively available. 
The will of the founder (Stifterwille) is laid down in the declaration of establishment, and it is 
the responsibility of the Board of Directors (Stiftungsvorstand) to ensure und control that the 
purpose of the foundation set forth in the declaration of establishment is observed. The dec-
laration of establishment consists of a foundation deed which has to be drawn up under Aus-
1 BStFG, Federal Law Gazette 1975/11 
2 PSG, Federal Law Gazette 1993/694

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