47 Regular Taxation of the Foundation On foundations which do not pursue a public utility purpose, a special corporate tax rate of 4.25% is levied on the federal level (tax allowance of CHF 5,000). Tax exemptions (in the form of an investment allowance or “Beteiligungsabzug”) exist for investment income realised in connection with shareholdings equal to or exceeding 20% and shareholdings equal to or exceeding CHF 2,000,000 of the registered/share capital of another company. As a result of this allowance, a part of the foundation profits, which is proportional to the amount of the shareholding, is tax-exempt. The same applies to capital gains generated by a disposal of shareholdings. Dividends distributed to the foundation are subject to a 35% withholding tax; the foundation may however claim a refund. As a consequence, all capital income from shareholdings is tax-exempt at the level of the foundation. In the canton Zug, the base tax rate is 4% (tax allowance of CHF 10,000). On the basis of this base tax rate, the rates of the canton Zug (0.83%), the municipality Zug (0.63%), and the protestant church community (0.095%) are determined. In total, this leads to a tax rate of 6.22%. However, at cantonal level, foundations can benefit from advantages granted to so-called domiciled management companies (Domizilgesellschaften). These are companies which are not engaged in business in Switzerland, but only perform management activities there. In this case, all profits from shareholdings are tax-exempt at foundation level. Other income is subject to the tax rates stated above. Concerning real properties, it should be taken into account that in the canton of Zug no speculation periods apply; as a result, capital gains from the disposal of real estate are subject to taxation. Furthermore, at cantonal level, there is a so-called net asset tax (Nettovermögenssteuer) or capital tax. This tax is, however, so low that it is negligible in economic terms. Thus, profits in connection with shareholdings (including capital gains) realised by a founda- tion established in the canton of Zug and which exclusively bundles large shareholdings in companies are ultimately tax-exempt. While foundations are not subject to the 12.5% rate applicable in Austria, there are some other fiscal aspects that should be taken into account (taxation of payments to beneficiaries or taxation upon liquidation). Taxation of payments to beneficiaries or in the event of liquidations According to prevailing opinion, payments by corporate foundations of liquidation proceeds or assets to beneficiaries are subject to personal income tax at the level of the beneficiaries in Switzerland (in some cases these payments may also be subject to gift tax). The highest marginal tax rate in the canton capital Zug amounts to 25.5% including direct federal tax. If the beneficiary resides in Austria, the payment is only subject to taxation in Austria pursuant