Well-known differences and similarities.
In a majority of cases, the trust certificates are more detailed than the Foundation documents and specify the rights and obligations of the settlor, trustee and beneficiary. This can be traced back to the early concept of the common law, meaning that judgment is not based on the statutory law, but in accordance with the Judges Law. The Foundation is based on civil law concept and is always in accordance with the statutory law, so its textual representation is relatively simple. Although Liechtenstein's trust law is enacted under a civil law jurisdiction, the contents of the trust certificate are very detailed, given the potential of being converted into a common law system (it is easy to do this through the appropriate choice of law and to replace the trustee). In addition, adopting the British Trust Certificate mode is easy to be recognized all over the world, so it's common to see the British elements in Liechtenstein trust certificates. Of course, it's unnecessary in Liechtenstein (such as time limits, etc.). Detailed trust certificates can also play a role in helping change some specifications according to customers' wishes. Therefore, in many ways, the Liechtenstein trust law is a dispositive law.
The influence of the 2009 amendments to the Foundation Act.
Trust and Foundation have a fundamental difference: the business purpose of the Foundation is limited and not flexible enough. Foundation follows the fixed principles, under which the purpose of the foundation is set when the founder establishes the Foundation (especially the Beneficiary Ordinance) and can not be changed. The Foundation Act, which was amended in 2009, made a more clear explanation, and validated it by legislation. The founder of the Foundation can stipulate in the Charter that he or she reserves the right to change the purpose of the Foundation during his or her lifetime. However, the situation is valid only if the founder of the Foundation is a natural person. The Settlor in a trust can also enjoy similar rights, but it also offers a greater autonomy of the Trustee. Within a certain range, the Trustee can act without seeking the consent from the Settlor, but from the Protector. In other words, the Liechtenstein trust is not subject to the fixed principles and is a more dynamic property custodian.
The Influence of the amended 2010 Tax Law.
According to the No. 48 Proposal of 2010 and the report on the New Tax Law, "Special Property Custodian (such as trust institution) without a legal personality doesn't need to pay profit tax; However, pursuant to the 65 Article, it shall pay a minimum profit tax." The first provision of the 65 Article enables the Trust to have apparent advantages over foundations and other custodian institutions with legal personality. If other property custodians with legal personality (such as foundations and legal entities) would like to exempt from the tax reporting obligations and pay only the minimum profit tax, they have to submit a statement to qualify as a PVS, while the trust institution doesn't need such a statement. The Trustee should only pay 1,200 CHF annually as tax regardless of the form and the amount of the property.
Summary.
The amended Foundation Act 2009 and the amended Tax Law 2010 have enlarged the differences between the Trust and the Foundation. After the revisions, Trust's advantages are more prominent: as the Trust is based on the dispositive law, the flexibility and degrees of freedom of the trust institution (for the Settlor and the Trustee) is significantly higher than those of the Foundation. Foundation's flexibility and freedom are very much restricted because of the amendments of the two laws. In addition, the trust has new advantages in terms of taxation: it needn't to file tax returns; regardless of the form and the account of the property under the trust, it only needs to pay a small-sum tax of 1,200 CHF. These advantages make the Trust more attractive than the Foundation.
