A foundation is a legal entity without members or shareholders. Therefore, the foundation does not belong to anyone. Although in many cases foundations have no profit motive, there are also foundations that run a business and thus make a profit. A foundation may only make distributions in accordance with its idealistic purpose. In particular, it may not make distributions to founders or directors. However, directors or other persons involved in the foundation may receive a salary or expense allowance for work performed.
In any case, the foundation has a board consisting of at least one person. In addition to the board, a foundation may have other bodies. For example, a supervisory board that supervises the board. But also a meeting of affiliates or a meeting of certificate holders.
A foundation is established by notarial deed. This deed also includes the articles of association. There is a lot of freedom in designing the articles of association. That is why a foundation is also often used as a trust office when certifying shares.
In principle, directors of a foundation are not privately liable for the foundation's debts. Only if there is mismanagement can the directors also be held liable in private for their actions.
If and to the extent that a foundation runs an enterprise, it has to pay corporate income tax on the profits made. If and to the extent that the foundation does not run an enterprise, profits are not taxed.
If the foundation qualifies as an Institution for General Benefit (ANBI), as a Social Interest-Bearing Institution (SBBI) or as a Support Foundation SBBI, there are some additional tax advantages with regard to gift and inheritance tax.
For more information on setting up a foundation and amending articles of association, please contact us. We will be happy to advise you.
