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Comparison: the Liechtenstein foundation and the Jersey trust

The Liechtenstein foundation

For Swiss families and their advisers, the Liechtenstein foundation has long been the most natural alternative to the restricted Swiss family foundation. It lies a little more than an hour’s drive from Zurich, uses German as its legal language, shares the Swiss franc and is administered by trust companies and lawyers whose training often overlaps with that of their Swiss colleagues. Its legal basis is Article 552 §§ 1 to 41 of the Liechtenstein Persons and Companies Act (PGR), which defines the foundation as a legally and economically independent fund dedicated to a purpose and established by a unilateral declaration of the founder. The minimum capital is 30,000 in Swiss francs, euros or US dollars. The foundation board must have at least two members, one of whom must meet residence and professional requirements.1

The decisive differences from Swiss law concern purpose and control. A Liechtenstein private-benefit foundation may serve the maintenance of family members without the restrictions of Article 335 of the Swiss Civil Code. The founder may also reserve the right to revoke the foundation or to amend its deed, which Swiss law does not permit. This allows the founder to keep considerable control over the beneficiaries and distributions during his lifetime, although it can make the foundation transparent for tax purposes in the founder’s state of residence. Liechtenstein law distinguishes between beneficiaries with enforceable claims, beneficiaries with conditional future rights, discretionary beneficiaries and final beneficiaries who receive the remaining assets on liquidation.2

The Liechtenstein foundation law was comprehensively revised with effect from 1 April 2009. The revision introduced a mixed system of external state supervision and internal control, depending on whether the foundation serves charitable or private purposes. It gave beneficiaries rights to inspect documents, to receive information and to obtain accounts, subject to the founder’s power to redirect control to an internal review body. It also replaced the former deposit of foundation documents with a notification of establishment, which the foundation board submits with a certificate from a licensed lawyer or trustee.3 Charitable foundations must be entered in the commercial register and are supervised by the Liechtenstein Foundation Supervisory Authority (STIFA). Private-benefit foundations are supervised only if the deed so provides. Those that are not supervised file only a notification of formation, which must contain the information listed in Article 552 § 20(2) PGR, within thirty days.4

For Swiss residents, the Liechtenstein foundation presents a specific tax problem. Swiss tax practice treats a foreign foundation whose founder has retained control, or whose structure is comparable to a prohibited maintenance foundation, as transparent, and attributes its assets and income to the founder in the same way as a revocable trust. Swiss courts have recognised Liechtenstein foundations under the PILA as foreign legal entities, but recognition under private international law does not settle their treatment for tax purposes.5 Liechtenstein foundations therefore play their principal role in Zurich practice for families who are not yet Swiss resident, or for structures that were established long before the family moved to Switzerland.

The Jersey trust

Jersey, a Crown Dependency in the Channel Islands, has become the preferred trust jurisdiction for many clients of the Zurich financial centre. Its trust law is laid down in the Trusts (Jersey) Law 1984, which has been amended repeatedly to maintain its attractiveness. Article 9 of that law contains the so-called firewall. It provides that questions concerning a Jersey trust are determined by Jersey law, and Article 9(4) states that no judgment of a foreign court with respect to a trust shall be enforceable or given effect to the extent that it is inconsistent with the Article.6 The firewall protects trusts against claims based on foreign forced heirship rules or foreign matrimonial property regimes. It is one of the reasons why families from civil law countries use Jersey trusts.

The Royal Court of Jersey has clarified the limits of the firewall. In In the matter of the R Trust, it held that Article 9(4) does not prevent trustees from taking decisions that are in the interest of the beneficiaries simply because a foreign court has reached similar conclusions, provided the trustees act in good faith, reasonably and without conflict of interest.7 Jersey has continued to modernise its trust law. The Trusts (Amendment No. 8) (Jersey) Law came into force on 20 March 2026. It restricts the right of adult beneficiaries to terminate a trust under Article 43 where other persons could become beneficiaries, subordinates the trustee’s lien to third-party secured creditors under a new Article 43A, and contains a series of clarifications that codify market practice.8 Jersey also offers foundations under the Foundations (Jersey) Law 2009, which some families use as an alternative to a private trust company.

Comparative assessment

The comparison shows why Zurich practice relies on foreign instruments. A Jersey trust or a Liechtenstein foundation offers what the Swiss family foundation lacks: freedom to provide for the maintenance of family members, flexible control mechanisms, a developed body of case law and, in Jersey’s case, a statutory firewall against foreign claims. The Swiss financial centre compensates for this by supplying the services that surround these structures: the banks that hold the assets, the trustees licensed by FINMA who administer them, the lawyers who advise on them and the courts and arbitral tribunals that resolve disputes about them. Geneva, as the companion volume shows, has developed the same model, with its own trust companies and an even stronger orientation towards families from France, the Middle East and Latin America. In both cities foreign structures are combined with Swiss services.

For clients, the choice between a trust and a foundation often turns on cultural familiarity. Families from common law countries or with Anglo-Saxon advisers tend to prefer trusts, whereas families from German-speaking Europe or from civil law jurisdictions tend to find the foundation, with its legal personality and its board, easier to understand. Tax considerations in the countries where the family members live often decide the matter in the end. Germany, for example, taxes foreign family foundations and trusts under its own rules on foreign family foundations, which Part K of this book addresses.

Notes

  1. MME, “Die Stiftung nach liechtensteinischem Recht”, https://www.mme.ch/de-ch/magazin/artikel/die-stiftung-nach-liechtensteinischem-recht. ↩
  2. MME, “Die Stiftung nach liechtensteinischem Recht”, URL as above. ↩
  3. Christoph Kerres and Florian Proell, “Die Revision des liechtensteinischen Stiftungsrechts”, ecolex 2009, issue 4, https://www.florianproell.com/pdf/Die%20Revision%20des%20liechtensteinischen%20Stiftungsrechts,%20ecolex%202009-04.pdf. ↩
  4. Stiftungsaufsichtsbehörde Liechtenstein (STIFA), “FAQs on the Law of Foundations”, version May 2025, https://www.stifa.li/faqs-on-the-law-of-foundations/. ↩
  5. BGE 135 III 614 of 17 November 2009, holding that a Liechtenstein family foundation validly organised under its law of incorporation has legal capacity in Switzerland under Article 154(1) PILA and that Article 335(2) of the Civil Code is not a mandatory rule under Article 18 PILA, https://www.servat.unibe.ch/dfr/bge/c3135614.html. ↩
  6. Ogier, Edward Mackereth and Ewelina Clyde-Smith, “Testing Jersey’s firewall”, 18 April 2016, https://www.ogier.com/news-and-insights/insights/testing-jersey-s-firewall/. ↩
  7. Ogier, “Testing Jersey’s firewall”, URL as above, discussing In the matter of the R Trust [2015] JRC267A and the test in Re S Settlement [2001]. ↩
  8. Walkers, “Jersey trust law update: Eighth Amendment now in force”, March 2026, https://www.walkersglobal.com/en/Insights/2026/03/Jersey-trust-law-update-Eighth-Amendment-now-in-force. ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.

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