How to Set Up a Charitable Foundation in Switzerland: A Complete Guide
Switzerland has a long-established tradition of philanthropy and offers an attractive legal framework for individuals, families and organisations wishing to create a charitable foundation. A Swiss foundation can be used to support humanitarian, educational, scientific, cultural, environmental, religious or other public-benefit objectives. Once established, it becomes an independent legal entity with its own assets, governance and responsibilities. However, setting up a foundation in Switzerland involves considerably more than simply registering an organisation. The founder must determine the foundation's purpose, dedicate sufficient assets to that purpose, establish an appropriate governance structure, execute the foundation deed before a notary and complete the registration and supervisory procedures. Where tax-exempt charitable status is sought, the foundation must also satisfy separate tax requirements. This guide explains the main steps involved in establishing a charitable foundation in Switzerland and the issues founders should consider before proceeding.
What Is a Swiss Foundation?
A foundation is an independent legal entity created by dedicating assets to a specific purpose.
Unlike a company, a foundation does not have shareholders or owners. Unlike an association, it does not have members.
The foundation itself owns the assets that have been dedicated to it.
Once those assets have been transferred to the foundation, they must be administered and used in accordance with the purpose established by the founder.
This characteristic makes the foundation particularly suitable for projects intended to continue independently over the long term.
Swiss law recognises different forms of foundations, including charitable foundations, family foundations, employee-benefit foundations and other purpose-driven structures.
For philanthropic projects, the most common structure is a public-benefit or charitable foundation.
Who Can Establish a Foundation in Switzerland?
A Swiss foundation may be established by an individual or by a legal entity.
The founder does not generally need to be a Swiss citizen.
This means that foreign individuals, international families, companies and other organisations can potentially establish a foundation in Switzerland.
A foundation can also be created by more than one founder.
The central question is not the founder's nationality, but whether the foundation satisfies the requirements of Swiss foundation law and has sufficient assets to pursue its stated purpose.
What Purposes Can a Charitable Foundation Pursue?
The purpose is one of the most important elements of the foundation.
A charitable foundation may, for example, pursue objectives relating to:
humanitarian assistance;
education and scholarships;
scientific research;
health;
culture and heritage;
environmental protection;
social integration;
development assistance;
religious or community projects;
or other activities serving the public interest.
The purpose should be carefully drafted.
If it is excessively narrow, the foundation may encounter difficulties if circumstances change over time.
If it is excessively broad or vague, the authorities may question whether the assets can genuinely be administered in accordance with a sufficiently identifiable purpose.
The objective is therefore usually to formulate a purpose that is both precise and capable of remaining workable over the long term.
This decision deserves particular attention because changing a foundation's purpose after incorporation is considerably more restrictive than changing the objects of an ordinary company.
What Is the Minimum Capital Required to Establish a Swiss Foundation?
Swiss law requires assets to be dedicated to the foundation's purpose.
There is no single statutory amount written into Article 80 of the Swiss Civil Code for every possible foundation. However, the assets must be sufficient in relation to the purpose pursued.
Under the practice of the Swiss Federal Supervisory Authority for Foundations, a foundation under federal supervision should generally have at least CHF 50,000 in net cash assets as initial capital.
The authority considers that a foundation must have sufficient resources not only to pursue its purpose but also to meet ongoing administrative expenses such as accounting, auditing and supervisory costs.
Depending on the nature and ambition of the project, CHF 50,000 may therefore be only a starting point.
A foundation planning substantial grant-making or operational activities will naturally require resources proportionate to those objectives.
How to Set Up a Foundation in Switzerland
Although each project is different, the establishment of a Swiss foundation normally follows several key stages.
Step 1: Define the Foundation's Purpose
The first step is to determine exactly what the foundation is intended to achieve.
The founder should consider questions such as:
Who should benefit from the foundation's activities?
What geographical area will it cover?
Will the foundation make grants to other organisations or carry out projects directly?
Will it operate only in Switzerland or internationally?
Will it employ staff?
Will it receive donations from third parties?
Will its activities remain purely charitable, or could some activities generate revenue?
These questions influence not only the wording of the purpose but also the governance structure, tax treatment and competent supervisory authority.
For internationally active foundations in particular, it is useful to define the intended geographical scope from the outset.
Step 2: Draft the Foundation Deed
The foundation deed is the principal constitutional document of the foundation.
At minimum, the founder must express the intention to establish an autonomous foundation, identify the assets dedicated to it and define its purpose.
In practice, the foundation documents will generally regulate additional matters, including:
the name and registered office of the foundation;
the purpose;
the initial assets;
the composition and powers of the foundation board;
representation and signature rights;
the appointment of an auditor where required;
governance arrangements;
the use of the foundation's assets;
and the treatment of remaining assets if the foundation is dissolved.
The drafting stage is particularly important where the founder intends to obtain charitable tax exemption.
The foundation documents should be prepared with both foundation law and tax requirements in mind from the beginning.
Step 3: Establish the Foundation Board
The foundation board is the supreme governing body of the foundation.
It is responsible for ensuring that the foundation's assets are administered in accordance with the foundation deed and used exclusively for the designated purpose.
Its responsibilities may include approving strategy, budgets and annual accounts, supervising investments, selecting projects or beneficiaries, appointing management and ensuring compliance with legal and regulatory obligations.
The composition of the board should therefore not be treated as a formality.
A good foundation board should combine appropriate expertise with clear decision-making rules and adequate independence.
Depending on the structure, it may be useful to include people with experience in areas such as finance, law, philanthropy, investment management or the foundation's substantive field of activity.
The foundation must also satisfy the applicable Swiss requirements concerning representation.
Step 4: Execute the Foundation Deed Before a Notary
A foundation established during the founder's lifetime is normally constituted by public deed.
The founder therefore appears before a Swiss notary, directly or through an appropriately authorised representative where permitted, to execute the foundation deed.
Before this stage, it is often advisable to coordinate the proposed documents with the relevant authorities, particularly where the structure or charitable purpose is complex.
Doing this in advance can reduce the risk of having to amend important provisions after notarisation.
Step 5: Deposit the Initial Capital
The assets dedicated to the foundation must be made available to the foundation.
For foundations under the practice of the Federal Supervisory Authority for Foundations, the initial cash assets are deposited in an account opened in the foundation's name with a bank in Switzerland.
Bank onboarding should not be underestimated.
Depending on the founder, source of funds, countries involved and expected activities of the foundation, the bank may conduct extensive know-your-customer and source-of-funds checks before activating the relationship.
International foundations should therefore address banking requirements early in the establishment process.
Step 6: Register the Foundation in the Commercial Register
Classical foundations are entered in the Swiss Commercial Register.
Registration identifies important information concerning the foundation, including its name, registered office, purpose and persons authorised to represent it.
Once registered, the foundation operates as a separate legal entity.
The relevant Commercial Register will normally be the register of the canton in which the foundation has its registered office.
Step 7: Determine the Competent Supervisory Authority
Swiss foundations are subject to governmental supervision.
The competent authority depends principally on the scope and purpose of the foundation.
A foundation whose activities are national or international may fall under the Federal Supervisory Authority for Foundations.
A foundation operating predominantly at cantonal or local level may instead be supervised by the relevant cantonal authority.
The supervisory authority's role is not to manage the foundation.
Rather, it ensures that the foundation's assets are used in accordance with its legally established purpose and that the foundation complies with the applicable legal framework.
Step 8: Apply for Charitable Tax Exemption
Creating a charitable foundation and obtaining tax exemption are two related but legally distinct matters.
Tax exemption is not automatic.
A foundation wishing to obtain tax-exempt status must demonstrate that the applicable conditions are satisfied.
Generally, this means that the foundation must genuinely pursue a public-benefit or public-service purpose, operate on a non-profit basis and dedicate its assets irrevocably to that purpose.
The foundation's assets must not ultimately revert to the founder or be used primarily for the founder's private interests.
The competent cantonal tax authority examines the request.
For more complex foundations, it may be advisable to discuss the proposed structure with the tax authority before final establishment.
What Are the Tax Advantages of a Charitable Foundation?
A foundation recognised as pursuing a qualifying public-benefit purpose may obtain exemption from federal and cantonal taxation on its profit and capital to the extent the applicable requirements are satisfied.
The precise scope of the exemption depends on the applicable tax regime and canton.
The tax status can also be beneficial for donors.
Individuals and companies taxable in Switzerland may generally deduct qualifying donations to recognised Swiss charitable organisations within the limits prescribed by federal and cantonal tax law.
At the federal level, qualifying charitable donations by individuals can generally be deducted subject to the statutory limits, while rules at cantonal level must also be considered.
Cantonal rules concerning inheritance and gift taxation should be examined separately.
For example, Geneva provides favourable treatment for qualifying donations, legacies and inheritances made to institutions recognised as serving a public-benefit purpose.
Tax exemption should therefore always be analysed specifically for the canton in which the foundation will be established.
Does a Charitable Foundation Pay VAT?
Tax-exempt status for direct tax purposes does not automatically mean that the foundation is outside the scope of Swiss VAT.
The VAT consequences depend on the activities performed by the foundation.
Pure donations and grants must be distinguished from payments received in exchange for goods or services.
Where a charitable institution carries out taxable economic activities, VAT registration may become relevant.
Swiss VAT law currently applies a special turnover threshold to qualifying non-profit institutions, and cross-border services can create additional VAT considerations.
Foundations carrying out commercial, fundraising or international activities should therefore assess VAT separately from their charitable tax-exemption status.
Can Foundation Board Members Be Paid?
This question is increasingly important in Swiss foundation governance.
Historically, many tax authorities expected board members of charitable organisations to perform their functions largely on an honorary basis.
Practice has nevertheless evolved.
In the Canton of Zurich, since February 2024, reasonable remuneration of foundation board members does not in itself prevent a foundation from qualifying for charitable tax exemption.
The reasonableness of the remuneration and the foundation's governance arrangements remain important.
At federal supervisory level, foundations are also required to disclose information regarding remuneration paid to members of the foundation board and management.
A foundation considering remuneration should therefore establish a clear remuneration policy and verify the requirements of the relevant tax and supervisory authorities.
Can a Swiss Charitable Foundation Operate Internationally?
Yes.
A Swiss foundation may pursue charitable activities outside Switzerland.
This is particularly relevant for foundations involved in humanitarian assistance, international development, education, health, scientific research or other cross-border initiatives.
International activity does, however, create additional governance and compliance considerations.
The foundation should be able to demonstrate that funds sent abroad are actually used for the charitable purpose.
It may therefore need appropriate project-selection procedures, grant agreements, reporting requirements, financial controls and monitoring mechanisms.
Cross-border activities can also create banking, sanctions, tax, anti-money-laundering and regulatory considerations depending on the jurisdictions involved.
The intended international scope should consequently be considered when drafting the foundation's purpose and governance documents.
What Are the Ongoing Obligations of a Swiss Foundation?
Creating the foundation is only the beginning.
A Swiss foundation is subject to continuing governance, accounting and supervisory obligations.
The foundation board must ensure proper bookkeeping and prepare annual financial statements.
Depending on the applicable rules, an external auditor may be required, although exemptions from the ordinary audit requirement can exist in specific circumstances.
Foundations must also comply with the reporting requirements of their supervisory authority.
For foundations under federal supervision, annual reporting includes information needed for the authority to assess the foundation's activities, financial situation and compliance with its purpose.
Information concerning remuneration of the foundation board and management must also be disclosed to the supervisory authority.
A tax-exempt foundation must additionally continue satisfying the conditions on which its exemption was granted.
Tax exemption is therefore not simply a status obtained once and then forgotten.
A material change in the foundation's activities, governance or use of funds can have tax consequences.
Can the Founder Take the Initial Capital Back Later?
As a general principle, no.
One of the defining characteristics of a foundation is the irrevocable dedication of assets to its purpose.
Once the founder has contributed assets to the foundation, those assets belong to the foundation rather than to the founder personally.
They cannot simply be withdrawn later because the founder has changed their mind.
For a tax-exempt charitable foundation, this principle is even more important.
The assets must remain permanently dedicated to the charitable purpose.
If the foundation is eventually dissolved, the remaining assets will normally have to be transferred to another organisation pursuing an equivalent or similar qualifying public-benefit purpose rather than returned to the founder.
Can the Foundation's Purpose Be Changed Later?
Swiss foundation law places significant importance on preserving the founder's original intention.
Consequently, changing the foundation's purpose is not as straightforward as changing the purpose clause of a company.
Amendments may be possible in certain circumstances, but they are subject to the statutory framework and the involvement of the competent authority.
Founders should therefore think carefully about the long-term wording of the purpose before the foundation is created.
A purpose that is well drafted from the beginning can provide sufficient operational flexibility while preserving the founder's intended mission.
Charitable Foundation or Association: Which Is Better?
A foundation is not always the best structure for every charitable project.
An association may be more appropriate where a group of individuals wishes to pursue a common purpose collectively and participate in decision-making through a membership structure.
A foundation is generally better suited where a founder wishes to dedicate assets permanently to a defined purpose and create an institution that continues independently from its founder.
The major distinction is therefore structural:
an association is fundamentally based on members, while a foundation is fundamentally based on assets dedicated to a purpose.
The choice should be made according to the long-term objective rather than simply according to the perceived prestige of the legal form.
What Is the Difference Between a Charitable Foundation and a Family Foundation?
A Swiss charitable foundation pursues a public-benefit purpose and is intended to benefit a sufficiently broad section of the public or advance an objective recognised as being in the public interest.
A family foundation, by contrast, serves members of a particular family within the limits permitted by Swiss law.
The two structures therefore serve fundamentally different purposes.
A family foundation cannot simply be labelled charitable in order to obtain tax exemption.
If the primary purpose is to preserve or distribute wealth for private family interests, charitable tax exemption will generally not be available.
Founders should therefore identify from the outset whether their goal is genuine philanthropy, family wealth planning or a combination requiring a different structure.
How Long Does It Take to Establish a Foundation in Switzerland?
There is no universal processing period.
A relatively straightforward foundation can often be established efficiently once the purpose, governance, capital, banking relationship and documentation have been prepared.
However, the overall timetable can be affected by:
the complexity of the purpose;
bank onboarding;
the nationality and residence of the founders;
the source and nature of the initial assets;
advance discussions with the supervisory authority;
the Commercial Register;
and the procedure for obtaining tax exemption.
International or heavily endowed foundations may therefore require more preparation than a relatively simple domestic structure.
For this reason, it is preferable to plan the legal, banking, governance and tax aspects in parallel rather than addressing them consecutively after the deed has already been signed.
Establishing a Charitable Foundation in Geneva
Geneva is particularly attractive for internationally oriented foundations.
The canton is home to numerous international organisations, NGOs, humanitarian actors, philanthropic institutions and financial and professional-service providers.
A Geneva-based foundation can therefore be particularly suitable for projects involving international humanitarian assistance, development, education, health, human rights, culture or other international public-benefit activities.
The Canton of Geneva also has a dedicated framework for charitable organisations seeking tax exemption.
The choice between Geneva and another Swiss canton should nevertheless depend on the substance of the project, its governance, activities, operational requirements and intended network rather than tax considerations alone.
Setting Up a Foundation in Switzerland: Planning Matters
A charitable foundation is intended to exist independently and potentially for generations.
For that reason, decisions made during its creation can have consequences long after the founder has transferred the initial assets.
The purpose must be sufficiently clear but durable.
The governance structure must work even when the original founder is no longer involved.
The financial resources must be appropriate for the intended activities.
The foundation documents should anticipate tax exemption, supervision, succession within the board, potential conflicts of interest and the management of the foundation's assets.
Careful planning at the establishment stage can therefore prevent significant legal and governance difficulties later.
Assistance With Establishing a Swiss Foundation
Boundless Consultancy assists individuals, families and organisations with the establishment and structuring of foundations in Switzerland.
Depending on the project, the establishment process may involve coordinating the foundation purpose and governing documents, the foundation board, notarial incorporation, banking arrangements, Commercial Register registration, supervisory requirements and the application for charitable tax exemption.
For international founders, particular attention may also need to be given to cross-border governance, the origin and transfer of assets and the foundation's planned activities outside Switzerland.
If you are considering establishing a charitable foundation in Switzerland, an initial assessment can help determine the appropriate structure and identify the legal and administrative steps required before incorporation.
This article provides general information and does not constitute legal or tax advice. Foundation, supervisory and tax requirements depend on the individual structure, canton and activities of the foundation.