Mini-modernization of the law on foundations

On September 14, 2021 the National Council approved the selective amendments to the law on foundations. The background to the planned amendments to civil and tax law is the parliamentary initiative submitted in 2014 by Council of States member Werner Luginbühl "Schweizer Stiftungsstandort. Stärkung". The purpose of the amendments is to modernize foundation law and to ensure that Switzerland remains attractive as a foundation location in the future. In light of these changes, we will present an overview of the most important modifications:

• Tax exemption despite reasonable compensation for foundation boards: In the future, the compensation of foundation boards should not jeopardize the tax exemption of the charitable foundation. The need for reasonable compensation is evident against the background of the increasing expectations on the honorary foundation boards and the fact that they deal with complex issues and the supervision of considerable sums of money, which requires expertise and time.
• Extension of the legitimacy of foundation supervisory complaints: In order to ensure that the foundation is managed in accordance with the law, anyone with a legitimate control interest in checking that the administration of the foundation is in compliance with the law and the foundation deed may now file a complaint with the supervisory authority against acts and omissions of the foundation bodies. This is associated with the right to a decision and referral to the courts.
• Optimization of the founder's rights: A new provision is to extend the founder's right to amend the foundation deed to include changes in the organization, subject to a reservation of the right to make amendments. For example, the founder shall be able to change the creation or abolition of a secondary body or an election regulation. Furthermore, amendments to the foundation deed regarding the purpose or the organization of a foundation shall be possible with the indication of a simple, factual reason, without notarial certification.

The matter was discussed a second time in the Council of States during the fall session as part of the procedure for settling differences. Due to remaining disagreements, namely with regard to the definition of "legitimate control interest" and the interpretation of "reasonable compensation", the two differences will be dealt with a second time in the National Council during the winter session (November 29 to December 17, 2021). After that, the matter is likely to be dealt with a third time in the Council of States and National Council before it would come to a potential conciliation committee. Taking into account the referendum period, it is realistic to expect the modernized foundation law to enter into force on July 1, 2022 at the earliest, but more likely on January 1, 2023.

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