Firstly, it’s important to note that while Swiss Charitable Foundations are not financial institutions per se, many of them finance fintech, blockchain projects, or Initial Coin Offerings (ICOs). This makes them a topic of interest for our Fitenchsetup.com blog. Should you have any questions on this matter, feel free to reach out to us at connect@swissfintechpro.com .
Regarding Swiss Philanthropic Foundations, their primary aim is to support social, educational, religious, or other charitable activities. Switzerland is home to nearly 14,000 such foundations, with combined assets exceeding CHF 100 billion. Remarkably, half of these foundations were established in the last two decades. Moreover, with 15.5 foundations per 10,000 inhabitants, Switzerland has six times more charitable foundations per capita than the USA.
Establishing a Swiss philanthropic foundation requires a humanitarian, social, cultural, or altruistic purpose, a governing board, sufficient initial funding (typically a practical minimum of CHF 50,000), a well-defined foundation charter, and approval from either the Swiss Federal Supervisory Board for Foundations or a cantonal supervisory authority.
As for tax exemption, a newly established foundation must apply for this status with the relevant cantonal tax authority, such as Geneva. The application should detail the foundation’s purpose, activities, and financial situation. To qualify, the foundation must have a charitable purpose recognized under Swiss law, operate on a non-profit basis, benefit a broad public segment, and comply with Swiss laws and regulations.
Maintaining tax-exempt status requires ongoing compliance, including regular financial reporting, audits, and ensuring that assets and income continue to be used for charitable purposes. Failure to comply can lead to the revocation of this status, attracting taxes and penalties.
Regarding donations, they are not considered taxable income for the foundations in Switzerland. This is due to their typical exemption from income taxes, provided they serve a public benefit.
Charitable foundations in Geneva can engage in entrepreneurial funding models like social impact bonds, participations, and convertible loans. However, these activities should align with the foundation’s charitable purpose and not primarily serve for-profit objectives. A significant focus on for-profit ventures, or if these activities are not closely tied to the charitable goals, could risk the foundation’s tax-exempt status.
Charitable foundations are generally allowed to conduct and fund activities outside of Switzerland. To maintain tax-exempt status, these international activities must align with the foundation’s charitable purpose and comply with both Swiss and local laws. Proper documentation and reporting are crucial for these activities.
In Switzerland, tax authorities permit the remuneration of board members of charitable foundations. This remuneration should be reasonable and in line with the non-profit nature of the foundation. Foundations must maintain transparency in their remuneration policies and ensure compliance with Swiss legal standards.
This concludes our presentation on Swiss Charitable Foundations. For more information on the tax deductibility of donations from US or European donors to these foundations, click here.
We invite you to contact us to discuss the specifics of your foundation. Do not hesitate to reach out for more information at connect@swissfintechpro.com.
We encourage you to contact us to further discuss the issue of your foundation. Do not hesitate to contact us for more information at connect@swissfintechpro.com
