Article Tools

Sharp decline in Creation of New Foundations

Published: November 10, 2010; 14:50 · (Vindobona)

In particular, legal uncertainty and abolished tax advantages cause the creation of fewer foundations in Austria.

Sharp decline in Creation of New Foundations / Picture: © Flickr / Michael Thurm

The new tax plans of the government and the recent developments in Law offer little incentive to establish foundations. Accordingly, the establishment of new private foundations has declined significantly.

Veit Sorger, President of the Verband Österreichischer Privatstiftungen (Association of Austrian Private Foundations) and also president of the Industriellenvereinigung (Industrialists Association), considered  that an "envy-debate" and legal uncertainty have discouraged potential donors in recent months. The tax increases on private foundations in the amount of approximately 50 million euros would be accepted, but legal uncertainty is not so easily acceptable. The association demanded more legal security for private foundations, because since 1994 fiscal conditions have been modified 14 times.

There are currently around 80billion euro (112 billion dollars) invested in assets of private foundations: 60% participations, 20% real estate and 20% private assets.

Sorger refers to the high relevance of private foundations for the domestic economy, "80 of the 100 largest companies in Austria are at least partially owned by private foundations”.

As of next year, according to the bill as it has been drawn up, the existing rule on division of the capital gains tax (KEST) will be abolished for private foundations, applying the normal KEST of 25%. Furthermore, the taxation of real estate profits for corporations as donors is established. The introduction of the new securities capital gains tax on shares and other securities will also affect Austrian private foundations.

Fast News Search