The Luxembourg Council of State has issued its opinion dated 29
April 2014 on the bill of law to introduce in Luxembourg
the private foundation (the "Bill"). It has
raised certain issues and suggested certain amendments to the
Bill:
- On the civil law aspects of the Bill, the Council of State
noted that the private foundation is a sui generis legal
entity which has nothing to do with the philanthropic foundation
except its name. The Council of State suggested the lawmaker to
deepen the nature and characteristics of the private foundation as
a patrimonial entity. Going into more details, the Council of State
noted that the private foundation should acquire its legal
personality as from the date of its creation through the execution
of its incorporation deed in the presence of a notary and also
noted that a private foundation could not be formed post-mortem.
Further, the Council of State also pointed out that the Bill was
silent on the articulation of the institution of a private
foundation with certain public policy provisions applicable to the
portion of an estate that is reserved to legal heirs.
- On the tax aspects of the Bill, the Council of State raised a certain number of technical issues with respect to registration duties as well as to income tax and municipal business tax.
We therefore expect that the draft bill be substantially modified before its vote. The entry into force of the new form of the private foundation cannot be anticipated with certainty at this stage, although it is the common intention of the government and of the industry players that it becomes available as soon as it is technically possible.
The description of the Luxembourg Private Foundation Bill can be found here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
