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In Germany, and by extension Berlin, the trust concept as understood in Anglo-American law does not exist. Instead, Germany uses the 'Stiftung', or foundation, a legal construct that has resemblances to a trust. They are used for both charitable and private purposes. This guide is meant to offer a basic understanding of the Stiftung law and the factors surrounding it.
Despite the lack of trust law in Germany, setting up a Stiftung or dealing with inheritance, tax implications, or management of assets can be complex and require expert advice. Situations where you might need a lawyer include disputes over the foundation, changes in its purpose, understanding tax consequences, or dealing with international aspects if you are a non-resident. Expert legal advice can help ensure your rights, interests and assets are protected.
The 'Civil Code' (Bürgerliches Gesetzbuch) and 'Tax Code' (Abgabenordnung) are main pieces of legislation governing foundations in Germany. Important to know is that foundations enjoy certain tax privileges if they are recognized as charitable. Also, they must serve a specific purpose detailed in their charter and cannot directly benefit their founder. Last, but not least, the assets transferred into the foundation must be managed separately and distinct from the founder’s personal assets.
Yes, a non-resident can set up a foundation in Germany, but the process can be complex, particularly if it involves assets located outside of Germany. An experienced lawyer can provide guidance on this issue.
While foundations generally have to pay taxes on their income, they can be fully or partially exempt from taxes if they are recognized as charitable by the tax authorities.
Yes, but this is usually a complex process and depends on the stipulations in the foundation's statute or charter.
The foundation’s management, or ‘board members’, have fiduciary duties of care and loyalty and can be held personally liable for any deliberate breaches of these duties.
You are essentially free to transfer everything you own to a foundation, but be aware that transferred assets will no longer be part of your personal property and will have to be managed separately.
For more detailed information, consult the websites of the German Federal Ministry of Justice and Consumer Protection or the Berlin Senate Department for Justice, Consumer Protection and Anti-discrimination. The Bundesverband Deutscher Stiftungen (Association of German Foundations) is also a valuable source of information.
If you're considering setting up a foundation, or dealing with issues related to an existing one, the first step is to engage a lawyer experienced in German foundation law. They can guide you through the legal complexities, help you understand your options and work with you to create an effective strategy for your foundation.
