The Austrian private foundation
A separate legal person without owners or shareholders, taxed under its own regime — the Privatstiftung is Austria's principal vehicle for keeping family wealth together.
In short
- A Privatstiftung is a legal entity with no owners or shareholders — endowed assets leave the founder's ownership for civil and tax purposes, though forced heirs can still have an endowment added back when their shares are calculated.
- Minimum endowment EUR 70,000; established by notarial deed; it comes into existence on registration in the commercial register.
- Endowments bear a 3.5% foundation entry tax (as of 1 January 2026); real estate is taxed under real-estate transfer tax rules instead, at up to 7% once the 3.5% entry tax equivalent is added.
- The foundation pays 23% corporate income tax, with dividends it receives generally exempt.
- Interest, realised gains on securities and derivatives, crypto income and private property gains bear a 27.5% interim tax, credited when distributions finally burdened with withholding tax are made.
- Distributions to beneficiaries carry a 27.5% withholding tax; distributions of substance can be tax-neutral, and treaties often shift taxing rights to a foreign beneficiary's home state.
What a Privatstiftung is
The Austrian private foundation (Privatstiftung) is a creature of statute: a legal person that owns itself. It has no shareholders and no members. The founder endows it with assets, defines its purpose — almost any lawful purpose will do — and from that point the assets belong to the foundation, managed by its board for the beneficiaries the founder has designated. That separation is the vehicle's entire point. Because the founder no longer owns the assets, they are not divided among the heirs on the founder's death, a business cannot be splintered among heirs, and family wealth can be governed by one set of rules across generations. The separation is not absolute: an endowment to a foundation counts as a gift for forced-heirship purposes, so a forced heir can require it to be added back when the statutory share is calculated. Even so, it is the closest thing civil-law Austria has to the dynastic trust, and it is the standard answer where a family wants Austrian law, Austrian courts and an Austrian treaty-resident entity rather than a foreign trust or foundation.
The vehicle is common. Around 3,000 private foundations exist, standing behind a large share of the country's biggest family enterprises and several hundred thousand jobs (sector figures, 2025; indicative). Most are family foundations; some serve as top-tier holding entities in international groups. Three limits keep the form honest: a Privatstiftung may not carry on a commercial activity beyond what is merely ancillary, may not take over the management of a commercial company, and may not be the unlimited-liability partner of a registered partnership. It holds and governs wealth; it does not trade. Nor is it quite perpetual: a family foundation whose predominant purpose is providing for individuals must be wound up once it has run for 100 years, unless all of its final beneficiaries unanimously resolve to continue it — which they may then do for up to a further 100 years at a time.
Setting it up: deed, board, auditor
A Privatstiftung is established by a deed of foundation executed before an Austrian notary and comes into legal existence on registration in the commercial register (Firmenbuch) — with the paperwork in order, a matter of weeks. The minimum endowment is EUR 70,000 in cash or in kind; a family foundation that is to earn its keep will hold far more. The deed itself is public, but Austrian practice splits the documentation in two: the mandatory provisions sit in the registered deed, while sensitive matters — above all who the beneficiaries are and what they are to receive — go into a supplementary deed that is not publicly accessible. Discretion has limits, though: founders, board members and beneficiaries must be reported to the beneficial-ownership register. That register is no longer open to the general public — the Court of Justice of the EU struck public access down in November 2022 — but authorities, businesses carrying out anti-money-laundering checks, and anyone who can show a legitimate interest, journalists and researchers among them, can obtain an extract.
Control is a matter of drafting, and the statute gives the founder real room. The founder may reserve the right to revoke the foundation altogether, the right to amend the deed and supplementary deed, and may generally take a seat on the board. What the founder cannot do is collapse the separation the vehicle depends on: the board must consist of at least three natural persons, at least two of them habitually resident in the EU or EEA, and beneficiaries — together with their close relatives — are excluded from board membership. An independent foundation auditor (Stiftungsprüfer) is a mandatory organ and examines the annual financial statements. These governance features are not decoration; they are what persuades courts, banks and foreign tax authorities that the assets genuinely are no longer the founder's.
Costs follow from that architecture rather than from any single fee. Establishing a foundation means notarial and advisory work on deeds that are hard to change casually; running one means remunerating a three-member board, keeping accounts, and paying the annual audit. As a rule of thumb the vehicle suits substantial, long-horizon family wealth — for a single property or a modest portfolio, the same goals are usually reached more cheaply through a well-drafted will and succession plan.
How it is taxed: three levels
The tax regime is best read as three separate events: assets going in, income arising inside, and money coming out. Two of the headline rates were raised with effect from 1 January 2026 — the entry tax from 2.5% to 3.5% and the interim tax from 23% to 27.5% — so older summaries understate both.
| Event | Tax | Rate (2026) | Notes |
|---|---|---|---|
| Endowment of assets | Foundation entry tax (Stiftungseingangssteuer) | 3.5% | On the fair market value of assets endowed. Real estate is carved out and taxed under the real-estate transfer tax rules instead, but not more cheaply: the graduated gratuitous-transfer rate (0.5% on the first EUR 250,000, 2% on the next EUR 150,000, 3.5% above that) is topped up by a 3.5% entry tax equivalent, so a substantial property bears up to 7%. Certain financial assets endowed on death are exempt. |
| Ongoing income — general | Corporate income tax | 23% | Dividends received are generally exempt, which makes the foundation an efficient holder of shareholdings. |
| Ongoing income — interest-type income and certain gains | Interim tax (Zwischensteuer) | 27.5% | Not payable — or credited — to the extent distributions are made that are finally burdened with the 27.5% withholding tax; economically a prepayment on the distribution tax. Distributions relieved of withholding under a treaty do not count, so the interim tax can become a real cost where the beneficiaries live abroad. |
| Distributions to beneficiaries | Withholding tax (KESt) | 27.5% | Withheld by the foundation as a flat, final tax for Austrian-resident beneficiaries. |
| Distributions of substance | — | 0% | Returns of endowed substance can normally be made tax-neutrally, subject to ordering and documentation rules. |
| Distributions to foreign beneficiaries | Withholding tax, subject to treaty | Often reduced to 0% | The foundation is a treaty-resident person; most Austrian treaties leave the taxing right to the beneficiary's residence state, so the foundation can often refrain from withholding — but a distribution relieved of Austrian withholding tax earns the foundation no relief from the interim tax, which then stays with it. |
Treaty residence is worth pausing on. Because the foundation is a resident person under Austria's network of double-taxation treaties, it can claim reduced withholding on foreign dividends and interest in its own right — something many foreign trusts cannot do. And since Austria levies no inheritance or gift tax, the 3.5% entry tax is, for most families, the only transfer-tax cost of moving financial assets and shareholdings into a multi-generational structure. Real estate is the exception: endowing Austrian land costs real-estate transfer tax on the property value plus the 3.5% entry tax equivalent, up to about 7% in all.
When a foundation beats a trust
For a family that will be Austrian-tax-resident, the comparison with a foreign trust is rarely close. Endowing an Austrian foundation costs 3.5%; endowing a non-transparent foreign trust triggers a 25% foundation transfer tax. The foundation's distributions bear a flat 27.5%, withheld at source; distributions from a foreign trust attract that flat rate only where the trust is comparable to a private-law foundation — a test widened, and so more easily met, from 1 January 2026 — and even then the beneficiary must declare them in an Austrian assessment rather than have the tax withheld. Where the structure is not comparable, recurring distributions can fall into the progressive rates of up to 55%. The foundation is treaty-resident; a trust's treaty position is precarious. And the foundation is a registered Austrian legal person that can hold Austrian real estate and company shares without friction, where a trustee's title sits awkwardly in the land register and commercial register. The full comparison — including the transparent-trust cases where the analysis differs — is set out under foreign trusts and foundations under Austrian tax law.
The honest counterpoints: a trust settled and kept outside Austria by a family that never becomes Austrian-resident is none of Austria's business, and even for arriving families an existing trust can sometimes be left in place, restructured or unwound more cheaply than replaced. The right answer depends on what already exists — which is a sequencing question.
The choice of vehicle is made properly only once — before Austrian tax residence begins. Endowments, distributions and restructurings that are cheap on one side of that date can be expensive on the other. See pre-immigration tax planning for the order of the steps, and the wealth & succession overview for the whole landscape.
Questions on this page
What is the minimum capital of an Austrian private foundation?
A Privatstiftung must be endowed with assets worth at least EUR 70,000, in cash or in kind. In practice family foundations are endowed with far more, since the vehicle only earns its running costs with substantial assets.
Can the founder keep control of a Privatstiftung?
To a meaningful degree. The founder can reserve the right to revoke the foundation and to amend its deeds, and can generally sit on the board — though beneficiaries and their close relatives cannot.
Is the identity of the beneficiaries of an Austrian foundation public?
The foundation deed is public in the commercial register, but beneficiaries are usually named in a supplementary deed, which is not publicly accessible. They must, however, be reported to the beneficial-ownership register.
What is the Austrian interim tax (Zwischensteuer)?
A 27.5% corporate income tax (as of 2026) on a foundation's interest-type income and certain capital gains. It is credited or refunded to the extent the foundation makes taxable distributions to beneficiaries, so it works as a prepayment rather than a final cost.
How long does it take to set up a Privatstiftung?
The foundation comes into existence on registration in the commercial register. With the deed prepared and the endowment ready, the process is typically a matter of weeks; designing the deeds and governance properly is what deserves the time.
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