Austrian Private Foundation: A European Alternative in 2026

The Austrian private foundation (Privatstiftung) is an entity with its own legal personality, created under the Private Foundations Act (Privatstiftungsgesetz, PSG), with minimum assets of €70,000 and a board of at least three members. For Brazilians, it serves succession and family protection, but it does not remove individual income tax (IRPF).

Law No. 14,754/2023 (Lei 14.754/2023) reaches foundations abroad.

What is the Austrian private foundation and what is it for?

The PSG defines the Privatstiftung as a "Rechtsträger", that is, a legal entity to which the founder (Stifter) devotes assets so that they are used, managed and realized in service of a lawful purpose chosen by the founder. The foundation has legal personality and must have its seat in Austria (PSG, § 1, Abs. 1).

In practice, those who use it want to separate family assets from the founder's personal life and set rules of use for the next generations. The beneficiaries (Begünstigte) are those named in the declaration of establishment, and the final beneficiary (Letztbegünstigter) is whoever receives what is left when the foundation is liquidated (§§ 5 and 6). The foundation belongs to no one, not even the founder, and has no shareholders. That is the point that sets it apart from an ordinary holding company.

What are the legal requirements to set up a Privatstiftung?

The first is capital: the law requires assets of at least €70,000 to be devoted to the foundation (§ 4). The second is form. The foundation arises from a declaration of establishment (Stiftungserklärung), which must be executed as a notarial deed (§ 10), and it only comes into existence upon entry in the commercial register, the Firmenbuch (§ 7). Before that, anyone acting on behalf of the foundation is jointly liable for the acts performed.

The founder may be one or more individuals or legal entities (§ 3). The rights to shape the foundation reserved to the founder do not pass to the founder's successors, and anyone who makes an additional donation after establishment (Zustiftung) does not become a founder.

The foundation also has limits on what it can do. It cannot carry on a business beyond a merely ancillary activity, cannot manage a commercial company, and cannot be a partner with unlimited liability in a registered partnership (§ 1, Abs. 2). For investing in portfolios of assets and holdings, that is usually enough. For running a business, it is not.

Who manages the foundation and what does the founder still control?

Management lies with the foundation's board (Stiftungsvorstand), which must have at least three members, two of whom must have their habitual residence in a country of the European Union or the European Economic Area (§ 15, Abs. 1). The beneficiary, the spouse, the partner and relatives in the direct line or up to the third collateral degree cannot sit on this board (§ 15, Abs. 2). In other words, management is carried out by independent third parties, which strengthens the separation of assets.

A supervisory board (Aufsichtsrat) is only mandatory in situations such as more than three hundred employees at the foundation (§ 22). The foundation must keep accounts in line with the Austrian Commercial Code (§ 18) and is overseen by a foundation auditor (Stiftungsprüfer), who must be a qualified accountant or auditor and is appointed by the court or, where there is one, by the supervisory board (§ 20). The beneficiary may request information on compliance with the purpose and examine the balance sheet, books and deed (§ 30).

The founder's power depends on what the founder reserves in the act of establishment. Once the foundation exists, the founder can only amend the declaration of establishment if that right was reserved (§ 33, Abs. 2), and can only revoke the foundation if the right of revocation was reserved (§ 34). A legal entity cannot reserve the right to revoke (§ 34). This balance is decisive for Brazil, as we will see below.

How much tax does the foundation pay in Austria?

There are two main layers. The first applies when assets come in. Under the law on the tax on gifts to foundations (Stiftungseingangssteuergesetz, StiftEG), gratuitous transfers to a private foundation are taxed when the donor or the foundation is domiciled or has its seat in Austria (§ 1, Abs. 2). Since the Austrian private foundation must have its seat in the country, the initial donation falls within the scope of the law. The rate is 3.5%, and rises to 25% in cases such as when the foundation's organizational documents were not submitted to the Finanzamt für Großbetriebe by the tax due date (§ 2, Abs. 1).

The second layer applies to income. Investment income, realized gains on financial assets, derivatives and crypto-assets of the foundation are taxed separately (Corporate Income Tax Act, KStG, § 13, Abs. 3). The rate for this income is 27.5% from 2026 (KStG, § 22, Abs. 2). The general corporate income tax rate in Austria has been 23% since 2024 (§ 22, Abs. 1). The statute separates the two regimes, and the final calculation depends on the composition of the portfolio and the distributions made to beneficiaries.

How does Brazil treat an Austrian foundation?

This is the least well explained point about foundations abroad. Law 14,754/2023 treats as "controlled" not only companies but also funds and foundations in which the individual resident in Brazil holds rights that give them a preponderant vote in decisions or the power to elect the majority of the administrators, or more than 50% of the capital or of the rights to profits and to assets on liquidation (art. 5, § 1). Anyone who reserves for themselves the rights to amend or revoke the foundation, under the terms of the PSG, should carefully analyze whether the case falls under this rule.

If the foundation is controlled in this sense, the annual regime of art. 5 applies when it is in a favored-taxation country or has its own active income below 60% of total income (§ 5). A foundation that only holds financial investments has passive income, because the law excludes from active income, among other things, interest, dividends, rents and financial investments (§ 6). In that case, the profit determined in the annual balance sheet is taxed on December 31, at a rate of 15%, without waiting for any distribution (art. 2, § 1, and art. 5, caput and § 10, III). The tax actually paid in Austria may be deducted, within the limits of art. 5, § 15.

Law 14,754 also allows you to opt to declare the assets of the controlled entity as if they were your own (art. 8). The option is irrevocable while you hold the entity (§ 1, II). How to declare the structure on your income tax return is covered in declaring offshore on your income tax return, and the comparison of the regimes in opaque or transparent offshore.

There is also the Central Bank of Brazil (BCB). Central Bank Resolution BCB No. 279/2022 (Resolução BCB 279/2022) includes, among Brazilian capital abroad, assets whose ownership was transferred to a fiduciary agent abroad in favor of resident beneficiaries (art. 7, § 2). The annual declaration (CBE, Brazilian Capital Abroad report) is required when the total reaches USD 1 million on December 31 (art. 10). Confirm with your advisor whether your case falls under this rule, because the classification of the foundation depends on the design of the act of establishment.

Austrian foundation, trust or offshore holding: how to choose?

The Austrian foundation is usually considered when the family wants a legal solution under European law, with registration in the commercial register (Firmenbuch) and governance fixed by statute. The trust follows a different logic, and some prefer a foundation in Liechtenstein or an offshore holding. Each path changes costs, timelines, the founder's level of control and the form of taxation in Brazil.

If the priority is family continuity, the conversation should start with succession planning and tax planning, and only then get to the jurisdiction. On the flow of information between countries, see CRS and automatic exchange of tax information. To keep compliance up to date, plan the accounting, the annual-regime balance sheet and the declarations from the first year.

When is the Privatstiftung not the best choice?

It is heavy for small estates, because the minimum capital is €70,000 and the foundation requires a board with independent members, accounting and a foundation audit. It is also not suitable for anyone who intends to run a business inside it, because of the limits in § 1, Abs. 2. And if the founder wants to keep direct control and the power to revoke at any time, Brazilian law itself tends to treat the foundation as a controlled entity.

The term also matters. A non-charitable foundation aimed mainly at supporting individuals must be dissolved on completing 100 years, unless the final beneficiaries unanimously decide to continue it for a new period (§ 35, Abs. 2, Z 3).