The Foundation

The Private Foundation Act of 1993 offers a considerable advantage in respect of capital formation and retention. Contributions to a foundation are subject to gift tax at a rate of 5% of the value concerned.
 
Contributions from the foundation to recipients are subject only to a 12,5% withholding tax, which is in effect an end tax that has no effect in increasing the progressive effect on other income. Interest income received by a foundation from bank accounts and securities, as well as earnings realised from the sale of participatory shares, are levied under a corporate income tax of 12,5%. The remaining income for the foundation is subject to a standard corporate tax at a level of 34%.
 
The Austrian private foundation therefore represents an ideal instrument for income retention and thus to accelerated growth in assets.