Austria: Situation of private foundations

A survey recently conducted by the Association of Austrian private foundations has shown that in spite of the economic and financial crisis in 2008 private foundations have succeeded in raising their assets.

Compared to a similar survey in 2005, the assets of the 467 foundations examined have risen by 38.2% from 19.2 billion to 26.5 billion euro. If this result is used as the basis for a projection regarding the economic development of the 3400 foundations existing in total in Austria, the assets of the foundations in 2005 of 60 billion euro have risen to 65-70 billion euro.

Investments that the foundations participating in the survey made in holdings in companies have increased by approximately 4% to 62.36% of the assets, while investments in securities and in investment funds have decreased respectively from 5.17% to 2.75% and from 7.94% to 5.97%. The real estate sector has experienced a growth of 1.4% to 23.5%.

In absolute terms, however, investments in securities, treasury bonds, investment funds and liquidity have risen while in terms of shares on the total capital sum, investments have fallen by 5%. Hence a transfer of capital towards holdings in companies and real estate has taken place.

As of 2010, the number of newly established private foundations has been declining. Compared to 2009 the number of new foundations has halved.

According to the Association of private foundations, this development is caused on the one hand by the fact that from the entry into force of the law on foundations, 14 amendments have been introduced and, on the other, by the fact that the interest of people and companies in this legal form has reached a point of saturation.

Two rulings pronounced by the Supreme Court in 2010 have resulted in the introduction of more strict rules aiming at curtailing the possibility of intervention on the part of founders and beneficiaries and restricting the choice of consultants and their appointment to the board of directors.

Until now, however, the much feared withdrawal of the foundations’ assets has not occurred, also because in the event of the dissolution a capitals gain tax at the rate of 25% is due.

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