FAQ

“How is the Fondation de Luxembourg financed?”

“What costs does the Fondation de Luxembourg invoice for its services?”

“If a founder already knows which project he wishes to support, can he structure his commitment via a sheltered foundation?”

“What can Luxembourg offer by way of added value to the process of structuring a philanthropic commitment?”

"What rules apply to crossborder donations in Europe?

“How can a founder who is resident outside Luxembourg easily benefit from the fiscal advantages available in his own country?”

"If I set up a sheltered foundation and donate assets to it, can I change my mind and recover these assets at a later date?"

"I have no direct heirs and would like to set up a sheltered foundation to which to bequeath my assets after my death. Can that be done?"

“My child is handicapped. I would like to set up a foundation to make sure that he is able to lead a dignified life even after my death. Can a sheltered foundation enable me to achieve that goal?”

"I am a Luxembourg tax resident. What action must I take to enable my donations to the Fondation de Luxembourg or to institutions recognized as being of public utility to be deducted from my taxable income?"

“How is the Fondation de Luxembourg financed?”

The Fondation de Luxembourg has been bestowed with an endowment of 5 million euros to cover its immediate needs. In the further course of its work, the Fondation de Luxembourg is authorized to charge commissions to the sheltered foundations in order to cover management, oversight and administration costs.

“What costs does the Fondation de Luxembourg invoice for its services?”

For an endowment foundation, the Fondation de Luxembourg may charge an annual management commission of 0.8% of the value of the endowment.

In the case of a turnover foundation, fees of 5% will be levied on outgoing moneys.

In both cases, the minimum fee is set at €5,000 per year.

These costs cover all of the services provided: management, accountancy, audit and administration of the sheltered Foundation, organization of the management committees and implementation and follow-up of the decisions taken by these committees, together with project selection, monitoring and reporting on the initiatives which are supported.

The Fondation de Luxembourg also invoices initial costs when the sheltered foundation is set up.

“If a founder already knows which project he wishes to support, can he structure his commitment via a sheltered foundation?”

The Fondation de Luxembourg exists to support individuals and companies wishing to structure and implement a philanthropic project. If the founder already has in mind a public utility project, the Fondation de Luxembourg can set up the appropriate structure (sheltered foundation) and accompany the project (optimization and reporting to the founder). The only conditions are of course that the project be in the public interest and in compliance with the statutes of the Fondation de Luxembourg.

“What can Luxembourg offer by way of added value to the process of structuring a philanthropic commitment?”

There are many arguments in favour of structuring a philanthropic commitment in Luxembourg. The following are often cited:

Political and economic stability which safeguards the permanency of the existing legal framework; that is particularly important for long-term commitments.
Luxembourg is acknowledged to be a highly international financial centre within the European Union.
Luxembourg offers a high concentration of crossborder expertise on tax, legal and financial issues.
The Government provides and maintains strong support for public utility initiatives.
Last but not least, Luxembourg has been able to develop widely acknowledged expertise in the areas of micro-finance and development aid.

Today, Luxembourg has become the ideal European centre to structure interests, especially if these have an international slant. Many entrepreneurs and businessmen therefore see high added value in setting up the structure to shelter their philanthropic commitment close to the same actors and advisors who advise them on their core business, all this at the heart of the European Union.

"What rules apply to crossborder donations in Europe?"

Persons who have some form of connection with Luxembourg often wish to group all of their interests in this country, including the philanthropic side of their business. The European Court of Justice has handed down a clear ruling to the effect that, in compliance with the principle of freedom of movement of capital, donors must be able to benefit from the fiscal advantages in force in their country of tax residence for donations made to causes in the general interest in another Member State of the European Free Trade Association. On this subject, see the case law of the Court in the Persche ruling C-318/07 http://www.bailii.org/eu/cases/EUECJ/2009/C31807.html

However, this ruling has not yet been transposed into domestic law by a good number of countries in the Union. Donors who do not wish to take legal action in the European Court of Justice against the tax authorities of their own country may therefore envisage an alternative solution:

“How can a founder who is resident outside Luxembourg easily benefit from the fiscal advantages available in his own country?”

TGE, or Transnational Giving Europe, is a network of Foundations in 19 European countries recognized as being of public utility. They enable donors to make donations to institutions recognized as being of public utility in any one of these 19 countries via an institution which is acknowledged by the tax authorities in their own country of residence and able to issue tax certificates.

Solutions are also available to enable US tax residents to make fiscally efficient donations in Europe.

"If I set up a sheltered foundation and donate assets to it, can I change my mind and recover these assets at a later date?"

The answer is no: a donation to a foundation is irrevocable in Luxembourg.

"I have no direct heirs and would like to set up a sheltered foundation to which to bequeath my assets after my death. Can that be done?"

The wish to continue to benefit from your own assets during your lifetime is perfectly understandable. You can therefore set up a sheltered foundation stipulating its purpose and the assets with which it will be endowed; the foundation will be activated when the estate has passed on these assets. A copy of the founder’s last will and testament will then be attached to the agreement setting up the foundation.

Nevertheless, we advise founders to endow their foundation at least in part before their own death so as to have an opportunity to see for themselves some of the practical benefits of their initiative.

“My child is handicapped. I would like to set up a foundation to make sure that he is able to lead a dignified life even after my death. Can a sheltered foundation enable me to achieve that goal?”

The Fondation de Luxembourg is governed by Luxembourg law on foundations; it must therefore always act in the general interest. Its action must benefit the whole of society rather than a particular subgroup of persons.

However, support can sometimes be provided for a particular individual, provided that the project forms part of a broader framework of support for a cause in the general interest. In a word, the general public must derive greater benefit from the action in question than these private interests.

Since 2009, the Luxembourg tax authority no longer requires the submission of a tax certificate by establishments which benefit from donations in order to validate the corresponding deduction for tax purposes. The taxpayer therefore only has to notify the donation on his tax return to which he must attach a bank statement clearly showing the transfer. This naturally simplifies the management and administration of deductions of donations for tax purposes by the associations and foundations on the one hand and donors on the other.

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