Establishment and Consulting for Foundations

There is no legally mandated minimum capital requirement in Germany. In practice, however, a guideline of at least 100,000 euros has become established, which most foundation supervisory authorities expect. The key factor is that the capital ensures the foundation’s purpose can be fulfilled in a lasting and sustainable manner, so the actual amount required depends on the specific project. For greater impact, we recommend 250,000 euros or more. Tax-efficient: Founders can claim up to one million euros, and married couples up to two million euros, for tax purposes.

Foundations are generally established in perpetuity; changes are possible but subject to strict conditions. Since the 2023 reform of foundation law, a three-tier model has been in effect nationwide: Minor organizational adjustments are permitted if there is a valid reason. More substantial, fundamental changes require a significant change in external circumstances. The foundation’s purpose itself can only be changed if it can no longer be fulfilled on a permanent basis. Any amendment to the articles of incorporation requires the approval of the competent foundation authority in the respective federal state, which is why it is advisable to incorporate desired flexibilities into the foundation deed from the outset.

Generally speaking, a distinction is made between a foundation with legal capacity – which operates as an independent legal entity with its own board of directors – and a trust foundation, which lacks its own legal personality and can be established with as little as approximately 5,000 euros. Within these basic forms, there are various types depending on the purpose: the charitable foundation, which serves the public good and enjoys tax benefits; the family foundation, which serves to preserve private assets within a family; the consumable foundation, in which even the endowment capital may be used for specific purposes; and the dual foundation, which combines a family foundation and a charitable foundation, thereby combining both tax and strategic advantages.

Establishing a foundation is a multi-step process that realistically should be planned to take at least one year. The planning phase, which includes defining the foundation's purpose, bylaws, and asset structure, typically takes three to six months. The subsequent review by the foundation supervisory authority takes an additional three to twelve months, depending on the state and the complexity of the case. For charitable foundations, this is followed by recognition by the tax office before the foundation is permitted to become fully operational. Early coordination with authorities and experienced advisors significantly shortens the process.