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Trust foundation as a progressive and flexible solution for medium-sized businesses

The medium-sized entrepreneur
is currently facing a
exposed to a multitude of problems,
for which he urgently needs efficient
Solutions needed:
According to calculations by the Institute
for middle class research
stand in the next few years
over 300,000 family businesses
before the change of ownership.
Estimated at
about 40 percent of all cases there are
there is no suitable successor
from the family circle or
no descendants. Further
is due to the tightened
Banking requirements (Basel II) and
related restrictions
in granting credits
the liquidity situation at the
Small and medium-sized enterprises to the utmost
tense. In addition
owner of medium-sized
Businesses often face revenue shortfalls
to fight the
for example, to economic
Declines in orders or
on the premature acceptance of a bid
for health reasons
can be traced back to. The financial experts
Frank M. Strobelt
and Dr. Johannes Fiala describe,
to what extent charitable
Foundations at least
partially, can remedy the situation.
For many medium-sized companies
until a few years ago the
Topic “foundation” taboo and
was made possible with the commitment of
Large companies like Bertelsmann,
Henkel, Bosch or Hertie
associated. That has
but since the reform of the foundation
of the year 2000 with the “Law
for further tax incentives
of foundations” has been amended.
Further positive impulses for the
foundations are affected by the new
“Act to further strengthen
of civic engagement”
to be expected before the
Summer break from the Bundestag
is to be adopted. The
Bill, which in a first
Statement from the Federal Council
in March predominantly positively assessed
the simplification of the
Summer break from the Bundestag
is to be adopted. The
Bill, which in a first
Statement from the Federal Council
in March predominantly positively assessed
the simplification of the
Deduction limit for donations at 20
Percentage of annual income
are, among other things, significant tax relief
for founders of foundations
provided for. Instead of
307,000 euros can be donated
according to the draft up to 750,000
Euro start-up capital as special expenses
tax-reducing at the
private tax return.
The increased maximum foundation amount
is then available for jointly assessed
Spouses each spouse
separately. Following the decision
of the Federal Cabinet enter
the beneficial arrangements
with retroactive effect.

Charitable trust foundation

The deductibility of donations
to charitable trusts
of taxable income
is already today for middle class
attractive: Due to a
Ruling of the Federal Supreme Finance Court
of August 2005 and
the decree of the Bavarian
State Tax Office in the past
year, the nationwide
valid, spouses can,
who are jointly assessed, the
double the amount for grants
into the estate of a
charitable foundation for tax purposes
…to claim. The maximum foundation amount
rises for married people
under the hitherto existing
Provisions thus from
307,000 euros to 614,000 euros.
The founders of the foundation can be a-
times in ten years the maximum foundation amount
as a special edition
Furthermore, donors can
Maximum foundation amount based on
of the remission of EUR 20 450
to 40,900 euros, just as
such as the maximum donation
(see calculation)
take. assets, such as
z. e.g. GmbH shares, real estate,
Securities, works of art, cash
can be transferred to the charitable trust foundation
be turned to.
The double foundation, which is one of the
business-related foundations
counts, is considered to be a contemporary, intelligent
Building block to the solution for
the succession and pension problem
to see.

Succession plan via
Solve double foundation

For example, the shareholder
the managing director of a
GmbH owns a large part of the privately
held company shares
non-voting and tax-neutral
into a non-profit
Trust Foundation.
The remaining GmbH shares,
with voting rights and sufficient
Profit participation rights
are equipped, will be transferred to a
Family foundation at home or abroad
brought in. The families
foundation regulates the supply of the
Family members and determined
also about the death of the founder
beyond the shareholders’ meeting
control the destiny of
Ltd. The management of the company
will be from a certain
Date on qualified outside directors
transferred. The
charitable trust
is in the retirement phase of the
GmbH managing director, according to Andreas
M. Bosl, owner of the Mittelstands
Advisory Service (MBD)
in Pöcking, as an ideal field of activity
to see. The latter may engage in charitable
Activities such as promotion
of sports, of education,
to culture around the world. The
often associated with publicity-effective
additionally strengthen the reputation
and core business of the own

Supply instrument

For owners of medium-sized businesses
it is possible to independently
from the double foundation described,
beyond a certain point
in permanent employment
for the own non-profit
Trust Foundation to be active,
in order to actively support the foundation’s
abroad. Available at
times without employment in your own company
can be so clever
can be bridged. This variant
is also interesting for groups of people,
which, as of a certain
date due to health reasons
Reasons physical activities,
in the trades, for example, not
…you’ll be able to do it.

Trust foundation or
legally responsible foundation

Legally regulated and in the
Maintenance payments stipulated in the foundation statutes
for the founder
or his relatives are a
Alternative to the employment model outlined
in the non-profit sector.
The foundation with legal capacity is an independent
rights holders
and duties. On the foundation of the
Foundation as a legal entity are
two processes are necessary: the foundation transaction
and the state
Approval. With the approval
by the competent supervisory authority
of the respective federal state
the foundation acquires the
Legal capacity. Afterwards the
foundation with legal capacity from this
Authority Supervised. In contrast
required for the foundation with legal capacity
the trust foundation does not
own organization. The fiduciary
Management is carried out by
a legal entity is-
which are normally due to
of a closed trust agreement
and the Articles of Association
to the outside world. The non-profit
Trust foundation requires
in contrast to the legally capable
Foundation only to the examination regarding
of the non-profit status by the
responsible tax office. So the
incorporated foundation in Germany
by two authorities at once
supervised: the tax office and
the foundation supervisory authority.
The fiduciary, also dependent
Foundation called, is
especially for the middle class the
more flexible and at the same time the older
Basic form of the foundation. Trust Foundations
have a more than
thousand years of history
in Germany. Trust Foundations
can be quite
can be erected quickly. Inside
of one month, the
foundation, in exceptional cases
in a few days. The
related award
the provisional non-profit character
depends on the workload
of the responsible tax office.
If one draws a comparison between
legal and fiduciary
Foundation, the
most cases, the fiduciary
Foundation on the basis of the following
Advantages preferred:
● lengthy official approval procedures
● government oversight of the
current foundation activity is
not given; for this there are
Control mechanisms through
the tax authorities and by
Foundation bodies, which the founder
can determine himself, who
Capital inflow and outflow can
regulated more flexibly by the founder
depending on the revenue situation
of the founder,
● there are cost advantages
both at the time of foundation and
also during operation
of the foundation,
● the articles of association of a fiduciary
Foundation can, in contrast
to a foundation with legal capacity,
hands down
the present circumstances
be adjusted,
● the entire administration
of the foundation, the founder may
transferred to the foundation carrier
and focus on the fulfillment
focus on the purpose of the foundation
Despite the numerous advantages that
the Trust Foundation vis-à-vis
of the foundation with legal capacity,
there are few consultants who
the advantages of this legal form in
competently submit to donors
and the regular
Establishment of trust foundations
at home and abroad
accompany. Cross-border
Foundation constructions can be
can only be realized with teams of experts,
who also have experience in
have the practical implementation.
To a qualified consultation
concerning the trust foundation
includes, among other things, interdisciplinary
Thinking, since besides
the civil law the tax law in
taken into account in any particular way
needs to be.
Only those who are familiar with both legal forms
actively considered
can judge in which
cases the trust foundation for the
Founder appears to be advantageous.
More info: www.fiala.de;

Dr. Johannes Fiala
Dr. Johannes Fiala, Attorney at Law,
Banker and business economist
(MBA), certified financial and investment advisor,
Master of Business Administration
(University of Wales),
Master of Mediation (University),
EC expert (C.I.F.E.), advises
independent financial service providers for years,
Investors and distributors
on the subject of advisory and prospectus holding.
Two decades
for a long time he gained experience in
the fiduciary settlement
or management of company and
Estate assets, real estate
and securities – also in the judicial

Frank M. Strobelt
Frank M. Strobelt is managing director
the Society for the Promotion of Foundations
e. V. (GfS), was
Member of audit committees for many years
the industry and
Chamber of Commerce (IHK) and is
Vice-President of the European
Business and Finance Academy
(EWFA). He’s been
on the boards of non-profit organizations
Corporations and foundations

(Network Career Feb. 2008, 26)

Courtesy ofwww.network-karriere.com.

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About the author

Dr. Johannes Fiala Dr. Johannes Fiala

Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
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